The Business Council strongly opposes provisions of this wide-ranging legislation that would require corporations formed under the laws of New York State – including the business corporation law, the limited liability corporations law, the not-for-profit corporation law, the railroad law, the banking law and others - to obtain approval of a majority of shareholders before making any political donations in New York. This same proposal was previously proposed as a standalone requirement in S.7083-A.
These restrictions are described as a response to the United State’s Supreme Court decision in Citizen’s United v. Federal Election Commission.
Using this Supreme Court decision as a rationale for this legislation is misplaced and indicates a misunderstanding of Citizen’s United, which overturned restrictions on independent campaign expenditures by corporations, and did not create a change in New York Law that necessitates placing a new restriction on the ability of business entities to make any political expenditure.
Corporations are affected by political regulation and should continue to have the right to participate in the political process.
To require shareholder votes relating to political spending in New York is unworkable, and designed simply to deter corporate involvement. The vast majority of shareholders in many of the Corporations subject to this proposal would have no relationship with New York State, and in many instances a large percentage of shareholders are institutions, not individuals. Requiring even an annual approval vote of a budget for political expenditures will likely result in an end to corporate participation in the political process, in that the Corporation would have to know which issues and races it intended to weigh in on as far as a full year in advance, when many of the issues and candidates may not yet be known.
The effective date of this legislation would also effective prohibit businesses incorporated in New York from participating in this year’s election cycle insofar as the effective date is August 1, 2010.
This legislation, if enacted, would impermissibly chill political speech by creating a burden that is not narrowly tailored, in fact, it would apply to matters that relate to one state but require participation of shareholders with little or no knowledge or relationship to New York politics.
The bill should not be advanced for the reasons stated above.