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 banking law and others - to obtain approval of a majority of shareholders before making any political contribution, independent expenditure, or political issue communication. A similar provision 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, and it does not merit placing broad new restrictions on the ability of business to communicate with the public regarding legislation, public policy, or government rules or regulations.
Corporations are affected by political regulation and should continue to have the right to participate in the political process. This legislation is so broad that it would require incorporated entities and LLC’s to engage in what would be, in many instances, an expensive and lengthy process just for the right to post a website asking the public or their employees to weigh in with their elected officials regarding legislation or policy decisions that impact them.
To require shareholder votes relating to political spending and communication to the public 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 immediate.
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.