Introduced Version
House Bill 3098 History
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Key: Green = existing Code. Red = new code to be enacted
H. B. 3098
(By Delegates Manchin, Poore, Hunt,
Wells, Pino, Caputo and Longstreth)
[Introduced March 25, 2013; referred to the
Committee on the Judiciary.]
A BILL to amend and reenact §31D-1-150 of the Code of West
Virginia, 1931, as amended; to amend said code by adding
thereto two new sections, designated §31D-7-740 and §31D-7-
741; to amend said code by adding thereto a new section,
designated §31D-8-834; to amend said code by adding thereto a
new section, designated §31D-15-1540; and to amend said code
by adding thereto a new section, designated §31D-16-1621, all
relating to the accountability of a corporation's political
activities; defining additional terms; requiring annual
authorization and approval by a majority of shareholders for
corporations spending a yearly aggregate of $10,000 or more
for political activities in this state; providing for director
liability for spending without proper authorization; requiring
disclosure of corporate political activities to shareholders
and the public; and applying these new requirements to foreign
corporations.
Be it enacted by the Legislature of West Virginia:
That §31D-1-150 of the Code of West Virginia, 1931, as
amended, be amended and reenacted; that said code be amended by
adding thereto two new sections, designated §31D-7-740 and §31D-7-
741; that said code be amended by adding thereto a new section
designated §31D-8-834; that said code be amended by adding thereto
a new section, designated §31D-15-1540; and that said code be
amended by adding thereto a new section, designated §31D-16-1621,
all to read as follows:
ARTICLE 1. GENERAL PROVISIONS.
§31D-1-150. Definitions.
As used in this chapter, unless the context otherwise requires
a different meaning, the term:
(1) "Articles of incorporation" includes, but is not limited
to, amended and restated articles of incorporation and articles of
merger.
(2) "Authorized shares" means the shares of all classes a
domestic or foreign corporation is authorized to issue.
(3) "Conspicuous" means written so that a reasonable person
against whom the writing is to operate should have noticed, including, but not limited to, printing in italics or boldface or
contrasting color, or typing in capitals or underlined.
(4) "Contribution or expenditure" means any monetary and
nonmonetary political contributions and expenditures not deductible
under Section 162 (e)(1)(B) of the Internal Revenue Code,
including, but not limited to, contributions to or expenditures on
behalf of political candidates, political parties, political
committees and other political entities organized and operating
under 26 U.S.C. §527 of the Internal Revenue Code and any portion
of any dues or similar payments made to any tax exempt organization
that is used for an expenditure or contribution if made directly by
the corporation would not be deductible under Section 162 (e)(1)(B)
of the Internal Revenue Code, any contribution or expenditure, as
those terms are defined in 2 U.S.C. §431, as well as any
contribution or expenditure defined under section two-a, article
eight, chapter three of this code, and also includes any direct or
indirect payment, distribution, loan, advance, deposit, or gift of
money, or any services, or anything of value (except a loan of
money by a national or state bank made in accordance with the
applicable banking laws and regulations and in the ordinary course
of business) to any candidate, campaign committee, or political
party or organization, in connection with any election to any
office. The term "contribution or expenditure" does not include:
_____(A) Communications by a corporation to its stockholders and
executive or administrative personnel and their families on any
subject;
_____(B) Nonpartisan registration and get-out-the-vote campaigns by
a corporation aimed at its stockholders and executive or
administrative personnel and their families; and
_____(C) The establishment, administration, and solicitation of
contributions to a separate segregated fund to be utilized for
political purposes by a corporation.
_____(4) (5) "Corporation" or "domestic corporation" means a
corporation for profit, which is not a foreign corporation,
incorporated under or subject to the provisions of this chapter.
(5) (6) "Deliver" or "delivery" means any method of delivery
used in conventional commercial practice, including, but not
limited to, delivery by hand, mail, commercial delivery and
electronic transmission.
(6) (7) "Distribution" means a direct or indirect transfer of
money or other property or incurrence of indebtedness by a
corporation to or for the benefit of its shareholders in respect of
any of its shares: Provided, That "distribution" does not include
a direct or indirect transfer of a corporation's own shares. A
distribution may be in the form of a declaration or payment of a
dividend; a purchase, redemption or other acquisition of shares; or
a distribution of indebtedness.
(7) (8) "Effective date of notice" means the date as
determined pursuant to section one hundred fifty-one of this
article.
(8) (9) "Electronic transmission" or "electronically
transmitted" means any process of communication not directly
involving the physical transfer of paper that is suitable for the
retention, retrieval and reproduction of information by the
recipient.
(9) (10) "Employee" includes an officer and may include a
director: Provided, That the director has accepted duties that
make him or her also an employee.
(10) (11) "Entity" includes corporations and foreign
corporations; nonprofit corporations; profit and nonprofit
unincorporated associations; limited liability companies and
foreign limited liability companies; business trusts, estates,
partnerships, trusts and two or more persons having a joint or
common economic interest; and state, United States and foreign
government.
(11) (12) "Foreign corporation" means a corporation for profit
incorporated under a law other than the laws of this state.
(13) "General treasury funds" means those moneys in possession
of a corporation incorporated under the laws of the state in the
normal course of business. General treasury funds may include,
among others, funds from sales, accounts payable, loans,
investments, bonds or debt instruments.
_____(12) (14) "Governmental subdivision" includes, but is not
limited to, authorities, counties, districts and municipalities.
(13) (15) "Individual" includes, but is not limited to, the
estate of an incompetent or deceased individual.
(16) "Issue advocacy campaign" means contributions or
expenditures for any communication to the general public intended
to encourage the public to contact a government official regarding
pending legislation, public policy or a government rule or
regulation. Issue advocacy campaign does not include contributions
or expenditures for registered lobbyists or other persons employed
by the corporation to lobby directly state or federal government
officials.
_____(17) "Known at the time of the authorization vote" means that,
at the time the corporation seeks authorization from shareholders
to spend corporate funds for political activities in this state:
(A) The corporation's officers, directors or employees have
identified a specific political activity for the corporation to
support or oppose; (B) corporate officers, directors or employees
have taken steps to obligate funds to a political activity; or (C)
the corporation has a regularly scheduled payment to a trade
association or other entity to pay for a political activity in the
next twelve months.
_____(18) "Majority of all shareholders" means fifty percent plus
one of all outstanding voting securities, as provided in section
seven hundred twenty-one, article seven of this chapter.
Shareholders not casting votes shall not count toward affirmative
authorization under this chapter.
_____(14) (19) "Person" includes, but is not limited to, an
individual and an entity.
(20) "Political activities" means any contributions or
expenditures made directly or indirectly to, or in support of or
opposition to, any candidate, political party, committee,
electioneering communication, ballot measure campaign, or an issue
advocacy campaign. Political activities do not include activities
defined as lobbying under any local, state or federal law.
_____(15) (21) "Principal office" means the office so designated in
the return required pursuant to section three, article twelve-c,
chapter eleven of this code where the principal executive offices
of a domestic or foreign corporation are located.
(16) (22) "Proceeding" includes, but is not limited to, civil
suits and criminal, administrative and investigatory actions.
(17) (23) "Record date" means the date established under
article six or seven of this chapter on which a corporation
determines the identity of its shareholders and their
shareholdings. The determinations are to be made as of the close
of business on the record date unless another time for doing so is
specified when the record date is fixed.
(18) (24) "Registered agent" means the agent identified by the
corporation pursuant to section five hundred one, article five of
this chapter.
(19) (25) "Registered office" means the address of the
registered agent for the corporation, as provided in section five
hundred one, article five of this chapter.
(20) (26) "Secretary" means the corporate officer to whom the
board of directors has delegated responsibility under subsection
(c), section eight hundred forty, article eight of this chapter for
custody of the minutes of the meetings of the board of directors
and the meetings of the shareholders and for authenticating records
of the corporation.
(27) "Separate segregated fund" means a political action
committee formed by a corporation for the purpose of making
contributions to candidates for office or to political parties. A
"separate segregated fund" which supports federal candidates shall
have the same meaning as that found in 2 U.S.C. §441b.
_____(21) (28) "Shareholder" means the person in whose name shares
are registered in the records of a corporation or the beneficial
owner of shares to the extent of the rights granted by a nominee
certificate on file with a corporation.
(22) (29) "Shares" means the units into which the proprietary interests in a corporation are divided.
(23) (30) "Sign" or "signature" includes, but is not limited
to, any manual, facsimile, conformed or electronic signature with
means to identify a record by signature, mark or other symbol, with
intent to authenticate it.
(24) (31) "State", when referring to a part of the United
States, includes a state and commonwealth and a territory and
insular possession of the United States and their agencies and
governmental subdivisions.
(25) (32) "Subscriber" means a person who subscribes for
shares in a corporation, whether before or after incorporation.
(26) (33) "United States" includes, but is not limited to,
districts, authorities, bureaus, commissions, departments and any
other agency of the United States.
(27) (34) "Voting group" means all shares of one or more
classes or series that, pursuant to the articles of incorporation
or this chapter, are entitled to vote and be counted together
collectively on a matter at a meeting of shareholders. All shares
entitled by the articles of incorporation or this chapter to vote
generally on the matter are for that purpose a single voting group.
(28) (35) "Voting power" means the current power to vote in
the election of directors.
ARTICLE 7. SHAREHOLDERS.
PART 4. SHAREHOLDERS VOTE ON CORPORATE
POLITICAL ACTIVITIES.
§31D-7-740. Annual vote.
_____(a) A corporation spending in the aggregate $10,000 or more of
corporate treasury funds on political activities in this state,
shall comply with the requirements of this section and section
seven hundred forty-one of this article.
_____(b) Any proxy or consent or authorization for an annual
meeting of the shareholders of a corporation held pursuant to
section seven hundred one of this article, or a special meeting
held pursuant to section seven hundred two of this article, shall
provide for a separate resolution subject to shareholder vote to
approve any spending of $10,000 or more by the corporation for any
political activity.
_____(c) Notwithstanding the requirement of subsection (b) of this
section for an annual shareholder vote to authorize any spending of
$10,000 or more by the corporation for political activity, a
corporation may request authorization for spending on political
activities in this state on a more frequent basis. Any
authorization request by the corporation that is not made during an
annual authorization shall be deemed a special authorization.
_____(d) If the corporation spends less than an aggregate of
$10,000 in a twelve-month period for political activities in this
state, it does not have to seek shareholder authorization for such spending.
§31D-7-741. Shareholder approval of political activities.
_____(a) When seeking shareholder authorization for expenditures
for political activities in this state, the corporation shall
request the authority to spend a maximum dollar amount in the next
twelve months;
_____(b) If known at the time of the shareholder vote, the
corporation shall articulate whether the corporate treasury funds
so authorized are intended to benefit or defeat specific
candidates, ballot measures or issue advocacy campaigns, or whether
it will be paid to specific nonprofits or trade associations for
political activities in this state;
_____(c) To be effective, the authorization vote must garner
support from a majority of the corporation's shareholders;
_____(d) A vote by the shareholders to approve or disapprove any
spending of $10,000 or more by a corporation for a political
activity shall be binding on the corporation;
_____(e) Notwithstanding the requirement of subsection (b), section
seven hundred forty of this article for an annual shareholder vote
to authorize any spending of $10,000 or more by the corporation for
any political activity, a corporation may request a special
authorization for additional spending on political activities in
this state, provided that:
_____(1) All spending on political activities in this state of
$10,000 or more shall be authorized by a shareholder majority vote;
and
_____(2) For any special authorization, the corporation shall
articulate whether the corporate treasury funds so authorized are
intended to benefit or defeat candidates, ballot measures or issue
advocacy campaigns, or will be paid to specific nonprofits or trade
associations for political activities in this state, at the time
the special authorization is requested.
ARTICLE 8. DIRECTORS AND OFFICERS.
PART 3. DIRECTORS.
§31D-8-834. Directors' liability for unlawful political __
expenditures.___________
__(a) A director who votes for or assents to a expenditure or
contribution without the authorization of shareholders pursuant to
section seven hundred forty, article seven of this chapter, is
personally liable to the corporation for:
__(1) The amount of the unauthorized expenditure or
contribution;
__(2) Damages in respect of any loss or damage sustained by the
corporation as a result of the unauthorized expenditure or
contribution; and
__(3) Interest on the amount of the unauthorized expenditure or
contribution for the period:
__(A) Beginning with the date when the expenditure or
contribution was made or incurred; and
__(B) Ending with the date when that amount is repaid to the
corporation.
__(b) Where two or more directors are subject to liability
pursuant to this section, each director is jointly and severally
liable.
__(c) Where only part of any expenditure or contribution was
made or incurred in violation of the provisions of section seven
hundred forty, article seven of this chapter, this section applies
only to that portion made or incurred in violation of section seven
hundred forty, article seven of this chapter._____
__(d) It shall be a defense to liability imposed by this
section:
__(1) If the unauthorized expenditure or contribution has been
repaid to the corporation, together with any interest on that
amount due under subdivision (3), subsection (a) of this section;
__(2) That repayment has been approved by the shareholders; and
__(3) The notice to shareholders of the meeting during which
full disclosure is made, the contents of the notice include:
__(A) The circumstances in which the unauthorized expenditure or
contribution; and
__(B) The circumstances in which, and the person or persons by
whom, the repayment was made.
ARTICLE 15. FOREIGN CORPORATIONS.
PART 4. Corporate Political Activity.
§31D-15-1540. Applicability of provisions in this chapter related
__to political activity to foreign corporations.
__Prior to engaging in any political activities in this state,
a foreign corporation shall comply with the requirements of
sections seven hundred forty and seven hundred forty-one, article
seven of this chapter, section eight hundred thirty-four, article
eight of this chapter, and section one thousand six hundred twenty-
one, article sixteen of this chapter, inclusively.
ARTICLE 16. RECORDS AND REPORTS.
PART 2. REPORTS.
§31D-16-1621. Disclosure of corporate political activities to
__shareholders.
__(a) At least quarterly during each fiscal year, a corporation
that makes contributions or expenditures for political activities
in this state shall notify its shareholders, in writing, of the
nature of all its political activities in this state, funded by
either its separate segregated fund or through its general
corporate treasury, including contributions or expenditures made
directly or indirectly.
__(b) A report made pursuant to this section shall include the
following:
__(1) The date of the contributions or expenditures;
__(2) The amount of the contributions or expenditures;
__(3) The identity of the candidate, political party, committee,
electioneering communication, ballot measure campaign or issue
advocacy campaign;
__(4) If the contributions or expenditures were made for or
against a candidate, including an electioneering communication as
defined in section one-a, article eight, chapter three of this
code, the office sought by the candidate and the political party
affiliation of the candidate;
__(5) If the contributions or expenditures were made for or
against a ballot measure, the purpose of the measure and whether
the contributions or expenditures were made in support or
opposition to the ballot measure;
__(6) If the contributions or expenditures were made for or
against an issue advocacy campaign, the nature of the political
issue and whether the contributions were made in support or
opposition to the political issue; and
__(7) All expenditures made by a separate segregated fund
affiliated with the corporation.
__(c) (1) The quarterly reports of political activities in this
state by a corporation shall be public records.
__(2) A copy of the reports filed pursuant to subsection (a)
shall be posted for at least one year on the corporation's website,
if any.
NOTE: The purpose of the bill is to address the
accountability of a corporation's political activities. The bill
requires annual authorization and approval by a majority of
shareholders for corporations spending a yearly aggregate of
$10,000 or more for political activities in this state. The bill
provides for director liability for spending without proper
authorization. The bill requires disclosure of corporate political
activities to shareholders and the public. The bill applies these
new requirements to foreign corporations. The bill defines new
terms.
Strike-through indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.
§31D-7-740, §31D-7-741, §31D-8-834, §31D-15-1540 and §31D-16-
1621 are new; therefore, they have been completely underscored.