H. B. 4646
(By Delegates Manchin, Frazier,
Moore, Brown, Caputo, Woot
n, Ferro and Wells)
(Originating in the Committee on the Judiciary.)
[February 24, 2010]
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; and to amend said code by
adding thereto a new section, designated §31D-16-1621; all
relating to corporate political accountability; definitions;
requiring annual authorization and approval by a majority of
shareholders for corporations spending an aggregate of $10,000
or more for political activities; providing for director
liability for spending without proper authorization; and
disclosure of corporate political activities to shareholders
and the public.
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; and that said code be amended by
adding thereto a new section, designated §31D-16-1621, all to read
ARTICLE 1. GENERAL PROVISIONS.
PART 5. 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
(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. Sec. 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 2-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
tate 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
(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
(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
(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
(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
(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
(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: (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
(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
(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
§31D-7-740. Annual vote.
(a) A corporation spending in the aggregate $10,000 or more of
corporate treasury funds on political activities, 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
provide for a separate resolution subject to shareholder vote to
approve any spending of $10,000 or more by the corporation for any
(c) Notwithstanding this requirement 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 on a more frequent basis. Any authorization request by the corporation that
is not made during an annual authorization shall be deemed a
(d) If the corporation spends less than an aggregate of
$10,000 in a twelve-month period for political activities, then 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, the corporation shall request the
authority to spend a maximum dollar amount in the next twelve
(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
(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 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, provided that:
(1) All spending on political activities 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, at the time the special
authorization is requested.
ARTICLE 8. DIRECTORS AND OFFICERS.
PART 3. DIRECTORS.
§31D-8-834. Directors' liability for unlawful political
(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
(2) Damages in respect of any loss or damage sustained by the
corporation as a result of the unauthorized expenditure or
(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
(b) Where two or more directors are subject to liability
pursuant to this section, each director is jointly and severally
(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, the provisions of
this section applies only to that portion made or incurred in
violation of section seven hundred forty, article seven of this
(d) It shall be a defense to liability imposed by this
(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);
(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
(B) The circumstances in which, and the person or persons by whom, the repayment was made.
ARTICLE 16. RECORDS AND REPORTS.
PART 2. REPORTS.
§31D-16-1621. Disclosure of corporate political activities to
(a) At least quarterly during each fiscal year, a corporation
that makes contributions or expenditures for political activities
shall notify its shareholders, in writing, of the nature of all its
political activities, 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
(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
(4) If the contributions or expenditures were made for or
against a candidate, including an electioneering communication as
defined in section two-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 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,