Political disclosure bill seeks to chill business activities

By CMTA Staff

Capitol Update, March 7, 2013 Share this on FacebookTweet thisEmail this to a friend

SB 121by Senator Noreen Evans (D-Santa Rosa) is a reintroduction of her bill from last year, SB 982. It requires certain publicly-held corporations to annually disclose to shareholders their past political expenditures and to start providing 24 hour notification prior to making new political contributions. 

Many companies have thousands of shareholders, most of which hold a very small, minority interest. The time and cost to comply with this bill would be extremely burdensome, especially given that the information is already available via the Secretary of State’s website. And, while this bill appears to limit these disclosures to just corporate shareholders, its application would be much broader given that the bill also requires the information to be posted on the company website, making it available to competitors and the general public.   

This bill essentially chills the ability of publicly-held companies to defend themselves against political attacks from entities not subject to the same requirements. It also creates an unequal playing field. A company’s business conduct and financial success are directly affected by state and federal policies that are part of the political process; therefore, corporations have a right to try to influence this process. Publicly-held corporations should not be denied the ability to utilize the same tools and protections of the political arena afforded to everyone one else.

The bill also creates a civil cause of action for shareholders against corporations that fail to adhere to the notification requirements. The political arena is volatile and flexibility is key.  Corporations needing to adjust to last minute developments could find themselves subject to frivolous lawsuits. Out-of-state stakeholders also have the ability to sue under California law.

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