Shareholder Protection Act of 2010

The House Financial Services Committee approved a bill that would require companies to obtain investor approval before spending more than $50,000 per year in general corporate funds on political activities. H.R. 4790, the “Shareholder Protection Act of 2010,” was inspired by the Supreme Court’s Citizens United decision in January, which lifted restrictions on independent expenditures by companies. The bill would require issuers to obtain shareholder authorization each year for “expenditures on political activities,” which include independent expenditures, contributions to political parties or committees, and contributions to trade associations or other tax-exempt organizations. (House Panel Endorses Shareholder Votes on Political Spending, RiskMetrics Group, 7/29/10)

The U.S. Chamber of Commerce immediately sent a letter to the House of Representatives expressing strong opposition to H.R. 4790, the so-called “Shareholder Protection Act of 2010,” citing the onerous burdens placed on corporate directors who have been empowered to carry out good faith business decisions. The Chamber’s letter asserts that this extra layer of shareholder authorization will hinder, through increased regulatory hurdles, a company’s ability to exercise its constitutional right to free speech. (U.S. Chamber Expresses Strong Opposition to Shareholder Protection Act, the Financial 7/29/10)

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