AB 726

Under current law, corporations and cooperatives are prohibited from making

contributions or disbursements (expenditures) in campaigns for state or local office.

Violators are subject to a forfeiture (civil penalty) of not more than $500 for each

violation. Intentional violators are guilty of a Class I felony, which is punishable by

a fine of not more than $10,000 or imprisonment for three and one-half years, or

both, except that if a violation involves $100 or less, the violation is punishable as

a misdemeanor with a fine of not more than $1,000 or imprisonment for not more

than six months, or both. A recent decision of the U.S. Supreme Court has cast doubt

about whether this law is enforceable as it applies to disbursements. See

Citizens

United v. F.E.C.

, 130 S. Ct. 876 (2010).

This bill provides that if a court with jurisdiction in this state finds in a reported

decision, whether or not applicable in this state, that a prohibition against the

making of political expenditures by corporations or similar entities is not enforceable

for constitutional reasons, the Government Accountability Board (GAB) must

publish a finding to that effect. The bill then provides that, during a period when a

finding of unenforceability is in effect, before a corporation or cooperative may make

a disbursement or incur an obligation to make a disbursement for the purpose of

influencing an election for state or local office, the corporation or cooperative must

file with its registration statement and maintain on file with the appropriate filing

officer or agency: 1) a copy of a document that is satisfactory to the GAB, reflecting

action taken not more than two years previous to the time that any disbursement is

made or any obligation to make a disbursement is incurred, demonstrating that the

corporation or cooperative has received the approval of a majority of its voting

shares, exclusive of any proxy votes cast, to make disbursements and incur

obligations to make disbursements for the purpose of influencing an election for state

or local office; or 2) a statement that the corporation or cooperative has no

shareholders. The bill prohibits a corporation or cooperative from making a

disbursement or incurring an obligation to make a disbursement unless the

corporation or cooperative has a current statement or file and the statement is

accurate.

The bill also provides that no owner, officer, employee, or agent of a corporation

or cooperative may cause or authorize the corporation or cooperative to make a

disbursement or to incur an obligation that is prohibited under the bill. Under the

bill, if an owner, officer, employee, or agent causes or authorizes a violation, action

must be brought against the owner, officer, employee, or agent personally and the

corporation or cooperative is not financially liable for the violation. In addition, no

corporation or cooperative is permitted to reimburse an owner, officer, employee, or

agent for any financial liability incurred by the owner, officer, employee, or agent.