Yesterday, in a 5-4 decision, the US Supreme Court delivered a surprising – and groundbreaking – opinion in Citizens United v. Federal Election Commission that held, among other things, that a prohibition on corporations, unions, etc. from using their general treasury funds to pay for campaign advertisements regarding an issue or political candidate was unconstitutional. Note that corporations are still prohibited from making direct political contributions to candidates or political parties. This decision is expected to radically alter the role that companies will play in political elections, as it turns back the clock a century on laws in this area. It represents quite an aggressive intervention into politics by SCOTUS.
Looking at Google News, there are already more than 2500 articles on this case – and I see that some law firms have already set up webcasts to explain this decision to be held as early as Monday! We will be posting memos on this decision in our “Political Contributions” Practice Area.
Here are a few blogs that lay out the issues and possible consequences of the decision pretty nicely:
What Does Citizens United Mean for Director Elections? Turns Them Into Political Ones?
One topic not addressed so far in the media pieces I have read is how Citizens United may impact the boardroom. Given that a company’s board will likely be the greatest influencer on how a company spends money in political campaigns, I imagine the politics of each director could well be scrutinized now and perhaps it’s more likely that third-parties will attempt to place alternative candidates – ones with a different political bent – on a company’s ballot. Plus, Senator Schumer is talking about Congress adopting a law that would require shareholder approval of political expenditures as one of several alternatives to limit the decision’s impact. A true mix of politics and investing.
The importance of proxy access just jumped three-fold in my opinion. And the importance of the roles played by chief governance officers, corporate secretaries and investor relations departments also jumped as they will be called upon to help directors conduct real campaigns, a topic I have written about often (here is one example and another). The change never stops…
Mailed: January-February Issue of The Corporate Counsel
The January-February issue of The Corporate Counsel was recently mailed and analyzes these topics:
– Will Delaware Issuers Be Utilizing the New Bifurcated Record Dates for Their Upcoming Annual Meeting?
– Incorporation By Reference/Totality of Information As Good Deal-Disclosure–The Dialogue Continues
– Do Spring-Loaded Option Grants To Executives Trigger 8-K Item 5.02(e)?
– Rule 10b5-1 Plan Practices–Staff CDIs and Other Updates
– More Section 13(d)/(g) CDIs
– Getting Familiar with the GAAP Codification
– Broc Romanek