A5358

An Act concerning the rights of certain business entities to make contributions and expenditures for certain political purposes, amending N.J.S.14A:3-4 and N.J.S.15A:3-3, and supplementing Title 14A of the New Jersey Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. (New section) This act shall be known and may be cited as the “Stop Corporate Money in Politics Act.”

2. (New section) As used in this act, P.L. , c. (C. ) (pending before the Legislature as this bill):

“Business entity” means and includes a corporation organized pursuant to N.J.S.14A:1-1 et seq., a nonprofit corporation organized pursuant to P.L.1983, c.127 (C.15A:1-1 et seq.), a credit union established pursuant to P.L.1984, c.171 (C.17:13-79 et seq.), a partnership or limited liability partnership established pursuant to P.L.2000, c.161 (C.42:1A-1 et seq.), a limited partnership established pursuant to P.L.1983, c.489 (C.42:2A-1 et seq.), a limited liability company organized pursuant to P.L.2012, c.50 (C.42:2C-1 et seq.), and any organization organized under any other law of this State or any law of any jurisdiction other than this State pursuant to which business entities may be organized; except that, “business entity” shall not include any committee, as defined in this section, any entity expressly identified by law as a public body corporate and politic, or any agency or instrumentality of this State or its political subdivisions.

“Candidate” means the same as that term is defined in section 3 of P.L.1973, c.83 (C.19:44A-3).

“Committee” means and includes candidate committees, joint candidate committees, political committees, continuing political committees, legislative leadership committees, and independent expenditure committees, as those terms are defined in section 3 of P.L.1973, c.83 (C.19:44A-3).

“Contributions” and “expenditures” mean the same as those terms are defined in section 3 of P.L.1973, c.83 (C.19:44A-3).

3. (New section) a. Notwithstanding any law, rule, or regulation to the contrary, the creation, organization, and existence of a business entity shall not be deemed a right but shall be a conditional grant of legal status by this State and shall remain subject to complete withdrawal at any time.

b. (1) A business entity shall not have the power to make contributions or expenditures for or to any candidate or committee in this jurisdiction or to make, incur, or authorize any expenditures in furtherance of the nomination, election, or defeat of any candidate, or in aid of the passage or defeat of any public question, or to provide political information on any candidate or public question to be voted on at an election in this jurisdiction. Under no circumstances shall any such contribution or expenditure be deemed necessary or convenient for a business entity’s lawful purpose or affairs.

(2) The provisions of this subsection shall apply notwithstanding the provisions of sections 3 through 11 of P.L.2004, c.19 (C.19:44A-20.4 through C.19:44A-20.12), P.L.2005, c.51 (C.19:44A-20.13 et seq.), sections 2 and 3 of P.L.2005, c.271 (C.19:44A-20.26 and C.19:44A-20.27), or any other law to the contrary.

(3) The provisions of this subsection shall not be construed to apply to any bona fide news item or editorial contained in any publication of bona fide general circulation.

c. A foreign business entity shall have no greater rights or privileges than, and shall be subject to the same duties, restrictions, penalties, and liabilities as a domestic business entity, as provided by this section. A foreign business entity that is authorized to transact business, is otherwise transacting business, or holds property in the State shall be subject to this section. A foreign business entity that directly or indirectly undertakes, finances, or directs election activity or ballot-issue activity in the State shall be conclusively deemed to be transacting business in the State.

d. Any provision of the articles of incorporation, bylaws, or other organizational documents of a business entity purporting to grant or confer any power expressly prohibited by this section shall be void.

e. Any act undertaken by a business entity in violation of this section shall be ultra vires and void. A business entity that exercises any power in violation of this section shall be subject to any applicable sanctions or penalties pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill).

4. (New section) Upon a finding that a business entity has violated the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill), the Attorney General may bring an action in a court of competent jurisdiction seeking such penalties as may be necessary and appropriate to remedy the violation. Those penalties may include, but need not be limited to:

temporarily suspending the business entity's authority to operate in the State, transact business in the State, or otherwise exercise its lawful purposes in the State;

prohibiting the business entity from entering into a public contract awarded pursuant to the State procurement process;

revoking the business entity's State tax exempt status, if applicable;

requiring additional reporting by the business entity;

revoking the business entity's charter, certificate, or other instrument authorizing the entity to operate in the State, transact business in the State, or otherwise exercise its lawful purposes in the State; and

involuntarily dissolving the business entity in the State.

5. N.J.S.14A:3-4 is amended to read as follows:

14A:3-4. (1) Any corporation organized for any purpose under any general or special law of this State, unless otherwise provided in its certificate of incorporation or by-laws, or unless prohibited by subsection b. of section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), shall have power, irrespective of business benefit, to aid, singly or in cooperation with other corporations and with natural persons, in the creation or maintenance of institutions or organizations engaged in community fund, hospital, charitable, philanthropic, educational, scientific or benevolent activities or patriotic or civic activities conducive to the betterment of social and economic conditions, and the board may authorize the making of contributions for those purposes in money, securities, including shares of the corporation, or other property, in such reasonable amounts as the board may determine; provided, that a contribution shall not be authorized hereunder if at the time of the contribution or immediately thereafter the donee institution shall own more than 10% of the voting stock of the donor corporation or one of its subsidiaries.

(2) The provisions of this section shall not be construed as directly or indirectly minimizing or interpreting the rights and powers of corporations, as heretofore existing, with reference to appropriations, expenditures or contributions of the nature above specified.

(cf: P.L.1988, c.94, s.12)

6. N.J.S.15A:3-3 is amended to read as follows:

15A:3-3. a. Any corporation, unless otherwise provided in its certificate of incorporation or bylaws, and subject to the purposes specified in its certificate of incorporation , and unless prohibited by subsection b. of section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), may, irrespective of business benefit, aid, singly or in cooperation with other business entities and with natural persons, in the creation or maintenance of institutions or organizations engaged in activities for the purpose of which a corporation may be organized under this act; including institutions or organizations engaged in community fund, hospital, charitable, philanthropic, educational, scientific or benevolent activities or patriotic or civic activities conducive to the betterment of social and economic conditions. The trustees may appropriate, spend or contribute for the purposes reasonable sums as they may determine.

b. The provisions of this section shall not be construed as directly or indirectly minimizing or interpreting the rights and powers of corporations, provided for prior to the effective date of this act, with reference to appropriations, expenditures or contributions of the nature set forth in subsection a. of this section.

(cf: N.J.S.15A:3-3)

7. This act shall take effect one year following the date of enactment.

STATEMENT

This bill establishes the “Stop Corporate Money in Politics Act” and restricts the right of certain business entities to make contributions and expenditures for certain political purposes.

The bill declares that the creation, organization, and existence of a business entity is not a right, but a conditional grant of legal status by the State that is subject to complete withdrawal at any time.

Under the bill, any business entity would be unable to make contributions or expenditures for or to any candidate or committee in this State or to make, incur, or authorize any expenditures in furtherance of the nomination, election, or defeat of any candidate, or in aid of the passage or defeat of any public question, or to provide political information on any candidate or public question to be voted on at an election in this State. The bill does not prohibit business entities from communicating with employees, shareholders, and the public on the issues implicated by an election.

The prohibition established by the bill would apply equally to domestic business entities and foreign business entities that are authorized to transact business, are otherwise transacting business, or hold property in the State.

Upon finding a violation of the bill’s provisions has occurred, the Attorney General may bring an action in a court of competent jurisdiction seeking such penalties as may be necessary and appropriate to remedy the violation. Such penalties may include:

temporarily suspending the business entity's authority to operate in the State, transact business in the State, or otherwise exercise its lawful purposes in the State;

prohibiting the business entity from entering into a public contract awarded pursuant to the State procurement process;

revoking the business entity's State tax exempt status, if applicable;

requiring additional reporting by the business entity;

involuntarily dissolving the business entity in the State.

The bill defines a “business entity” to mean and include a corporation, a nonprofit corporation, a credit union, a partnership or limited liability partnership, a limited partnership, a limited liability company, and any organization organized under the laws of this State or any other jurisdiction. However, the definition excludes certain political committees, any entity expressly identified by statute as a public body corporate and politic, and any agency of instrumentality of this State or its political subdivisions. Under the bill, “committee” includes candidate committees, joint candidate committees, political committees, continuing political committees, legislative leadership committees, and independent expenditure committees.