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With Corporations’ New Outsize Voice, Can Shareholders Speak?

New policy proposal based on British law shows congressional leaders how to give corporate shareholders a voice in election spending.

January 29, 2010

New policy proposal based on British law shows congressional leaders how. 

For Immediate Release, January 28, 2010
Contact: Jeanine Plant-Chirlin, 212–998–6289

New York—A new policy proposal released today urges Congress to change U.S. securities laws in order to protect shareholders in the wake of the Supreme Court’s ruling in Citizens United v. FEC.

The decision overturns legal doctrine dating back a century that banned corporate managers from directly spending shareholder funds in elections. Corporate law is ill-prepared for this new age of corporate political spending by publicly-traded companies. Today, corporate managers need not disclose to their investors – individuals, mutual funds, or institutional investors, such as government or union pension funds – how funds are being spent, either before or after the fact.

Modeled on existing British law, the Brennan Center plan outlines a way to change the law so that managers at publicly traded companies must get shareholder approval on corporate political expenditures.

 "Citizens United severely undercut democracy; now we must bolster it. This proposed change would help by giving shareholders a more robust voice in elections. Disclosure rules will also provide greater transparency and make it tough for corporations to make stealth moves to influence election outcomes." said Ciara Torres-Spelliscy, author of the new report, Corporate Campaign Spending: Giving Shareholders a Voice.

According to news reports, the President and Congressional leaders are examining the idea. Both the House and the Senate are set to hold hearings next week on an array of legislative responses-with shareholders’ rights key among them.
The report suggests two specific reforms to corporate law to adapt to this new legal landscape:

1.       That shareholders be given full periodic reports of past corporate political spending; and
2.       That shareholders be given the opportunity to vote on future corporate political expenditures.

In the U.K., companies disclose past political expenditures directly to shareholders. Investors also authorize the use of shareholder funds in political spending beforehand. The report urges Congress to adopt changes to the U.S. securities laws to mirror the British law. That way, shareholders have notice of, and the ability to consent to corporate political expenditures.

The Brennan Center is also endorsing other reforms to address the fallout from Citizens United. We will be supporting current proposals and developing additional ideas for public funding systems that build on grassroots participation with matching funds. We will also be examining creative ways to broaden First Amendment jurisprudence after Citizens United. In addition, the Center continues its work to modernize the voter registration system – to counter the flood of new money in politics post-Citizens United with millions of new voters.

For more information or to set up an interview with Ciara Torres-Spelliscy, please contact Jeanine Plant-Chirlin at 212–998–6289 or