Bill Text: NY S01126 | 2021-2022 | General Assembly | Amended


Bill Title: Enacts the democracy preservation act; prohibits contributions by foreign-influenced business entities; requires certification.

Spectrum: Partisan Bill (Democrat 12-0)

Status: (Engrossed - Dead) 2022-01-10 - referred to election law [S01126 Detail]

Download: New_York-2021-S01126-Amended.html



                STATE OF NEW YORK
        ________________________________________________________________________

                                         1126--B

                               2021-2022 Regular Sessions

                    IN SENATE

                                     January 7, 2021
                                       ___________

        Introduced  by  Sens.  GIANARIS,  HARCKHAM,  HOYLMAN,  JACKSON, KRUEGER,
          MAYER, MYRIE, RAMOS, SALAZAR -- read twice and  ordered  printed,  and
          when  printed to be committed to the Committee on Elections -- commit-
          tee discharged, bill amended, ordered reprinted as amended and  recom-
          mitted  to said committee -- recommitted to the Committee on Elections
          in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill
          amended, ordered reprinted as amended and recommitted to said  commit-
          tee

        AN ACT to amend the election law, in relation to enacting the "democracy
          preservation  act";  and  in  relation to prohibiting contributions by
          foreign-influenced business entities and requiring certification

          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:

     1    Section  1. This act shall be known and may be cited as the "democracy
     2  preservation act".
     3    § 2. Legislative Findings. The legislature hereby finds  and  declares
     4  that  New  York  state welcomes immigrants, visitors, and investors from
     5  around the world. However, its elections should be decided by the people
     6  of New York and not by foreign investors or the business  entities  over
     7  which  they exert influence. Corporations with partial foreign ownership
     8  have been spending money to influence state and local elections  in  New
     9  York  and  around  the  country. The public has a compelling interest in
    10  limiting the participation of foreign entities in activities of American
    11  democratic self-government, which include spending  money  to  influence
    12  voters  and  finance  campaigns,  in  the interest of preventing foreign
    13  influence over the United States political process.
    14    Investors are the ultimate beneficiaries of corporate interests. Where
    15  part of the shareholders' equity is attributable to  foreign  investors,
    16  spending  corporate  treasury funds on New York elections means spending
    17  the equity of foreign entities on New York elections.

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD03229-05-1

        S. 1126--B                          2

     1    Business corporations and similar entities have a  fiduciary  duty  to
     2  their  shareholders, including investors around the world, and generally
     3  prioritize  the  interests  of  such  shareholders,  which  may  diverge
     4  substantially  from the interests of the people of New York and of citi-
     5  zens of the United States. In addition, both formal procedures of corpo-
     6  rate  democracy and informal mechanisms of influence can provide foreign
     7  investors with substantial  influence  even  with  only  a  minority  of
     8  shares.  The  United  States  Securities  and Exchange Commission, major
     9  capital investors, corporate managers, and corporate governance  experts
    10  broadly agree that ownership or control of one percent or more of shares
    11  can confer substantial influence on corporate decision-making.
    12    Political spending by foreign-influenced business entities can weaken,
    13  interfere with, or disrupt New York's democratic self-government and the
    14  faith  that  the electorate has in its elected officials. To protect the
    15  integrity of New York's democratic self-government, it is  necessary  to
    16  prevent  foreign-influenced  business entities from influencing New York
    17  elections through political spending.
    18    § 3. The election law is amended by adding a new section  14-116-a  to
    19  read as follows:
    20    §  14-116-a.  Prohibited  contributions by foreign-influenced business
    21  entities. 1. Notwithstanding any provision of law to  the  contrary,  it
    22  shall  be unlawful for a foreign-influenced business entity, directly or
    23  indirectly, to make a contribution or donation of money or  other  thing
    24  of  value,  or  to make an express or implied promise to make a contrib-
    25  ution or donation, in connection with a state or local election.
    26    2. It shall be unlawful for a business entity prohibited under  subdi-
    27  vision  one  of this section, directly or indirectly, to make a contrib-
    28  ution or donation to a constituted  committee,  independent  expenditure
    29  committee, political committee, or party committee.
    30    3.  It shall be unlawful for a business entity prohibited under subdi-
    31  vision one of this section, directly or indirectly, to make an  expendi-
    32  ture,  independent expenditure, or disbursement for a political communi-
    33  cation.
    34    4. It shall be unlawful for a person to knowingly solicit, accept,  or
    35  receive  a contribution or donation described in subdivision one, two or
    36  three of this section from a foreign-influenced business entity.
    37    5. Except as provided in subdivision six of this section, it shall  be
    38  unlawful  for  a  person  who receives a contribution or donation from a
    39  business entity to use that contribution or donation, directly or  indi-
    40  rectly,  for  any  of the purposes described in subdivision one, two, or
    41  three of this section, or to contribute,  donate,  transfer,  or  convey
    42  funds from such a contribution or donation to another person for use for
    43  any  of the purposes described in subdivision one, two, or three of this
    44  section. However, a person may use funds that do  not  comply  with  the
    45  requirements of this section for other lawful purposes.
    46    6.  A  person  who receives a contribution or donation from a business
    47  entity, and also receives from the business entity a copy of the  state-
    48  ment of certification described in subdivision four of section 14-116 of
    49  this title, may use such funds for the purposes described in subdivision
    50  one,  two, or three of this section only if the person separately desig-
    51  nates, records, and accounts for such funds, and ensures that  disburse-
    52  ments  for  the  purposes described in subdivision one, two, or three of
    53  this section are only made from funds that comply with the  requirements
    54  of  this  section.  A  person  may  rely in good faith on a statement of
    55  certification that meets the requirements of subdivision four of section
    56  14-116 of this title.

        S. 1126--B                          3

     1    7. Any person found in violation of this section shall be guilty of  a
     2  class  E  felony  and  shall  be subject to a civil penalty equal to the
     3  contribution or donation amount plus  a  fine  of  up  to  ten  thousand
     4  dollars, to be recoverable in a special proceeding or civil action to be
     5  brought by the state board of elections chief enforcement counsel.
     6    § 4. Section 14-100 of the election law is amended by adding three new
     7  subdivisions 18, 19 and 20 to read as follows:
     8    18.  "foreign-influenced"  shall  mean  a business entity for which at
     9  least one of the following conditions is met:
    10    i. a single foreign owner holds,  owns,  controls,  or  otherwise  has
    11  direct  or  indirect  beneficial ownership of one percent or more of the
    12  total equity, outstanding voting  shares,  membership  units,  or  other
    13  applicable ownership interests of the business entity; or
    14    ii.  two  or more foreign owners, in aggregate, hold, own, control, or
    15  otherwise have direct or indirect beneficial ownership of  five  percent
    16  or  more  of  the  total  equity,  outstanding voting shares, membership
    17  units, or other applicable ownership interests of the  business  entity;
    18  or
    19    iii.  a foreign owner participates directly or indirectly in the busi-
    20  ness entity's decision-making process with respect to the business enti-
    21  ty's political activities in the United States.
    22    19. "business entity" shall mean a for-profit  entity  doing  business
    23  for  profit  in  the  state  or elsewhere, including a for-profit corpo-
    24  ration, company, limited liability company, limited  partnership,  busi-
    25  ness trust, business association, joint-stock association or other simi-
    26  lar entity.
    27    20. "foreign owner" shall mean:
    28    i. a foreign national; or
    29    ii.  a  business  entity  wherein  a  foreign  national  holds,  owns,
    30  controls, or otherwise has directly or  indirectly  acquired  beneficial
    31  ownership  of  equity  or voting shares in an amount that is equal to or
    32  greater than fifty percent of the total  equity  or  outstanding  voting
    33  shares.
    34    §  5.  Section  14-116  of the election law is amended by adding a new
    35  subdivision 4 to read as follows:
    36    4. Every business entity that makes an expenditure,  or  contribution,
    37  for political purposes for a state or local election shall file with the
    38  state  board  of elections, within seven business days after making such
    39  expenditure or contribution, on the form prescribed by the  state  board
    40  of elections, a statement of certification signed by the chief executive
    41  officer, president or owner under penalty of perjury, avowing that after
    42  due  inquiry, such business entity was not a foreign-influenced business
    43  entity on the date such expenditure or contribution was  made.  Business
    44  entities shall provide a copy of the statement of certification required
    45  by  this subdivision to any campaign or committee to which they contrib-
    46  ute, and, upon request of the recipient, to any  other  person  to  whom
    47  they contribute.
    48    § 6. This act shall take effect on the one hundred eightieth day after
    49  it shall have become a law.  Effective immediately, the addition, amend-
    50  ment and/or repeal of any rule or regulation necessary for the implemen-
    51  tation of this act on its effective date are authorized to be made on or
    52  before such effective date.
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