Washington, D.C. — The Supreme Court’s 2010 decision in Citizens United has opened the door for for-profit corporations to engage in political spending. However, a recent report from the Center for American Progress highlights the legal risks associated with this practice.
According to the report, corporate boards have been misusing the ruling, allowing them to make political contributions without proper legal authority. The report argues that corporate boards do not have the inherent authority to spend corporate treasury funds in candidate elections as it is rooted in the U.S. citizenship of the corporation’s shareholders.
Tom Moore, a senior fellow at CAP and co-author of the report, expressed concern over this issue, stating, "Since Citizens United, corporate boards have been unfairly depriving shareholders of their political rights. A wave of shareholder lawsuits may well stop the steal."
The report emphasizes that the right to spend funds for political purposes is tied to the U.S. citizenship of individual shareholders, not the corporate board. It asserts that in any decision related to political speech rights in candidate elections, the distribution of power should be based on one U.S.-citizen shareholder, one vote.
Furthermore, the report highlights that major shareholders, regardless of the number of shares they hold, do not have more political rights than any other U.S.-citizen shareholder. Foreign-national shareholders are not entitled to U.S. political spending rights.
The report offers a roadmap for both individual U.S.-citizen shareholders and the government to address this issue through legal challenges against corporate boards and management that are exercising shareholder political rights without proper authority. It calls on regulatory agencies, legislatures, and courts to enforce regulations, statutes, and judicial decisions that account for U.S.-citizen shareholders in for-profit corporations when asserting political speech rights under Citizens United.
The suggested report, titled "Citizens United Gave Corporations, But Not Their Boards, the Authority To Spend in Candidate Elections" by Tom Moore and Alexandra Thornton, encourages a reevaluation of corporate democracy procedures to ensure compliance with legal standards.
For further inquiries on this subject or to engage with an expert, please reach out to Sam Hananel at [email protected].