Yesterday's post discussed a recently introduced bill that would amend California's Political Reform Act of 1974, among other things, to prohibit contributions by a "foreign-influenced business entity", as defined, in connection with a state or local election or state or local ballot measure. The bill, AB 83 (Lee & Kalra), would also require a "business entity" to file with the filing officer and the candidate or committee to which or for which the contribution or expenditure is made a statement of certification, signed by the chief executive officer of the business entity under penalty of perjury, avowing that, after due inquiry, the business entity was not a foreign-influenced business entity on the date the contribution or expenditure was made.
One obvious question of CEOs will be the level of inquiry that is "due". The bill provides a not so helpful answer:
(A) For purposes of the statement of certification, a business entity shall ascertain beneficial ownership in a manner consistent with the requirements of the Corporations Code or, if the business entity is registered on a national securities exchange, as set forth in Sections 240.13d-3 and 240.13d-5 of Title 17 of the Code of Federal Regulations.(B) Upon request of the recipient, a business entity shall also provide a copy of the statement of certification to any other candidate or committee to which the business entity provides a contribution.
One problem with this answer is that the California Corporations Code does not specify any requirements with respect to the ascertainment of "beneficial ownership". Another more technical cavil is that business entities do not register on national securities exchanges - classes of their securities are listed for trading on the exchanges. Finally, a CEO is unlikely to have access to the facts necessary to apply Rules 13d-3 and 13d-5 and the ownership threshold for filings of Schedule 13D and Schedule 13G are higher than the 1% threshold defining "foreign-influenced".