The California legislature is currently in recess and is scheduled to reconvene on January 4. However, some bills have already been introduced, including AB 83 (Lee & Kalra), which would enact the "Get Foreign Money Out of California Elections Act". The California Political Reform Act already forbids a foreign government or foreign principal from making any contribution, expenditure, or independent expenditure in connection with the qualification or support of, or opposition to, a state or local ballot measure or an election for a state or local office. Cal. Gov't Code § 85320. This bill would, among other things, extend this prohibition to foreign-influenced business entities. The bill would also impose a filing requirement disavowing foreign-influenced entity status if a business entity makes a political contribution.
As a corporate lawyer, I am interested in the bill's definition of "foreign-influenced business entity". As proposed the term means a business entity (defined in Cal. Gov't Code § 82005) in which any of the following occur:
As defined in the bill, a "foreign principal" would include, among others, a partnership, association, corporation, organization, or other combination of persons organized under the laws of or having its principal place of business in a foreign country.
The 1% ownership threshold seems to be extraordinarily low. As an initial matter, it is not even require voting power. Even if limited to voting power, it would be a rare situation in which a 1% shareholder could wield significant influence over corporate decisionmaking.