June 7, 2023

Volume XIII, Number 158

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June 06, 2023

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June 04, 2023

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California Bill Banning Foreign-Influenced Business Entity Contributions Advances Despite Dubious Constitutionality

Last December, I wrote about  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.  See California Bill Would Require CEOs to Disavow "Foreign Influence".  

On March 15, the bill was passed out of the Assembly Elections Committee on a 5-2 vote, despite a bill analysis questioning the constitutionality of the bill:

Nonetheless, in light of the fact that this bill could restrict the ability of business entities to make contributions and expenditures in elections based on relatively low levels of foreign ownership, including in situations where the foreign shareholders had no involvement in influencing or attempting to influence the business entity’s political decisions, it is unclear whether a court would uphold this bill against a challenge that its provisions violate the First Amendment to the US Constitution.

Readers may recall that I questioned the constitutionality of AB 83 last December:  Has The Legislature Forgotten Citizens United And The First Amendment?

© 2010-2023 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XIII, Number 86
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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
Partner

Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

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