Hawaii Senate Bill 2471 Tries to End Run Citizens United
Hawaii beats Montana to the punch
Hawaii Governor Josh Green recently signed Senate Bill 2471 into law. As the bill’s summary states, the bill:
Reaffirms that artificial persons created under state law possess only those powers that are necessary or convenient to carry out lawful purposes, and that those powers do not include the power to spend money or contribute anything of value to influence elections or ballot measures. Authorizes the Attorney General and the Director of Commerce and Consumer Affairs to impose certain penalties for violations.
Regular readers will recall that I wrote two articles about a similar initiative pending in Montana. In the first post, I discussed the state power to define the rights and powers of corporations and expressed some skepticism about the constitutionality of such laws, specifically focusing on whether the state can condition the grant of powers on giving up constitutional rights:
The Montana "Transparent Election Initiative": Part 1
The Center for American Progress and a group of Montana politicians are trying to undo Citizens United by amending the state constitution to limit the scope of corporate powers. As Tom Moore of CAP explains:
In the second post, I discussed the extent to which Montana (and now Hawaii) can its limits on corporate powers extraterritorially to what out of state corporations do outside of Montana. I concluded that it cannot do so. Hawaii cannot tell a Delaware corporation—even one based in Hawaii—what powers it can wield in states other than Hawaii.
I also discussed the extent to which a state like Hawaii or Montana can regulate the activities of out-of-state corporations in the adopting state, concluding that they may do so.
The Montana "Transparent Election Initiative": Part 2
In the previous post, I noted that The Center for American Progress and a group of Montana politicians are trying to undo Citizens United by amending the state constitution to limit the scope of corporate powers. In that post, I discussed whether Montana can define the powers of corporations incorporated under Montana law. As a matter of corporate law, the answer is clearly “yes.” I’m more skeptical of the constitutionality of doing so, but I concede that that’s a question at the outer margins of my expertise.
If this topic is of interest, I would encourage you to check out my posts on Citizens United:
Looking Back at Citizens United Part 1: The Case
I was browsing over at X.com, as is my wont (I tweet using the handle @PrawfBainbridge), and was surprised to see a rash of recent posts about the Supreme Court’s decision in Citizens United v. FEC.
Revisiting Citizens United II: The Corporate Governance Implications
The late Larry Ribstein was a deservedly prominent and respected scholar of corporate and partnership law. His book The Rise of Uncorporation (AMAZON LINK) remains the seminal work on the theoretical underpinnings of partnership and, especially, limited liability company law.