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Revised Invitation for Comments:
Charitable Giving by Public Companies
The U.S. Securities and Exchange Commission, the SEC, invites the public to comment on matters related to charitable giving by public companies. The SEC is studying these issues at Congress' request in connection with pending Congressional legislation about charitable contributions by public companies. In general, one bill would require public companies to disclose their charitable contributions and a second bill would require each public company to allow its shareholders to participate in deciding which charities the company should contribute to and how much to contribute.
Introduction
The SEC is the federal agency that oversees disclosure by public companies. The Division of Corporation Finance of the SEC is conducting a study about matters related to charitable giving by public companies.
Current Disclosure and Other Requirements
for Charitable Contributions
Currently, the federal securities laws do not specifically require public companies to disclose information regarding their charitable contributions. These laws also do not require public companies to give their shareholders a role in determining who should receive contributions or the amount of contributions.
Congressional Proposals
The House Committee on Commerce has asked the Commission to study the feasibility of two related proposals contained in bills introduced by Representative Paul Gillmor. Copies of the bills, H.R. 944 and H.R. 945, are attached (below).
Disclosure
H.R. 944 would require public companies each year to disclose to their shareholders the charities to which they made contributions and the amount of each contribution.
Shareholder Participation
H.R. 945 would require public companies to let their shareholders decide, each year, what charities should receive contributions from the company and the amount of the contributions. Each shareholder could vote on how the company should distribute the shareholder's proportionate share (based on the percentage of shares owned) of the funds each company sets aside for charitable contributions. Under H.R. 945, management would retain the right to make additional contributions, although H.R. 944 would require disclosure of all contributions, whether directed by management or by shareholders.
To Whom the Requirements Would Apply
Under both pending bills, these requirements would apply to all public companies, both corporate issuers and investment companies (such as mutual funds).
Exemptions
Under the pending legislation, the SEC would have the authority to adopt rules granting exemptions from the disclosure requirement and/or the shareholder participation requirement. These potential exemptions would apply to:
- gifts of tangible personal property (such as products produced by the company);
- gifts to public or private nonprofit educational institutions; and
- gifts to local charities.
The Commission's Study
Congress has asked the Commission to assess the feasibility of each of the legislative proposals and analyze the costs and benefits of imposing the requirements. We would welcome any comments you may have regarding:
- the feasibility of each proposal;
- the costs associated with each proposal; and
- the benefits of each proposal.
Estimates of the actual costs and benefits (and the basis for your estimates) would be appreciated.
Who Should Comment
The Division invites institutional and individual investors, companies, charitable organizations and other interested persons to comment.
When and How To Send Your Comments
Responding to this invitation is voluntary. We would appreciate your comments as soon as possible, but no later than December 15, 1997. Please send your comments by mail or by e-mail. In either case, please mark your letter "File No. S7-26-97." Comment letters sent to the Commission by e-mail are
available on this web site. All comment letters sent to the Commission are available in the Commission's Public
Reference Room at 450 5th Street NW, Washington, DC.
Responding by Postal Mail
You may send your comments by mail to the following address:
Jonathan G. Katz
Secretary
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Responding by E-Mail
You may send your comments by e-mail to the following address:
questionnaire@sec.gov
Questions
If you have questions about this invitation, you can send them by electronic mail to
askcf@sec.gov
or leave a message at 202-942-2900. In either case, please leave a daytime telephone number. A member of our staff will contact you.
Thank you for helping the Commission study these issues.
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105TH CONGRESS
1ST SESSION
H.R.944
To amend the Securities Exchange Act of 1934 to require improved disclosure
of corporate charitable contributions, and for other purposes.
_______________________________________
IN THE HOUSE OF REPRESENTATIVES
March 5, 1997
Mr. GILLMOR (for himself, Mr. OXLEY, and Mr. MANTON) introduced the
following bill; which was referred to the Committee on Commerce
_______________________________________
A BILL
To amend the Securities Exchange Act of 1934 to require
improved disclosure of corporate charitable contributions,
and for other purposes.
| 1 | |
Be it enacted by the Senate and House of Representa- |
| 2 | |
tives of the United States of America in Congress assembled, |
| 3 | |
SECTION 1. CHARITABLE CONTRIBUTIONS. |
| 4 | |
Section 14 of the Securities Exchange Act of 1934 |
| 5 | |
(15 U.S.C. 78n) is amended by adding at the end thereof |
| 6 | |
the following new subsection: |
| 7 | |
"(i) DISCLOSURE OF CHARITABLE CONTRIBU- |
| 8 | |
TIONS. --The statement or other disclosure documents ac- |
| 9 | |
companying any proxy, consent, or authorization solicited |
| 10 | |
by or on behalf of the management of an issuer in respect |
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|
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[Start page 2 of bill] |
| 1 | |
of a security registered pursuant to section 12 of this title, |
| 2 | |
or a security issued by an investment company registered |
| 3 | |
under the Investment Company Act of 1940, prior to any |
| 4 | |
annual or other meeting of the holders of such security, |
| 5 | |
shall include a disclosure of the issuer's charitable con- |
| 6 | |
tributions during the preceding fiscal year, including the |
| 7 | |
identity of and the amount provided to each recipient of |
| 8 | |
such contributions. The Commission may, by rule, grant |
| 9 | |
exemptions from the requirements of this subsection for |
| 10 | |
gifts of tangible personal property, gifts to public or pri- |
| 11 | |
vate nonprofit educational institutions, and gifts to local |
| 12 | |
charities, consistent with the public interest, the protection |
| 13 | |
of investors, and the purposes of this subsection.". |
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105TH CONGRESS
1ST SESSION
H.R.945
To amend the Securities Exchange Act of 1934 to require corporations
to obtain the views of shareholders concerning corporate charitable
contributions.
_______________________________________
IN THE HOUSE OF REPRESENTATIVES
March 5, 1997
Mr. GILLMOR introduced the following bill; which was referred to the
Committee on Commerce
_______________________________________
A BILL
To amend the Securities Exchange Act of 1934 to require
corporations to obtain the views of shareholders concern-
ing corporate charitable contributions.
| 1 | |
Be it enacted by the Senate and House of Representa- |
| 2 | |
tives of the United States of America in Congress assembled, |
| 3 | |
SECTION 1. CHARITABLE CONTRIBUTIONS. |
| 4 | |
Section 14 of the Securities Exchange Act of 1934 |
| 5 | |
(15 U.S.C. 78n) is amended by adding at the end thereof |
| 6 | |
the following new subsection: |
| 7 | |
"(i) APPROVAL OF CHARITABLE CONTRIBUTIONS. -- |
| 8 | |
Each issuer of a security registered pursuant to section |
| | |
|
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[Start page 2 of bill] |
| 1 | |
12 of this title, or a security issued by an investment com- |
| 2 | |
pany registered under the Investment Company Act of |
| 3 | |
1940, shall afford to its shareholders the opportunity, on |
| 4 | |
a basis proportional to the number of shares owned or con- |
| 5 | |
trolled by such shareholder, to participate through a |
| 6 | |
proxy, consent, or authorization in the designation of re- |
| 7 | |
cipients of the issuer's charitable contributions. This sub- |
| 8 | |
section shall not be construed to limit or otherwise affect |
| 9 | |
the authority of the management of such an issuer to des- |
| 10 | |
ignate additional recipients of such contributions. The |
| 11 | |
Commission may, by rule, grant exemptions from the re- |
| 12 | |
quirements of this subsection for gifts of tangible personal |
| 13 | |
property, gifts to public or private nonprofit educational |
| 14 | |
institutions, and gifts to local charities, consistent with the |
| 15 | |
public interest, the protection of investors, and the pur- |
| 16 | |
poses of this subsection.". |
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http://www.sec.gov/rules/other/chgive.htm
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