SF4513

Purpose

• To restrict corporate and limited liability company powers from participating in or influencing election activity, including elections of candidates and ballot questions.
• To define what counts as election activity and to align this prohibition across multiple Minnesota statutes governing corporations and LLCs.

Definition: Election activity

• Election activity means:
  • paying, contributing, or expending anything of value (monetary or in-kind) to aid promote or defeat the nomination or election of a candidate; or
  • paying, contributing, or expending anything of value to aid promote or defeat the passage of a ballot question; and
  • also can include actions that aid or defeat the interests, success, or defeat of any political party or political organization.

Main provisions and what the bill seeks to accomplish

• Adds explicit election activity definitions to key corporate and LLC statutes (covering for-profit corporations and LLCs).
• Prohibits corporations and LLCs from using their powers to participate in or influence election activity, with the effect that such activity would be ultra vires (beyond their lawful powers) unless otherwise authorized.
• Establishes mechanisms to handle acts beyond power (ultra vires) and to address consequences:
  • Courts can enjoin unauthorized acts or continue/finish actions under certain circumstances, and may order compensation for losses if relevant.
  • Involved proceedings can address contracts or ongoing transactions to set aside or enjoin them if they exceed corporate authority.
  • The attorney general can seek dissolution of the corporation or enjoin unauthorized business.
• Provides for ratification or validation of defective corporate acts or putative shares to prevent voiding solely due to lack of authorization, if properly ratified or validated by a court.
• Applies the same election activity prohibitions and related ultra vires concepts across multiple entities:
  • Corporations governed by Minnesota Statutes 2024 sections 302A.011, 302A.161, 302A.165, 302A.166, and related sections.
  • Corporations governed by Minnesota Statutes 317A.011, 317A.161, 317A.165.
  • Limited liability companies governed by Minnesota Statutes 322C.0102, 322C.0105.
• Overall aim: ensure corporate and LLC powers cannot be used to influence elections, while providing legal pathways to address violations and cure issues through ratification or court action.

Significant changes to existing law

• Creates a new defined category of “Election activity” inside several statutes governing corporate and LLC powers.
• Draws a clear line that participating in election activity is not within the normal powers of corporations/LLCs, unless explicitly authorized through ratification or court validation.
• Introduces cross-statutory consistency by mirroring the election activity prohibition and ultra vires consequences in multiple chapters (corporations and LLCs) to ensure uniform application.
• Establishes enforcement options (injunctions, potential contract remedies, dissolution by AG) for unauthorized election activity.
• Adds ratification/validation provisions to prevent voiding of acts solely due to power issues, if the act or ownership share is ratified or validated by a court.

Key terms to know

• Election activity
• Nomination or election of a candidate
• Ballot question
• Monetary contributions
• In-kind contributions
• Political party
• Political organization
• Ultra vires
• Injunction
• Ratification
• Validation
• Putative share
• Defective corporate act
• Dissolution (as pursued by the attorney general)

Relevant Terms - Election activity - candidate nomination - ballot question - monetary contributions - in-kind contributions - political party - political organization - ultra vires - injunction - ratification - validation - defective corporate act - putative share - dissolution