SF4147

Purpose

This bill changes how corporations (including foreign corporations operating in Minnesota) get and use their powers. It revokes all existing corporate powers and creates a new, restricted set of powers. A key limit is a prohibition on any power to engage in election activity.

Main provisions and what the bill seeks to accomplish

• Election activity defined

  • Election activity includes: making campaign expenditures, independent expenditures, distributing electioneering communications, contributing or donating (or in-kind contributions) to support or defeat a candidate, political party, ballot question, or related political groups or funds; and efforts to promote or defeat endorsements, nominations, or elections.
  • News reporting, commentary, or editorials are not counted as election activity unless the media outlet is owned or controlled by a political party, committee, or candidate.
  • The definitions in Chapter 10A apply to this new definition.

• Revocation and granting of powers

  • The bill intends to revoke all powers, privileges, and capacities previously granted to corporations (and foreign corporations) under Minnesota law and grant a new set of powers with specific limits.
  • A corporation will have perpetual duration and can do typical corporate activities (sue, own property, borrow money, invest, donate to charitable causes, pay pensions, form committees, issue stock or other securities, etc.), but only within the limits set by this section.
  • The law explicitly states there is a prohibition on any power to engage in election activity (the “Limitation of powers election activity” provision).

• Scope of powers and operations

  • The new framework covers both for-profit and nonprofit corporations (as applicable in the sections that mirror 302A, 317A, and 322C provisions).
  • It lists a broad set of powers, including:
  • Property ownership and disposition
  • Contracts, mortgages, and borrowing
  • Trading in securities and investments
  • Donating and supporting public welfare, education, religion, science, charity, civic activities, and related purposes
  • Pensions, benefits, and employee programs
  • Insurance, corporate seals, bylaws, committees, officers, and employees
  • Mergers, dissolutions, and other corporate reorganizations
  • Emergency powers during a disaster or emergency
  • A corporation may operate anywhere in the world, hold property, and engage in many standard business activities, but only to the extent allowed by the new powers.

• Ultra vires and ratification

  • The bill includes typical “ultra vires” language (powers cannot invalidate acts unless lack of power is proven in court), but it explicitly excludes election activity from applying this ultra vires rule.
  • There are parallel provisions for ratification or validation of defective acts, but again, election activity is not covered by these protections.

• Governance and modification of articles/bylaws (for both jurisdictions covered)

  • It sets out how articles, bylaws, directors, and shareholder/member voting rules may be modified, subject to the new limitations.
  • It preserves standard corporate governance concepts (board meetings, quorum, voting, committees, officer roles) but within the framework of the new grant-and-limit powers.

Significant changes to existing law

• Major shift: All previously granted corporate powers are revoked and replaced with a new, limited framework.
• Explicit prohibition on election activity: No power granted under the act can be used for election-related activities.
• Parallel treatment for different types of corporations: The bill creates mirrored rules for both Minnesota’s nonprofit corporation framework and the for-profit framework, affecting sections like 302A, 317A, and 322C.
• Expanded authority to operate globally: Corporations could conduct business and own property anywhere in the world under the new framework.
• Detailed outline of the specific powers allowed (and not allowed), including powers related to donations, pensions, insurance, mergers, and governance—tied to the new, restricted powers.

How this could affect people and organizations

• Corporate political influence: Because election activity is prohibited, corporations could be limited in political spending and actions that affect elections.
• Compliance burden: Corporations would need to adjust to the new grant-and-limit framework, ensuring their activities stay within the defined powers and avoiding prohibited election activity.
• Governance and operations: While many standard corporate powers remain (ownership, contracts, investments, etc.), they’re now governed by a new statutory structure that may change how bylaws and articles are drafted and modified.

Relevant Terms

Election activity, campaign expenditures, independent expenditures, electioneering communications, endorsement, nomination, ballot question, political party, political committee, inkind contributions, bona fide news story, commentary, editorial, broadcasting station, Minnesota Statutes 302A.011, 302A.165, 317A.011, 317A.111, 322C.0102, limitations, revocation, grant of powers, ultra vires, donor, donations, pensions, employee benefits, committees, bylaws, directors, board, emergency powers, dissolution, merger, contruction, securities, shares, voting, common shares, one class, par value, stipulations for voting, ownership, location of operations.