§ 163-278.19. Violations by corporations, business entities, labor unions, professional associations and insurance companies.
§ 163‑278.19. Violations by corporations, business entities, labor unions, professionalassociations and insurance companies.
(a) Except as providedin subsections (a2), (b), (d), (e), (f), and (g) of this section it shall beunlawful for any corporation, business entity, labor union, professionalassociation or insurance company directly or indirectly:
(1) To make anycontribution to a candidate or political committee or to make any expenditureto support or oppose the nomination or election of a clearly identifiedcandidate;
(2) To pay or use oroffer, consent or agree to pay or use any of its money or property for anycontribution to a candidate or political committee or for any expenditure tosupport or oppose the nomination or election of a clearly identified candidate;or
(3) To compensate,reimburse, or indemnify any person or individual for money or property so usedor for any contribution or expenditure so made;
and it shall be unlawful for anyofficer, director, stockholder, attorney, agent or member of any corporation,business entity, labor union, professional association or insurance company toaid, abet, advise or consent to any such contribution or expenditure, or forany person or individual to solicit or knowingly receive any such contributionor expenditure. Supporting or opposing the election of clearly identifiedcandidates includes supporting or opposing the candidates of a clearlyidentified political party. Any officer, director, stockholder, attorney, agentor member of any corporation, business entity, labor union, professionalassociation or insurance company aiding or abetting in any contribution orexpenditure made in violation of this section shall be guilty of a Class 2misdemeanor, and shall in addition be liable to such corporation, businessentity, labor union, professional association or insurance company for theamount of such contribution or expenditure, and the same may be recovered ofhim upon suit by any stockholder or member thereof.
(a1) A transfer of fundsshall be deemed to have been a contribution or expenditure made indirectly ifit is made to any committee or political party account, whether inside oroutside this State, with the intent or purpose of being exchanged in whole orin part for any other funds to be contributed or expended in an election forNorth Carolina office or to offset any other funds contributed or expended inan election for North Carolina office.
(a2) Proceeds of loansmade in the ordinary course of business by financial institutions may be used forcontributions made in compliance with this Chapter. Financial institutions mayalso grant revolving credit to political committees and referendum committeesin the ordinary course of business.
(b) It shall, however,be lawful for any corporation, business entity, labor union, professionalassociation or insurance company to communicate with its employees,stockholders or members and their families on any subject; to conductnonpartisan registration and get‑out‑the‑vote campaigns aimedat their employees, stockholders, or members and their families; or forofficials and employees of any corporation, insurance company or businessentity or the officials and members of any labor union or professionalassociation to establish, administer, contribute to, and to receive and solicitcontributions to a separate segregated fund to be utilized for politicalpurposes, and those individuals shall be deemed to become and be a politicalcommittee as that term is defined in G.S. 163‑278.6(14) or a referendumcommittee as defined in G.S. 163‑278.6(18b); provided, however, that itshall be unlawful for any such fund to make a contribution or expenditure byutilizing contributions secured by physical force, job discrimination,financial reprisals or the threat of force, job discrimination or financialreprisals, or by dues, fees, or other moneys required as a condition ofmembership or employment or as a requirement with respect to any terms orconditions of employment, including, without limitation, hiring, firing,transferring, promoting, demoting, or granting seniority or employment‑relatedbenefits of any kind, or by moneys obtained in any commercial transactionwhatsoever.
(c) A violation of thissection is a Class 2 misdemeanor. In addition, the acceptance of any contribution,expenditure, payment, reimbursement, indemnification, or anything of valueunder subsection (a) shall be a Class 2 misdemeanor.
(d) Whenever acandidate or treasurer is an officer, director, stockholder, attorney, agent,or employee of any corporation, business entity, labor union, professionalassociation or insurance company, and by virtue of his position therewith usesoffice space and communication facilities of the corporation, business entity,labor union, professional association or insurance company in the normal andusual scope of his employment, the fact that the candidate or treasurerreceives telephone calls, mail, or visits in such office which relates toactivities prohibited by this Article shall not be considered a violation underthis section.
(e) Notwithstanding theprohibitions specified in this Article and Article 22 of this Chapter, apolitical committee organized under provisions of this Article shall beentitled to receive and the corporation, business entity, labor union, professionalassociation, or insurance company designated on the committee's organizationalreport as the parent entity of the employees or members who organized thecommittee is authorized to give reasonable administrative support that shallinclude record keeping, computer services, billings, mailings to members of thecommittee, membership development, fund‑raising activities, officesupplies, office space, and such other support as is reasonably necessary forthe administration of the committee.
The approximate cost of anyreasonable administrative support shall be submitted to the committee, inwriting, and the committee shall include that cost on the report required byG.S. 163‑278.9(a)(6). Also included in the report shall be theapproximate allocable portion of the compensation of any officer or employee ofthe corporation, business entity, labor union, professional association, orinsurance company who has devoted more than thirty‑five percent (35%) ofhis time during normal business hours of the corporation, business entity,labor union, professional association, or insurance company during the periodcovered by the required report. The approximate cost submitted by the parentcorporation, business entity, labor union, professional association, or insurancecompany shall be entered on the committee's report as the final entry on itslist of "contributions" and a copy of the written approximate costreceived by it shall be attached.
The reasonable administrativesupport given by a corporation, business entity, labor union, professionalassociation, or insurance company shall be designated on the books of thecorporation, business entity, labor union, professional association, orinsurance company as such and may not be treated by it as a business deduction forState income tax purposes.
(f) This section doesnot prohibit a contribution or independent expenditure by an entity that:
(1) Has as an expresspurpose promoting social, educational, or political ideas and not to generatebusiness income;
(2) Does not haveshareholders or other persons which have an economic interest in its assets andearnings; and
(3) Was not establishedby a business corporation, by an insurance company, by a business entity,including, but not limited to, those chartered under Chapter 55, Chapter 55A,Chapter 55B, or Chapter 58 of the General Statutes, by a professionalassociation, or by a labor union and does not receive substantial revenue fromsuch entities. Substantial revenue is rebuttably presumed to be more than tenpercent (10%) of total revenues in a calendar year.
(g) If a politicalcommittee has as its only purpose accepting contributions and makingexpenditures to influence elections, and that political committee incorporatesas a nonprofit corporation to shield its participants from liability createdoutside this Chapter, that political committee is not considered to be acorporation for purposes of this section. Incorporation of a politicalcommittee does not relieve any individual, person, or other entity of anyliability, duty, or obligation created pursuant to any provision of thisChapter. To obtain the benefits of this subsection, an incorporating politicalcommittee must state exactly the following language as the only purpose forwhich the corporation can be organized: "to accept contributions and makeexpenditures to influence elections as a political committee pursuant to G.S.163‑278.6(14) only." No political committee shall do business as apolitical committee after incorporation unless it has been certified by theState Board of Elections as being in compliance with this subsection. (1973, c. 1272, s. 1; 1975,c. 565, s. 6; 1979, c. 517, ss. 1, 2; 1985, c. 354; 1987, c. 113, s. 3; c. 565,s. 16; 1993, c. 539, ss. 1115, 1116; c. 553, s. 69; 1994, Ex. Sess., c. 24, s.14(c); 1999‑31, ss. 4(d), 5(a), 6(b); 2001‑487, s. 97(a); 2002‑159,s. 57.3(a), (b); 2006‑195, s. 3; 2006‑262, ss. 4.1(a), (b), 4.3.)