Regulatory Requirements for Corporate Donors
| Author | Michael Smyth/Patricia Barratt/Fraser Campbell |
| Pages | 115-131 |
Chapter 4
Regulatory Requirements for Corporate Donors
INTRODUCTION
4.1 Specific provisions regulating political donations by companies were introduced on 16 February 2001, when the PPERA 2000 amended the Companies Act 1985 (CA 1985). The law in this area is now contained primarily in Part 14 of the Companies Act 2006 (CA 2006), which has replaced and re-enacted relevant sections of the CA 1985.
4.2 Although the CA 2006 and the CA 1985 are broadly similar as regards the treatment of political donations, there are important differences in the statutory schemes. For example, the CA 2006 covers donations to election candidates who stand as independents, while donations to trade unions are now exempt from the rules. Part 14 of the CA 2006 applies to donations made, or expenditure incurred, on or after 1 October 2007, while the CA 1985 continues to apply to donations made, or expenditure incurred, before that date. Where an amount is incurred pursuant to a contract, the relevant date will be the date of the contract.
4.3 Part 14 of the CA 2006
1 Which came into force on 1 October 2007, except for the provisions relating to independent election candidates, which took effect from 1 October 2008.
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4.4 Authorisation is not required for political donations of less than £5,000 in aggregate made by companies forming part of the same group in any 12-month period.
4.5 In addition to the need for authorisation, specific disclosure requirements exist as regards political donations and expenditure made by companies. For the purposes of directors’ reports relating to financial years beginning on or after
6 April 2008, companies must disclose donations or other political expenditure over £2,000. Companies should also include a statement in the directors’ report of the total amount of any contribution made to a non-EU political party.
4.6 While most of the general reporting requirements of the PPERA 2000 impose obligations on the recipients of donations rather than on donors,
REQUIREMENT FOR AUTHORISATION: RELEVANT DONATIONS AND EXPENDITURE
Political donations
4.7 Section 363 of the CA 2006 states that the provisions regarding political donations set out in Part 14 apply to donations made to (a) political parties, (b)
2 Section 378, CA 2006.
3 Chapter 2 considers political donations more fully. For political expenditure, see paragraphs 4.19 and 4.20, below.
4 See Chapter 3.
5 The Commission maintains searchable online registers of donations and loans reported by political parties, accessible at https://pefonline.electoralcommission.org.uk.
6 See Article 4 of the ICC Rules on Combating Corruption, 2011 edition.
7 ICGN Statement and Guidance on Political Lobbying and Donating, March 2012. The Preamble to the Statement says it ‘addresses investor concerns about corporate involvement in the political process, as a matter of both business ethics and corporate governance … the ICGN generally discourages companies from making monetary political contributions, but also recognises that in most jurisdictions such contributions are allowed legally [but] … should be supported by a transparent and robust governance framework’.
political organisations other than political parties and (c) independent candidates at any election to public office in the United Kingdom or in another member state of the European Union.
4.8 In this context, political parties include not only parties registered under the PPERA 2000,
… carries on, or proposes to carry on, activities for the purposes of or in connection with the participation of the party in any election or elections to public office held in a member State [of the European Union] other than the United Kingdom.
4.9 A political organisation is defined as an organisation which:
... carries on, or proposes to carry on, activities that are capable of being reasonably regarded as intended—
(a) to affect public support for a political party to which, or an independent election candidate to whom [Part 14 of the CA 2006] applies, or
(b) to influence voters in relation to any national or regional referendum held under the law of the United Kingdom or another member State.
4.10 Charities are unlikely to be considered political organisations, since charity law prohibits charities from having political objects. Charities may, however, carry out campaigning activities without affecting their charitable status (provided that such campaigning is incidental to their charitable purposes), but must take care when becoming involved in matters of party political significance.
4.11 Section 364 of the CA 2006 defines a ‘political donation’ by reference to sections 50–52 of the PPERA 2000 (although it provides that, for this purpose, amendments made to the PPERA 2000 by the EAA 2006, removing loans made otherwise than on commercial terms from the definition of ‘donation’, are to be disregarded). It also provides that the value of a donation is to be calculated
8 See Chapter 3.
9 Section 363(1)(b), CA 2006.
10 Section 363(2), CA 2006.
11 The role of think-tanks in the UK, often registered as charities, may be problematic in this regard. See, for example, the Charity Commission’s investigations into allegations of unacceptable political activities by the Politics and Economics Research Trust (regulatory case report dated 21 February 2011, which found no evidence to support allegations that the charity had been supporting the political campaigning work of the non-charitable Taxpayers’ Alliance) and the Atlantic Bridge Education and Research Scheme (regulatory case report dated 26 July 2010, which upheld certain concerns about the charity’s promotion of the UK-US ‘special relationship’ and perceived lack of independence from party politics).
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according to section 53 of the PPERA 2000.
4.12 The following will be treated as donations for the purposes of the CA 2006, if they have a value exceeding £500 and are given to a political party or organisation:
(a) any gift (including a transfer of property where the total value in monetary terms of any consideration provided by, or on behalf of, the recipient is less than the market value of the property transferred)
(b) any sponsorship to help meet the costs of, or to prevent incurring the costs of:
(i) any conference, meeting or other event organised by, or on behalf of, the recipient (for example, a reception hosted by a registered party);
(ii) the preparation, production or dissemination of any publication (regardless of the form in which, or the means by which, it has been made available)
(iii) any study or research undertaken by, or on behalf of, the...
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