ICSA Guidance on EU Political Donations from the UK
The ICSA has issued a Guidance Note on the Political Parties, Elections and Referendums Act 2000 which regulates companies making donations to EU political organisations.
The Guidance Note clarifies the new rules, in particular the definition of what constitutes a political donation. It also gives the ICSA’s interpretation, having sought guidance from a number of individuals, the DTI and the Electoral Commission, on particular situations where companies have been concerned that they might inadvertently get caught. These include among other things, donations to lobby groups, sending representatives to Party Conferences and entertaining a politician or Minister of State.
The Guidance also clarifies the position on parent/subsidiary arrangements. Institutional investors were concerned that parent companies should not be able to avoid disclosure by moving political donations down the group chain. As a result, the legislation clearly states that no subsidiary may make a political donation within the definition of the legislation unless the parent has passed a ‘subsidiary approval resolution in general meeting. Although it has been suggested that the same result could be achieved by allowing one resolution listing each subsidiary with its own approved amount, as the legislation stands, a separate subsidiary approval resolution is required for each relevant subsidiary, which could make for some lengthy general meetings.
The guidance can be found on the ICSA website,
www.icsa.org.uk.Companies urge reform of political donations legislation
Businesses are urging the government to reform the political donations legislation. Directors who fall foul of the law can be sued and required to repay any donation with interest. The CBI views the legislation as obscure, impracticable, a distraction for directors and an inconvenience for companies. The legislation can affect employees who get unions, which some companies have encouraged. If they get paid while working for other bodies, their pay is deemed to be a political donation.
Source: Financial Times - 27 December 2001
© Herbert Smith 2002
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