Political donations
Political donations

The following Corporate guidance note provides comprehensive and up to date legal information covering:

  • Political donations
  • Definitions
  • Shareholder authority
  • Liability of directors for unauthorised donation or expenditure
  • Additional guidelines for listed companies
  • Disclosure requirements

Part 14 of the Companies Act 2006 (the CA 2006) and the Political Parties, Elections and Referendums Act 2000 (PPERA 2000) contain provisions which control:

  1. political donations made by companies to political parties, to other political organisations and to independent election candidates, and

  2. political expenditure incurred by companies

Although few companies make direct political donations or incur direct political expenditure, the definitions under the CA 2006 and PPERA 2000 are wide and may catch types of donation and expenditure that are not overtly political. For this reason, many companies propose a standard resolution at each year's annual general meeting (AGM) to approve political donations and political expenditure.

For an example of a shareholder resolution approving political donations and expenditure, see Precedent: Notice of AGM of a listed public company.

Definitions

BREXIT IMPACT: The definitions below will be affected by Brexit under paragraphs 7 and 8 of Schedule 1 to The Companies, Limited Liability Partnerships and Partnerships (Amendment etc.) (EU Exit) Regulations 2019 (SI 2019/348), namely to omit references to EU member states, thereby restricting the application of CA 2006, Pt 14 to the UK.

Political parties, organisations and independent election candidates

A political party must comply with CA 2006, Pt 14 if:

  1. it is registered under PPERA 2000, or

  2. it carries on, or proposes to carry on, activities for the purposes