North Carolina General Statutes 163-278.19. Violations by corporations, business entities, labor unions, professional associations and insurance companies
(a) Except as provided in subsections (c), (d), (f), (g), (h), and (i) of this section it shall be unlawful for any corporation, business entity, labor union, professional association or insurance company directly or indirectly do any of the following:
(1) To make any contribution to a candidate or political committee.
Attorney's Note
Under the N.C. Gen. Statutes, punishments for crimes depend on the classification. In the case of this section:| Class | Prison | Fine |
|---|---|---|
| Class 2 misdemeanor | up to 60 days | up to $1,000 |
Terms Used In North Carolina General Statutes 163-278.19
- affiliated party committee: means a General Assembly affiliated party committee as established by N. See North Carolina General Statutes 163-278.6
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- board: means the State Board of Elections with respect to all candidates for State, legislative, and judicial offices and the county board of elections with respect to all candidates for county and municipal offices. See North Carolina General Statutes 163-278.6
- business entity: means any partnership, joint venture, joint-stock company, company, firm, or any commercial or industrial establishment or enterprise. See North Carolina General Statutes 163-278.6
- candidate: means any individual who, with respect to a public office listed in N. See North Carolina General Statutes 163-278.6
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- corporation: means any corporation established under either domestic or foreign charter, and includes a corporate subsidiary and any business entity in which a corporation participates or is a stockholder, a partner or a joint venturer. See North Carolina General Statutes 163-278.6
- election: means any general or special election, a first or second primary, a run-off election, or an election to fill a vacancy. See North Carolina General Statutes 163-278.6
- following: when used by way of reference to any section of a statute, shall be construed to mean the section next preceding or next following that in which such reference is made; unless when some other section is expressly designated in such reference. See North Carolina General Statutes 12-3
- in writing: may be construed to include printing, engraving, lithographing, and any other mode of representing words and letters: Provided, that in all cases where a written signature is required by law, the same shall be in a proper handwriting, or in a proper mark. See North Carolina General Statutes 12-3
- Indemnification: In general, a collateral contract or assurance under which one person agrees to secure another person against either anticipated financial losses or potential adverse legal consequences. Source: FDIC
- individual: means a single individual or more than one individual. See North Carolina General Statutes 163-278.6
- insurance company: means any person whose business is making or underwriting contracts of insurance, and includes mutual insurance companies, stock insurance companies, and fraternal beneficiary associations. See North Carolina General Statutes 163-278.6
- labor union: means any union, organization, combination or association of employees or workmen formed for the purposes of securing by united action favorable wages, improved labor conditions, better hours of labor or work-related benefits, or for handling, processing or righting grievances by employees against their employers, or for representing employees collectively or individually in dealings with their employers. See North Carolina General Statutes 163-278.6
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- person: means any business entity, corporation, insurance company, labor union, or professional association. See North Carolina General Statutes 163-278.6
- political committee: includes the campaign of a candidate who serves as his or her own treasurer. See North Carolina General Statutes 163-278.6
- political party: means any political party organized or operating in this State, whether or not that party is recognized under the provisions of N. See North Carolina General Statutes 163-278.6
- professional association: means any trade association, group, organization, association, or collection of persons or individuals formed for the purposes of advancing, representing, improving, furthering or preserving the interests of persons or individuals having a common vocation, profession, calling, occupation, employment, or training. See North Carolina General Statutes 163-278.6
- property: shall include all property, both real and personal. See North Carolina General Statutes 12-3
- referendum: includes any type of municipal, county, or special district referendum and any initiative or referendum authorized by a municipal charter or local act. See North Carolina General Statutes 163-278.6
- referendum committee: means a combination of two or more individuals such as a committee, association, organization, or other entity or a combination of two or more business entities, corporations, insurance companies, labor unions, or professional associations such as a committee, association, organization, or other entity the primary purpose of which is to support or oppose the passage of any referendum on the ballot. See North Carolina General Statutes 163-278.6
- Revolving credit: A credit agreement (typically a credit card) that allows a customer to borrow against a preapproved credit line when purchasing goods and services. The borrower is only billed for the amount that is actually borrowed plus any interest due. (Also called a charge account or open-end credit.) Source: OCC
- state: when applied to the different parts of the United States, shall be construed to extend to and include the District of Columbia and the several territories, so called; and the words "United States" shall be construed to include the said district and territories and all dependencies. See North Carolina General Statutes 12-3
- treasurer: means an individual appointed by a candidate, political committee, or referendum committee as provided in N. See North Carolina General Statutes 163-278.6
(2) To pay or use or offer, consent or agree to pay or use any of its money or property for any contribution to a candidate or political committee.
(3) To compensate, reimburse, or indemnify any person or individual for money or property so used or for any contribution or expenditure so made.
It shall also be unlawful for any officer, director, stockholder, attorney, agent or member of any corporation, business entity, labor union, professional association or insurance company to aid, abet, advise or consent to any such contribution, or for any person or individual to solicit or knowingly receive any such contribution. Supporting or opposing the election of clearly identified candidates includes supporting or opposing the candidates of a clearly identified political party. Any officer, director, stockholder, attorney, agent or member of any corporation, business entity, labor union, professional association or insurance company aiding or abetting in any contribution made in violation of this section shall be guilty of a Class 2 misdemeanor, and shall in addition be liable to such corporation, business entity, labor union, professional association or insurance company for the amount of such contribution and the same may be recovered of him upon suit by any stockholder or member thereof.
(b) A transfer of funds shall be deemed to have been a contribution made indirectly if it is made to any committee, affiliated party committee, or political party account, whether inside or outside this State, with the intent or purpose of being exchanged in whole or in part for any other funds to be contributed or expended in an election for North Carolina office or to offset any other funds contributed or expended in an election for North Carolina office.
(c) Proceeds of loans made in the ordinary course of business by financial institutions may be used for contributions made in compliance with this Subchapter. Financial institutions may also grant revolving credit to political committees and referendum committees in the ordinary course of business.
(d) It shall, however, be lawful for any corporation, business entity, labor union, professional association or insurance company to communicate with its employees, stockholders or members and their families on any subject; to conduct nonpartisan registration and get-out-the-vote campaigns aimed at their employees, stockholders, or members and their families; or for officials and employees of any corporation, insurance company or business entity or the officials and members of any labor union or professional association to establish, administer, contribute to, and to receive and solicit contributions to a separate segregated fund to be utilized for political purposes, and those individuals shall be deemed to become and be a political committee as that term is defined in N.C. Gen. Stat. § 163-278.6(74) or a referendum committee as defined in N.C. Gen. Stat. § 163-278.6(84); provided, however, that it shall be unlawful for any such fund to make a contribution or expenditure by utilizing contributions secured by physical force, job discrimination, financial reprisals or the threat of force, job discrimination or financial reprisals, or by dues, fees, or other moneys required as a condition of membership or employment or as a requirement with respect to any terms or conditions of employment, including, without limitation, hiring, firing, transferring, promoting, demoting, or granting seniority or employment-related benefits of any kind, or by moneys obtained in any commercial transaction whatsoever.
(e) A violation of this section is a Class 2 misdemeanor. In addition, the acceptance of any contribution, reimbursement, or indemnification under subsection (a) shall be a Class 2 misdemeanor.
(f) Whenever a candidate or treasurer is an officer, director, stockholder, attorney, agent, or employee of any corporation, business entity, labor union, professional association or insurance company, and by virtue of his position therewith uses office space and communication facilities of the corporation, business entity, labor union, professional association or insurance company in the normal and usual scope of his employment, the fact that the candidate or treasurer receives telephone calls, mail, or visits in such office which relates to activities prohibited by this Article shall not be considered a violation under this section.
(g) Notwithstanding the prohibitions specified in this Article and Article 22 of this Chapter, a political committee organized under provisions of this Article shall be entitled to receive and the corporation, business entity, labor union, professional association, or insurance company designated on the committee’s organizational report as the parent entity of the employees or members who organized the committee is authorized to give reasonable administrative support that shall include record keeping, computer services, billings, mailings to members of the committee, membership development, fund-raising activities, office supplies, office space, and such other support as is reasonably necessary for the administration of the committee.
The approximate cost of any reasonable administrative support shall be submitted to the committee, in writing, and the committee shall include that cost on the report required by N.C. Gen. Stat. § 163-278.9(a)(4). Also included in the report shall be the approximate allocable portion of the compensation of any officer or employee of the corporation, business entity, labor union, professional association, or insurance company who has devoted more than thirty-five percent (35%) of his time during normal business hours of the corporation, business entity, labor union, professional association, or insurance company during the period covered by the required report. The approximate cost submitted by the parent corporation, business entity, labor union, professional association, or insurance company shall be entered on the committee’s report as the final entry on its list of “contributions” and a copy of the written approximate cost received by it shall be attached.
The reasonable administrative support given by a corporation, business entity, labor union, professional association, or insurance company shall be designated on the books of the corporation, business entity, labor union, professional association, or insurance company as such and may not be treated by it as a business deduction for State income tax purposes.
(h) This section does not prohibit a contribution by an [a] person or entity that:
(1) Has as an express purpose promoting social, educational, or political ideas and not to generate business income;
(2) Does not have shareholders or other persons which have an economic interest in its assets and earnings; and
(3) Was not established by 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 N.C. Gen. Stat., by a professional association, or by a labor union and does not receive substantial revenue from such entities. Substantial revenue is rebuttably presumed to be more than ten percent (10%) of total revenues in a calendar year.
(i) If a political committee has as its only purpose accepting contributions and making expenditures to influence elections, and that political committee incorporates as a nonprofit corporation to shield its participants from liability created outside this Subchapter, that political committee is not considered to be a corporation for purposes of this section. Incorporation of a political committee does not relieve any individual, person, or other entity of any liability, duty, or obligation created pursuant to any provision of this Subchapter. To obtain the benefits of this subsection, an incorporating political committee must state exactly the following language as the only purpose for which the corporation can be organized: “to accept contributions and make expenditures to influence elections as a political committee pursuant to N.C. Gen. Stat. § 163-278.6(74) only.” No political committee shall do business as a political committee after incorporation unless it has been certified by the State Board 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; 2010-170, s. 5; 2015-258, s. 3(o); 2017-6, s. 3; 2018-146, s. 3.1(a), (b).)