SECTION 1. Legislative findings and purpose. The General Assembly finds and declares that:
(1) All political power is inherent in the people, and corporations and other artificial persons are creations of statute that exist only by virtue of powers affirmatively extended by the State.
(2) The creation, continued existence, and enjoyment of charter privileges by an artificial person are not natural rights; they are conditional grants of legal status made by the State and accepted subject to the State’s reserved authority to define, limit, revise, or withdraw the powers and privileges it confers.
(3) Rhode Island law has historically included broad grants of powers to artificial persons, including powers described as necessary or convenient to lawful purposes, and these broad formulations have more recently been construed to include the legal capacity to engage in political spending, including both monetary expenditures and expenditures of other things of value, to support or oppose the outcome of a vote of the electorate.
(4) Because the general grants of powers to artificial persons have been construed to include political spending power in a manner that does not reflect the will of the people, it is therefore necessary to enact this act to redefine those grants and make their contents explicit, in order that the legal privileges conferred on artificial persons by the people through the State are not used to compromise the integrity of the people’s political process.
(5) The general assembly finds that every artificial person formed under the laws of this State, or authorized to transact business or hold property in this State, has accepted its legal status and any charter privileges subject to the continuing authority of the State to define the scope of its powers; that an artificial person has not acquired a vested right to the continuation of a particular statutory grant of power; and that this principle is well established in law.
(6) The purposes of this act are to:
(i) Establish that State-conferred legal status and charter privileges are granted to an artificial person only on the condition that the artificial person operates within the powers extended by the State;
(ii) Make explicit that political spending power is not among the powers extended to artificial persons, except as expressly provided by law for political committees;
(iii) Establish a single, uniform definition of the powers extended to artificial persons under this act;
(iv) Provide clear and enforceable consequences for the exercise of political spending power not extended by the State; and
(v) Leave wholly undisturbed the constitutional rights of natural persons.
SECTION 2. Title 7 of the General Laws entitled "CORPORATIONS, ASSOCIATIONS, AND PARTNERSHIPS" is hereby amended by adding thereto the following chapter: 7-9.1-1. Short title. This chapter shall be known and may be cited as the "Rhode Island Corporate Power Reset Act." 7-9.1-2. Definitions. As used in this chapter:
(1) "Artificial person" means an entity whose existence, legal status, or limited liability is conferred by the laws of this state, including an entity organized or existing under the laws of another jurisdiction that is authorized to transact business, is otherwise transacting business, or holds property in this state. An entity organized or existing under the laws of another jurisdiction that directly or indirectly undertakes, finances, or directs acts constituting political spending power in this state is conclusively deemed to be transacting business in this state for purposes of jurisdiction and enforcement.
(2) "Artificial-person powers" means the powers necessary or convenient for an artificial person to carry out lawful business, charitable, cooperative, or organizational purposes as provided by Rhode Island law, excluding political spending power. Political spending power shall not be deemed necessary or convenient under any circumstances.
(3) "Charter privileges" means any legal benefit that exists only because the state confers it on an artificial person, including limited liability, perpetual duration, succession in entity name, or any statutory limitation on personal liability.
(4) "Political spending power" means the legal capacity to pay, contribute, expend, transfer, or disburse money or anything of value to support or oppose:
(i) A candidate, political party, or political committee in an election held in this state; or
(ii) An initiative, referendum, recall, constitutional amendment, charter amendment, or any other question formally certified or submitted to the electors of this state or any political subdivision of this state. "Political spending power" does not include the distribution of bona fide news, commentary, or editorial content, unless the publishing entity is owned or controlled by a political party, a political committee, or a candidate. Political spending power may be exercised by political committees organized and regulated under the election laws of this state or under federal law, as provided by those laws. 7-9.1-3. General rule -- Revocation and regrant of artificial-person powers.
(a) The creation and continued existence of an artificial person is not a right but a conditional grant of legal status by the state and remains subject to complete withdrawal at any time. All powers previously granted to artificial persons under the laws of this state are revoked in their entirety. An artificial person operating under the jurisdiction of this state shall possess no power unless specifically granted by this section.
(b) Unless its organizational documents provide otherwise, every artificial person has perpetual duration and succession in its name and is hereby granted the artificial-person powers defined in § 7-9.1-2, consisting of the powers necessary or convenient to carry out its lawful business, charitable, cooperative, or organizational purposes, excluding any power to directly or indirectly exercise political spending power.
(c) The absence of political spending power is a condition of state-conferred legal status and charter privileges. An artificial person that exercises political spending power not extended by the state acts outside the powers granted as a condition of that status. 7-9.1-4. Applicability.
(a) This chapter applies to all artificial persons formed, organized, or existing under the laws of this state.
(b) This chapter applies to any artificial person organized under the laws of another jurisdiction that is authorized to transact business, is otherwise transacting business, or holds property in this state.
(c) This chapter applies to any trust, statutory trust, business trust, or similar arrangement to the extent the laws of this state confer limited liability, perpetual duration, succession in name, or any other charter privilege by reason of that form.
(d) This chapter does not apply to:
(1) Natural persons acting solely in an individual capacity;
(2) The state or any agency, authority, or political subdivision of the state; or
(3) Any public body corporate and politic expressly identified as such by statute.
(e) This chapter does not restrict the lawful activities of political committees organized and regulated under the election laws of this state or under federal law. 7-9.1-5. Ultra vires acts -- Voidness -- Nonratification.
(a) An act by an artificial person that constitutes an exercise of political spending power not extended by the state is ultra vires and void.
(b) An act described in subsection (a) of this section:
(1) Is void from the beginning (ab initio);
(2) May not be ratified, validated, or given effect by consent, waiver, estoppel, reliance, course of dealing, or any other equitable doctrine; and
(3) Creates no enforceable rights, obligations, or defenses.
(c) The character of an act that is beyond the scope of authority under this section arises solely from the absence of political spending power as a condition of state-conferred legal status and charter privileges. 7-9.1-6. Forfeiture of charter privileges -- Reinstatement.
(a) An artificial person that exercises political spending power not extended by the state forfeits all charter privileges as a matter of law.
(b) Charter privileges forfeited under this section include, without limitation, limited liability, perpetual duration, succession in entity name, and any statutory limitation on personal liability conferred by the laws of this state.
(c) Forfeiture under this section applies only to charter privileges conferred by the laws of this state and does not purport to affect privileges conferred by the laws of another jurisdiction.
(d) An artificial person whose charter privileges are forfeited under this section shall be reinstated only pursuant to procedures administered by the state and only upon:
(1) Full disgorgement of all money or things of value expended, contributed, transferred, or disbursed in the exercise of political spending power;
(2) Certification of future compliance with this chapter; and
(3) Satisfaction of any additional conditions as authorized by law.
(e) Disgorgement under this section is required regardless of whether the political spending supported or opposed a position, candidate, or question that prevailed or failed. 7-9.1-7. Administration and enforcement.
(a) The secretary of state shall administer this chapter and shall adopt rules and regulations necessary to implement forfeiture of charter privileges, reinstatement, disgorgement, certification of compliance, notice, and opportunity to be heard consistent with due process.
(b) The attorney general has the authority and responsibility to bring actions to enforce this chapter, including actions seeking declaratory relief, injunctive relief, disgorgement, confirmation of forfeiture of charter privileges, revocation of an artificial person’s charter or authority to transact business in this state, and confirmation or enforcement of forfeiture.
(c) The authority provided by this section is in addition to any other authority provided by law. 7-9.1-8. Supersession and construction.
(a) The powers of an artificial person under the laws of this state are limited to artificial- person powers as defined in this chapter.
(b) No provision of title 7 or any other law of this state may be construed to extend political spending power to an artificial person except as expressly provided by law for political committees.
(c) Any grant of power, authority, or capacity to an artificial person that could otherwise be construed to include political spending power is superseded by this chapter and shall be given no effect. 7-9.1-9. Effect on organizational documents. Any provision of articles of incorporation, articles of organization, partnership agreements, operating agreements, bylaws, trust instruments, or other organizational documents purporting to grant or confer political spending power is void. 7-9.1-10. Savings.
(a) Nothing in this chapter invalidates, impairs, or modifies any contract, debt instrument, security, or other legal obligation lawfully entered into before the effective date of this chapter.
(b) Nothing in this chapter authorizes the exercise of political spending power on or after the effective date. 7-9.1-11. Severability -- Nonrevival -- Preference.
(a) If any provision of this chapter or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications that can be given effect without the invalid provision or application.
(b) A power, privilege, or capacity withdrawn or not extended by this chapter shall not be revived, reinstated, or implied by operation of law or judicial construction.
(c) It is the preference of the general assembly that, if any portion of this chapter is held invalid, an artificial person shall possess no powers at all rather than acquire political spending power.
SECTION 3. Section 17-25-10.1 of the General Laws in Chapter 17-25 entitled "Rhode Island Campaign Contributions and Expenditures Reporting" is hereby amended to read as follows: 17-25-10.1. Political contributions — Limitations. (a)(1) No person, other than the candidate to his or her own campaign, nor any political action committee shall make a contribution or contributions to any candidate, as defined by § 17- 25-3, or political action committee or political party committee that, in the aggregate, exceed two thousand dollars ($2,000) within a calendar year; nor shall any political action committee make such contributions that in the aggregate, exceed twenty-five thousand dollars ($25,000) within a calendar year; nor shall any candidate or any political action committee or any political party committee accept a contribution or contributions that, in the aggregate, exceed two thousand dollars ($2,000) within a calendar year from any one person or political action committee.
(2) Notwithstanding the provisions of subsection (a)(1) of this section, a person or political action committee or political party committee may contribute an amount that in the aggregate, does not exceed ten thousand dollars ($10,000) within a calendar year to a political party committee, which funds can be utilized for organizational and party building activities, but shall not be used for contributions to candidates state and local for public office.
(b) Contributions to a named candidate made to any political committee authorized by that candidate to accept contributions on the candidate’s behalf shall be considered to be contributions made to the candidate. Contributions to a candidate by a political committee for another person shall be considered to be contributions by that person.
(c) Expenditures made by any person in cooperation, consultation, or concert with, or at the request or suggestion of, a candidate, the candidate’s authorized political committees, or their agents shall be considered to be a contribution to the candidate.
(d) The financing by any person of the dissemination, distribution, or republication, in whole or in part, of any broadcast or any written, graphic, or other form of campaign materials prepared by the candidate, the candidate’s campaign committees, or their authorized agents shall be considered to be a contribution to a candidate.
(e) Nothing in this section shall be construed to restrict political party committees organized pursuant to this title from making contributions to the candidates of that political party; provided, that these contributions, other than allowable “in-kind” contributions, shall not exceed, in the aggregate, twenty-five thousand dollars ($25,000) to any one candidate within a calendar year; nor shall any candidate accept a contribution or contributions, other than allowable “in-kind” contributions, that, in the aggregate, exceed twenty-five thousand dollars ($25,000) within a calendar year from all committees of his or her political party. There shall be no restriction on the amount of “in-kind” contributions that a political party committee may make to a candidate of its political party; provided, that for the purposes of this subsection only, the cost of any preparation and airing of television and/or radio advertisements and the cost of any print advertisements shall not be considered an allowable “in-kind” contribution and shall be subject to the aggregate limitation of twenty-five thousand dollars ($25,000). (f)(1) A contribution from an individual’s dependent children, as defined in § 36-14-2, shall be deemed a contribution from the individual for the purpose of determining whether aggregate contributions exceed either the two hundred dollar ($200) threshold for reporting purposes or the two thousand dollar ($2,000) maximum for contributions to a single candidate or political action committee within a calendar year.
(2) No dependent child shall contribute an amount that, when added to contributions already made by that child’s parent or legal guardian and by other dependent children of that parent or legal guardian, exceed the two thousand dollar ($2,000) maximum for contributions to a single candidate or political action committee within a calendar year.
(g) Nothing in this section shall be construed to restrict the amount of money that a candidate can borrow in his or her own name, and subsequently contribute or loan to his or her own campaign. (h)(1) It shall be unlawful for any corporation, whether profit or non-profit, domestic corporation or foreign corporation, as defined in § 7-1.2-106, or other business entity to make any campaign contribution or expenditure, as defined in § 17-25-3, to or for any candidate, political action committee, or political party committee, or for any candidate, political action committee, or political party committee to accept any campaign contribution or expenditure from a corporation or other business entity. Any contribution made in the personal name of any employee of a corporation or other business entity, for which the employee received or will receive reimbursement from the corporation or other business entity, shall be considered as a contribution by the corporation or other business entity, in violation of this section.
(2) Any voluntary payroll deduction and/or contribution made by employees of a corporation or other business entity shall not be deemed a contribution of a corporation or other business entity, notwithstanding that the contributions were sent to the recipient by the corporation or other business entity.
(3) Pursuant to the provisions of chapter 9.1 of title 7 ("Rhode Island corporate power reset act"), any contributions received from an artificial person as defined in § 7-9.1-2 consisting of the exercise of the political spending power as defined in § 7-9.1-2 shall be ultra vires, void and prohibited as an unlawful campaign contribution or expenditure pursuant to the provisions of this subsection.
(i) All contributions of funds shall be by check, money order, or credit card and may be made over the internet, but in each case the source of the funds must be identified; provided, that candidates, political action committees, and political party committees may accept contributions in cash that do not exceed twenty-five dollars ($25.00) in the aggregate from an individual within a calendar year. The cash contribution must be delivered directly by the donor to the candidate, the campaign treasurer, or deputy treasurer. The treasurer or deputy treasurer shall maintain a record of the name and address of all persons making these cash contributions.
(j) Except as provided in subsection (h) of this section, no entity other than an individual, a political action committee which is duly registered and qualified pursuant to the terms of this chapter, political party committee authorized by this title, or an authorized committee of an elected official or candidate established pursuant to this chapter shall make any contribution to or any expenditure on behalf of or in opposition to any candidate, political action committee, or political party.
(k) For purposes of the limitations imposed by this section, all contributions made by a person, either directly or indirectly, on behalf of a particular candidate, including contributions that are in any way earmarked or otherwise directed through an intermediary or conduit to such candidate, shall be treated as contributions from such person to such candidate. The intermediary or conduit shall report the original source and the intended recipient of such contribution to the board of elections and to the intended recipient, in accordance with regulations and reporting requirements promulgated by the board of elections.
SECTION 4. This act shall take effect on January 1, 2027.
