I. TITLE The Corporate Decency Act
II. SHORT TITLE A bill to amend Section 000 of the State Code to
establish new requirements for corporate entities and corporate officials and to
impose new penalties on corporate entities and officials that violate existing
state law and the provisions of this Act.
III. PURPOSE To establish a system of corporate governance that better
protects employees and the public at large from corporate lawbreakers and that
leads to greater compliance with existing civil and criminal law.
IV. ENACTING CLAUSE Be it enacted by the State that Section 000 of the
State Code is amended by adding at the end the following new section. The Act
may be cited as the Corporate Decency Act.
V. FINDINGS The legislature finds that –
A. Current state corporation provisions, and traditional criminal law
sanction of fines and imprisonment, do not adequately deter lawbreaking by
companies or their executive officials. In fact, penalties against corporate
officials are far less severe than those against ordinary lawbreakers; fines are
nominal, prison sentences are frequently suspended, and probation is easily
B. Industrial plants that abruptly close down or relocate can disrupt a local
economy’s employment structure and tax base;
C. Many company employees can now legally be dismissed for the exercise of
their political rights of speech and assembly;
D. The limited disclosure of information regarding corporate entities’
economic and social impacts deny various people, groups and communities vital
information about practices that greatly affect them; and
E. The cost to society of corporate lawbreaking, to the extent that in can be
quantified, evidences the need for a more comprehensive legal framework to
increase compliance with the law by corporations. Corporate crime costs run into
billions of dollars. These costs involve not only large financial losses but
also injuries and health hazards to workers and consumers. Over 75 percent of
all corporate crimes are in the environmental and labor protection
VI. JURISDICTION Any state court or administrative tribunal of
appropriate jurisdiction shall have the authority to offer declaratory or
equitable relief for any violation of this Act. Individuals may commence an
action in a state court of appropriate jurisdiction or before an administrative
tribunal in the event that the state official charged with enforcing any
provision of the Act fails to do so whether the individual is or is not
specifically aggrieved by a violation of the Act.
VII. STANDING Any person has standing to bring a claim in a state court
of appropriate jurisdiction or before an administrative tribunal challenging any
act or conduct of a person that threatens to cause or is causing substantial
harm to the public.
VIII. ATTORNEYS FEES The court may grant such relief as it deems
appropriate and shall award reasonable costs of litigation, including attorney’s
fees and other reasonable costs of litigation if a party substantially prevails
in a court of final jurisdiction, or the court determines that such action
served an important public purpose, or either party can demonstrate that its
economic interest is small in comparison to its costs of effective participation
or that it lacks sufficient resources to participate in the action absent the
IX. EFFECTIVE DATE This Act shall become effective the first calendar
year commencing six months after its enactment.
A. “Person” means any individual, governmental entity (including any state or
political subdivision or department or public agency thereof), or corporate
entity as defined herein.
B. “Corporate entity” means any corporation, individual unincorporated
association, partnership, authority, or local government organized or doing
business in the state.
C. “Serious danger” used with respect to a product or business practice,
means that the normal or reasonably foreseeable use of, or the exposure of human
beings to, such product, practice or service will cause death or serious bodily
injury to an individual.
D. “Serious bodily injury” means any impairment of physical or mental
condition, including physical pain, a substantial risk of death or serious
permanent disfigurement, unconsciousness, extreme pain, or permanent or
protracted loss or impairment of the function of any bodily member or organ.
E. “Warn or notify” used with respect to employees, the public, or the
community, means to give sufficient description of the danger to all individuals
working for or in the corporate entity, those who are likely to use a product or
service, and those who are or who are likely to be in the proximity of the
F. “Appropriate state agency” means a state agency having regulatory
authority or enforcement powers with respect to the product, service or practice
and dangers of the sort discovered.
G. “Corporate official” means an appropriate manager having management
authority or enforcement powers with respect to the product, service or
practice, a corporate officer, a member of the board of directors, or an agent
of the corporate entity.
H. “Discover” means obtains or has information that would alert a reasonable
person in the circumstances in which the discoverer is situated that it is
probable that a serious danger exists.
I. “Class One Offense” means any offense or violation by a corporate official
or those responsible to a corporate official that is knowingly committed or that
the corporate official on the balance of probabilities should have known would
be committed that results in the death of a pon that is recklessly or
negligently committed by a corporate official or those responsible to a
corporate official, or is knowingly committed or that the corporate official on
the balance of probabilities should have known would be committed but that does
not result in the death of a person or serious bodily injury.
XI. ADMINISTRATIVE AUTHORIZATION The Secretary of State and all agencies
charged with duties under this Act are authorized to make and amend such rules
and regulations as may be necessary to carry out the provisions of this
XII. CONFLICTS The rights and remedies provided for in this Act shall be
in addition to and not in lieu of any other rights and remedies provided by
common law or under state law.
XIII. PREEMPTION This Act shall preempt local law to any extent local law
is inconsistent, unless the relevant sections of local law are at least as
protective of public health and welfare as the provisions of this Act and in all
cases, provisions of this Act must be liberally construed to benefit the party
bringing an action under the Act.
XIV. SEVERABILITY If any provision or application of this Act to any
person or circumstance is held invalid does not affect other provisions or
applications of the Act which can be given effect without the invalid provision
or application, and to this end the provisions of the Act are severable.
XV. PROHIBITED ACTIVITY
A. CONCEALMENT It shall be unlawful for any corporate entity or
corporate official to conceal from authorities any product or process that
[results] in death or serious injury. This offense shall be considered a Class
One Offense under the Act.
B. HOMICIDE It shall be unlawful for any corporate entity or corporate
official to engage in conduct which results in death, which such corporate
entity or corporate official knew or should have known would result in death, or
which was reckless or negligent. This offense shall be consid for any corporate
entity or corporate official, to knowingly or negligently endanger the public.
This offense shall be considered a Class Two Offense under the Act.
D. FALSIFICATION AND DESTRUCTION OF DOCUMENTS It shall be unlawful for
any corporate official to destroy or falsify documents or to negligently allow
the destruction of documents pertaining to hazards to the public, or the
corporate entity’s employees or agents. This offense shall be considered a Class
Two Offense under the Act.
E. WHISTLEBLOWER PROTECTION AND MALICIOUS DISCHARGE It shall be
unlawful for any corporate official to discriminate against, retaliate against,
or deprive an employee of employment, employment benefits, employment
opportunities, or any other rights secured under the laws of the state because
of the employee’s involvement in or participation in any of the following
1. Filing, instituting, or causing to be filed or instituted any
investigation or proceeding resulting from the administration or enforcement of
any federal, state, or local statute, regulation or executive order;
2. Assisting or participating, or being about to [preparing to] assist or
participate in any manner in any proceeding or action to carry out the purposes
of this Act;
3. Communicating to, or providing any information to any employer, or
employer’s agent, regarding a violation, or suspected violation, of any federal,
state, or local statute, regulation or executive order;
4. Participating in any federal, state or local government investigation or
other proceeding; and/or
5. Opposing any practice made unlawful by any federal, state, or local
statute, [law,] regulation or executive order
Upon suit being brought for violations under this provision, the defendant
employer must clearly and convincingly prove the action was not with malice or
in bad faith. This offense shall be considered a Class Two Offense under the
A. CHARTER REQUIREMENT FOR ALL CORPORATE ENTITIES DOING BUSINESS OR LICENSED
IN THE STATE Any corporate entity organized or doing business in the state
shall have good corporate character. A corporate entity that through its action
or inactions evidences an absence of ethics or virtue, or tendency to habitually
engage in activities which are detrimental to the public health, safety, or
welfare including, but not limited to,: patterns of misconduct, disregard for
the law or government regulations designed to protect the public, failure to
prevent deceptive practices, the abdication of responsibility, disregard for
government reporting requirements, involvement in lawbreaking in any area of
activity, lack of candor and forthrightness with governmental agencies, criminal
activity, or patterns of regulatory violations shall result in the corporate
entity being in violations of this provision.
Any conduct shall be probative of character which illuminates the likelihood
of prospective conduct and probable performance, including whether the
misconduct is an isolated incident or reflects a pattern of misbehavior, and how
recently the misconduct occurred.
The Secretary of State shall require submission of proof of character as a
condition of allowing the corporate entity to do business in the state. The
Secretary may at any time require supplemental written character reports in
order to enable the Secretary to determine whether the corporate entity
continues to meet the state’s character requirements. A violation of this
provision shall be considered a Class Two Offense under the Act.
B. REPORTING AND DISCLOSURE RESPONSIBILITIES
1. OMNIBUS WORKER, COMMUNITY, CONSUMER RIGHT TO KNOW All corporate
entities shall provide workers, consumers and the public with information on the
hazardous substances in the workplace, community and environment, and establish
emergency planning and notification plans which would alert the public in the
event of a release of hazardous substances.
Information to be provided includes:
Where, and in what amounts hazardous substances are generated, transported,
stored and used;
How hazardous substances are recycled, treated or stored;
The acute and chronic health effects and symptoms the hazardous substances
are likely to produce [upon exposure];
Explosiveness and flammability and toxicity of any combustion
Reactions produced when hazardous substances are mixed with water [or with
other substances stored in the same locality];
The nature, location [and age] of hazardous substance storage
The major transportation routes, [transporting containers] and evacuation
routes that are or would be used with respect to hazardous substances;
Safety equipment and medical equipment needed to deal with an accident;
The exposure routes, and proper handling procedures for hazardous
A violation of this provision shall be considered a Class One Offense under
2. VICTIM NOTIFICATION Corporate entities shall notify those who may
[forseeably] be adversely affected by potential health or safety dangers
associated with any product, practice or service of the corporate entity. A
violation of this provision shall be considered a Class One Offense under the
3. EXECUTIVE RESPONSIBILITY Corporate officials must notify employees,
agents and sub-contractors and appropriate government agencies if a serious
danger exists in handling or using a particular product or service, within 30
days of discovering the danger. A violation of this provision shall be
considered a Class One Offense under the Act.
4. PLANT CLOSING If a corporate entity intends to close or transfer any
of its operations, resulting in a loss of employment of 500 or more persons or
20% of the total labor force within a geographically continuous area, or 20% or
more of the labor force of a standard metropolitan statistical area, whichever
is smaller, it shall furnish the Secretary of State, the Secretary of Labor,
affected employees and community representatives written notice of the timing
and extent of such a closing or transfer not less than 24 months in advance. It
shall publish in a local medium any plan to relocate or rehire affected
employees, except where the Secretary of State finds that the corporate entity
could not reasonably have predicted its intention to close or transfer, in which
case the Secretary of State may allow such shorter notice as may be reasonable
under the circumstances.
The Secretary of State has the authority to appoint an arbitrator with
subpoena power to hold hearings in the affected community in order to make
findings of fact concerning (a) the economic reasons for the closing or
transfer, (b) any non-economic reasons, (c) and the potential economic, social
and environmental cost of the abandonment to the affected community. These
hearings will produce a community impact analysis to be forwarded to the
Secretary of State, and included in a yearly report from the Secretary of State
to the state legislature summarizing the causes and effects of plant closings
The corporate entity will be liable for the loss of revenue to the city,
county or state government in a percentage equal to one year’s tax revenues lost
as a result of such transfer or closing; severance pay for workers; and
community assistance for areas they are leaving. In addition, the corporate
entity receiving the benefits must provide retraining for its workforce in the
event of plant closings. Corporate entities must also offer the local community
the right of first refusal on the facility being abandoned, and pay the State
the value of any tax credits and or tax abatements received by the corporate
entity that have not expired.
(b) Closure report
Upon the permanent cessation of production operations at a Department of
Energy defense nuclear facility, the Secretary of Energy shall submit to
Congress a report
(1) a complete survey of environmental problems at the facility;
(2)budget quality data indicating the cost of environmental restoration and
other remediation and clearup efforts at the facility; and
(3) a discussion of the proposed cleanup schedule.
5. STATE REPORTING REQUIREMENTS
a. ANNUAL REPORTS Every corporate entity incorporated or doing business
in the state, whether foreign or domestic, must provide the Secretary of State
by December 31 of each year:
1. The names, addresses, and number of shares held by the twenty largest
shareholders and an list of, in descending order, the twenty largest beneficial
holders of voting shares in the corporate entity excluding any holder with less
than one-tenth of one percent of the outstanding shares. For each stockholder,
the annual report shall list the name, address and type (bank, broker, holding
company, individual or trust), the number of voting shares held (as of the end
of the calendar year), and the number of shares over which the holder has sole
voting power, shared voting power, or no voting power under any circumstances.
In determining the number of shares held, all nominee and other accounts of each
shareholder, including the accounts held be depository trust company, shall be
aggregated and reported as one account in the name of the bank, broker, holding
company, individual, or other identified shareholder. For each revolving credit
agreement, the corporate entity shall report the total amount available, the
commitment fee and the average monthly amount outstanding during the previous
Performance by geographic center, reporting its assets at year end, gross
revenue, total expense, income tax, net income, number of US employees, and
number of non-US employees for the following geographic regions: North America
(excluding US), Asia-Australasia, Europe, Middle East, Latin America/Caribbean,
Africa, total international, total domestic and total worldwide. The firm shall
also report the same figures by country for the four countries (excluding the
US) in which the firm and its subsidiaries have the largest sales and
2. All political action committee contributions and the amount of money given
to each individual candidate;
3. Information on employment patterns, environmental matters, job safety and
health, foreign production, shareholder ownership, the time and place of all
shareholder meetings and yearly local, state, and federal tax payments,
including: For each of the five largest of its facilities which report to the
Environmental Protection Agency and to state health authorities on air and water
pollution, the firm shall indicate in its annual export its actual average daily
emissions and effluents for each pollutant required to be reported under the
federal Clean Air Act and Clean Water Act. In addition, the corporate entity
shall list in its annual report any outstanding environmental legal actions at
each of these facilities.
Each corporate entity shall indicate in its annual report the total of all
occupational injuries and illnesses incurred. This total will be based on data
recorded on the plant-wide Occupational Safety and Health Administration Form
200 or its equivalent, and aggregated for all plants owned and operated by the
corporate entity. If a corporate entity manufactures a chemical product that is
identified only as a trade named substance, disclosure of the chemical
constituents of the substance shall be provided upon request of any stockholder
of record or employee of the corporate entity.
4. All criminal convictions, and all pleas of nolo contendere;
5. All civil infractions and verdicts against the corporate entity and all of
the violations of local, state and federal statutes, regulations, or executive
6. The status of its compliance with all federal, state and local health and
safety laws, including occupational safety and health laws, environmental
protection laws and equal opportunity laws. The distribution of the workforce by
sex, race and job classification in the same format as that required to be
reported to the Equal Employment Opportunity Commission in the EEO-1
Consolidated Report or its equivalent. In addition, the category, of officers,
shall be added to the present nine job classifications, and the net increase or
decrease over the previous year in the number of employees at year end in each
category shall be indicated.
A violation of this provision shall be considered a Class Two Offense under
b. HEALTH AND SAFETY INFORMATION IN CASES THAT ARE SETTLED OR ADJUDICATED
Any corporate entity that settles a case involving health or safety information,
shall make available to the Secretary of State any material contained in sealed
records that could be useful in preventing the endangerment of the public at
large. A violation of this provision shall be considered a Class Two Offense
under the Act.
c. INSURANCE DISCLOSURE Any property/casualty insurance company
incorporated or doing business in the state shall identify and make available to
the public, relative to each claim and/or disputed injury the following:
(1) The physical hazard or unsafe condition that resulted in the claim;
(2) The make and model of the product, or service, that served as host for
the hazard by category to assure for its easy and accurate identification;
(3) The hazardous material, substance or service by both brand and generic
name any offending chemical content that could cause harm.
This information an annual summaries of all death or injury-related
occurrences shall be transmitted to the State Insurance Commissioner and to the
Secretary of State on or before the last day of each year. A violation of this
provision shall be considered a Class Two Offense under the Act.
C. SHAREHOLDER RIGHTS
1. NOTIFICATION A violation of any of the following provision shall be
considered a Class Two Offense under the Act.
(a) Corporate entities must individually notify, by mail, all shareholders of
all criminal convictions, nolo contendere pleas, and civil sanctions incurred by
the corporate entity whenever proxy materials are distributed, or in the event
that no proxy materials are distributed , by mail to all shareholders at least
once a year.
(b) Upon request by a shareholder of record, the corporate entity shall
provide a description of each long term debt (debt due after one year) and
revolving credit agreement of the corporate entity in excess of one million
dollars. The corporate entity shall include the name of the creditor, the
character of the debt, the nature of the security if any, the date of origin,
the date of maturity, the total amount of the debt, the rate of interest, and a
copy of any and all restrictive covenants attached to the indebtedness.
(c) Upon request by any shareholder of record, or member of the public, the
corporate entity shall provide copies of its discharge monitoring reports, as
filed monthly with the EPA, and its emissions inventories, as filed
semi-annually with the state and local agencies, for any and all of the firm’s
(d) Upon request by an shareholder of record, or member of the public, the
corporate entity shall provide EEO-1 reports for any or all of its
2. CONSTITUENCY BOARD Every corporate entity subject to this Act shall
have at least nine board members, in addition to their traditional fiduciary
obligations, with responsibilities to oversee, investigate, receive complaints
about and address the board on matters affecting, respectively, 1) employee
well-being 2) consumer protection, 3) environmental protection, 4) community
relations, 5) shareholder rights, 6) law compliance, 7) technology assessment,
8) anti-trust standards, and 9) political relations.
3. BOARD COMMITTEES Every corporate entity subject to this Act shall
have an Audit Committee, Nominating Committee, a Compensation Committee, a
Public Policy Committee and a Law Compliance Committee, all of which shall be
comprised of independent directors, except for the Public Policy and Law
Compliance Committees, which shall have a majority of independent directors.
4. SHAREHOLDER NOMINATIONS AND VOTES Shareholders of every corporate
entity subject to this Act shall have the right to nominate candidates for the
board of directors if such candidates are supported by a reasonable absolute
minimum number or percentage of shares, to be determined by the Securities and
Exchange Commission. Only the actual or beneficial owners of stock are eligible
to nominate a candidate or to vote for candidates. The corporate entity would
provide equal funds to all nominees – the maximum amount to be determined by the
Secretary of State. At least six weeks prior to a shareholders’ meeting to elect
directors, each shareholder shall receive a ballot and brief written statement
by each candidate as to their qualifications for the position.
5. SHAREHOLDER REVIEW Shareholders of any corporate entity subject to
this Act shall be entitled to vote on any transaction involving the purchase,
sale, lease, merger, consolidation, financing, refinancing, dissolution or
liquidation of assets equal to ten percent of the corporate entity’s total
assets, or the sale or redemption of ten percent of the company’s outstanding
stock, or the authorization of corporate stock or securities in any amount. At
least six weeks before a shareholder vote on such a matter, the board shall
forward a written statement to all shareholders indicating the vote of directors
on the issue, reasons form the majority for their approval, reasons from the
minority for their disapproval, and the foreseeable benefits and risks of
implementing the proposal.
6. CUMULATIVE VOTING Every shareholder of any corporate entity subject
to this Act entitled to vote at any directorial election may cumulate such
shareholder’s votes and give one candidate a number of votes equal to the number
of directors to be elected, multiplied by the number of votes to which the
shareholder’s shares are entitled. Classification, or the staggered election of
directors which have the effect of undermining the cumulative voting’s purposes
of minority representation, are prohibited.
D. TRUTH IN BIDDING Any corporate entity receiving tax abatements, tax
credits or subsidies must enter into a legally binding contract with any
governmental entity providing these benefits, stating the precise benefits the
corporate entity will provide in exchange for the benefits conferred by the
state. In those cases where the corporate entity is providing jobs – the number
of jobs, the job level, the salary by level, and the duration of the jobs must
be made public.
E. RECALL OF DIRECTORS In the event that a corporate entity engages in
criminal activity and is convicted or pleads nolo contendere, any shareholder
shall be entitled to a full list of the shareholders of all classes of stock.
The list shall be furnished to any shareholder seeking to notify other
shareholders that a recall of the current officers and directors is in order.
The cost of furnishing the list and mailing such notices shall be borne by the
F. INDEPENDENT DIRECTORS AND SHAREHOLDERS The majority of the board of
directors of each corporation doing business or incorporated in the state must
be independent. An independent director is one who is not, and was not within
the past five years, an officer or an employee of the firm or any of its
parents, subsidiaries or affiliates; is not a relative of an executive officer
of the firm by marriage, blood , or adoption ( unless more remote than first
cousin); does not have any equity interest in the firm; is not a lawyer who
currently or in the past five years has received a fee from the firm; is not a
director, partner, officer or employee of an investment or commercial banking
firm which in the past five years has performed services for the firm; is not
and has not been an officer, director, employee or more than one percent equity
owner of a supplier or customer who received more than one percent of its
consolidated gross revenued or more than $5,000,000 per year, whichever is less,
from a corporate entity affected by this Act. The board of directors
collectively shall be provided with such support staff reportable solely to
itself, as it deems necessary to fulfill the board’s responsibilities.
XVII. REMEDIES AND SANCTIONS
A. CLASS ONE SANCTIONS
1. ENDANGERMENT A corporate official who knowingly conceals a dangerous
product or business practice shall be sentenced up to 10 years in prison or fine
2. CORPORATE HOMICIDE A corporate entity or corporate official engaging in
conduct where the corporate entity knew or should have known that death could
result, or was reckless or negligent, that resulted in death, shall be subject
to prosecution under the homicide act of the state.
3. CHARTER REVOCATION Any corporate entity convicted of a Class One Offense
shall have its charter revoked or suspended for no less than 30 days. Each
additional infraction within a year shall result in a doubling of the suspension
4. EQUITY FINES Any corporate entity violating any provision of this Act may
be required to authorize and issue to the state treasury shares of stock equal
to the value of fines or such number of shares to the state’s crime victim
compensation fund as would be necessary to deter any violation of this Act. The
treasury shall then establish a special crime victim compensation fund, and use
the proceeds from the occasional sale on the open market of the accumulated
portfolio of the fund to provide money for victims of corporate crimes who would
not otherwise be compensated.
The fund directors may liquidate the securities in whatever manner maximizes
5. REVOKE TAX ABATEMENTS FOR CORPORATE ENTITIES The state shall be prohibited
from providing any corporate entity that is convicted of a Class One Offense
from receiving any tax abatements, tax credits or subsidies of any kind for a
period of not less than one year.
6. PROHIBIT STATE PURCHASES FROM CORPORATE ENTITIES The state shall be
prohibited from purchasing any goods or services from any corporate entity that
is convicted of a Class One Offense for a period of not less than one
B. CLASS TWO SANCTIONS Any corporate entity that violated any part of
this Act may be subject to the following sanctions:
1. REVOKE TAX ABATEMENTS FOR CORPORATE ENTITIES The state shall be prohibited
from providing any corporate entity that is convicted of a Class Two Offense
from receiving any tax abatements, tax credits or subsidies of any kind for a
period of not less than one year.
2. PROHIBIT STATE PURCHASES FROM CORPORATE ENTITIES The state shall be
prohibited from purchasing any goods or services from any corporate entity that
is convicted of a Class Two Offense for a period of not less than one
3. PROHIBIT INVESTMENT IN CORPORATE ENTITY The state may be prohibited from
investing state pension funds, any other state controlled funds in any corporate
entity that has been convicted of committing a Class Two Offense for a period of
not less than one year.
4. PUBLICITY SANCTION Any corporate entity violating any provision of this
Act may be required to publicize the details of its offenses in a full page
advertisement in the largest paper in the state and the largest paper in any
5. COMMUNITY SERVICE Any corporate entity violating any provision of this Act
may be required to undertake a socially useful project using its own skills and
6. PROBATION For a corporate entity in violation of any provision of this
Act, a court in its discretion may give a probation officer such visitorial
powers, create such positions within an organization, require such financial and
non-financial disclosure or appoint such special receivers as is deemed
necessary to protect against repeat offenses.
7. PUNITIVE INJUNCTION Any corporate entity or corporate official violating
any provision of this Act may be prohibited from engaging in specified business
practices or be required to revamp its internal controls; develop a remedy for a
problem introducing state-of-the-art equipment or procedures; revise its
screening procedures; use its international facilities to audit the destination
of products supplied, to report back to the enforcement agency at periodic
intervals and, if necessary, to have those reports verified by an independent
8. RESTITUTION TO VICTIMS Any corporate entity violating any provision of
this Act may be required to pay restitution and/or treble damages to any victim
of the offense, and/or any other party [to be determined by the court].
9. PROBATION FOR CORPORATE EXECUTIVES WHO FAIL TO PROHIBIT CIVIL OR CRIMINAL
VIOLATIONS BY THE CORPORATE ENTITY When a corporate official is convicted of an
offense committed in furtherance of the affairs of the organization, the court
may include in the sentence an order disqualifying the corporate official from
exercising similar functions in the same and/or other organization for a period
not in excess of the authorized term of imprisonment for such offense, if it
finds the scope or willfulness of the official’s illegal actions make it
dangerous or inadvisable for such functions to be entrusted to the official.
Any corporate official who serves on the board of a corporate entity that is
convicted of violating any criminal law shall be prohibited from serving on any
other board of directors in the state
10. EXECUTIVE DISCLOSURE Any corporate official convicted in a criminal
proceeding shall participate in statewide lecture series for grades 9-12. In
this lecture series the corporate official will spend at least two hours a day
delivering a court approved lecture to students on the need for corporate
responsibility and the cost to society of the criminal
C. ACTIONS FOR CIVIL DAMAGES
1. FLUID RECOVERY When a corporate entity has violated a provision of this
Act or any other law of the state and direct compensation of individual class
members is unfeasible the class-wide damages should be aggregated and a single
recovery fund should be created. This class-wide recovery fund shall be used to
compensate individual claimants as appropriate, but only to the extent that
doing so does not sacrifice the interests of absentee class members – the
remainder of any fund should be distributed through cy pres. In selecting the cy
pres remedy, the preference should be for equitable trusts that operate to
benefit past injured classes and to alleviate the potential for injury to the
public in the future.
XVIII. LIABILITY STANDARDS
1. STRICT LIABILITY All corporate entities organized or doing business in the
state shall be held strictly liable for damages caused to persons, property or
chattel in the event that any product, practice or service causes death, serious
bodily harm, or destruction of or damage to property or chattel.
2. REMOVE LIMITED LIABILITY FOR RECKLESS CONDUCT In those instances where the
board of directors of any corporate entity subject to this Act have engaged in
ultra vires activities (or have been reckless in exercising their oversight
duties) the shareholders on a pro rata basis and the directors individually
shall be liable for the actions of the corporate entity.
3. ENTERPRISE LIABILITY Affiliated corporate entities involved in a common
enterprise should be treated as one entity if they are in reality an integrated
4. TREAT CORPORATE EXECUTIVES AS PUBLIC OFFICIALS IN LIBEL PROCEEDINGS One
who utters defamatory speech concerning a corporate official or corporate entity
shall be immune from liability notwithstanding the falsity of such speech,
unless such speech was made with knowledge of its falsity, or reckless disregard
for the truth.
XIX. OTHER PROVISIONS
A. MULTI-STATE TAX COMMISSION The state shall join the Multi-State Tax
Commission, a compact of states that share expenses for a joint audit program to
ensure full compliance with the state’s tax laws.
B. UNITARY APPORTIONMENT AND WORLDWIDE COMBINED REPORTING The state is
authorized to take into account a corporate entities’ world-wide income, using a
formula involving wages, sales and property taxes within the state, and then
apportion an appropriate amount of income to the state for tax purposes.
C. CORPORATE OFFICIAL RESPONSIBILITY Where a corporate entity commits an
offense under this Act, any corporate official who directed, authorized,
assented to, acquiesced in or participated in the commission of the offense is a
party to and guilty of the offense and is liable for punishment provided for the
offense whether or not the corporate entity has been prosecuted or
D. BURDEN OF PROOF
1. MANAGER ACCOUNTABILITY A corporate official’s guilt is imputed from the
conscious disregard or recklessness in not stopping a wrongful
2. In any prosecution of an offense under this Act, it is sufficient proof of
the offense to establish that it was committed by an employee or agent of the
accused, whether or not the employee or agent is identified or prosecuted for
E. BONDING The Secretary of State may require a corporate entity to post
such bond or pay such amount of money into an escrow account as will ensure
compliance with any order made pursuant to this Act or in the event the
corporate entity becomes insolvent or files for bankruptcy.
XX. EMINENT DOMAIN If at any time corporate entity is in violation of
this Act, the Secretary of State may require a corporate entity to show cause as
to why its charter should not be suspended and its assets purchased by the state
at fair market value.
XXI. ATTORNEY RESPONSIBILITIES In the representation of a corporate
entity, an attorney shall not conceal or knowingly fail to disclose that which
by law the attorney is required to reveal or disclose.
An attorney shall notify the board of directors of a corporate entity of any
violation of this Act or any other law by the client corporate entity in writing
within five days of discovering the violation.
XXII. STATUTE OF LIMITATIONS An action to recover damages for personal
injury, illness, death or injury to property caused by the latent effects of
exposure, direct or indirect, to a substance upon or within the body, or upon or
within property, may be commenced within five years from the date of discovery
of the injury, illness or death, whichever is later. Provided, however, that
where the injury or illness involves damage to the respiratory system or other
system, part or function of the body caused by exposure to a substance, the
effects of such exposure being latent and not manifested upon exposure but
thereafter resulting in a disability, an action or proceeding to recover damages
for such injury or illness may be commenced within five years after taused by