MEMORANDUM

TO:

Right to Rise Super PAC

FROM:

Charlie Spies

DATE:

February 19, 2015

SUBJECT:

Contributions by Domestic Subsidiaries of Foreign Corporations to Federal Super
PACs

Foreign nationals have been prohibited from contributing, donating, or spending funds in
connection with any elections in the United States for more than forty years. 2 U.S.C.§441e.
The term “foreign national” is defined by reference to “foreign principal” in the United States
Code. Therefore, a “foreign national” includes, for these purposes, “a partnership, association,
corporation, organization, or other combination of persons organized under the laws of or having
its principal place of business in a foreign country.” 22 U.S.C. §611(b).
Foreign Corporate Contributions
No foreign corporation, either organized under the laws of, or having its principal place of
business in, a foreign country may contribute or participate at all in state or federal elections.
Therefore, a foreign corporation may not contribute to a Super PAC.
Domestic Corporations Owned in Whole or Part by Foreign Corporations
The Federal Election Commission (“FEC”) has repeatedly made clear that even if a corporation
is a wholly owned subsidiary of a foreign corporation, and by implication, any foreign ownership
under 100%, as long as the subsidiary is both organized under the laws of a U.S. state and has its
principal place of business within the U.S., the subsidiary is not a foreign national under the
statute. AO 2006-15; AO 2000-17.
However, the FEC has also imposed several restrictions under what conditions a subsidiary may
participate in the political system. In AO 2006-15, two wholly owned subsidiaries of a Canadian
corporation sought to donate to a state and local election. The FEC concluded that, subject to
restrictions, the corporations could. The restrictions are based on 11 C.F.R. §110.20, which,
supplementing 2 U.S.C. §441e, do two things.
First, 11 C.F.R. §110.20(b) provides a foreign national may not make expenditures,
contributions, or disbursements in connection with elections. In AO 1992-16, the FEC
concluded that this prohibition meant a subsidiary could make contributions as long as the
money was wholly derived from the net earnings generated within the United States and were
spent from segregated accounts not subsidized by the foreign parent corporation. The FEC

 FOREIGN CORPORATE CONTRIBUTIONS
MEMORANDUM

PAGE 2

concluded that the subsidiary must also demonstrate through reasonable accounting methods that
the funds were segregated. AO 1992-16.
Second, 11 C.F.R §110.20(f) provides a foreign national may not direct, control, participate, or
otherwise administer the decision-making process of any person or organization, in the decisions
regarding participation in elections. In AO 2000-17, the FEC concluded that a subsidiary could
create a PAC and donate money, so long as the decision making process was made by U.S.
citizens. The foreign parent corporation, or the non-U.S. citizen leadership of the subsidiary,
was permitted to make the general decision to 1) create a separate segregated fund and/or PAC,
2) the decision to disband such a fund or PAC, 3) and a specific “not-to-exceed” budget level for
the fund. However, any further decisions had to be made by a Special Committee comprised
solely of U.S. citizens, including the composition of the Special Committee itself. AO 2000-17.
Direct Contributions from a Domestic Subsidiary of a Foreign Corporation to a Super PAC
A question arises if a U.S. subsidiary of a foreign corporation, in compliance with both the
segregation of funds and decision-making, wishes to contribute directly to a Super PAC in
connection with an election. Because of 2 U.S.C. §441b’s ban on corporate contributions, this
problem has not emerged since Citizens United v. FEC declared the ban unconstitutional.1 The
last such advisory opinion regarding these regulations was written in 2006. Therefore, the FEC
has not yet specifically addressed whether such a corporation may directly contribute to a Super
PAC in connection with a federal election.
Nevertheless, the FEC has consistently made clear that a U.S. subsidiary, as long as it is
chartered and principally operating domestically, is not a foreign national and may participate,
even by contributing to state elections. AO 2006-15. Now that §441b’s contribution ban for
federal elections has been struck by Citizens United, Speechnow v. FEC and its progeny, we
conclude that a domestic subsidiary corporation may now directly contribute to a Super PAC in
connection with a federal election.
With that said, because 11 C.F.R. §110.20 remains in force, the domestic subsidiary corporation
must still comply with the restrictions on foreign national funds and participation. We
believe that the creation of a separate corporate account of only U.S. raised monies, and a special
committee subject to the same restrictions in AO 2000-17 under U.S. citizen control, would be
sufficient to permit donations directly from a domestic subsidiary to a Super PAC.

1

This proceeds from the assumption a foreign national is not simply “funneling” money through the U.S.
corporation, as this would (and has been declared to) violate §441e.

202058113.1 48886/181460