Federal Election Commission Main Page
March 29, 1982
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
ADVISORY OPINION 1982-10
Jim C. Curlett
Holtzman, Wise & Shepard
755 Page Mill Road, Suite A-230
Palo Alto, California 94304
Dear Mr. Curlett:
This responds to your letter dated February 19, 1982,
requesting an advisory opinion on behalf of Syntex (U.S.A.), Inc.
concerning application of the Federal Election Campaign Act of
1971, as amended, ("the Act"), and Commission regulations to
certain proposed activity by Syntex (U.S.A.), Inc. with respect
to state and local election activity.
You state that Syntex (U.S.A.), Inc., ("Syntex U.S.A."), is
a Delaware corporation with its executive and administrative
offices and principal place of business in Palo Alto, California.
It is the wholly-owned subsidiary of Syntex Corporation,
("Syntex-Panama"), a corporation organized under the laws of
Panama. Syntex-Panama is an international life sciences company
that develops, manufactures and markets a wide range of health
and personal care products. You state that all members of the
Board of Directors of Syntex U.S.A. are either U.S. citizens or
have permanent resident status in the United States. The
corporate officers of Syntex U.S.A. include one individual who is
neither a U.S. citizen nor a permanent resident of the United
States.
You ask specifically whether Syntex U.S.A. would be
permitted under the Act to make contributions and expenditures in
connection with state and local campaigns for political office
and in connection with state and local ballot measures. You
state that all such contributions and expenditures would be made
in compliance with state and local law. In this regard, you
state that the proposed contributions and expenditures will be
"made independent of, and will not be dictated or directed by,
Syntex-Panama or any Directors or officers of Syntex U.S.A. who
are foreign nationals."
The issue raised by your request is whether a corporation
that is organized under Delaware law with its principal place of
business in California, and that is also a wholly-owned
subsidiary of a foreign parent corporation, may make
contributions and expenditures in connection with non-federal
elections.
As you know, the Act prohibits corporations organized by
authority of any law of Congress from making contributions and
expenditures in connection with any election to any political
office. It also prohibits any corporation whatever from making
contributions and expenditures in connection with Federal
elections. See 2 U.S.C. SS 441b(a). In addition, the Act
prohibits foreign nationals from making contributions, directly
or through any other person, in connection with any election to
any political office. See 2 U.S.C. SS 441e.
The term "foreign national" is defined by 2 U.S.C.
SS 441e(b) (1) to mean a "foreign principal" as such term is defined
specifically by 22 U.S.C. SS 611(b). Section 611(b) defines
"foreign principal" as including:
(1) a government of a foreign country and a foreign
political party;
(2) a person outside of the United States, unless it
is established that such person is an individual
and a citizen of and domiciled within the United
States, or that such person is not an individual
and is organized under or created by the laws of
the United States or any State or other place
subject to the jurisdiction of the United States
and has its principal place of business within the
United States; and
(3) 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.
Under 22 U.S.C. SS 611(b), a corporation organized under the
law of any state within the United States whose principal place
of business is within the United states is not a "foreign
principal." Thus, such a corporation is not a "foreign national"
under 2 U.S.C. SS 441e. The Commission is, therefore, of the
opinion that since Syntex U.S.A. is a domestic rather than a
foreign corporation, the Act would not prohibit it from making
contributions and expenditures in connection with campaigns for
state or local political office and in connection with ballot
measures. See Advisory Opinion 1981-36; also see Advisory
Opinion 1980-95, copies enclosed. This result also accords with.
Advisory Opinion 1980-7 where the Commission held that a
California corporation which was a wholly-owned subsidiary of a
federally chartered corporation (a savings and loan institution)
was separate from the parent corporation for purposes of 2 U.S.C.
SS 441b provided that the subsidiary California corporation was not
merely an instrumentality or agent of the parent Federal
corporation.
This conclusion is based, however, on your representation
that no director or corporate officer of Syntex U.S.A. (or
Syntex-Panama) who is a foreign national will participate in any
way in the decision-making process with regard to making the
proposed contributions or expenditures for state and local
elections to political office. See Advisory Opinions 1978-21 and
1980-100, copies enclosed. Such participation is immaterial for
purposes of the Act with respect to ballot measure campaigns.
The Commission expresses no opinion with regard to the
application of any state law to the factual situation you have
presented.
This response constitutes an advisory opinion concerning
application of the Act, or regulations prescribed by the
Commission, to the specific transaction or activity set forth in
your request. See 2 U.S.C. SS 437f.