Re: Administrative Code §3-703(1) (f); Campaign Finance Board Rule 1-04(h); Op. No. 1992-2
An advisory opinion has been requested to address the following issue:
If, during March 1991, two completely unrelated organizations made contributions to the committee authorized by a candidate choosing to participate in the New York City Campaign Finance Program and those organizations subsequently merged into one organization during late December 1991, will the prior contributions still be considered as having been made by two separate unrelated entities for the purpose of the New York City Campaign Finance Act, or, in the alternative, as a result of the subsequent merger, will those prior contributions now be considered to have been made by the new entity resulting from the merger?
Committees authorized by candidates participating in the Campaign Finance Program may not accept contributions from any one contributor or aggregate contributions from affiliated contributors that, in total, exceed the contribution limit applicable in elections under the Act. New York City Administrative Code §3-703(1) (f) 1; Campaign Finance Board Rule 1-04(h) 2.
Rule 1-04(h) provides that aggregate contributions from the following contributors are subject to a single contribution limit:
(1) a corporation and any parent, subsidiary, or affiliated corporation, and any person or entity who or which controls the corporation...;3
(2) affiliated committees; and4
(3) any person or entity who or which establishes, maintains, or controls another entity and every entity so established, maintained, or controlled5.
For the period during which the two organizations were not affiliated, as described in Rule 1-04(h), contributions received from them during that period will not be aggregated and thus not subject to a single contribution limit under the Act. The opinion request implies and the Board presumes that the two organizations were not in any way affiliated within the meaning of Rule 1-04(h) until December 1991. The opinion request itself does not present sufficient information to permit an independent evaluation by the Board of the question whether the organizations referred to in this case were affiliated before the merger.
Contributions received from these organizations and the new entity created in December 1991 must, however, be aggregated under the single contribution limit applicable under the Act beginning at the time the organizations became affiliated. Thus, if the aggregate contributions received before the organizations became affiliated equal or exceed the amount of the contribution limit, the candidate's authorized committees may not accept any contributions for the same elections from the new entity.
Finally, contributions from all three organizations must be noted as "affiliated" on Campaign Finance Board forms, accompanied by a memorandum if necessary to explain any apparent over-the-limit contribution.
NEW YORK CITY CAMPAIGN FINANCE BOARD
1 A single limit applies to contributions received for the primary and general elections held in the same calendar year. Administrative Code §3-703(1) (f).
2 See also Advisory Opinion No. 1989-38 (July 24, 1989) (now codified as Rule 1-04(h) (1) and (3)); Advisory Opinion No. 1989-52 (October 26, 1989) (interpreting former Board Rule 102(n), now codified as Rule 1-04(j); disclosure pursuant to Advisory Opinion No. 1989-52 is no longer required pursuant to Rule 3-03(f) (3)).
3 A person or entity is considered to control a corporation when that person beneficially owns, holds, or has the power to vote stock constituting more than fifty percent of the combined voting power of all classes of stock in the corporation. Rule 1-04(h) (1). The terms parent, subsidiary, and affiliated corporation are defined in Rule 1-02.
5 Rule 1-04(h) (3) set forth the factors for determining whether a person or entity establishes, maintains, or controls another entity.