SB 6358
In CommitteeSenate
Corporate powers
Concerning corporate powers.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill eliminates broad corporate powers in Washington and restricts corporations to only those powers specifically granted in state law—particularly banning them from political spending on candidates, parties, or ballot measures. If a corporation violates these limits, it risks losing its legal protections like limited liability. The law also extends state jurisdiction to out-of-state corporations involved in Washington elections.
- Repeals all general corporate powers previously granted under state law—corporations can only exercise powers explicitly granted in Titles 23, 23B, and 24 RCW.
- Prohibits corporations from engaging in election activity (supporting/opposing candidates or parties) or ballot measure activity (supporting/opposing ballot measures).
- Declares that any corporate action outside granted powers is ultra vires and void, and that the corporation forfeits key protections—including limited liability and perpetual duration—if it violates this rule.
- Deems out-of-state corporations that fund or direct election or ballot measure activity in Washington as 'transacting business' in the state, making them subject to state jurisdiction.
- Protects pre-existing contracts and obligations from being invalidated by the new rules.
Who is affected
- Washington-based corporations and similar business entities — Corporations (including LLCs, nonprofits, and partnerships) formed under Washington law would lose general corporate powers unless specifically granted by law; they would also lose ability to engage in election or ballot measure activity without risking loss of corporate protections like limited liability.
- Out-of-state corporations — Out-of-state corporations that fund or direct election or ballot measure activity in Washington would be treated as doing business in the state, making them subject to state jurisdiction and enforcement.
- Political candidates, parties, and ballot measure committees — Political candidates, parties, and ballot measure campaigns may see reduced corporate funding if corporations are barred from political spending under this law.
- Business partners, lenders, and investors — Creditors, investors, and contract counterparties may face increased risk if a corporation loses its limited liability protection due to ultra vires actions.
Pro/Con Analysis
Potential Benefits (5)
By banning corporate political spending and imposing severe penalties—including loss of limited liability—for violations, the bill aims to reduce corporate influence in elections and ballot measures, potentially increasing public trust in electoral integrity.
Public SafetyPeopleRef: Sec. 3(2)(c), Sec. 3(3)Expanding jurisdiction over out-of-state corporations engaging in Washington elections strengthens the state’s ability to enforce disclosure, transparency, and campaign finance laws, enhancing accountability to local voters.
Local GovernmentPeopleRef: Sec. 3(4)The bill explicitly includes LLCs, nonprofits, and partnerships within the definition of “corporation,” ensuring that entities often used for political advocacy are subject to the same restrictions—promoting equal treatment and reducing regulatory arbitrage.
Rights & LibertiesPeopleRef: Sec. 3(2)(a)-(e), Sec. 1(3)Safeguarding pre-existing contracts and obligations prevents retroactive disruption of legitimate business relationships, providing some stability during the transition to the new regulatory regime.
Business & EmploymentPeopleRef: Sec. 3(5)Repealing broad corporate powers may encourage more targeted, transparent, and democratically legitimate corporate engagement—though the penalty structure overshadows this benefit for most stakeholders.
Business & EmploymentLean peopleRef: Sec. 3(2)(a)
Potential Concerns (5)
Eliminating general corporate powers and imposing ultra vires penalties—including loss of limited liability—creates significant legal uncertainty for business operations, potentially deterring investment and increasing compliance costs for all entity types, including small businesses.
Business & EmploymentRef: Sec. 3(3)Loss of limited liability for corporations engaging in prohibited political activity exposes individual owners, including sole proprietors and small business owners operating as LLCs, to personal financial risk—including seizure of personal assets—over political speech, even if unintentional.
Business & EmploymentRef: Sec. 3(3)Expanding jurisdiction over out-of-state corporations based solely on political spending creates complex compliance burdens for regional or national businesses, especially small firms with limited legal resources, potentially deterring cross-border operations.
Business & EmploymentRef: Sec. 3(4)Punishing political speech by revoking core legal protections (limited liability, perpetual existence) creates a chilling effect on corporate participation in democracy and may raise First Amendment concerns under current federal jurisprudence.
Rights & LibertiesRef: Sec. 3(3)While preserving pre-existing contracts, the bill does not clarify how ongoing obligations (e.g., loan covenants, shareholder agreements) will be interpreted under ultra vires constraints—potentially triggering defaults or disputes over enforceability.
Business & EmploymentRef: Sec. 3(5)
Who Is Most Affected
Washington-based corporations (especially LLCs and S-corps) face heightened legal risk: if they engage in political speech—even inadvertently—they could lose limited liability and face personal liability for owners. This disproportionately impacts small and medium-sized businesses with limited legal oversight.
Out-of-state corporations will now be subject to Washington jurisdiction if they fund political activity in-state, increasing compliance costs and exposure to state enforcement actions—especially burdensome for small regional firms without in-house legal teams.
Political candidates, parties, and ballot measure committees may receive less corporate funding, potentially reducing campaign resources—but this could also reduce perceived corporate dominance in politics and increase grassroots fundraising.
Lenders and investors may face higher risk if a borrower or portfolio company loses limited liability due to ultra vires political activity, potentially leading to tighter credit terms or higher interest rates for small businesses.
Voters and civic organizations may benefit from reduced corporate spending in elections, potentially increasing the influence of individual donors and local issues—but this depends on enforcement and whether corporations shift spending to other channels (e.g., independent expenditures under new interpretations).