Parliamentary and election law is not only relevant to politicians. Many companies and businesses will wish to consider the impact of different election outcomes with their clients and counterparties. Other businesses may wish to circulate research papers to a wider audience. Some businesses may wish to actively participate in the political debate and/or make donations. All of these activities may be constrained by UK election law.
Many businesses are in the habit of making donations to political parties, on a one-off or regular basis. There are complex laws governing political donations, who they can be made by, when they need to be registered, and what documentation needs to be completed.
Government Relations and Lobbying
Many businesses have dealings with the government in the course of their work. Some depend on the public sector to make decisions affecting their work, and will make representations to public officials through professional government relations agencies or otherwise. Since the entry into force of the Transparency of Lobbying, Non-party Campaigning and Trade Union Administration Act 2014, consultant lobbying without prior registration, with some exceptions for specific circumstances, can be a criminal offence.
Where the work of a business is adversely affected by the decisions of a public sector body, it is open to the business to bring a legal claim against that body for judicial review. This involves making an application to the High Court for permission to judicially review the relevant public authority’s decision. If permission is granted, the court will then scrutinise the decision-making process and ensure that the decision was lawfully made.
Public authorities’ decisions can be quashed, or set aside, on the grounds that they were irrationally made, tainted by apparent bias, tainted by defects in the process followed by the decision-maker, or the decision was made for an improper purpose or taking into account irrelevant considerations, among others. A successful judicial review can see the respondent public authority ordered to pay the legal costs of the applicant business.
In the period leading up to an election, public authorities are under what has come to be known as ‘purdah’. To avoid incumbent administrations, national or local, enjoying the advantage of being able to use the resources of the authority they are responsible for running to benefit them electorally, public authorities suspend using elected politicians as their public face. Additionally, during this period, elected politicians are advised to “observe discretion” and defer major decisions on policy, commercial contracts or senior public appointments on which a new administration might take a different view from the present administration. These temporary changes to how the government operates can have a significant impact on businesses dealing with government.
Restrictions on political expenditure by businesses
Expenditure by businesses that can reasonably be regarded as intended to promote or procure electoral success at any relevant election for:
- a particular political party or parties;
- one or more political parties who advocate (or do not advocate) particular policies, or who fall within a particular category; or
- candidates who hold (or do not hold) particular opinions or who advocate (or do not advocate) particular policies or who otherwise fall within a particular category
is subjected to strict limits and regulation, and breaching these can result in criminal liability.
The Companies Act contains provisions regulating political donations and expenditure by companies. Donations over a £5,000 threshold are required to be authorised by a shareholders’ resolution and reported to shareholders. Any breach of the Companies Act rules can result in personal liability for directors. Therefore, companies making political donations or undertaking expenditure which could be regarded in law as having an impact on an election, must ensure they have the appropriate authorisations in place and seek specific advice.
Businesses making political donations, dealing with government officials, lobbying public authorities, considering challenging a decision of a public authority, or otherwise requiring advice on parliamentary and electoral law should get in touch with our team of specialists with decades of experiencing this very niche field. Call 020 7803 3999 and ask for Gerald Shamash, Kevin Bonavia or Axel Landin.