03/12/1998 01:37 PM Senate L&C

                                                                               
            SB 329 - INVESTMENT CLUB LICENSE EXEMPTION                         
                                                                               
CHAIRMAN LEMAN called the Senate Labor and Commerce Committee                  
meeting to order at 1:37 p.m. and announced SB 329 to be up for                
consideration.                                                                 
                                                                               
MS. ANNETTE KREITZER, Staff to the Senate Labor and Commerce                   
Committee, said this legislation was introduced because of a                   
discrepancy in how Alaska statutes are interpreted.  Mr. Floyd                 
Damron, Alaska Regional Council and National Association of                    
Investors Corporation, contacted them regarding this issue saying              
they had been advised that they need to purchase a business license            
to be able to be an investment club in Alaska.  That's not the case            
in other states.  Alaska is the sole exception to that.                        
                                                                               
MR. FLOYD DAMRON, Co-President, Alaska Council of the National                 
Association of Investors Corporation, said they are a newly formed             
council that represents 112 investment clubs in Alaska with about              
1,500 - 1,600 Alaska residents as members.  Their national                     
organization has about 36,000 clubs made up of about 600,000                   
people.  He explained that the primary purpose of the Alaska                   
Council and investment clubs is educational.  A group of friends               
get together with a small amount of money, so they can learn how to            
invest in the U.S. stock market.  The Securities and Exchange                  
Commission does not view this type of investment club as being                 
securities dealers or brokers.                                                 
                                                                               
MR. DAMRON said they are uncertain as to whether or not they need              
to have a business license.  Polls of investment clubs indicated               
most of them have not purchased business licenses and they,                    
therefore, think that there is an exemption.  He didn't think there            
would be any significant decrease in monies to the State of Alaska             
without licensing.                                                             
                                                                               
MS. CATHERINE REARDON, Director, Division of Occupational                      
Licensing, said they have no opposition to this bill.  She said                
they have given conflicting answers to investment clubs about                  
whether or not they need business licenses.  Part of the problem               
has been that the definition of business is extremely difficult for            
staff and the public to understand.  She thought it would be a good            
idea to clarify it in the future.  There are only a couple of                  
investment clubs that hold business licenses.  Therefore, the                  
fiscal note shows $300 in lost revenue, but it may be less because             
of her Division giving conflicting advice.  She would feel                     
comfortable making a $0 fiscal note, so the bill would not need an             
extra committee stop.                                                          
                                                                               
CHAIRMAN LEMAN said he thought it would be helpful if she could                
provide a revised fiscal note.                                                 
                                                                               
MS. REARDON said she also had a revised definition of "business" to            
offer "engaging or offering to engage in a trade, profession, or               
activity with a goal of receiving a benefit in exchange for                    
provision of good services or property.  Business does not include             
the following activities...(include the exemptions that exist in               
law)" and add to that the exemption for investment clubs and the               
existing exemption for giving or supplying services as an employee,            
and, finally, the current exemption for giving or furnishing of                
goods and services by a person who does not represent to be                    
regularly engaged in those activities.                                         
                                                                               
CHAIRMAN LEMAN asked if that definition would make it easier to                
administer her Division.                                                       
                                                                               
MS. REARDON said it would, because it would delete language like               
"calling or vocation."  The whole world is business technically in             
this definition.                                                               
                                                                               
Number 172                                                                     
                                                                               
SENATOR HOFFMAN noted that fishermen are included as requiring a               
business license, but then later they are exempt.                              
                                                                               
MS. REARDON explained that fishermen are one of the current                    
exemptions.  She also noted that they would want to exempt liquor              
sales from business, not a liquor license.                                     
                                                                               
SENATOR MACKIE said he wasn't opposed to a rewrite.                            
                                                                               
CHAIRMAN LEMAN said they could send a proposed committee substitute            
to the next committee of referral with the suggestion to work with             
Ms. Reardon on the changes.                                                    
                                                                               
SENATOR MACKIE moved to pass SB 329 from Committee with the                    
accompanying fiscal note with individual recommendations.  There               
were no objections and it was so ordered.