Legislature(2017 - 2018)HOUSE FINANCE 519
05/09/2017 01:30 PM FINANCE
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HOUSE BILL NO. 124 "An Act relating to corporations, including benefit corporations, and other entities; and providing for an effective date." 2:29:39 PM Co-Chair Foster MOVED to ADOPT Amendment 2 (copy on file): Page 15, following line 2: Insert a new section to read: "Sec. 10.60.725. Reliance by third parties. (a) A person who, in good faith, enters into a transaction with a benefit corporation may assume without inquiry that the transaction, and each action or inaction by any director or officer of the benefit corporation giving effect to the transaction, does not conflict with the benefit corporation's general public benefit purpose or specific public benefit purpose. (b) Nothing in this section exempts a covered financial institution from identifying and verifying the beneficial owner of a legal entity that is a customer as required under a federal or state law or regulation. In this subsection, "covered financial institution" has the meaning given in 31C.F.R.1010.605." Representative Wilson OBJECTED for discussion. Co-Chair Foster invited his staff to the table to explain the amendment. JANE PIERSON, STAFF, REPRESENTATIVE NEAL FOSTER, explained that Amendment 2 was the safe harbor amendment which had been offered before. The language had been corrected. The amendment operated as a safe harbor for parties that entered into contractual relationships with benefit corporations. It prevented third parties from being able to assume a contract, made sure the contract did not conflict with any public benefit goals, and provided assurances that the contract would be enforced. The amendment was offered to provide contractual certainty to third parties dealing with benefit corporations. Ms. Pierson continued that absent the proposed language, third parties might feel compelled to make an independent assessment of whether the transaction satisfied the public benefit requirement. The analysis might increase the cost of completing transactions and make some transactions more difficult to complete. The safe harbor amendment would make it easier for benefit corporations to include third parties to transact business with them. Co-Chair Foster relayed the list of available testifiers. Representative Wilson WITHDREW her OBJECTION. There being NO OBJECTION, Amendment 2 was ADOPTED. Vice-Chair Gara reviewed the fiscal note: [FN1 - Fiscal Impact Note] Department: Department of Commerce, Community and Economic Development Appropriation: Corporations, Business and Professional Licensing Allocation: Corporations, Business and Professional Licensing OMB Component Number: 2360 Vice-Chair Gara reported that the cost reflected in the fiscal note was $27,400 in the first year with no other costs estimated in the future. The costs had to do with database changes to accommodate the new from of business. Representative Wilson noted that the costs were paid for through program receipts but wanted further detail. Vice- Chair Gara thought the committee should defer to someone from DCCED. JANEY HOVENDEN, DIRECTOR, DIVISION OF CORPORATIONS, BUSINESS AND PROFESSIONAL LICENSING, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, responded that fees would be spread across corporations' business licensing revenues. Representative Wilson asked how much money was in the fund that was not being utilized. Ms. Hovenden did not have the exact dollar amount but relayed that any of the excess revenues went back into the general fund. She estimated the dollar amount to be about $6 million. Co-Chair Seaton MOVED to report CSHB 124 (FIN) out of Committee with individual recommendations and the accompanying fiscal note. Representative Wilson OBJECTED. A roll call vote was taken on the motion. IN FAVOR: Gara, Grenn, Stutes, Kawasaki, Ortiz, Thompson, Seaton, Foster OPPOSED: Tilton, Wilson, Pruitt The MOTION to REPORT OUT CSHB 74(FIN) PASSED (8/3). CSHB 74(FIN) was REPORTED OUT of Committee with a "do pass" recommendation and with a previously published fiscal impact note: FN1(CED).