Legislature(1995 - 1996)

04/26/1995 03:22 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
 HB 251 - NATIVE CORPORATIONS                                                
                                                                               
 Number 116                                                                    
                                                                               
 REPRESENTATIVE ROKEBERG moved to rescind the committee's action               
 on tabling HB 251.                                                            
                                                                               
 CHAIRMAN KOTT said there is a motion to rescind the committee's               
 action in tabling HB 251.                                                     
                                                                               
 REPRESENTATIVE ROKEBERG said it is rescinding the tabling.  He                
 said he would move to take it off the table.                                  
                                                                               
 CHAIRMAN KOTT said probably the appropriate motion would be to                
 move to untable.  He explained there is a question as to which                
 motion Representative Rokeberg wants.  He said the motion to                  
 untable is not debatable.  To rescind the committee's action is               
 debatable.                                                                    
                                                                               
 REPRESENTATIVE ROKEBERG said he wishes to rescind the committee's             
 action in tabling.                                                            
                                                                               
 REPRESENTATIVE KIM ELTON said he isn't interested in debating it.             
 He stated it doesn't matter which motion is made.  However, he                
 noted he had a question of Representatative Rokeberg.  He asked               
 why the motion is being made now.  He said it seems to him that a             
 message has been sent.  The bill was put aside for awhile and now             
 the bill is being brought up in a point in time when those who                
 are most interested in the bill aren't in the room.                           
 Representative Elton said it seems sudden to him.                             
                                                                               
 REPRESENTATIVE ROKEBERG said he believes the committee was at a               
 point, at the last meeting when the bill was under consideration,             
 to take a vote when the committee lost a quorum.  He said as he               
 recalls that was the reason the committee didn't vote at that                 
 time.  However, there is a question as to the nature of the exact             
 document that the committee would vote on.                                    
                                                                               
 CHAIRMAN KOTT said he doesn't believe there was a question as to              
 which document the committee would have moved had they had the                
 quorum to move it.  He referred to Representative Elton's                     
 question of "why now," and said, "Why not now?"  He said the                  
 issue was debated.  He noted public testimony wasn't taken during             
 the last two hearings on the measure.  There is nothing that the              
 public could have offered.  Chairman Kott noted there is a                    
 representative from the Division of Banking, Securities and                   
 Corporations, Department of Commerce and Economic Development, in             
 attendance if there are any questions.  He asked Representative               
 Rokeberg which motion he desires to make.                                     
                                                                               
 Number 168                                                                    
                                                                               
 REPRESENTATIVE ROKEBERG moved to untable HB 251.                              
                                                                               
 CHAIRMAN KOTT said there is a motion to untable, bring it off the             
 table, HB 251.  He said that motion is not debatable.  He asked               
 if there was an objection.                                                    
                                                                               
 REPRESENTATIVE ELTON objected.                                                
                                                                               
 Number 182                                                                    
                                                                               
 A roll call vote was taken.  Representatives Kott, Rokeberg,                  
 Kubina and Sanders voted in favor of the motion.  Representative              
 Elton voted against the motion.  So HB 251 was before the                     
 committee.                                                                    
                                                                               
 REPRESENTATIVE GENE KUBINA asked for a copy of the bill that was              
 before the committee.                                                         
                                                                               
 A brief at ease was taken at 3:32 p.m.  CHAIRMAN KOTT called the              
 meeting back to order at 3:34 p.m.                                            
                                                                               
 CHAIRMAN KOTT announced the committee has been provided with a                
 copy of the latest committee substitute (CS) for HB 251, Version              
 O, dated 4/24/95.  He said the CS increases the petition numbers.             
 He said 15 percent of the shareholders must sign a petition if                
 the corporation has 500 or more shareholders.  If there are less              
 than 500, then the number is 25 percent.  There is a provision in             
 the bill that extends the time from the previous CS of 90 days to             
 180 days after filing.  He explained on line 21, the years were               
 increased from one to two years.  Chairman Kott said all the                  
 civil and legal penalties were removed.                                       
                                                                               
 Number 204                                                                    
                                                                               
 REPRESENTATIVE ROKEBERG moved Amendment 1, a conceptual                       
 amendment.  He explained that would be on page 2, line 15, after              
 the word "corporation" insert a "." and delete "within 180 days               
 after the filing."  Representative Rokeberg referred to line 21,              
 after the word "preceding" change "two" to "one".  Then change                
 the word "years" to "year".  He moved his amendment.                          
                                                                               
 CHAIRMAN KOTT asked Representative Rokeberg to divide the                     
 question and to deal each of the changes separately.                          
                                                                               
 CHAIRMAN KOTT recapped Amendment 1.  On page 2, line 15, after                
 the word "corporation" insert a "." and delete "within 180 days               
 after the filing."  REPRESENTATIVE ROKEBERG said that is correct.             
                                                                               
 CHAIRMAN KOTT said Amendment 1 has been moved and he would object             
 for the purpose of discussion.                                                
                                                                               
 Number 254                                                                    
                                                                               
 REPRESENTATIVE ELTON said he would prefer that the "two" to "one"             
 year was the first amendment, because that will affect the way he             
 will vote on the 180 day period.  For example, if the two year                
 period is maintained, he may prefer leaving the 180 days in.  He              
 said if chair and maker of the amendment doesn't object, maybe                
 the two amendments can be flipped.                                            
                                                                               
 REPRESENTATIVE ROKEBERG and CHAIRMAN KOTT stated they didn't                  
 object.                                                                       
                                                                               
 CHAIRMAN KOTT said Amendment 2 would be first.  He asked                      
 Representative Rokeberg to withdraw his motion.                               
                                                                               
 REPRESENTATIVE ROKEBERG withdrew his motion on Amendment 1.  He               
 then moved Amendment 2, line 21, after the word "preceding"                   
 change "two" to "one".  Then change "years" to "year".                        
                                                                               
 CHAIRMAN KOTT said there is a motion to move Amendment 2.  He                 
 asked if there was an objection.  Chairman Kott said he would                 
 object for the purpose of discussion.  He asked why the number of             
 years is being reduced from "two" to "one."                                   
                                                                               
 REPRESENTATIVE ROKEBERG said in the interest of only modifying                
 the existing corporate regulations (indisc.) corporations, it is              
 the sponsor's belief that this would be more readily acceptable               
 to all parties in order to move the bill along.  He asked for the             
 committee member's support.                                                   
                                                                               
 CHAIRMAN KOTT said he will maintain his objection.                            
                                                                               
 Number 254                                                                    
                                                                               
 REPRESENTATIVE ELTON said he believes the committee has done a                
 very good job reaching a middle ground, something that everybody              
 is starting to feel more comfortable with.  The committee has                 
 heard a lot of testimony.  He said he believes the people in his              
 district feels very strongly about one year rather than two                   
 years.  The issue that we are trying to get to is repetitive                  
 petitions or repetitive votes.  He believes this is acceptable to             
 both sides.  Representative Elton said he sees this as an attempt             
 to make it less onerous and, hopefully, smooth passage down the               
 road.                                                                         
                                                                               
 Number 263                                                                    
                                                                               
 CHAIRMAN KOTT referred to his objection and said he thinks that               
 when you start reducing the amount of time, such as from two                  
 years to one year, you provide a mechanism that would cause some              
 disruption within the corporation and interfere with their                    
 ability to enhance the position of the shareholders.  Every year              
 the shareholders can come back if they acquire the number of                  
 signatures and cause disruption within the corporation.                       
 Therefore, probably cause some concern among the board members                
 and their ability to do their assigned task.                                  
                                                                               
 REPRESENTATIVE ELTON said he believes the chairman has identified             
 a significant problem.  He said a majority of that problem comes              
 about when there is an annual meeting and things don't go the way             
 a shareholder would expect.  So the day after the annual meeting,             
 when a vote has been taken, they're on the street with a                      
 petition.  He said he thinks that is where most of the problem                
 occurs.  This provides for a one year cooling off period.  It is              
 his guess it would substantially meet the purposes to the                     
 repetitive petition.                                                          
                                                                               
 There being no further discussion on Amendment 2, a roll call                 
 vote was taken.  Representatives Rokeberg, Elton, Sanders and                 
 Kubina voted in favor of the motion.  Chairman Kott voted against             
 the motion.  So Amendment 2 was adopted.                                      
                                                                               
 Number 291                                                                    
                                                                               
 REPRESENTATIVE ROKEBERG moved Amendment 1.  CHAIRMAN KOTT                     
 objected for the purpose of discussion.                                       
                                                                               
 REPRESENTATIVE ROKEBERG said by removing this requirement, we                 
 would take away one of the most divisive issues that the                      
 committee heard in public testimony.  That was to set up a                    
 limiting time frame as to how long the petitions could be                     
 circulated.  He said it would return the petitioning process to               
 the existing statutory language.  He asked for the committee's                
 support.                                                                      
                                                                               
 CHAIRMAN KOTT said what he believes was done by changing two                  
 years to one year, and now taking away the time certain that the              
 shareholders have to collect the signatures, will place a great               
 degree of disruption within the corporation.  Now they would be               
 battling the petition and collection of those signatures for an               
 indefinite amount of time.  The committee has already, by                     
 adoption of the previous amendment, placed another problem in                 
 front of them.  He said he believes the committee is going in the             
 wrong direction.                                                              
                                                                               
 Number 313                                                                    
                                                                               
 REPRESENTATIVE ELTON said he believes the amendment is more of a              
 problematic amendment then the others.  There is the one year                 
 cooling off period.  He said he guesses that if the language is               
 kept in the bill, it would be guaranteeing that a divisive issue              
 will be back perhaps within a year and a half.  If you take that              
 away, that divisive issue may not be back on the table for two                
 years.  What is being done is the amount of time is being                     
 extended between the divisive votes.                                          
                                                                               
 CHAIRMAN KOTT said the divisive issue may never go away based on              
 having unlimited amount of time to collet signatures.  He said he             
 would maintain his objection.                                                 
                                                                               
 REPRESENTATIVE KUBINA said he has had communication from numerous             
 Native corporations and people involved with them.  What a lot of             
 them have realized is that they just have to have better                      
 communications.  A lot of them have solved this problem.                      
                                                                               
 Number 336                                                                    
                                                                               
 CHAIRMAN KOTT said one of the provisions was agreed to by one of              
 the members on the panel, it was one of the shareholders who said             
 this would be acceptable.  Obviously, there has been a change of              
 heart and it is no longer acceptable by some of the members in                
 the shareholder community.                                                    
                                                                               
 A roll call vote was taken.  Representative Elton voted in favor              
 of the amendment.  Representatives Kott, Sanders, Kubina and                  
 Rokeberg voted against the amendment.  So Amendment 1 failed to               
 be adopted.                                                                   
                                                                               
 Number 355                                                                    
                                                                               
 REPRESENTATIVE KUBINA said he has a problem he would like to                  
 discuss.  He referred to page 2, line 8, and read, "The notice                
 must state in detail the purpose of the special meeting and                   
 include a copy of the petition or request and all materials to be             
 used in connection with the solicitation."  Representative Kubina             
 said his problem is with the wording "and include a copy of the               
 petition or request and all materials to be used in connection                
 with the solicitation."  He said he understands that one of the               
 biggest problems was that they are trying to get some kind of                 
 mechanism so that what gets put out is factual.  This sounds like             
 they have to do this all at the beginning.  He said it seems this             
 is like a campaign and when you have a campaign, you may not have             
 everything at the beginning.  He said he was wondering if                     
 technically, could the corporation then use this to stymie their              
 free speech.                                                                  
                                                                               
 CHAIRMAN KOTT asked Larry Carroll to come forward.                            
                                                                               
 Number 375                                                                    
                                                                               
 LARRY CARROLL, Senior Securities Examiner, Division of Banking,               
 Securities and Corporations, Department of Commerce and Economic              
 Development, referred to Representative Kubina's concerns and                 
 said the point he raised is appropriate.  He explained it seems               
 to him that filing must be at the time that the petition is filed             
 and should include all materials which would then handicap people             
 if the course of the campaign needed to change and new materials              
 needed to be developed.  If materials weren't filed initially,                
 theoretically an objection could be raised.  Mr. Carroll referred             
 to material the department sent over and said it was suggested                
 that the notice be in detail for the purpose of a special meeting             
 and include a copy of the petition or request and stop right                  
 there so that they had some latitude of with what they would use.             
                                                                               
 Number 389                                                                    
                                                                               
 REPRESENTATIVE SANDERS said he agrees with those statements.  He              
 said things do develop like a campaign and change as you go                   
 along.  However, the things that come along later would still                 
 need to be submitted.                                                         
                                                                               
 MR. CARROLL said they have to file anything they use with his                 
 division.                                                                     
                                                                               
 REPRESENTATIVE SANDERS asked if it isn't in the bill, would they              
 still have to file with the division.                                         
                                                                               
 MR. CARROLL indicated they still would have to file with the                  
 division.                                                                     
                                                                               
 REPRESENTATIVE KUBINA referred to the last sentence and said if               
 they don't comply, the petition is invalid.  He said what he                  
 fears is we will see these people in court.  He said he thinks it             
 would be appropriate for him to move that on page 2, line 8, put              
 a "." after the word "request" and delete the rest of the                     
 sentence.                                                                     
                                                                               
 CHAIRMAN KOTT said it would then read, "The notice must state in              
 detail the purpose of the special meeting and include a copy of               
 the petition or request."  Delete the remaining portion of that               
 sentence which reads, "and all materials to be used in connection             
 with the solicitation."                                                       
                                                                               
 Number 410                                                                    
                                                                               
 REPRESENTATIVE ROKEBERG objected to the motion for the purpose of             
 discussion.  He said as the division has said it is necessary                 
 that the material be filed.  He said he thinks that is currently              
 the case.                                                                     
                                                                               
 REPRESENTATIVE KUBINA said his problem is it appears that once                
 they submit it, they can't use any other material because it says             
 that all materials to be used in connection with this campaign                
 has to be submitted at the beginning.  If they used a different               
 flyer and sent it out to everybody, according to the last                     
 sentence the corporation could argue that the whole thing should              
 be thrown out.                                                                
                                                                               
 REPRESENTATIVE ROKEBERG said it is his understanding that by                  
 providing all those materials, at least there is public                       
 disclosure.  There is no question about what they're using.                   
                                                                               
 CHAIRMAN KOTT asked Mr. Carroll if we're talking about providing              
 this to the corporation.                                                      
                                                                               
 MR. CARROLL said that is correct.  He said the division's                     
 requirement is that they be filed with them, and they (indisc.)               
 to our false and misleading standards and all the provisions of               
 the Securities Act, notwithstanding anything that is said in the              
 bill.  What they bill is saying is the corporation wants it in                
 its hands at the onset.  The division is saying that it has to be             
 filed with the division concurrent with distribution to                       
 shareholders.  That is what the Securities Act states.                        
                                                                               
 REPRESENTATIVE KUBINA asked if the documents would then be                    
 available to the corporations at that point as they are public                
 documents.                                                                    
                                                                               
 MR. CARROLL stated that is correct.                                           
                                                                               
 CHAIRMAN KOTT asked if the bill sponsor's staff want to make a                
 comment.                                                                      
                                                                               
 Number 435                                                                    
                                                                               
 TIM BENINTENDI, Legislative Assistant to Representative Carl                  
 Moses, said the provisions (indisc.) originally knowing that                  
 material was automatically submitted to the division, it was put              
 in to help blunt or maybe to help (indisc.) groups to do a little             
 self policing on the so called "false or misleading statements"               
 or anything that later might become fuzzy.  In the third hearing              
 (indisc.) bill, this topic was discussed and, except for a couple             
 of the large corporations, it was pretty much agreed that we                  
 could do without this since the material is submitted                         
 automatically and anybody can get it from the division.  The                  
 sponsor was happy to (indisc.).  He said Representative Moses                 
 would support that direction.                                                 
                                                                               
 REPRESENTATIVE ELTON asked Mr. Carroll if all Alaska Native                   
 Claims Settlement Act (ANCSA) corporations file with the Division             
 of Banking, Securities and Corporations.  He asked if the small               
 ones don't need to file.  Representative Elton asked if we would              
 only be talking about the larger corporations with a certain                  
 number assets.                                                                
                                                                               
 MR. CARROLL said Representative Elton is correct.  The threshold              
 is corporations having $1 million in assets and the number of                 
 shareholders amounts to 500 or above.                                         
                                                                               
 REPRESENTATIVE ELTON said what we're talking about is only for                
 certain (indisc.)                                                             
                                                                               
 Number 456                                                                    
                                                                               
 REPRESENTATIVE KUBINA said the other side of that coin is that                
 the problem doesn't seem to be with the small corporations, it                
 seems to be with the larger ones that are asking for the changes.             
 He said what he is hearing from the smaller corporations is that              
 they don't want any change.                                                   
                                                                               
 REPRESENTATIVE ROKEBERG said it should probably be left in there              
 because there is no other disclosure material from the smaller                
 corporations.  This is the only means for disclosure.                         
                                                                               
 Number 465                                                                    
                                                                               
 MR. BENINTENDI said he doesn't remember it being specifically                 
 being discussed with Representative Moses, but suspected that he              
 would support the removal of that as well as it ties so closely               
 to the other.                                                                 
                                                                               
 REPRESENTATIVE KUBINA said the last sentence could be removed and             
 it would say, "any subsequent material produced."                             
                                                                               
 MR. CARROLL said the committee could possibly adopt language that             
 says, "concurrent with distribution."                                         
                                                                               
 REPRESENTATIVE KUBINA said leave that (indisc.) in all materials              
 and all subsequent...  He asked Mr. Carroll to restate his                    
 language.                                                                     
                                                                               
 MR. CARROLL said, "The notice must state in detail the purpose of             
 the special meeting and include a copy of the petition or request             
 and all materials to be use in connection with the solicitation,              
 concurrent with their distribution to shareholders."                          
                                                                               
 Number 485                                                                    
                                                                               
 CHAIRMAN KOTT said Representative Kubina's new Amendment 3 would              
 remove the "." after solicitation and insert the words                        
 "concurrent with their distribution to shareholders."                         
                                                                               
 REPRESENTATIVE KUBINA indicated that is correct.                              
                                                                               
 CHAIRMAN KOTT said there is a motion to move Amendment 3.  He                 
 asked if there was objection.                                                 
                                                                               
 REPRESENTATIVE ELTON said he almost prefers the way it was the                
 first time round.  What the committee is doing is creating                    
 another bureaucratic hoop that the shareholders, the circulators              
 of the petitions, need to go through.  Currently, they are only               
 required to file those materials with the division.  The                      
 amendment would require another hoop for them to go through and               
 create another bureaucratic step upon which they could stumble.               
 He explained that is his observation and noted he doesn't feel                
 strongly about it.                                                            
                                                                               
 CHAIRMAN KOTT asked Representative Elton if he is removing his                
 objection.  REPRESENTATIVE ELTON said he is removing his                      
 objection.                                                                    
                                                                               
 There being no objection, Amendment 3 was adopted.                            
                                                                               
 Number 499                                                                    
                                                                               
 REPRESENTATIVE KUBINA asked who makes the determination as to                 
 whether the information is valid or not.  Somebody has to be a                
 rule maker.  He asked if the department would be doing that.                  
                                                                               
 MR. CARROLL said not for any corporations.  He said the petition              
 (indisc.) requests and materials for corporations less than 500               
 shareholders are not going to pass through the division's hands.              
 They are not going to be in a position to adjudicate whether                  
 those things were filed timely with the corporation or whether                
 they were not.  With respect to the larger corporations, it would             
 seem to him that the moving party will be the corporation that is             
 going to make the allegation that these things didn't occur.  So              
 it would be their water to carry.  Mr. Carroll said the statutory             
 language is very clear in that the petitioner request is invalid,             
 on its face.  He said he doesn't know who does make that                      
 determination.                                                                
                                                                               
 Number 512                                                                    
                                                                               
 REPRESENTATIVE ROKEBERG suggested that it would be the courts.                
                                                                               
 REPRESENTATIVE KUBINA said he thinks that Representative Rokeberg             
 is right which is what bothers him.  REPRESENTATIVE ROKEBERG said             
 that is what they are for.                                                    
                                                                               
 REPRESENTATIVE ELTON said it probably would be the court.  The                
 180 day provision was left in the bill.  There is no provision                
 that the 180 day clock stops ticking while somebody goes to                   
 court.  He said it seems to him that what the committee is doing              
 is not just giving a corporation a hammer, it is giving them an               
 ax.                                                                           
                                                                               
 Number 521                                                                    
                                                                               
 REPRESENTATIVE ELTON moved that the last sentence in paragraph                
 (m) on page 2, line 11, beginning with "If a petition..." through             
 line 13, be deleted.                                                          
                                                                               
 CHAIRMAN KOTT asked if there was an objection to Representative               
 Elton's motion.                                                               
                                                                               
 REPRESENTATIVE ROKEBERG objected for the purpose of discussion.               
 He said his concern is without the last sentence, the entirety of             
 subsection (m) is not enforceable.  He said he would like the                 
 sponsors opinion.                                                             
                                                                               
 MR. BENINTENDI said he thinks that the sponsor would support that             
 motion.                                                                       
                                                                               
 REPRESENTATIVE KUBINA said he doesn't think that this would stop              
 them from going to court if the corporation still thinks that                 
 something was done illegally and the laws were (indisc.)  He said             
 the court still (indisc.) enforce the law.  What it does do is                
 say the whole thing is invalid.  The court may say, "Well, this               
 minor little fragment (indisc.) but that doesn't (indisc.) the                
 whole thing."                                                                 
                                                                               
 REPRESENTATIVE ROKEBERG withdrew his objection.                               
                                                                               
 CHAIRMAN KOTT asked if there was further objection in deleting                
 the language.  Hearing none, it was so ordered.                               
                                                                               
 Number 542                                                                    
                                                                               
 REPRESENTATIVE ROKEBERG moved that CSHB 251(L&C), Version O, as               
 amended, be adopted with any accompanying fiscal notes, and                   
 individual recommendations, be passed out of the House Labor and              
 Commerce Committee.  Hearing no objection, it was so ordered.                 

Document Name Date/Time Subjects