Legislature(1995 - 1996)
04/26/1995 03:22 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
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.