Legislature(1993 - 1994)
02/24/1994 08:00 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 394 - UNIFORM LIMITED PARTNERSHIP ACT UPDATE Number 018 TIM BENINTENDI, STAFF, REPRESENTATIVE CARL MOSES, Prime Sponsor of HB 394, presented the sponsor statement. He said HB 394 completes the upgrade of the Uniform Limited Partnership Act, Title 32, by adopting the recommended uniform rule of the National Conference of Commissioners on Uniform State Law. He said HB 394 regards the form of registration or certification of limited partnerships. Section 1 reduces the amount of information which must be provided. MR. BENINTENDI stated the language currently on the books dates back to 1917 and needs to be upgraded; the bulk of Title 32 was upgraded in 1992. The legislature, at the time, adopted the National Conference's 1976 rewrite of Limited Partnership Law with amendments made to it from 1985. This process was done except the portion dealing with certification because of a conflict between the use of the long form, currently being used, or the short form. The sponsor of the bill did finally agree to the short form; however, it was too late to amend the bill. MR. BENINTENDI stated in 1993, HB 112 was submitted, which upgraded the certification requirements, passing both houses. At the end of session, however, Senator Steve Rieger amended HB 112 based on personal experience. Legal Services and House Rules determined the amendment would not hurt the bill, and HB 112 passed with the amendment. MR. BENINTENDI found out, over time, that the amendment would have caused problems. He referred to a letter from David Shaftel, dated January 10, 1994, which articulated the two main problems the amendment created. (A copy of this letter is on file.) First, he said, the amendment would have caused the elimination of some creditor protection benefits. Secondly, there would have been a denial of the state tax reduction for those limited partnerships that are formed to manage estates. He stated Mr. Shaftel reiterated support for the original HB 112 from the 1993 session and also the reintroduction of that bill in the 1994 session, HB 394. MR. BENINTENDI said HB 394 had been introduced to complete the upgrade of the Limited Partnership Act, without the Rieger amendment from 1993. He stated the House Labor & Commerce Committee has successfully passed HB 394 out of that committee. MR. BENINTENDI urged the passage of HB 394 from the House State Affairs Committee. He noted ART PETERSON, UNIFORM LAW COMMISSIONER, was also present to answer more technical questions from the committee. Number 125 REPRESENTATIVE KOTT questioned if MR. BENINTENDI had spoken with Senator Rieger to ensure he would not offer the same amendment again. Number 129 MR. BENINTENDI responded yes, Senator Rieger would not amend HB 394 again. In 1993, there had not been a problem until meeting with the Bar Association, which specifically deals with these issues, and they noted problems for their clients. MR. BENINTENDI noted that Senator Rieger does have concerns; however, he understands his amendment got beyond what he was hoping to do. He said Senator Rieger does support HB 394. Number 152 CHAIR VEZEY introduced ART PETERSON as the next person to testify. Number 158 ART PETERSON, DILLON & FINDLEY ATTORNEY, UNIFORM LAW COMMISSIONER, stated the members of the National Conference range from private practitioners, to government attorneys, judges, law professors, etc. He said HB 394 would complete the update of current law, which has not been altered since 1917. The main point of HB 394 is the simplification of what appears on the certificate of limited partnership. The partnership agreement and the certificate are the two significant documents in a limited partnership. The agreement creates the entity of the partnership, papers are filed, and the certificate is received. The current long form certificate requires information which is no longer feasible. When limited partnerships began, they were contemplated as a small entity with a limited number of people; a compromise between the corporation concept and the partnership concept. Corporation concept means all the share holders have a limited liability. Partnership concept means all the partners have general liability. Limited partnership combines both general partners, whose name is important to lenders and investors, and limited partners. The general partners will continue to appear on the certificate, but oftentimes thousands of limited partners who trade their shares daily will not be. MR. PETERSON stated there is no way all of these limited partners can possibly be transferred to the certificate. He said HB 394, Section 20, states the information will be located at partnership headquarters. For a foreign limited partnership, Section 18 requires the information. The only concern of the state in HB 394 would be the simplification of the amount of filings the state has to keep track of. He understood HB 112 passed overwhelmingly in 1993 by both Houses and the only reason for the veto by the governor was the addition of Senator Rieger's amendment. Because of the possibility the courts or the IRS might rule differently than the intent of HB 112, the practitioners who examined HB 112 felt the public may be disadvantaged by a bill which should provide a great deal of business benefit. The governor, therefore, vetoed HB 112 while still in favor of its' intent. The governor, executive branch, practicing attorneys throughout Alaska, and the Uniform Law Commissioners for Alaska all support HB 394. MR. PETERSON urged the committee to pass HB 394 from committee. Number 244 CHAIR VEZEY asked the full name of the National Conference. Number 248 MR. PETERSON answered the full name is the National Conference of Commissioners on Uniform State Laws (NCCUSL). The NCCUSL produces universally accepted things, such as Uniform Commercial Code and the Uniform Child Custody Jurisdiction Act, both of which govern the law in all jurisdictions. Alaska has enacted 64 uniform acts. Number 257 REPRESENTATIVE G. DAVIS responded that HB 394 sounded like a definite must. Number 263 CHAIR VEZEY reiterated MR. PETERSON was endorsing HB 394. He stated he had not received any negative comments on HB 394. CHAIR VEZEY asked if Alaskans had an advantage in having a limited partnership act in conformity with other states. Number 274 MR. PETERSON responded that Alaska would have an advantage. Alaska is currently under an antiquated system, even with the amendments, and not having the certification process upgraded puts Alaska behind. He stated, "outside money is not going to come into a state that has an antiquated system of such significance. Secondly, Alaskans who want to ... get the benefit of this form of business entity, will not be able to do so. They can go down to Seattle [and] create their limited partnership." He said HB 394 will promote activity in Alaska and the interstate exchange because partnerships, limited partnerships, and corporations do not live within single state boundaries. Number 288 CHAIR VEZEY clarified it was MR. PETERSON'S opinion that because of the state of Alaska's laws, the state has not had a lot of limited partnership formations or participation. Number 291 MR. PETERSON said he was not an expert, but he was sure the laws have been a deterrent. He felt HB 394 would benefit Alaskans substantially. Number 299 REPRESENTATIVE ULMER clarified that HB 394 is exactly the same bill as HB 112, which passed unanimously on the House floor in 1993. Number 302 MR. PETERSON replied there are four changes, all of which are time changes. Number 303 REPRESENTATIVE ULMER clarified there are no substantive policy changes. Number 305 MR. PETERSON said REPRESENTATIVE ULMER was correct. Number 306 CHAIR VEZEY understood there had been changes. Number 307 MR. PETERSON replied with examples of a few changes. The lead in lines are all different because the anticipated effective date of the comprehensive amendment, which read July 3, 1993, is now in the past. The effective date is now immediate. He repeated all the changes are related to the fact that the comprehensive revision has already taken effect, whereas in 1933 it was still in the future. CHAIR VEZEY asked if the committee had a motion. REPRESENTATIVE ULMER moved to pass HB 394 from committee with individual recommendations, asking unanimous consent. Number 331 CHAIR VEZEY recognized the motion and announced HB 394 had passed from the House State Affairs Committee with individual recommendations. CHAIR VEZEY noted REPRESENTATIVES B. DAVIS and SANDERS were absent and all of the other committee members were concurring.
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