Legislature(1999 - 2000)
03/10/1999 08:05 AM House URS
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 101 - CORPORATE PUBLIC UTILITY REINSTATEMENT CHAIRMAN HUDSON announced the first order of business is HB 101, "An Act relating to the reinstatement of corporations that are public utilities; and providing for an effective date." CHAIRMAN HUDSON explained at the last hearing of HB 101 there were questions of the prime sponsor, Representative Carl Morgan, who was not there. He is here today, and called him. Number 0135 REPRESENTATIVE CARL MORGAN, Alaska State Legislature, apologized for not being there at the last meeting. House Bill 101 is a vehicle to allow the Department of Commerce and Economic Development the discretion to reinstate as a corporation a local telecommunication company that services several communities in Western Alaska. After reviewing the facts and circumstances that surround the issue, he hopes that the committee members will agree this measure warrants attention and support. The following are the facts surrounding the involuntary dissolution of Bush-Tell, Incorporated (Bush-Tell): - Bush-Tell is a small, rural, local telephone company located in Aniak, Alaska which provides service to ten small villages in Western Alaska. - Bush-Tell was incorporated on November 10, 1969 and has been providing telecommunication service ever since 1970. - Mr. Harry Colliver, Jr, President and sole shareholder, was recently informed that Bush-Tell is no longer registered as a corporation because the registered agent failed to follow the proper procedures for resigning as a registered agent resulting in the involuntary dissolution of Bush-Tell. - Since the involuntary dissolution, Bush-Tell has observed all the corporate procedures required by its bylaws and state laws, including board of director meetings and paying corporate income taxes. REPRESENTATIVE MORGAN further noted, for the record, he drafted the bill on a narrow bias because, according to his understanding, it is the way the legislature has handled these types of issues in the past. He feels this is the best approach. He urged the committee members to support the bill and move it out of the committee without any amendments. CHAIRMAN HUDSON announced, for the record, the arrival of Representative Green. Number 0408 REPRESENTATIVE COWDERY asked Representative Morgan what has Bush-Tell changed to keep the same thing from happening again. REPRESENTATIVE MORGAN replied Bush-Tell hasn't done anything yet, because it hasn't been reinstated. He is sure, however, that Bush-Tell will not let this happen again. Number 0465 REPRESENTATIVE COWDERY asked Representative Morgan whether Bush-Tell will now be its own registered agent using its own address for receiving notifications. REPRESENTATIVE MORGAN replied yes. Number 0486 REPRESENTATIVE DAVIES asked to review what didn't happen that resulted in the involuntary dissolution. He wasn't at the last meeting. REPRESENTATIVE MORGAN deferred the question to Ashley Reed, Lobbyist for Bush-Tell. Number 0520 ASHLEY REED, Lobbyist for Bush-Tell, Incorporated, explained since 1969 Robert Colliver, Jr. has been the sole shareholder of Bush-Tell, Incorporated. A lawyer in Anchorage acted as the registered agent to handle corporate filings. That lawyer's life became more complicated and somewhere along the line his office closed and he didn't leave a forwarding address, even though it is required by law to notify the Department of Commerce and Economic Development of the resignation of a registered agent. This past year when Mr. Colliver contacted the department to register a new "d.b.a." (doing business as) he was informed of the involuntary dissolution. Apparently, the department sent a certified letter to the registered agent. The letter came back to the department and went into its file. Criticism has been expressed to the department and since then policies have been instituted to prohibit this type of thing from happening again in the future. Apparently, now, when a certified letter is returned, the department will actually track down listed board members. Number 0650 REPRESENTATIVE DAVIES asked Mr. Reed whether there are any corporate taxes or annual reports due that were not filed as the result of this. MR. REED replied Mr. Colliver has conducted his affairs not knowing that he is not a newly registered corporation. He just found out at the end of 1998. He has continued to hold board meetings, and pay federal and state corporate taxes. Number 0698 REPRESENTATIVE DAVIES stated, clearly, this bill verges on special legislation. It is obviously intended for a particular situation. He wondered why the legislature doesn't put a general reinstatement provision in statute to cover these types of circumstances. Number 0744 CHAIRMAN HUDSON stated the prime sponsor has asked that the bill stick to this particular subject. Number 0759 MR. REED stated, according to research, the last two times this has been done it related to village corporations. The department likes the narrow focus because it already is a requirement of law. The department wants corporations to follow the rules and frankly this is an extraordinary step that most corporations don't want to do. The department wants it to be an arduous process to ensure that everybody else follows the rules to the best of their ability. In the case of Bush-Tell, there is a unique set of circumstances because the registered agent left. The outcome would not be the same today because of policy changes within the department. Number 0852 REPRESENTATIVE DAVIES stated he doesn't see an automatic repealer in the bill, and asked whether the language would stay on the books. CHAIRMAN HUDSON replied yes. Number 0881 REPRESENTATIVE DAVIES stated he is troubled by this. He agrees that there ought to be some big hoops to jump through when these types of circumstances arise, but on the other hand, it is too much to put this type of language in statute. Clearly, it is a one shot affair, but he is not sure how it should be handled exactly. Number 0908 CHAIRMAN HUDSON noted at the last hearing there was discussion on expanding the bill to cover corporations in general. Number 0931 REPRESENTATIVE PORTER stated he agrees with Representative Davies. There should be a provision to repeal it out of the statutes, once it has become effective. CHAIRMAN HUDSON announced, for the record, the presence of Representatives Rokeberg and Berkowitz. CHAIRMAN HUDSON called on Dawn Williams from the Department of Commerce and Economic Development. Number 1005 DAWN WILLIAMS, Supervisor, Corporations Section, Division of Banking, Securities and Corporations, Department of Commerce and Economic Development, stated the division supports the bill. The division also supports a repealer in order not to clutter the statutes. The division does not support making a general change to cover all corporations, however. The Act of the division is modeled after the Model Business Corporation Act which allows for involuntary dissolution for the failure to file biennial reports and maintain registered agents. There is a two year period of reinstatement for every corporation and that period should stay. Number 1087 REPRESENTATIVE BERKOWITZ referred to AS 10.06.633(c) and read, "If, following a hearing, the commissioner determines the presence of neglect, omission, delinquency, or noncompliance providing grounds for involuntary dissolution under this section, the corporation may appeal to the superior court...". He asked Ms. Williams whether this avenue was pursued in this case. MS. WILLIAMS replied no. She doesn't have any record of that in Bush-Tell's file. Number 1123 REPRESENTATIVE ROKEBERG noted in this case the two years have elapsed. Number 1148 REPRESENTATIVE PORTER noted the appeal is if a corporation had felt something had been done improperly in relation to the requirements in statute. Obviously, that is not the case here. Number 1165 REPRESENTATIVE BERKOWITZ stated he reads the appeal to the superior court as a safety valve. REPRESENTATIVE PORTER noted that the legislature is the only branch of government that can make an exception to the law, not the courts. Number 1190 REPRESENTATIVE ROKEBERG noted that the Model Business Corporation Act refers to the secretary of state. He asked Ms. Williams whether a corporation has the right to appeal to the department rather than going to court. MS. WILLIAMS replied yes. A corporation has 60 days to request a hearing from the commissioner. REPRESENTATIVE ROKEBERG stated a request for reinstatement would be to the department and not to the court. MS. WILLIAMS said correct. REPRESENTATIVE ROKEBERG asked Ms. Williams whether that is in statute. MS. WILLIAMS replied, according to statute, if a corporation files a biennial report, pays taxes and/or penalties within 60 days, it can avoid dissolution. REPRESENTATIVE ROKEBERG stated his question related to the two-year provision, not the 60 days. MS. WILLIAMS stated a corporation can reinstate within two years after dissolution by following a biennial report, paying taxes and/or fees. There is a two-year period without going or going to court. Number 1288 REPRESENTATIVE ROKEBERG stated a compromise could be to extend the period of appeal to court. He would like to hear why Bush-Tell didn't go to court. CHAIRMAN HUDSON called on Heather Grahame, Attorney for Bush-Tell. Number 1335 HEATHER GRAHAME, Attorney, Dorsey and Whitney LLP, testified via teleconference from Anchorage. She noted that neither of the remedies are available for Bush-Tell because a request for a hearing has to be made within a 60-day period. In this case, Bush-Tell was involuntary dissolved in 1993, but didn't learn of it until 1998. In addition, there is no way for Bush-Tell to go to court because it is outside the two-year time period. The only remedy now is a legislative Act extending the reinstatement period to the end of this year. Under AS 10.06.965, there is a provision that gives the legislature the right to alter, amend or extend any part of Title 10 with respect to any company doing business within the state. This is the way the legislature has dealt with these types of issues in the past. Bush-Tell would rather have the issue resolved legislatively than go to court. She said, "If you can imagine, this is a public utility and it needs to get its corporate affairs in order as quickly as possible." Number 1444 REPRESENTATIVE DAVIES asked Ms. Grahame whether there is a prohibition against reestablishing a new corporation. MS. GRAHAME replied that was looked at, but it doesn't take care of the time period from 1993 to 1999, and Mr. Colliver would be exposed to all sorts of Internal Revenue Service (IRS) liabilities during that period of time. Even under the Model Business Corporation Act, the only remedy is a legislative one similar to HB 101 relating back to the point in time of dissolution. Number 1516 REPRESENTATIVE KOTT referred to AS 10.06.633(c) and noted that a copy of the dissolution "shall" be mailed to the registered agent. He asked Ms. Williams whether the change made by the division is internal policy or set in regulation. MS. WILLIAMS replied it is internal policy. It is not for notifying a corporation of its dissolution, however. In the past, biennial reports were sent to the registered agent, but the division found that many registered agents lost them. Therefore, the division started updating its files using the principal office address. If a report is returned now, one is then sent to the registered agent. Number 1634 CHAIRMAN HUDSON stated, in reading the bill, it is not necessary to broaden the bill's application. He asked that the chairman of the House Labor and Commerce Standing Committee consider the issue in his committee. He announced that the committee at this point has exhausted hearing the bill and called for a motion to move it out of committee. Number 1653 REPRESENTATIVE PORTER made a motion to move HB 101 out of committee with individual recommendations and the attached zero fiscal note with a caveat that the next committee of referral look at a sunset provision. There being no objection, HB 101 was so moved from the House Special Committee on Utility Restructuring.
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