Legislature(2017 - 2018)SENATE FINANCE 532

03/21/2018 09:00 AM FINANCE

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09:02:06 AM Start
09:03:00 AM Appointment: Commissioner - Department of Revenue
09:23:35 AM Appointment: State Assessment Review Board
09:30:39 AM Appointment: University of Alaska Board of Regents
09:37:56 AM HB114
09:45:22 AM HB124
10:39:06 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Consideration of Governor's Appointees TELECONFERENCED
Department of Revenue:
Mr. Sheldon Fisher
State Assessment Review Board:
Mr. William Westover
University of Alaska Board of Regents:
Mr. Joey Sweet
+ HB 124 BENEFIT CORPORATIONS TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 114 BOILER/PRESSURE VESSEL INSPECTION REPORTS TELECONFERENCED
Moved SCS HB 114(FIN) Out of Committee
CS FOR HOUSE BILL NO. 124(FIN)                                                                                                
                                                                                                                                
     "An Act relating to corporations, including benefit                                                                        
     corporations, and other entities; and providing for an                                                                     
     effective date."                                                                                                           
                                                                                                                                
9:45:22 AM                                                                                                                    
                                                                                                                                
Representative   Sam    Kito,   Sponsor,    introduced   the                                                                    
legislation.  He  reported that  HB  124  created a  benefit                                                                    
corporation classification for C  corporations in the state.                                                                    
The  benefit  corporation  allowed  for  more  than  just  a                                                                    
fiduciary  duty to  corporate  activities.  He provided  the                                                                    
example of a bike shop  that offered its employees paid work                                                                    
time for trail improvement  work. In a traditional corporate                                                                    
structure, the  individuals would be working  outside of the                                                                    
fiduciary   responsibility   of  the   corporation   risking                                                                    
shareholder objections.  The bill allowed for  the bylaws of                                                                    
a  corporation to  allow  for employees  to  work on  public                                                                    
service projects  or engage in  another manner to  provide a                                                                    
public benefit. The benefit had  to be clearly identified in                                                                    
the corporation's bylaws and a  periodic report was required                                                                    
that indicated  how the company  was meeting  its beneficial                                                                    
and fiduciary duties.                                                                                                           
                                                                                                                                
9:48:40 AM                                                                                                                    
                                                                                                                                
Senator Stevens asked whether other  states had similar laws                                                                    
in place.  Representative Kito  answered in  the affirmative                                                                    
and  estimated   that  30   other  states   adopted  similar                                                                    
statutes.                                                                                                                       
                                                                                                                                
Senator Micciche thought the bill  was interesting. He asked                                                                    
who defined whether the actions  were beneficial, or if each                                                                    
company  would define  its "benefit."  He  believed that  in                                                                    
some  cases  "some of  these  companies  worked against  the                                                                    
economy  of the  state of  Alaska."  He wondered  if it  was                                                                    
possible  for the  benefit to  counter what  others believed                                                                    
were  beneficial.  Representative   Kito  replied  that  the                                                                    
determination of  whether the action  of a company  would be                                                                    
beneficial   would  be   published   in   the  articles   of                                                                    
incorporation  and bylaws,  which was  available for  public                                                                    
scrutiny. He offered that a  benefit would not be defined in                                                                    
stature or regulation.                                                                                                          
                                                                                                                                
9:51:05 AM                                                                                                                    
                                                                                                                                
Senator  von Imhof  understood that  corporations currently,                                                                    
through  mission  statements  and  value  statements,  could                                                                    
express its objectives and intentions.  She was unsure as to                                                                    
what  problem the  bill was  trying to  solve. She  used the                                                                    
example  of  Wells  Fargo,  which  had  a  corporate  giving                                                                    
program. The  bank had employees  dedicated to  the program.                                                                    
The bank  offered defined allowances  for employees  to work                                                                    
on  company sanctioned  events  or volunteer  opportunities.                                                                    
She wondered what the bill was attempting to "fix."                                                                             
                                                                                                                                
Representative Kito  thought that  the examples  Senator von                                                                    
Imhof    described   did    not   violate    the   fiduciary                                                                    
responsibility  the company  had  to  its shareholders.  The                                                                    
company  had  made  profits  and   its  board  of  directors                                                                    
directed some profits to the  charitable activities that did                                                                    
not affect its  "bottom-line." He advised that  if a company                                                                    
started having  employees working on non-billable  hours for                                                                    
various beneficial  projects, a  complaint or  lawsuit could                                                                    
ensue  on the  basis that  the company  was not  meeting its                                                                    
fiduciary responsibility by paying  for an employee that was                                                                    
not  generating  income. The  bill  attempted  to protect  a                                                                    
company  whose board  of directors  wanted to  offer company                                                                    
time  or resources  to  benefit a  nonprofit  or some  other                                                                    
public benefit  like soup kitchens.  He added that  the bill                                                                    
could also  apply to native corporations.  A regional native                                                                    
corporation   could  provide   resources   to  support   its                                                                    
nonprofit   arm   without   concerns  over   lawsuits   from                                                                    
shareholders.                                                                                                                   
                                                                                                                                
9:54:44 AM                                                                                                                    
                                                                                                                                
Senator  von  Imhof  asked whether  there  was  a  numerical                                                                    
threshold in the  bill that addressed a level  of profit the                                                                    
benefit  corporation must  maintain.  She  guessed that  the                                                                    
company  could  be  accused  of being  too  focused  on  the                                                                    
benefit  in lieu  of  profit and  she  wondered whether  the                                                                    
benefit  corporation  was  subject  to a  certain  level  of                                                                    
profit. Representative Kito answered  that the line would be                                                                    
drawn  in the  bylaws of  the corporation  and would  be the                                                                    
measure   of    accountability   to   its    directors   and                                                                    
shareholders. He understood that  the corporation that filed                                                                    
as a benefit  corporation would be accountable  to itself in                                                                    
identifying  the  benefit it  wanted  to  offer and  how  it                                                                    
wanted  to  provide  it.  He  remarked  that  the  board  of                                                                    
directors  would   regulate  whether  the   corporation  was                                                                    
providing the benefit as determined by the bylaws.                                                                              
                                                                                                                                
Co-Chair MacKinnon  asked if the  sponsor knew of  any cases                                                                    
in  which a  company had  been sued  for misusing  proceeds.                                                                    
Representative Kito  deferred the  answer to his  staff. Co-                                                                    
Chair MacKinnon  asked if Representative  Kito was  aware of                                                                    
specific lawsuits  that happened  in other states  under the                                                                    
terms he  had discussed. Representative Kito  was unaware of                                                                    
any lawsuits and added that he  was aware that the trend was                                                                    
to  provide  corporations  as  many  tools  as  possible  to                                                                    
fulfill their mission.                                                                                                          
                                                                                                                                
Senator  von Imhof  voiced that  the  sponsor had  indicated                                                                    
that a  corporation's bylaws currently allowed  them to fill                                                                    
any mission they wish. She did  not feel a state statute was                                                                    
necessary. Representative Kito  responded that the challenge                                                                    
was  whether  a resource  of  a  company  could be  used  to                                                                    
benefit  a  community  versus direct  profit.  Currently,  a                                                                    
company could not  perform an action that did  not result in                                                                    
a profit.  The bill  allowed for more  flexibility in  how a                                                                    
corporation could perform community  service and be shielded                                                                    
from shareholder lawsuits.                                                                                                      
                                                                                                                                
Co-Chair MacKinnon  asked if a benefit  corporation would be                                                                    
required   to   pay   corporate    taxes   in   the   state.                                                                    
Representative Kito  replied that a benefit  corporation was                                                                    
another  classification of  a C  corporation with  a benefit                                                                    
bylaw and  would pay taxes  and registration  fees. Co-Chair                                                                    
MacKinnon inquired  whether B corporations were  required to                                                                    
pay taxes  in the  state. Representative Kito  answered that                                                                    
the benefit  corporation was  a C  corporation and  the bill                                                                    
would not impact any other  type of non-C corporation in the                                                                    
state.  The  benefit corporation  would  be  subject to  any                                                                    
applicable taxes.                                                                                                               
                                                                                                                                
10:00:12 AM                                                                                                                   
                                                                                                                                
Senator Micciche  asked if the sponsor  could verify whether                                                                    
the bill  would affect any  liability of a C  corporation to                                                                    
the state.  Representative Kito  stated that  C Corporations                                                                    
that currently  existed would not  be changed at  all unless                                                                    
they  opted   to  become  a  benefit   corporation.  Senator                                                                    
Micciche asked  if a  C corporation chose  to organize  as a                                                                    
benefit corporation  would the same  tax rate paid  prior to                                                                    
the  change  apply.  Representative  Kito  answered  in  the                                                                    
affirmative and  added that the only  practical change would                                                                    
be to the  corporation's bylaws and mission  and would still                                                                    
be required and obligated to pay the same income tax.                                                                           
                                                                                                                                
Co-Chair  MacKinnon  questioned  his  answer.  She  wondered                                                                    
whether more items were deducted  against the bottom-line of                                                                    
profit resulting in less corporate  taxes paid to the state.                                                                    
She surmised that  the state would lose money  by creating a                                                                    
new  category   of  expenses  to  write   off  from  profit.                                                                    
Representative  Kito imagined  that  a tax  impact would  be                                                                    
difficult  to determine.  He restated  that  his intent  was                                                                    
"not to take corporate profits  and turn them into something                                                                    
else." The  benefit corporation status was  another tool for                                                                    
corporations  to  use.  He elaborated  that  the  amount  of                                                                    
revenue  the state  received from  corporate income  tax and                                                                    
"the change in  the bill was not substantial  enough to make                                                                    
an  appreciable difference."  Co-Chair MacKinnon  considered                                                                    
large oil companies that paid  large amounts of taxes to the                                                                    
state and  wondered what the  impact would be if  they chose                                                                    
to  become benefit  corporations.  She was  unsure how  that                                                                    
would be accountable to the  Internal Revenue Service (IRS).                                                                    
She would follow up on the issue.                                                                                               
                                                                                                                                
10:03:19 AM                                                                                                                   
                                                                                                                                
Vice-Chair  Bishop  referred to  the  last  sentence of  the                                                                    
first  paragraph of  the Sponsor  Statement (copy  on file):                                                                    
"Allowing  the creation  of benefit  corporations will  give                                                                    
business owners  more choice  in how  to run  their business                                                                    
and will bring  to Alaska a slice of the  $6.6 trillion that                                                                    
is   invested  nationally   in  similar   corporations."  He                                                                    
understood that  the intent of  the bill was to  protect the                                                                    
fiduciary responsibility  of the shareholders. He  offered a                                                                    
hypothetical  scenario  of   benefit  corporation  employees                                                                    
rebuilding a  playground during work hours.  He deduced that                                                                    
the  shareholders  could   protest  that  the  corporation's                                                                    
bottom-line  was   not  being   increased  by   the  benefit                                                                    
activity. Representative  Kito replied that  his description                                                                    
was exactly  the type of  situation the bill  was attempting                                                                    
to  protect  against;  a  shareholder  lawsuit  because  the                                                                    
employee  was  not  fulfilling the  fiduciary  duty  of  the                                                                    
corporation when engaged in benefit activity.                                                                                   
                                                                                                                                
Vice-Chair Bishop  mentioned the eventuality of  an employee                                                                    
getting    injured   performing    benefit   activity.    He                                                                    
characterized  the situation  as "going  down another  whole                                                                    
rabbit  trail."   Representative  Kito  presumed   that  the                                                                    
employee  would still  be covered  by worker's  compensation                                                                    
and whatever  insurance the corporation  offered. Vice-Chair                                                                    
Bishop deduced that insurance premiums would rise.                                                                              
                                                                                                                                
CAITLYN ELLIS,  STAFF, REPRESENTATIVE SAM KITO,  stated that                                                                    
benefit  corporations  were  formed voluntarily  by  a  two-                                                                    
thirds vote  of the shareholders. The  shareholders endorsed                                                                    
whatever  public  good  was  defined  by  the  company.  She                                                                    
explained  that  benefits  could  include  redistributing  a                                                                    
percentage of profits or allow  employees to perform benefit                                                                    
work. The result  was a two-fold option for  the business; a                                                                    
fiduciary    responsibility    and    a    public    benefit                                                                    
responsibility. The  bill allowed the company  to prioritize                                                                    
its values  and the  shareholders were  "well aware"  of the                                                                    
mission.  The state  could benefit  from  the $6.6  trillion                                                                    
invested   in    B   Corporations   by    allowing   benefit                                                                    
corporations. She elucidated that  a handful of companies in                                                                    
the state wanted benefit corporation status.                                                                                    
                                                                                                                                
10:06:58 AM                                                                                                                   
                                                                                                                                
Senator  von  Imhof  asked  what   would  stop  an  existing                                                                    
corporation  from  switching  to a  B-Corporation  and  then                                                                    
writing  off more  expenses  claiming the  work  is for  the                                                                    
common  good and  paying less  taxes. She  characterized the                                                                    
bill as granting  allowable and legal tax  breaks. Ms. Ellis                                                                    
stated that the  bill would not change what  a company could                                                                    
do.  The  bill offered  protection  to  a company  from  its                                                                    
shareholders. The  same write-offs  would be  available that                                                                    
were currently in existence as  under HB 124. She reiterated                                                                    
that   benefit   corporations   were  voluntary,   and   the                                                                    
shareholders were aware of the bylaws.                                                                                          
                                                                                                                                
Co-Chair MacKinnon  asked whether Ms.  Ellis was aware  of a                                                                    
corporation  that was  sued by  its shareholders.  Ms. Ellis                                                                    
was not aware of a  company sued by shareholders but offered                                                                    
to follow up with a definitive answer.                                                                                          
                                                                                                                                
Representative  Kito  commented  that  the  state  currently                                                                    
offered a  series of  tax credits  currently available  to C                                                                    
corporations  that   allowed  them   to  reduce   their  tax                                                                    
liability by  donating to things like  the education system.                                                                    
He  thought the  scope of  the  change created  by the  bill                                                                    
would be significantly  smaller than any of  the tax credits                                                                    
the  state currently  offered. The  bill would  allow a  new                                                                    
type of  community and public involvement  with corporations                                                                    
and permit a company to define its values in its bylaws.                                                                        
                                                                                                                                
10:10:06 AM                                                                                                                   
                                                                                                                                
Ms.  Ellis  addressed  portions of  the  Sectional  Analysis                                                                    
(copy on file):                                                                                                                 
                                                                                                                                
     Section  1  10.06.633(a) Establishes  how  corporations                                                                    
     may  be dissolved  and is  amended  to include  benefit                                                                    
     corporations; (a8) declares  that a benefit corporation                                                                    
     is  dissolved if  delinquent for  6 months  or more  in                                                                    
     including its benefit report in  the biennial report or                                                                    
     in paying the benefit report filing fee.                                                                                   
                                                                                                                                
     Section  2  Adds   a  new  chapter  to   AS  10  Alaska                                                                    
    corporations code, chapter 60-Benefit Corporations.                                                                         
                                                                                                                                
     Article 1                                                                                                                  
     Establishes how a  business corporation may incorporate                                                                    
     or amend its status to become a benefit                                                                                    
     corporation; that the benefit  corporation shall have a                                                                    
     purpose of creating general public benefit from                                                                            
     all  effects of  its  business and  operations and  may                                                                    
     identify a specific public benefit; requires that any                                                                      
     status  change must  be approved  by  the minimum  two-                                                                    
     thirds vote.                                                                                                               
                                                                                                                                
     Article 2                                                                                                                  
     Establishes the  duties of the board  and the directors                                                                    
     and enumerates  seven factors  that must  be considered                                                                    
     while making decisions; clarifies  that a director of a                                                                    
     benefit corporation  is not  personally liable  for the                                                                    
     failure to create a general  public benefit if they are                                                                    
     acting  in  compliance with  the  chapter  and in  good                                                                    
     faith.                                                                                                                     
                                                                                                                                
     Article 3                                                                                                                  
     Directs  how  the board  of  a  benefit corporation  my                                                                    
     designate  a benefit  director,  who shall  not have  a                                                                    
     material  relationship with  the corporation;  outlines                                                                    
     the  benefit director's  role,  especially relating  to                                                                    
     the biennial  benefit report;  allows that  the benefit                                                                    
     director shall  have the  same role  and rights  as any                                                                    
     other director of the benefit corporation.                                                                                 
     Article 4                                                                                                                  
     Directs  an   officer  of  a  benefit   corporation  to                                                                    
     consider  the factors  enumerated  under  the board  of                                                                    
     directors; clarifies  the duties  of an  officer acting                                                                    
     in good  faith; and  allows that a  benefit corporation                                                                    
     may designate a benefit  officer, who shall have duties                                                                    
     similar to the benefit director.                                                                                           
                                                                                                                                
     Article 5                                                                                                                  
     Identifies  the  persons  that  may  bring  actions  or                                                                    
     claims against  a benefit corporation for  a failure to                                                                    
     pursue general or specific public benefit.                                                                                 
                                                                                                                                
     Article 6                                                                                                                  
     Defines  what   must  be  contained  in   the  required                                                                    
     biennial  benefit  report;  requires that  the  benefit                                                                    
     report  must be  held against  a third  party standard;                                                                    
     establishes a  timeline for the delivery  of the report                                                                    
     to  shareholders; requires  public availability  of the                                                                    
     report;  and directs  the benefit  corporation to  file                                                                    
     the  benefit  report with  the  department  as part  of                                                                    
     their biennial report.                                                                                                     
                                                                                                                                
     Article 7                                                                                                                  
     Identifies   the  process   necessary  for   a  benefit                                                                    
     corporation  to  effect  a status  change;  allows  for                                                                    
     shareholder  dissent  under  a status  change;  defines                                                                    
     guidelines  for  the third-party  standards;  clarifies                                                                    
     that a benefit corporation is  not eligible for any tax                                                                    
     exemptions  beyond those  available  for a  traditional                                                                    
     corporation;  and states  that  this  chapter does  not                                                                    
     prevent   a    non-benefit   corporate    entity   from                                                                    
     considering a general or specific public benefit.                                                                          
                                                                                                                                
     Article 8                                                                                                                  
     Allows  from  the  creation  of  regulations  for  this                                                                    
     chapter; clarifies  that this  chapter does  not affect                                                                    
     non-benefit corporate  entities; declares  that benefit                                                                    
     corporations  are  subject   to  Alaska  corporate  law                                                                    
     unless specifically  addressed; and defines  terms used                                                                    
     in the chapter.                                                                                                            
                                                                                                                                
10:13:35 AM                                                                                                                   
                                                                                                                                
Co-Chair  MacKinnon   asked  whether  it  was   unique  with                                                                    
corporations to "indemnify or protect"  directors who act on                                                                    
behalf of  corporations. Ms. Ellis  did not know  the answer                                                                    
and offered  to provide the information.  Co-Chair MacKinnon                                                                    
asked  whether it  was common  to extend  the protection  to                                                                    
third parties that engaged with  the director of the benefit                                                                    
corporation. She  requested more  clarity on  the difference                                                                    
between a benefit corporation and a C corporation.                                                                              
                                                                                                                                
Co-Chair  MacKinnon  wanted   the  Department  of  Commerce,                                                                    
Community  and  Economic   Development  (DCCED)  to  provide                                                                    
feedback  from  a  licensing  perspective  and  whether  the                                                                    
department supported the bill.                                                                                                  
                                                                                                                                
SARA  CHAMBERS, DEPUTY  DIRECTOR, DIVISION  OF CORPORATIONS,                                                                    
BUSINESS   AND   PROFESSIONAL   LICENSING,   DEPARTMENT   OF                                                                    
COMMERCE,   COMMUNITY   AND    ECONOMIC   DEVELOPMENT   (via                                                                    
teleconference),   stated  that   the   department  had   an                                                                    
administrative  interest in  the bill,  but did  not have  a                                                                    
recommendation either way. She  elaborated that the division                                                                    
did "very  little qualitative  work" with  corporations that                                                                    
were  required to  register. The  division only  collected a                                                                    
filing tax and the tax would not change.                                                                                        
                                                                                                                                
Co-Chair MacKinnon OPENED public testimony.                                                                                     
                                                                                                                                
10:17:05 AM                                                                                                                   
                                                                                                                                
STEVEN  TRIMBLE,  ARCTIC   SOLAR  VENTURES,  ANCHORAGE  (via                                                                    
teleconference),  testified  in  support  of  the  bill.  He                                                                    
reported  that  the.  company  was  Alaska's  largest  solar                                                                    
company and grew  300 percent each year  since its inception                                                                    
in 2015.  The company was  expecting to build 1  megawatt of                                                                    
solar  projects  in  the  state  through  its  two  business                                                                    
locations  in Anchorage.  He  delineated  that Arctic  Solar                                                                    
Ventures  was a  Certified B  Corporation and  was certified                                                                    
through  and international  body  called B  Lab that  worked                                                                    
with  other states  to  enact  legislation creating  benefit                                                                    
corporations.   He   explained    that   the   international                                                                    
certification allowed his company  to adopt a triple bottom-                                                                    
line   approach   to   business;  economic,   societal   and                                                                    
environmental. The  benefit corporation  legislation allowed                                                                    
a  company  to  protect its  certification  from  leadership                                                                    
changes and shareholders  votes.  He noted that a two-thirds                                                                    
vote was  required to become  a benefit corporation  and the                                                                    
same vote would  be required to undo it.  He emphasized that                                                                    
he wanted  state protection  like the  33 other  states that                                                                    
adopted  similar  legislation  and   operate  as  a  benefit                                                                    
corporation.  He  mentioned that  he  was  a co-owner  of  a                                                                    
nationwide  cooperative of  48  other  solar companies  that                                                                    
were certified B Corporations  and were benefit corporations                                                                    
or in the  process of becoming one.  The cooperative members                                                                    
shared the  same values and  reflected a  national movement.                                                                    
He favored adoption of HB  124 as a tool that differentiated                                                                    
the  way benefit  companies engaged  in  business "with  the                                                                    
backbone  that  we are  here  to  do  good for  Alaska."  He                                                                    
pointed out that  B corporations were held  accountable by a                                                                    
third party  through a  "very rigorous  assessment process."                                                                    
The benefit corporation status protected the certification.                                                                     
                                                                                                                                
10:22:04 AM                                                                                                                   
                                                                                                                                
Vice-Chair  Bishop  asked  whether Mr.  Trimble  would  have                                                                    
access to  more capital if the  bill was to become  law. Mr.                                                                    
Trimble answered  in the affirmative and  added that because                                                                    
his company  was a certified  B corporation people  opted to                                                                    
patronize his business, which  "directly contributed" to his                                                                    
company's bottom-line.                                                                                                          
                                                                                                                                
Co-Chair MacKinnon  asked whether Mr. Trimble  could provide                                                                    
a  copy of  the  third-party  rigorous assessment  standards                                                                    
that he  complied with.  Mr. Trimble  agreed to  provide the                                                                    
requested information  from B Lab. Co-Chair  MacKinnon asked                                                                    
if Mr.  Trimble served on  the board  since he had  an owner                                                                    
interest  in setting  the standards.  Mr. Trimble  clarified                                                                    
that  he  was  a  member   of  the  board  of  the  national                                                                    
cooperative where  he was a  member owner. He  answered that                                                                    
each of  the 48 solar  companies had one voting  member that                                                                    
voted in  the decisions of the  cooperative. The cooperative                                                                    
had  a board  of directors,  but each  member had  one equal                                                                    
vote  within  the   cooperative.  Co-Chair  MacKinnon  asked                                                                    
whether he served  on the board or if he  was the one voting                                                                    
member out of the 48. Mr.  Trimble responded that he was one                                                                    
voting  member.  Co-Chair  MacKinnon asked  if  Mr.  Trimble                                                                    
could  speak further  about protecting  the company  through                                                                    
leadership  changes. Mr.  Trimble  hypothesized  that if  he                                                                    
left  the company  and someone  else took  over who  did not                                                                    
want to engage  in the benefit activity the  new owner could                                                                    
simply change the directive  without protective statutes. He                                                                    
emphasized that the benefit was  an integral part of the way                                                                    
he built  and operated the  company and without  the state's                                                                    
benefit corporation  status leadership change  could reverse                                                                    
everything his company accomplished.                                                                                            
                                                                                                                                
10:26:32 AM                                                                                                                   
                                                                                                                                
Co-Chair MacKinnon  asked if Mr. Trimble's  company competed                                                                    
with other  corporations as an  energy company.  Mr. Trimble                                                                    
answered  in the  affirmative and  stated  that he  competed                                                                    
with other solar companies that  installed solar panels. Co-                                                                    
Chair MacKinnon asked  if Mr. Trimble could practice  as a B                                                                    
corporation under  a C corporation and  maintain the culture                                                                    
of his  company. Mr. Trimble  stated that there  was nothing                                                                    
preventing his  company from operating  as a  C corporation,                                                                    
but  the  issue  of  limited protection  still  existed.  He                                                                    
detailed  that   his  company   had  a   publicly  published                                                                    
scorecard  through the  assessment  and  certification of  B                                                                    
Lab.  He reiterated  that he  could establish  a corporation                                                                    
like  a benefit  corporation in  the state  but lacking  the                                                                    
protection and  reporting requirements. He furthered  that a                                                                    
corporation could claim they  were providing public benefits                                                                    
without being required to show accountability.                                                                                  
                                                                                                                                
10:29:57 AM                                                                                                                   
                                                                                                                                
Co-Chair  MacKinnon  asked  if  Mr.  Trimble  was  aware  of                                                                    
lawsuits in which shareholders  were challenging a director.                                                                    
Mr. Trimble  replied in the affirmative  and elucidated that                                                                    
Ben and  Jerry's Company was  subject to a  hostile takeover                                                                    
because  they were  operating  like  a benefit  corporation,                                                                    
before  benefit  corporation   legislation  was  adopted  in                                                                    
Vermont. A group  of shareholders got together  and sued the                                                                    
company  in an  attempt to  take it  over, which  lead to  a                                                                    
lengthy  and costly  lawsuit that  removed many  of the  co-                                                                    
founders of the company.                                                                                                        
                                                                                                                                
Senator  von  Imhof  asked  if passage  of  the  bill  would                                                                    
provide  the ability  of  benefit  corporations to  undercut                                                                    
prices  and  compete  against profit-driven  competitors  in                                                                    
order  to gain  market share  and in  Artic Solar  Venture's                                                                    
case,  in order  to get  customers off  oil and  gas through                                                                    
renewable energy.  She asked  if the bill provided an unfair                                                                    
business  advantage because  increased  volumes  at a  lower                                                                    
price could yield a higher  net profit. Mr. Trimble answered                                                                    
in  the  negative.  He  pointed out  that  his  company  was                                                                    
branded as a premium solar  provider and were not the lowest                                                                    
cost  option  as  per  a  "strict"  company  philosophy.  He                                                                    
stressed  he did  not  see any  scenario  where the  benefit                                                                    
status could provide an unfair competitive advantage.                                                                           
                                                                                                                                
10:33:01 AM                                                                                                                   
                                                                                                                                
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
                                                                                                                                
Vice-Chair  Bishop  discussed  FN2   (CED)  from  DCCED.  He                                                                    
detailed  that  the  cost  for  FY  19  was  $22.4  thousand                                                                    
allocated   to  Corporations,   Business  and   Professional                                                                    
Licensing. He read from page 2 of the fiscal note:                                                                              
                                                                                                                                
     To   implement  this   legislation  the   corporation's                                                                    
     database will  need a  systems change  to create  a new                                                                    
     entity  indicator, new  types of  officials, and  a new                                                                    
     reporting  requirement. A  regulations project  will be                                                                    
     necessary to  adopt regulations  for the  newly created                                                                    
     Chapter  60,  Benefit  Corporations, and  to  amend  AS                                                                    
     10.06.633.                                                                                                                 
     If  the  bill passes  the  following  expenses will  be                                                                    
     incurred:                                                                                                                  
     Services: $11.9 (legal costs to amend regulations,                                                                         
     printing, and postage in the first year) $10.5                                                                             
    (information technology services for system change)                                                                         
     Corporation filing fees are General Fund/Program                                                                           
     Receipts fund source 1005 GF/Prgm (DGF). Corporation                                                                       
     filing fees are                                                                                                            
     set in regulation per AS 10 and 32, and revenue in                                                                         
     excess of authorized budgeted expenses reverts to the                                                                      
     State of Alaska general fund.                                                                                              
                                                                                                                                
Co-Chair   MacKinnon  wondered   whether  the   state  would                                                                    
initially  use receipts  from other  corporations  licensing                                                                    
to support the  new licensure. Ms. Chambers  stated that any                                                                    
cost  incurred would  be recouped  in the  same fiscal  year                                                                    
from  the  benefit   corporations.  The  division  generated                                                                    
approximately  $6 million  to GF  each  year from  corporate                                                                    
licensing.                                                                                                                      
                                                                                                                                
10:36:47 AM                                                                                                                   
                                                                                                                                
Co-Chair MacKinnon asked  what the filing fee  for a benefit                                                                    
corporation was.  Ms. Chambers  stated that all  filing fees                                                                    
for  corporations were  the  same. She  deemed  that it  was                                                                    
possible that if  an existing C-corporation changed  to a B-                                                                    
corporation, they  would generate additional revenue  due to                                                                    
a fee to reincorporate. She  reported that the fee was $250,                                                                    
which  $100  was a  tax  and  the  remainder were  fees.  In                                                                    
addition,  other fees  were  charged  for multiple  required                                                                    
reporting.   Reincorporating   would   generate   additional                                                                    
revenue to  the state. Co-Chair MacKinnon  estimated that it                                                                    
would  take approximately  90 new  B  corporations to  break                                                                    
even  or   the  division   would  utilize   other  corporate                                                                    
licensing  funds.   Ms.  Chambers  had  not   performed  the                                                                    
calculation required to answer  the question. She offered to                                                                    
provide an answer.                                                                                                              
                                                                                                                                
HB  124  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                

Document Name Date/Time Subjects
FIN COMMISSIONER - Sheldon Fisher.pdf SFIN 3/21/2018 9:00:00 AM
Confirmations 2018
FIN ASSESSMENT REVIEW BOARD Westover.pdf SFIN 3/21/2018 9:00:00 AM
Confirmations 2018
FIN REGENT, UNIVERSITY of ALASKA Sweet.pdf SFIN 3/21/2018 9:00:00 AM
Confirmations 2018
HB124 Sponsor Statement 1.18.18.pdf SFIN 3/21/2018 9:00:00 AM
HB 124
HB124 Sectional Analysis ver U 1.18.18.pdf SFIN 3/21/2018 9:00:00 AM
HB 124
HB124 Explanation of changes from ver A to ver U 1.18.18.pdf SFIN 3/21/2018 9:00:00 AM
HB 124
HB124 Support Documents - Letters of Support 4.11.17.pdf SFIN 3/21/2018 9:00:00 AM
HB 124
HB 114 HB114 SCS v. O Explanation.pdf SFIN 3/21/2018 9:00:00 AM
HB 114
HB 114 SCS HB 114 FIN work draft v.O.pdf SFIN 3/21/2018 9:00:00 AM
HB 114
HB 114 DOWLD QA.pdf SFIN 3/21/2018 9:00:00 AM
HB 114
HB124 Support BENEFIT CORPORATIONS.pdf SFIN 3/21/2018 9:00:00 AM
HB 124
HB124 SFIN memo - follow up.pdf SFIN 3/21/2018 9:00:00 AM
HB 124