03/13/2013 01:00 PM House JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing(s): || Select Committee on Legislative Ethics | |
| HB9 | |
| HB57 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | HB 9 | TELECONFERENCED | |
| *+ | HB 57 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE JUDICIARY STANDING COMMITTEE
March 13, 2013
1:06 p.m.
MEMBERS PRESENT
Representative Wes Keller, Chair
Representative Bob Lynn, Vice Chair
Representative Neal Foster
Representative Gabrielle LeDoux
Representative Lance Pruitt
Representative Max Gruenberg
MEMBERS ABSENT
Representative Charisse Millett
COMMITTEE CALENDAR
CONFIRMATION HEARING(S):
Select Committee on Legislative Ethics
H. Conner Thomas - Nome
Janie Leask - Anchorage
- CONFIRMATION(S) ADVANCED
HOUSE BILL NO. 9
"An Act relating to secured transactions under the Uniform
Commercial Code and to the regulation of funds transfers,
including remittance transfers, under the Uniform Commercial
Code and federal law; and providing for an effective date."
- MOVED HB 9 OUT OF COMMITTEE
HOUSE BILL NO. 57
"An Act adopting the Alaska Entity Transactions Act; relating to
changing the form of entities, including corporations,
partnerships, limited liability companies, business trusts, and
other organizations; amending Rule 79, Alaska Rules of Civil
Procedure, and Rules 602(b)(2), 602(c), and 605.5, Alaska Rules
of Appellate Procedure; and providing for an effective date."
- HEARD & HELD
CONFIRMATION HEARING(S):
Commission on Judicial Conduct
- REMOVED FROM AGENDA
PREVIOUS COMMITTEE ACTION
BILL: HB 9
SHORT TITLE: SECURED TRANSACTIONS AND FUNDS TRANSFERS
SPONSOR(S): REPRESENTATIVE(S) GRUENBERG
01/16/13 (H) PREFILE RELEASED 1/7/13
01/16/13 (H) READ THE FIRST TIME - REFERRALS
01/16/13 (H) L&C, JUD
02/20/13 (H) L&C AT 3:15 PM BARNES 124
02/20/13 (H) Moved Out of Committee
02/20/13 (H) MINUTE(L&C)
02/22/13 (H) L&C RPT 3DP 3NR
02/22/13 (H) DP: REINBOLD, JOSEPHSON, OLSON
02/22/13 (H) NR: CHENAULT, SADDLER, MILLETT
03/13/13 (H) JUD AT 1:00 PM CAPITOL 120
BILL: HB 57
SHORT TITLE: ENTITY TRANSACTIONS ACT
SPONSOR(S): REPRESENTATIVE(S) HOLMES, OLSON
01/16/13 (H) PREFILE RELEASED 1/11/13
01/16/13 (H) READ THE FIRST TIME - REFERRALS
01/16/13 (H) JUD
03/13/13 (H) JUD AT 1:00 PM CAPITOL 120
WITNESS REGISTER
H. CONNER THOMAS, Appointee
Select Committee on Legislative Ethics
Nome, Alaska
POSITION STATEMENT: Testified as appointee to the Select
Committee on Legislative Ethics.
JANIE LEASK, Appointee
Select Committee on Legislative Ethics
Anchorage, Alaska
POSITION STATEMENT: Testified as appointee to the Select
Committee on Legislative Ethics.
DEBORAH E. BEHR, Chief Assistant Attorney General - Statewide
Section Supervisor
Legislation & Regulations Section
Civil Division (Juneau)
Department of Law (DOL);
Commissioner
National Conference of Commissioners on Uniform State Laws
Juneau, Alaska
POSITION STATEMENT: Assisted with the presentation of HB 9.
WILLIAM H. HENNING, Commissioner
National Conference of Commissioners on Uniform State Laws
Tuscaloosa, Alabama
POSITION STATEMENT: Assisted with the presentation of HB 9.
PAULA KELSEY, Recorder Manager
State Recorders Office
Department of Natural Resources
Anchorage, Alaska
POSITION STATEMENT: Confirmed the State Recorders Office, with
its current staff, is capable of handling the changes
necessitated by HB 9.
STACY SCHUBERT, Director, Governmental Affairs & Public
Relations
Alaska Housing Finance Corporation (AHFC)
Department of Revenue
Anchorage, Alaska
POSITION STATEMENT: Testified in support of the revisions as
proposed in HB 9 because they enhance AHFC's ability to
repossess its security.
LUKE FANNING
Alaska Bankers Association;
Vice President, First National Bank Alaska
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 9.
REPRESENTATIVE LINDSEY HOLMES
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 57 as one of the joint prime
sponsors.
JAMES R. WALDO, Staff
Representative Lindsey Holmes
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented CSHB 57, Version O, on behalf of
Representative Holmes, a joint prime sponsor of HB 57.
HARRY HAYNSWORTH, Commissioner
the National Conference of Commissioners on Uniform State Laws
POSITION STATEMENT: During hearing of HB 57, offered comments
as the chair of the committee that drafted the Model Entity
Transactions Act (META).
DON HABEGER, Director
Division of Corporations, Business, and Professional Licensing
Department of Commerce, Community & Economic Development
Juneau, Alaska
POSITION STATEMENT: During hearing of HB 57, answered
questions.
ACTION NARRATIVE
1:06:23 PM
CHAIR WES KELLER called the House Judiciary Standing Committee
meeting to order at 1:06 p.m. Representatives Keller, Lynn,
Foster, and LeDoux were present at the call to order.
Representatives Pruitt and Gruenberg arrived as the meeting was
in progress. Representative Millett was excused.
^CONFIRMATION HEARING(S):
^Select Committee on Legislative Ethics
CONFIRMATION HEARING(S):
Select Committee on Legislative Ethics
1:07:12 PM
CHAIR KELLER announced that the first order of business would be
consideration of the reappointment of H. Conner Thomas to the
Select Committee on Legislative Ethics.
1:07:40 PM
H. CONNER THOMAS, Appointee, Select Committee on Legislative
Ethics, in response to a question regarding why he wished to be
reappointed, said he views serving on the Select Committee on
Legislative Ethics as important, and he's enjoyed his service
thus far, adding that it's allowed him to do something
beneficial for the people of Alaska.
REPRESENTATIVE FOSTER disclosed that he's known Mr. Thomas for
many years, adding that he supports Mr. Thomas's [reappointment
to the Select Committee on Legislative Ethics].
REPRESENTATIVE GRUENBERG disclosed that he's served with Mr.
Thomas on the Select Committee on Legislative Ethics, referred
to him as highly qualified, and expressed favor with his
willingness to be reappointed.
CHAIR KELLER reminded members that signing the reports regarding
appointments to boards and commissions in no way reflect
individual members' approval or disapproval of the appointees,
and that the nominations are merely forwarded to the full
legislature for confirmation or rejection.
[The motion to advance from committee the nomination of H.
Conner Thomas to the Select Committee on Legislative Ethics was
offered later in the meeting.]
1:10:08 PM
CHAIR KELLER [announced that the next order of business would be
consideration of the appointment of] Janie Leask to the Select
Committee on Legislative Ethics.
1:10:57 PM
JANIE LEASK, Appointee, Select Committee on Legislative Ethics,
in response to a question regarding why she wished to serve on
the Select Committee on Legislative Ethics, explained that she
believes in Alaska's ethics laws, believes that legislators and
government officials are public servants, and believes that as
such, they have a code of conduct [intended to] ensure continued
public confidence in them. Serving on the Select Committee on
Legislative Ethics would therefore provide her with an
opportunity to also serve the public.
REPRESENTATIVE GRUENBERG disclosed that Ms. Leask is one if his
constituents, characterized her as highly qualified, and
indicated that he supports her [appointment].
CHAIR KELLER again reminded members that signing the reports
regarding appointments to boards and commissions in no way
reflect individual members' approval or disapproval of the
appointees, and that the nominations are merely forwarded to the
full legislature for confirmation or rejection.
1:13:32 PM
REPRESENTATIVE GRUENBERG made a motion to advance from committee
the nominations of H. Conner Thomas to the Select Committee on
Legislative Ethics and Janie Leask to the Select Committee on
Legislative Ethics. There being no objection, the confirmations
were advanced from the House Judiciary Standing Committee.
HB 9 - SECURED TRANSACTIONS AND FUNDS TRANSFERS
1:14:16 PM
CHAIR KELLER announced that the next order of business would be
HOUSE BILL NO. 9, "An Act relating to secured transactions under
the Uniform Commercial Code and to the regulation of funds
transfers, including remittance transfers, under the Uniform
Commercial Code and federal law; and providing for an effective
date."
1:14:25 PM
REPRESENTATIVE GRUENBERG, as the sponsor, characterized HB 9 as
an important bill, and relayed that Sections 1 and 2 address
[changes made in 2012 by the National Conference of
Commissioners on Uniform State Laws (NCCUSL) to] Article 4A of
the Uniform Commercial Code (UCC) - pertaining to [funds
transfers]; and that the remaining sections address [changes
made in 2010 by the NCCUSL to] Article 9 of the UCC - pertaining
to secured transactions.
1:15:43 PM
DEBORAH E. BEHR, Chief Assistant Attorney General - Statewide
Section Supervisor, Legislation & Regulations Section, Civil
Division (Juneau), Department of Law (DOL); Commissioner,
National Conference of Commissioners on Uniform State Laws
(NCCUSL), after providing some general information about the
NCCUSL, uniform laws, and the UCC, added that HB 9's proposed
updates to Alaska law pertaining to Article 4A and Article 9 of
the UCC need to be adopted by July 2013. She offered a few
examples to illustrate how the UCC can impact commerce conducted
across state lines - a common practice that individuals and
businesses frequently engage in for both buying/selling products
and borrowing/lending money - and relayed that all 50 states
[and the District of Columbia] adopted the UCC to ensure the
reliability and predictability of such transactions. She
indicated that the bill would [among other things] set out clear
rules for secured transactions - [transactions involving a
security interest in specified collateral intended to serve as
security against default] - with regard to how to engage in such
transactions, what state to file the associated documents in,
what shall occur in instances wherein one of the parties
relocates, and what shall occur in instances wherein the name of
one of the parties is misspelled in the associated documents.
MS. BEHR mentioned that in Alaska, [certain] secured
transactions are filed with the Department of Natural Resources'
(DNR's) Recorders office. With regard to situations involving
misspelled names on documents associated with secured
transactions, she indicated that the bill would specify that the
name used on a person's most-recently-issued valid driver's
license, valid commercial driver's license, or valid state-
issued identification (ID) shall be considered the name of the
person, even if the person's name is also misspelled on those
forms of ID. She referred to the latter proposed stipulation as
a "safe harbor" provision. The goal of providing uniform rules
pertaining to how to handle misspelled names is to avoid
litigation, make things smoother, and make commerce run better
across the states; such misspellings occur frequently and have
nothing to do with fraud, she noted.
1:19:38 PM
MS. BEHR, in response to a question regarding what would occur
should HB 9's proposed changes fail to be adopted by July 2013,
relayed that Alaska would then be one of very few states in the
nation not to have adopted [the NCCUSL's] updates to the UCC as
thus far 32 states have adopted the updates and 16 states have
legislation to do so pending. Therefore, she expected that
should a question arise the court would look to the rules and
attempt to apply them to the extent that it could. Without
adoption of the rules, it could make issues more confusing. The
banking industry and [securities] industry really like to have
rules that everybody understands, and so it would be to Alaska's
advantage to adopt the proposed changes in HB 9 by July 2013,
she remarked.
1:20:12 PM
MS. BEHR explained that HB 9 also addresses what she referred to
as "registered organizations." Since the code was adopted a
number of years ago, many new business organizations have come
into existence. The main goal [of HB 9] is to specify that the
state in which a new organization is formed is where the
security agreement would be filed. In Alaska the new
organization would file the security agreement with the
Department of Commerce, Community & Economic Development. The
third change in Article 9 deals with "after acquired property"
such that the security agreement filed where the new
organization is formed carries the perfection for four months
after the organization moves and then the bank must file where
the organization has moved. The fourth change addresses UCC
Article A, which deals with funds transfers. Currently, paper
checks are unusual to see as everything is usually performed by
wire.
1:23:52 PM
MS. BEHR concurred with Representative Gruenberg that this
language does address a glitch in the wire transfers portion of
the banking statutes. Before Congress made a change with the
Dodd-Frank Act it was clear that the electronic transfers
dealing with consumer transactions were performed under federal
law whereas commercial transactions were performed under state
law. With the recent change in federal law there is debate as
to whether remittance transfers are a specialty kind of
electronic transfer or covered under [any state's] law. The
proposed change in HB 9 would clearly specify that [remittance]
transfers fall under state law. She reiterated that 32
states/jurisdictions have already adopted these changes with
virtually no controversy. In terms of the Article 4 changes,
five jurisdictions have adopted them and are pending in 28
legislatures. She pointed out that committee members' packets
include a letter of support from the Alaska Bankers Association
dated January 8, 2013.
1:26:07 PM
MS. BEHR, in response to Representative Gruenberg, explained
that the letter in committee members' packets from DOL merely
suggests scheduling a hearing for HB 9 as the department
believes it's important that the UCC remain current. In
response to Chair Keller, Ms. Behr specified that the Article 9
changes have been adopted in 32 jurisdictions, which includes
Guam and Puerto Rico and pending in 16 more jurisdictions. The
Article 4A changes have been adopted in five jurisdictions and
pending in 28 other jurisdictions. She characterized the
aforementioned as a rapid movement to complete [the changes]
this year.
1:27:25 PM
REPRESENTATIVE LEDOUX asked whether all 50 states, including
Louisiana, use the UCC.
MS. BEHR replied yes.
REPRESENTATIVE GRUENBERG concurred.
1:28:00 PM
WILLIAM H. HENNING, Commissioner, National Conference of
Commissioners on Uniform State Laws (NCCUSL), relayed that he
was on the drafting committee that produced the portion of HB 9
that addresses the revisions to Article 9 of the UCC. In
response to a request, he clarified that for the Article 4A
revisions there are now 6 enactments and 29 introductions that
have occurred in a very short time as it came to the forefront
just late last year because of some changes in federal law.
With regard to the Article 9 provisions, he confirmed that there
have been 32 enactments in jurisdictions but are now 18
introductions with only three jurisdictions that haven't yet
introduced the act, which are Maine, New York, and the U.S.
Virgin Islands. It's important that this be [enacted/adopted]
by July 1 because Article 9 is a national system. There was a
major revision of Article 9 that became effective July 1, 2001.
That legislation was put before the states in 1999 and requested
those states that adopted it early to defer effectiveness. He
explained that if all the states don't come online together on
the same date, then problems could arise wherein the courts in
one state will look to the law of that state, which may refer to
the law of another state. There are situations that could
result in no answer. Currently, all states but Arizona, for
which there are technical reasons, will come online in July.
Although it seems Arizona will come on line on September 1
rather than July 1, the hope is to get that changed.
MR. HENNING, in response to an earlier question, said that
currently [the UCC] doesn't envision a national filing system to
merge all the filings, although there has been a lot of
discussion regarding that possibility since there is the
electronic capacity to do so. Still, there would be many
barriers, even within just one state. For instance, within a
state a common name could generate many false positives, which
on the national level would create issues. Although no one is
actively working on that at the moment, he said he wouldn't be
surprised if in the next 5-10 years the first steps in such a
project began.
1:33:52 PM
MR. HENNING explained that the 2010 revisions attempt to solve
practical problems that have arisen under the new version of
Article 9. He informed the committee that the drafting
committee made it a policy not to revisit previously made policy
decisions rather the drafting committee viewed itself as
technicians working to get things to work right. Therefore,
HB 9 is a technical bill that will fix problems and provide far
greater certainty in a number of areas such that transaction
costs are reduced. Ultimately, HB 9 is very pro-business and
pro-growth.
1:35:10 PM
REPRESENTATIVE LEDOUX again asked if there is a way to review
online whether a company is encumbered with UCC filings for all
50 states.
MR. HENNING answered that currently there is not a national
system, and therefore the review would have to be done on a
state-by-state basis. In further response to Representative
LeDoux, Mr. Henning agreed that there would be advantages to
such a searchable system. However, that hasn't occurred yet
partially because the new version of Article 9 that was adopted
in 2001 was actually written in the 1990s and the electronic
capacity available today wasn't clear at the time. Therefore,
the revision was drafted to continue the state filing system.
He offered that although there would be impediments, such as
false positives, the impediments could be overcome. To achieve
[a national online system] would require the will, time, and
funding, he opined. Furthermore, such action would likely
result in some level of defunding of state offices, which causes
disruption. Mr. Henning said he did agree with the premise and
it may very well happen, however, it hasn't yet.
1:38:09 PM
CHAIR KELLER asked whether there has been resistance [to the
revisions].
MR. HENNING responded that he is unaware of any resistance. He
noted that folks from every sector in the economy participated
in drafting the revisions. He noted that when the Uniform Law
Commission drafts an act it brings in representatives from all
interested parties. To his knowledge, there hasn't been a state
- of those states where the revisions are at the point of
adoption - where the revisions have been turned down.
1:40:31 PM
PAULA KELSEY, Recorder Manager, State Recorders Office,
Department of Natural Resources, in response to a question,
confirmed that the State Recorders Office, with its current
staff, is capable of handling the changes necessitated by HB 9.
1:42:13 PM
STACY SCHUBERT, Director, Governmental Affairs & Public
Relations, Alaska Housing Finance Corporation (AHFC), Department
of Revenue, provided the following testimony:
AHFC through its multi-family lending department
utilizes Article 9 of the UCC in securing some of its
collateral when financing multi-family projects. The
collateral, such as kitchen appliances, furniture,
equipment, and the like is perfected through the
recording of a UCC financing statement. The amendments
as proposed in HB 9 enhance AHFC's as well as other
creditors secured position by providing: 1) greater
guidance as to the name of the debtor that is to be
provided on the financing statement; 2) greater
protection for an existing secured creditor having a
security interest in after acquired property when the
debtor moves to another state or merges with another
entity. As an example, in the event that AHFC
forecloses on a property and is also trying to
repossess and sell the furniture and appliances, the
amendments proposed in the bill would protect AHFC if
the debtor has merged with another entity after the
loan has closed. AHFC supports the revisions as
proposed in HB 9 because they enhance AHFC's ability
to repossess its security.
1:43:43 PM
LUKE FANNING, Vice President, First National Bank Alaska; Alaska
Bankers Association, provided the following testimony:
I'm here today on behalf of the Alaska Bankers
Association, which represents eight state, national,
and federal savings banks in Alaska. Our member banks
are responsible for 85 percent of the nonpublic
commercial lending in Alaska as well as 2,500
employees across 130 branches statewide. The Alaska
Bankers Association supports HB 9 because it provides
for necessary amendments to Article 9 of the Uniform
Commercial Code. Article 9 has been adopted in all 50
states and this legislation is necessary to address
recent amendments made to the Article in 2010. The
amendments have already been adopted in 32 other
states and similar legislation is pending in many
others. It is important that this bill be passed this
session because the amendments will be effective July
1, 2013. If the bill is not passed this year, then
Alaska will be inconsistent with the amendments
already adopted in the majority of the states. The
bottom line for us is that the bill is necessary to
keep Article 9 up to date and to ensure that Alaska
law is consistent with financial practices in the rest
of the country. Failure to pass the bill could result
in additional costs and uncertainty for Alaska
businesses and financial services customers. Thank
you for your time and consideration on the Alaska
Bankers Association's position on this bill.
MR. FANNING, in response to a question, related that the Alaska
Bankers Association is also in support of the Article 4A portion
of HB 9.
1:46:22 PM
CHAIR KELLER, after ascertaining that no one else wished to
testify, closed public testimony on HB 9.
1:46:48 PM
REPRESENTATIVE LYNN moved to report HB 9 out of committee with
individual recommendations and the accompanying fiscal notes.
There being no objection, HB 9 was reported from the House
Judiciary Standing Committee.
HB 57 - ENTITY TRANSACTIONS ACT
1:47:24 PM
CHAIR KELLER announced that the final order of business would
be, HOUSE BILL NO. 57, "An Act adopting the Alaska Entity
Transactions Act; relating to changing the form of entities,
including corporations, partnerships, limited liability
companies, business trusts, and other organizations; amending
Rule 79, Alaska Rules of Civil Procedure, and Rules 602(b)(2),
602(c), and 605.5, Alaska Rules of Appellate Procedure; and
providing for an effective date."
1:47:56 PM
REPRESENTATIVE LINDSEY HOLMES, Alaska State Legislature, as one
of HB 57's joint prime sponsors, explained that HB 57 is
designed to make it easier to do business in Alaska by reducing
unnecessary burdens. Over time businesses merge and morph, HB
57 aims to allow the aforementioned to be done more efficiently.
The bill applies to the following four transactions: mergers
between different entities; conversions; an interest exchange;
and domestication. Current Alaska law would require multiple
steps and could cost a lot of money to perform the
aforementioned transactions. This bill, HB 57, will make it
easier to accomplish the aforementioned transactions in one
single step. She explained that the point is to conclude with a
sole entity that retains all the assets and liabilities of the
business, which would also protect creditors.
1:50:12 PM
REPRESENTATIVE GRUENBERG moved to adopt the proposed committee
substitute (CS) for HB 57, Version 28-LS0255\O,
Kirsch/Bannister, 3/12/13, as the working document. There being
no objection, Version O was before the committee.
REPRESENTATIVE HOLMES informed the committee that the one change
encompassed in Version O is the change from 5 days to 10 days on
page 35, line 25. The change was made per the request of the
Department of Commerce, Community & Economic Development (DCCED)
and would provide the department five more days to respond to
certain filings.
1:51:17 PM
JAMES R. WALDO, Staff, Representative Lindsey Holmes, Alaska
State Legislature, related that HB 57 is about creating an
efficient marketplace for the various types of
businesses/entities that can exist in Alaska including a limited
liability company (LLC), a limited liability partnership, and a
corporation. The various types of business entities often need
to communicate with each other and engage in other transactions.
This legislation establishes an environment such that the
various business entities can engage in transactions without
having to "jump through extra hoops." For example, in order for
an Alaska limited liability company to merge with an Alaska
corporation both of which were created, formed, and do business
in Alaska, the businesses would first have to create another
limited liability company in another state under that state's
laws, merge the Alaska limited liability company with that
state's new limited liability company. The now merged limited
liability company would need to then be converted to a
corporation under that state's laws. The next step would be to
transfer the new corporation back to Alaska and merge with the
Alaska corporation. The goal of HB 57 is to create an efficient
marketplace in Alaska such that businesses can perform all of
the aforementioned in Alaska without all of the extra time,
legal work, and costs. Mr. Waldo informed the committee that HB
57 is also a piece of legislation that's the result of the
Uniform Law Commission. He acknowledged the complexity of the
issue and the law surrounding it, but highlighted its importance
in keeping Alaska businesses competitive and growing.
1:56:37 PM
MR. WALDO, in response to questions, opined that HB 57 won't add
additional burdens to entities in Alaska, which will still
operate under the statute under which they were originally
created. This legislation, he said, merely adds an additional
"super highway" for businesses to engage in transactions with
other businesses.
1:57:41 PM
HARRY HAYNSWORTH, Commissioner, the National Conference of
Commissioners on Uniform State Laws (NCCUSL), began by informing
the committee that he is a retired law professor and was a dean
of various law schools during his career. He then informed the
committee that he was the chair of the committee that drafted
the Model Entity Transactions Act (META). He concurred with the
explanations of the overall purpose of [HB 57]. While one may
think it's lengthy and complicated, it's not as it simply sets
forth the procedures to follow to enact the aforementioned four
types of transactions. The pattern is the same in all
[transactions], just the voting to approve it is different. The
act [HB 57] very much simplifies the process for any of the
transactions and clarifies the legal effect of each of them in
such a way that it applies to any state or transaction. Mr.
Haynsworth noted the act is a joint project of the Commissioners
of the Uniform State Laws and the American Bar Association
(ABA), which is why it's a model act rather than a uniform act;
it involves corporations, both for-profit and not for-profit,
allowing them to merge, convert, and domesticate to have
interest exchanges as well as the unincorporated entities such
as the partnerships and LLCs. The ABA has jurisdiction over the
corporate codes, both the Model Business Corporation Act and the
Model Nonprofit Corporation Act. This joint effort provides a
"junction box" statute that allows all these transactions to
take place between and among the various entities wherever they
may be located. Therefore, it facilitates these transactions,
substantially reduces the costs, and clarifies a lot of issues
that previously existed about these various transactions.
2:01:02 PM
MR. HAYNSWORTH, in response to Representative Gruenberg,
specified that at least six states have adopted this act and
it's pending in about six others. He didn't recall there ever
being objection to this rather the issue has been getting folks
interested enough to propose it. Every time that it has been
considered by legislatures it has been adopted unanimously as
members have realized the benefits.
2:02:40 PM
REPRESENTATIVE GRUENBERG, noting that he supports HB 57, asked
why the fact that it is a joint effort between the Commissioners
of the Uniform State Laws and the ABA preclude it from being a
uniform act rather than a model act.
MR. HAYNSWORTH explained that a decision was made that it needed
to be a model act rather than a uniform act because of its
involvement with the Model Business Corporation Act and the
Model Nonprofit Corporation Act.
2:04:16 PM
REPRESENTATIVE GRUENBERG asked whether the adoption of HB 57
necessitates the adoption of various other laws to allow the
creation of these entities within the state.
MR. HAYNSWORTH stated that Alaska statute already provides for
most of the types of entities, including the general partnership
statute, the limited partnership statute, a limited liability
company act, the for-profit and nonprofit corporation codes, as
well as some cooperative act. A uniform limited cooperative
act, which allows cooperatives to engage in any type of
business, is the only one that Alaska may not have and want to
consider. He noted that cooperatives aren't covered by this act
as many states don't want to allow them to convert or merge.
2:06:05 PM
REPRESENTATIVE GRUENBERG asked Representative Holmes whether
HB 57 includes the Uniform Limited Cooperative Act. If not, he
asked why. He then asked whether it would be appropriate to
allow some of the other entities to be established in Alaska.
REPRESENTATIVE HOLMES clarified that to the best of her
knowledge Alaska doesn't yet have a Uniform Limited Cooperative
Act, and thus it wasn't included in HB 57. All the entities
referenced in HB 57 are already referenced in Alaska law, and
therefore there should be no need to update. With regard to
whether there would be a desire to create a Uniform Limited
Cooperative Act in Alaska, she said she didn't know since she is
very unfamiliar with such entities.
2:08:30 PM
CHAIR KELLER, noting that business contract law is
Representative Holmes' expertise, asked how often she
encountered a problem.
REPRESENTATIVE HOLMES explained that she introduced HB 57
because she has been told in her role as a member of the ABA's
Committee of Corporate Council that these [transactions] happen
frequently in Alaska. She then provided examples. In further
response to Chair Keller, Representative Holmes relayed that HB
57 will make it easier and cheaper to do business in Alaska.
Therefore, she opined that it will make Alaska a more attractive
place. She noted that HB 57 provides an option along with
current law.
2:12:38 PM
REPRESENTATIVE GRUENBERG asked whether there is any serious
opposition to the bill.
MR. HAYNSWORTH related his understanding that there has never
been opposition to this. There aren't more enactments [of the
act] because the bar association of the particular states
haven't been interested enough to push it. However, whenever it
has come forward, it sails through, he stated.
MR. WALDO, in further response to Representative Gruenberg,
explained that although HB 57 is a new bill in the Twenty-Eighth
Alaska State Legislature it was also dealt with in the Twenty-
Seventh Alaska State Legislature. He recalled that in 2011 the
Council of State Governments recommended it as model legislation
for the states. Mr. Waldo also related the lack of opposition.
REPRESENTATIVE HOLMES added that the bill addressing this in the
Twenty-Seventh Alaska State Legislature was slowed in order to
ensure it was correct because it deals with many different
statutes. She, too, related that she knew of no opposition [to
HB 57].
2:17:39 PM
DON HABEGER, Director, Division of Corporations, Business, and
Professional Licensing, Department of Commerce, Community &
Economic Development, noted that the division worked with the
Department of Law on a number of issues that were of [concern
with the bill last session], including an administrative change
so that the department would have 10 days rather than 5 days to
respond to certain filings. Mr. Habeger then related
satisfaction with [Version O] and the division's role in it.
2:20:11 PM
REPRESENTATIVE GRUENBERG inquired as to whether anything in
Version O is so different from the model act that it wouldn't be
considered a model act.
2:21:40 PM
MR. HAYNSWORTH, regarding the change in Version O from 5 days to
10 days on page 35, line 25, related that the [Uniform Law
Commission] believes that whatever is necessary for the filing
offices of the state to have consistent procedures across the
spectrum [of entities] should be followed. Therefore, if the
other statutes provide for 10 days, then this statute should as
well. The filing statutes in HB 57 should be consistent with
the other filing provisions for other entities. After reviewing
the bill, Mr. Haynsworth said that he didn't find anything in it
to the contrary. Furthermore, nothing in the bill would be
inconsistent with what is in the model act or authorized to be
in the model act. Therefore, he commended the drafters as
[HB 57] is totally parallel and consistent with existing state
statute.
CHAIR KELLER announced that HB 57 [Version O] would be held
over.
2:25:30 PM
ADJOURNMENT
There being no further business before the committee, the House
Judiciary Standing Committee meeting was adjourned at 2:25 p.m.