3:03:40 PM SB 78-LIQUOR LICENSE HOLDER LIABILITY  CHAIR EGAN announced SB 78 to be up for consideration. [27- LS0282\M version was before the committee.] ESTHER TEMPLE, staff to Senator McGuire, sponsor of SB 78, said the intent of this bill is to provide equal treatment to limited liability companies (LLC) and foreign LLCs in the liquor liability context as they are treated in the business generally. She explained that presently persons engaged in businesses commonly use LLCs instead of corporations while leaving intact the limited liability of the LLC members for all other business purposes. Currently, AS 04.21.035 is an exception to the protections against individual liability offered to partners of properly registered and maintained LLPs and LLCs. In other words, partners and members of LLPs and LLCs are not relieved of the obligation or the liability otherwise imposed upon a liquor license holder under Title 4. So, in order to avoid that result owners of liquor businesses that hold a liquor license that seek limited liability protection have to do business through a corporate entity. She said that businesses have increasingly turned to LLCs as a preferred entity for doing business in order to have greater management and efficiency without sacrificing the limited liability protection from business creditors that are afforded to owners of corporations. MS. TEMPLE said that LLCs are commonly used in Alaska as well as in the United State as limited liability protection entities in place of corporations. Therefore, SB 78 would amend existing statute to state that the liability will be imposed only on partners of a limited liability partnership or a foreign limited liability partnership, but will no longer apply a LLC or a foreign LLC. If passed, SB 78 would encourage business development by reflecting the fact that LLCs are more similar to those used in the business world as an alternative to corporations and are less commonly used as alternatives to sole proprietorships or general partnerships, which pass on general liability to their owners. 3:06:55 PM SENATOR PASKVAN asked if a foreign corporation can own a liquor license. He knows that state-formed corporations can own a liquor license. The reason he asked is because "foreign LLPs" are included in the language of SB 78. MS. TEMPLE answered that she didn't know that answer, but would look into it for him. CHAIR EGAN asked if anyone in the audience could answer. 3:08:30 PM BOB KLEIN, chairman, Alcohol Beverage Control Board (ABC), said he is an industry member because he is the Brown Jug Liquor Stores director of sales in Anchorage. He is also a member of CHARR and serves on their Government Affairs Committee.{ MR. KLEIN related that he was on the ABC board when LLCs were first introduced into Title 4 language. Their intent at the time was to give LLCs the same protections as partnerships and corporations. Recently he found that they missed the mark, because of inexperience and it now makes sense to insert Senator McGuire's changes. SENATOR PASKVAN said he agreed with him. He asked if a foreign LLP could own a liquor license. MR. KLEIN responded that he didn't know the answer. 3:11:08 PM DICK ROSTEN, Attorney, Dorsey & Whitney, representing Alyeska Resort as well as other holders of liquor licenses said the answer is yes; foreign corporations can own a liquor license if they are qualified to do business in Alaska. SENATOR PASKVAN asked if they do it by forming an Alaskan entity. MR. ROSTEN replied that they use a different process. Any corporation that is not formed in Alaska is known under our statutes as a "foreign corporation" whether they were formed in Canada or in Nevada or Delaware. They go through a qualifying process followed by a certificate of authority to own a business in Alaska. SENATOR PASKVAN asked if the assets of either the foreign entity or an Alaskan entity are equally subject to a judgment. MR. ROSTEN answered yes: whoever holds a liquor license, regardless of whether it's an Alaskan domestic corporation or a Nevada corporation, for example, those assets would be at risk. SENATOR PASKVAN asked if that is established as part of the process of qualifying to do business in Alaska by the foreign entity. MR. ROSTEN answered yes. 3:13:44 PM CHAIR EGAN thanked everyone for their comments and closed public testimony. He announced that SB 78 would be held, and finding no further business to come before the committee, he adjourned the meeting at 3:15 p.m.