Legislature(2015 - 2016)BARNES 124
04/13/2015 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Adjourn | |
| Start | |
| HB169 | |
| HB66 | |
| HB12 | |
| HB122 |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 12 | TELECONFERENCED | |
| *+ | HB 169 | TELECONFERENCED | |
| += | HB 66 | TELECONFERENCED | |
| *+ | HB 122 | TELECONFERENCED | |
HB 122-CORPORATION/LLC/PARTNERSHIP REPORTS
4:43:11 PM
CHAIR OLSON announced that the final order of business would be
HOUSE BILL NO. 122, "An Act relating to the required reports,
required fees, and other aspects of for-profit corporations,
cooperative corporations, nonprofit corporations, corporations
formed under AS 10.40, limited liability companies, and limited
liability partnerships; and providing for an effective date."
4:43:48 PM
REPRESENTATIVE COLVER, speaking as prime sponsor of HB 122,
stated that this bill hopes to cut "red tape" by reducing cost
and time for businesses and the state by reducing the corporate
filing reports from two years to four years. Currently, if the
corporation does not renew its certificate of authority, it will
automatically lapse and dissolve. There would not be any fiscal
change except to change the regulations.
4:45:59 PM
DAVID SCOTT, Staff, Representative Jim Colver, on behalf of the
prime sponsor, Representative Jim Colver, stated that HB 122
would amend two chapters, AS 10, related to corporation and AS
32, the Uniform Partnership Act. He related that the intent of
the bill would be to change the reporting requirements from two
years to four years for cooperative corporations, nonprofit
corporations, religious corporations, LLCs and limited liability
partnerships, businesses and professional corporations. He
added that the changes are limited to the length of time for
reporting from a biennial report to a status report every four
years.
4:47:06 PM
MR. SCOTT briefly reviewed the bill. He stated that Sections 1-
18 relate to the Alaska Corporations Code, Sections 19-25 relate
to the Cooperative Corporations Act, Sections 26-36 relate to
the Alaska Nonprofit Corporations Act, Sections 37-38 relate to
religious corporations, Sections 39-45 relate to LLCs, Sections
46-49 relate to the Uniform Partnership Act, Section 50 provides
transition provisions, Section 51 relates to regulation
authority, and Sections 52-53 provide effective dates.
MR. SCOTT directed attention to Section 6, which would change
the reporting requirement from every two years to every four
years. Section 12 would change the amount the filing fee, which
has a net effect of not changing the overall fees.
4:48:20 PM
MR. SCOTT referred to Sections 18, 25, 36, and 49 provide
definitions and Section 50, provides the transition provisions
and conversion from a two-year reporting requirement to four
years.
4:48:40 PM
REPRESENTATIVE JOSEPHSON asked whether there was anything the
department might discern in a two year renewal cycle as opposed
to the four year window.
REPRESENTATIVE LEDOUX changed to status report since people may
not know what quatra-annual report.
MR. SCOTT answered that the bill drafter made the decision.
4:49:46 PM
REPRESENTATIVE HUGHES expressed concern about cost of $72,000
listed in the fiscal note for operating expenditures and a loss
of $3.1 million for fiscal year (FY) 16, and in FY 17 of 2,617.
She asked for further clarification on the fiscal note.
REPRESENTATIVE COLVER deferred to the department to respond.
4:51:13 PM
REPRESENTATIVE HUGHES asked for further clarification on the
cycle.
REPRESENTATIVE COLVER suggested that it would be more
appropriate for department to answer the mechanics.
4:52:33 PM
REPRESENTATIVE JOSEPHSON asked for the type of things the
department reviews when it inspects the biennial corporate
reports and what might go missing if the reports were not
reviewed every two years.
SARA CHAMBERS, Operations Manager, Division of Corporations,
Business, and Professional Licensing, Department of Commerce,
Community, & Economic Development (DCCED), answered the
department collects basic information. The division was most
interested in the officers of the corporation, and the
registered agent. She stated that the division becomes the
repository for this information and many entities and private
citizens who use the information.
4:53:34 PM
CHAIR OLSON asked whether any information might be time
sensitive and any impact of waiting four years for the data.
MS. CHAMBERS reported that if HB 122 were to pass, Alaska would
be the only state not collecting the information on an annual or
biennial basis. She acknowledged that the information on file
might be less accurate if it was only required to be reported
every four years. She said the department was neutral on the
bill.
REPRESENTATIVE LEDOUX asked how the mechanism would work under
the bill if the registered agent changed. She asked whether
anyone else shared the concern.
MS. CHAMBERS shared Representative LeDoux's concern.
4:55:35 PM
REPRESENTATIVE HUGHES asked whether any other states have
something similar.
MS. CHAMBERS answered the program coordinator showed other
states have an annual or biennial license renewal.
4:56:03 PM
REPRESENTATIVE COLVER asked whether any states do not require
reporting by corporations.
MS. CHAMBERS said she was not aware of any jurisdictions without
reporting requirements.
REPRESENTATIVE COLVER offered that he has done some research and
will distribute the results.
4:56:48 PM
REPRESENTATIVE COLVER asked for any consequences to corporations
for not filing the biennial registration form.
MS. CHAMBERS answered that the department sends out courtesy
notices to corporations if the department does not receive the
form timely and if the corporation fails to respond, the
corporation is involuntarily dissolved.
4:57:23 PM
REPRESENTATIVE COLVER expressed concern that the corporation
would be dissolved for failure to return the biennial form that
restates corporate officers and registered agents - which can be
changed at any time. He stated that corporations pay a $100
filing fee for their corporate license, but the entity still
needs a business license, and any professional licenses. He was
unsure if it was in the state's interest to dissolve
corporations, which supports his desire to extend corporate
licenses for four years.
4:58:15 PM
MS. CHAMBERS, in response to Representative Hughes, stated that
the division initiated the courtesy notice a few years ago and
found many corporations appreciated the reminder. The division
has seen the numbers of involuntary corporate dissolutions drop
dramatically. She said the division will continue to send
courtesy reminders. As a side benefit, any net effect; surplus
for corporate fining fees is deposited into the general fund,
which has been between $5 to 6 million. She stated that part of
$72,000 in the fiscal note was to cover informational courtesy
mailings. In further response to Representative Hughes, she
explained that the courtesy reminders were sent out prior to the
involuntary dissolution; however she hoped everyone would
remember to file their biennial reports.
5:00:23 PM
REPRESENTATIVE HUGHES asked how many corporations were
involuntarily dissolved last year.
MS. CHAMBERS said she was uncertain, but could compile that
information.
5:00:49 PM
REPRESENTATIVE HUGHES asked if corporations that are dissolved
re-form their corporation.
MS. CHAMBERS answered yes; but explained corporations dissolve
for a variety of reasons, and some corporations come back as a
different iteration. Others simply acknowledged that they had a
glitch and failed to renew. In further response to
Representative Hughes, she explained that the initially filing
costs about $200 and the biennial report cycle would follow.
5:02:05 PM
REPRESENTATIVE LEDOUX, with regard to registered agents,
referred to page 1, lines 12-14, indicates that the corporation
was dissolved if within 30 days it has failed to notify the
commissioner of any changes to the registered agent. Thus, that
would not really be a consideration with the four year cycle
versus the two year cycle.
MS. CHAMBERS answered that the division could involuntarily
dissolve a corporation if the division was aware of any changes
in registered agents.
5:03:01 PM
REPRESENTATIVE LEDOUX said the only information filed in the
biennial report was registered agent and the officers of the
corporation.
MS. CHAMBERS answered that some additional information is
collected, such as shares of corporate ownership.
5:03:41 PM
REPRESENTATIVE LEDOUX wondered if it makes sense to have no
filing required, unless the corporation changes its officers or
registered agents.
REPRESENTATIVE COLVER agreed with Representative LeDoux's
approach.
5:04:17 PM
CHAIR OLSON asked if the division could generate a list of other
jurisdictions in terms of annual and biennial corporate filings
to ensure Alaska treats corporations similarly.
5:04:53 PM
REPRESENTATIVE COLVER said the biennial report asks corporations
to list their corporate officers, the number of outstanding
shares and the shareholder interest of the corporate officers,
or in other words, the number of share issued, the number of
outstanding shares, and the number of shares held by corporate
officers.
REPRESENTATIVE COLVER offered his belief that involuntary
dissolution of a company because of failure to fill out this
short form seemed like a harsh penalty. He suggested one
alternative to changing the cycle was to offer forgiveness since
it is expensive to reinstate a corporation, which often requires
legal assistance.
5:06:02 PM
REPRESENTATIVE JOSEPHSON asked whether the impetus was the
frustration over the threat of dissolution.
REPRESENTATIVE COLVER answered that it was he has a bit of a
"Libertarian" streak in him. He wasn't certain that government
should tell its citizens to do something. He asked whether the
state could get by with different reporting period was one
question and achieve the same results. He suggested that
corporations may receive the card in the mail, but the
corporation must track when the biennial report is due.
5:08:01 PM
[HB 122 was held over.]