01/16/1996 01:07 PM House CRA

 HB 392 - NATIVE CORP DIRECTOR CLASSIFICATION                                
                                                                               
 Number 429                                                                    
                                                                               
 CO-CHAIR IVAN noted the bill packets contained a copy of HB 392;              
 the sponsor statement; two zero fiscal notes, one from the                    
 Department of Community and Regional Affairs and one from the                 
 Department of Commerce and Economic Development; a letter from Glen           
 Price of Foster Pepper & Shefelman explaining the intent of the               
 bill; and resolutions in support from Napaskiak Incorporated and              
 Swan Lake Corporation.  As sponsor of the legislation, he asked Tom           
 Wright to present the bill on his behalf.                                     
                                                                               
 Number 477                                                                    
                                                                               
 TOM WRIGHT, Legislative Assistant to Representative Ivan, presented           
 the sponsor statement for HB 392, explaining it amends the Alaska             
 corporations code to authorize Alaska Native Claims Settlement Act            
 (ANCSA) village corporations to provide for Board of Director                 
 classification in their bylaws.  If enacted, HB 392 would allow               
 ANCSA village corporations to amend their articles of incorporation           
 to authorize a classified or staggered term board of directors by             
 a majority vote of the shares represented at a meeting of                     
 shareholders.  Under current law, for those villages which did not            
 have classified boards in place by July 1, 1989, such an amendment            
 requires a two-thirds vote of all outstanding shares entitled to              
 vote, which is often difficult for village corporations to achieve.           
                                                                               
 Number 564                                                                    
                                                                               
 REPRESENTATIVE PETE KOTT asked if there were only two village                 
 corporations to which HB 392 applied.                                         
                                                                               
 MR. WRIGHT responded that they were aware of only two, Napaskiak              
 and Swan Lake; however, there could be others.                                
                                                                               
 REPRESENTATIVE KOTT asked if they knew the reason why, prior to               
 1989, those corporations did not have a classified board in place.            
                                                                               
 MR. WRIGHT suggested that Glen Price, representative for Napaskiak            
 and Swan Lake, could better answer the question.                              
                                                                               
 CO-CHAIR IVAN added that the legislation was intended to assist               
 village corporations that incur costs in executing annual                     
 shareholder meetings.  Shareholders attended by proxy and in                  
 person, but the statutes required a two-thirds majority of all                
 shareholders to amend the articles and bylaws.  He deferred to Glen           
 Price to answer technical questions.                                          
                                                                               
 Number 686                                                                    
                                                                               
 GLEN PRICE, Foster Pepper & Shefelman, representing Napaskiak                 
 Incorporated and Swan Lake Corporation, testified via                         
 teleconference from Anchorage, saying he was unaware of why the               
 corporations had no classified boards before 1989.  He had                    
 represented Napaskiak and Swan Lake for two or three years.  The              
 corporations had attempted to address the issue at their last two             
 annual meetings, but had only obtained a majority vote at each                
 meeting, not the two-thirds vote required to amend articles.  He              
 added there were probably other corporations to which HB 392 would            
 apply, but he did not know which corporations had classified                  
 boards.  He thought polling Native corporation villages might be              
 required to obtain that information, which was not on file with the           
 Department of Commerce and Economic Development.                              
                                                                               
 Number 760                                                                    
                                                                               
 REPRESENTATIVE KOTT asked Mr. Price if the villages having                    
 classified boards in place prior to 1989 required a simple majority           
 vote.                                                                         
                                                                               
 MR. PRICE responded that he thought so; before July 1, 1989, it               
 could be in the bylaws.  Because a board could have amended the               
 bylaws, he thought boards rather than shareholders of most                    
 corporations had enacted the change.                                          
                                                                               
 Number 819                                                                    
                                                                               
 CO-CHAIR IVAN clarified that in no way did the legislation attempt            
 to alter the checks and balances in place.  However, the majority             
 of small communities had five directors, each up for election every           
 year.  In the case of Napaskiak and Swan Lake, they were trying to            
 expand the number of directors and institute staggered terms to               
 provide continuity.                                                           
                                                                               
 REPRESENTATIVE KOTT asked whether HB 392 would affect regional                
 corporations.                                                                 
                                                                               
 MR. PRICE confirmed that it would not.  He said it specifically               
 referenced village corporations only.                                         
                                                                               
 Number 908                                                                    
                                                                               
 REPRESENTATIVE KIM ELTON noted that the language of July 1, 1989,             
 was highly specific.  He asked Mr. Price what the history of the              
 1989 language was and why it was included.                                    
                                                                               
 MR. PRICE responded that July 1, 1989, was the effective date of              
 the corporations code currently in place.  Prior to that,                     
 corporations could provide for classified boards in their bylaws.             
 Under the new code, there must be authority in the articles if                
 there was no classified board before July 1, 1989.  For pre-                  
 existing corporations, as of July 1, 1989, they needed a two-thirds           
 vote to amend the articles.  However, he said, those corporations             
 cannot even get two-thirds attendance at a meeting.                           
                                                                               
 REPRESENTATIVE ELTON wanted to know if there had been discussion of           
 the difference between treatment of village corporations existing             
 before and after 1989.                                                        
                                                                               
 MR. PRICE responded he was unaware of such discussion.                        
                                                                               
 CO-CHAIR IVAN asked if there were any further comments or questions           
 from the committee.  Hearing none, he indicated he wanted to                  
 consider passing the bill from committee.                                     
                                                                               
 Number 1109                                                                   
                                                                               
 CO-CHAIR ALAN AUSTERMAN moved that HB 392 move from committee with            
 individual recommendations.  There being no objection, it was so              
 ordered.