Legislature(2013 - 2014)HOUSE FINANCE 519
04/09/2014 08:30 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing: Alaska Mental Health Trust Authority - John Mcclellan | |
| HB379 | |
| HB316 | |
| HB308 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | HB 316 | TELECONFERENCED | |
| + | HB 308 | TELECONFERENCED | |
| + | HB 214 | TELECONFERENCED | |
| + | SB 191 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 379 | TELECONFERENCED | |
HOUSE BILL NO. 308
"An Act relating to the exemptions under the Alaska
Securities Act and to securities issued by Native
corporations; and providing for an effective date."
9:59:29 AM
REPRESENTATIVE LINDSEY HOLMES, SPONSOR, spoke to the bill.
She relayed that many changes in the bill were conforming.
The bill did three substantive things: 1) eliminated fee
and filing requirements for small or limited offering
exemptions from registrations, specifically to 25 or fewer
investors or to existing security holders; 2) increased the
division's time to review and offer to repay or rescission
offer; and 3) clarified that securities issued by the
Alaska Native Claims Settlement Corporation, in compliance
with federal law, were exempt from registration. While
removing the reporting requirements, the bill still
required the business issuing the securities to provide
required information to investors in compliance with the
Securities Act so that they could make an informed
investing decision. The bill kept the Act's consumer
protection language intact and did not inhibit the Division
of Banking and Securities from investigating violations or
the investor seeking damages through the court system The
bill further sought to clarify that stock issued by Alaska
Native Claims Settlement Act (ANCSA) corporations to Alaska
Natives born after December 18, 1971 or issued after the
original stock offering in compliance with federal law were
exempt from registering under AS 45.55.070.
Vice-Chair Neuman assumed that the issuance of stock
related to corporate law for corporations within the state.
Representative Holmes replied in the affirmative, but
furthered that it could also be a limited liability. She
stressed that it had to be an Alaska entity and Alaska
investors.
Vice-Chair Neuman wondered why the state required the
additional information. Representative Holmes deferred the
question to the department for further detail.
10:07:22 AM
Co-Chair Stoltze spoke about the issue of the exemption
from the record request. He understood that native
corporations had a different set of laws, but stressed that
there were some large corporations that were favored by the
existing law. He wondered if the legislation would
disenfranchise the shareholders from the process. He
initially felt that the legislation was fairly simple, but
felt that there was brevity to the analysis in the fiscal
note. Representative Holmes agreed that the Alaska Native
Claims Settlement Act (ANCSA) corporations held some
issues, but felt that the concerns were unrelated to the
legislation. She stressed that the bill was about filing a
form with the state, but did not change any practice. The
issue was related to where the information was filed, so
because there was a requirement to comply with federal law
one could only apply within that requirement. She pointed
out that there was never a realization that those files
should also be filed with the state. The general accounting
office noticed that the filing requirement needed to be
detailed in state law.
Co-Chair Stoltze asked if the requirement was onerous.
Representative Holmes replied that the onerous part was
less affiliated with ANCSA corporations, but it was
redundant.
Co-Chair Stoltze pointed to the sponsor statement. He felt
that the information was available subject to a public
records request and served no interest of the department.
He did not want unintentional consequences. Representative
Holmes replied that the bill did not change any laws about
information to be provided to investors. She agreed that
she did not want unintended consequences.
10:12:49 AM
KEVIN ANSELM, DIRECTOR, DIVISION OF BANKING AND SECURITIES,
DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT,
ANCHORAGE (via teleconference), referred committee members
to a document titled "HB 308 Alaska Securities Act
Exemptions" dated March 31, 2014 (copy on file). She stated
that, generally, most securities must either be registered
or exempt from registration. The bill did not change those
requirements, but eliminated some of the paperwork and fee
filing with the division for the small offerings and
offerings to existing security holders. She shared that
there were three substantive changes: 1) eliminated fee and
filing requirements for small or limited offering
exemptions from registrations, specifically to 25 or fewer
investors or to existing security holders; 2) increased the
division's time to review and offer to repay or rescission
offer; and 3) clarified that securities issued by the
Alaska Native Claims Settlement Corporation, in compliance
with federal law, were exempt from registration. The small
offering exemptions were noted on page 2, line 21 and page
3, line 30 of the legislation. The small offering
exemptions were usually referred to as "friends and family
exemptions." Those transactions occurred because someone
has a business and invites friends or family to invest in
that business, and sales commissions were often involved.
The small offering exemptions were driven by the
entrepreneur, with no public solicitation or advertising.
Most states had small offering exemptions, and the filing
was required because filings were more prolific in the
original filing act. She noted that there were legends on
the securities that explain the limitations on the
securities resale; information was required, so investors
could make the appropriate decisions based on their own
needs; and the more investors there were, the more
prescriptive the requirements. She stressed that the only
change to the provisions was the filing of the form and fee
payment. She noted one other effected exemption in the bill
on page 4, line 19. The exemption was for securities issued
to existing shareholders, and only applied if there were no
commissions paid beyond a standby commission for the new
security issuance. Typically, the exemptions were used by
an existing business that were advancing. She stressed that
the division currently seldom receiving filings for this
particular exemption, but those that were filed were
usually unnecessary, because there was no commission paid
in the transaction.
10:20:47 AM
ALLAN JOHNSTON, REGIONAL MANAGER, TEAM NETWORK, INC.,
ANCHORAGE (via teleconference), spoke about his business
and angel investing networks. He felt that it was difficult
to navigate the technicalities of the laws related to the
legislation. He expressed respect for Ms. Anselm with her
work within the municipality to educate the people that
were attempting to create some of the programs. The
attorney fees in the private sector was unnecessary, so
there was friction and expensive that was counterproductive
on both sides. He pointed out that Alaska had the third
highest median family income in the United States, and
fiftieth in local risk capital.
Co-Chair Stoltze appreciated the testimony. He stated that
any time an ANCSA corporation was mentioned, there was an
assurance that the committee would be fully informed.
Co-Chair Stoltze CLOSED public testimony. He asked if there
were any amendments.
Representative Costello addressed the fiscal note from the
Department of Commerce, Community and Economic Development.
Representative Costello MOVED to REPORT HB 308 out of
committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
HB 308 was REPORTED out of committee with a "do pass"
recommendation and with one previously published fiscal
impact note: FN1 (CED).