Legislature(1993 - 1994)

03/22/1993 01:00 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  HB 112:  UNIFORM LIMITED PARTNERSHIP ACT UPDATE                              
  Number 741                                                                   
  REPRESENTATIVE CARL MOSES, PRIME SPONSOR of HB 112,                          
  mentioned that the year before, Alaska's Uniform Limited                     
  Partnership Act was amended so as to conform with                            
  recommendations of the National Conference of Commissioners                  
  for Uniform State Laws.  He noted that one significant                       
  component had been omitted from the bill which was enacted                   
  the year before.                                                             
  REPRESENTATIVE MOSES said that section 1 of HB 112 placed                    
  the notice form into statute and replaced the "long" notice                  
  form with a shorter one.  He said that this would reduce                     
  current cumbersome registration requirements.  He noted that                 
  the effective date of HB 112 would coincide with the                         
  effective date of last year's SB 193, allowing the entire                    
  body of amendments to become law on July 1, 1993.  He stated                 
  that the bill would result in no fiscal impact to the state.                 
  Number 770                                                                   
  testified in strong support of HB 112.  He said that Alaska                  
  had enacted the Uniform Limited Partnership Act in 1917, and                 
  left it in place, unamended, until 1990, when one small                      
  portion was updated.  He said that in 1976, the Uniform Law                  
  Commissioners came out with a thorough revision of the Act.                  
  Additionally, amendments to the 1976 revision had come out                   
  in 1985, he noted.  He commented that part of the 1985                       
  amendments appeared in HB 112.  He mentioned that all of the                 
  provisions of HB 112, with the exception of section 1, were                  
  compatibility amendments.                                                    
  MR. PETERSON stated that the gist of HB 112 was to change                    
  the current long form of limited partnership certificates to                 
  a shorter form, or "notice form."  He stated further that                    
  the partnership agreement, not the certificate, formed the                   
  heart of the business entity of partnerships.  All the                       
  certificate needed to show, he said, was the name of the                     
  partnership, and the names of the general partners involved.                 
  Additionally, he said that the certificate showed the five                   
  items listed on lines 8-13, on page 1 of HB 112.                             
  MR. PETERSON indicated that the certificate did not need to                  
  show the name and address of all of the limited partners,                    
  and the amount of capital contribution of each limited                       
  partner.  He said that the problem was that as the use of                    
  limited partnerships had developed over the decades, many                    
  had grown to include hundreds and thousands of limited                       
  partners.  He commented that it was no longer feasible,                      
  given the number of partners involved in many partnerships,                  
  to meet the requirements of the current Uniform Limited                      
  Partnership Act.  He noted that one requirement was that a                   
  certificate be signed by all partners, general and limited.                  
  MR. PETERSON said that when the Uniform Limited Partnership                  
  Act was written in 1917, partnerships were very much small,                  
  local entities.  Now, however, partnerships were used                        
  primarily as financing, capital acquisition structures, and                  
  were no longer local in nature.  By retaining the old                        
  version of the Uniform Limited Partnership Act, he said,                     
  Alaskans were being hindered in two respects:  the ability                   
  of outside partnerships to deal with Alaskans, and the                       
  ability of Alaskans to participate in partnerships.                          
  TAPE 93-39, SIDE B                                                           
  Number 000                                                                   
  MR. PETERSON said that HB 112 would enhance the business                     
  climate in Alaska.  He mentioned that the reason that the                    
  provisions of HB 112 were not included in the bill that                      
  passed the year before was that one California law professor                 
  preferred the old-fashioned notice requirements.  That                       
  professor had convinced the sponsor of the year before's                     
  SB 193 that he should not include the notice provisions of                   
  the 1985 amendments in his bill.                                             
  MR. PETERSON noted that as SB 193 made its way through the                   
  legislative process, the sponsor became convinced that he                    
  should amend it to include the notice requirement changes.                   
  However, time ran out, and it was passed the way it had been                 
  introduced.  House Bill 112 fixed the "glitch" contained in                  
  last year's SB 193, he said.                                                 
  Number 044                                                                   
  REPRESENTATIVE DAVIDSON asked Mr. Peterson what was lost and                 
  what was gained in changing the notice form from the long                    
  form to the shorter form.  Also, he asked Mr. Peterson to                    
  address the 1985 amendments to the Uniform Limited                           
  Partnership Act, in light of the deregulation that occurred                  
  in the 1980s, and its resulting problems.                                    
  Number 072                                                                   
  MR. PETERSON replied that HB 112 had nothing to do with                      
  deregulation, which was a popular idea in the federal                        
  government during the 1980s.                                                 
  Number 080                                                                   
  REPRESENTATIVE DAVIDSON asked if the deregulation climate of                 
  the 1980s drove the 1985 amendments to the Uniform Limited                   
  Partnership Act.                                                             
  MR. PETERSON did not think so.  He felt that the source of                   
  the change contained in HB 112 was not the philosophical                     
  climate of the 1980s, but rather the change in the use of                    
  limited partnerships.  He said that some state legislatures                  
  had already amended their uniform limited partnership acts                   
  to provide for a short form certificate requirement.  He                     
  said that the information which used to be required on the                   
  long form was now required to be kept available by a                         
  partnership, just not on the certificate form.                               
  MR. PETERSON reiterated his point that limited partnerships                  
  had developed using the partnership agreement as the vehicle                 
  that explained which partner held which number of shares.                    
  The certificate was no longer an appropriate place to put                    
  all of that information, he added.  He mentioned three                       
  categories of people who might be interested in who held                     
  limited partnerships:  potential investors, potential                        
  lenders, and the partners themselves.  All of those people,                  
  he stated, would still have access to the information they                   
  desired to review.                                                           
  Number 164                                                                   
  REPRESENTATIVE DAVIDSON mentioned Individual Fishing Quotas,                 
  or IFQs.  He said IFQ laws held that no one individual could                 
  hold more than 1% of those fishing shares.  He asked if                      
  HB 112 would make it more or less difficult for regulatory                   
  agencies to track ownership of shares.                                       
  Number 181                                                                   
  MR. PETERSON did not see HB 112 as making it more difficult                  
  for regulators to know who had invested in which                             
  partnership.  He asked Representative Davidson if he was                     
  assuming that a limited partnership held an IFQ.                             
  Number 185                                                                   
  REPRESENTATIVE DAVIDSON wanted to ensure a wide-open                         
  process, so that no individual could, through clever                         
  manipulation of corporate or partnership laws, hold more                     
  than 1% of the shares of a fishery.                                          
  Number 193                                                                   
  MR. PETERSON did not view HB 112 as posing any difficulties                  
  to regulators.                                                               
  Number 199                                                                   
  REPRESENTATIVE DAVIDSON asked if HB 112 would result in it                   
  being easier or more difficult for the public or regulators                  
  to know who was involved in limited partnerships.                            
  Number 209                                                                   
  MR. PETERSON stated that in his opinion, HB 112 did not                      
  change the availability of information on partnerships.  He                  
  explained that he also should have listed regulators among                   
  those categories of people who would need to know who was                    
  involved in limited partnerships.                                            
  Number 217                                                                   
  CHAIRMAN PORTER commented that if a person wanted to                         
  preclude disclosure of hidden investments, there were                        
  mechanisms for doing that.  Currently, he said, public                       
  disclosure of corporate shareholders was not a part of the                   
  articles of incorporation.                                                   
  Number 226                                                                   
  MR. PETERSON said that limited partnerships were the only                    
  entity in which persons with a limited role in that entity                   
  were extensively listed on a certificate or similar                          
  document.  He noted that corporations and other types of                     
  partnerships did not have a similar requirement.                             
  Number 241                                                                   
  REPRESENTATIVE PHILLIPS asked why the 1985 amendments were                   
  being acted on by the Alaska Legislature eight years later.                  
  MR. PETERSON responded that he was the most active Uniform                   
  Law Commissioner in Alaska, and had just never gotten around                 
  to putting the 1985 amendments before the legislature until                  
  Number 252                                                                   
  REPRESENTATIVE JAMES asked if SB 193, from the year before,                  
  had passed.                                                                  
  MR. PETERSON replied in the affirmative, but mentioned that                  
  one piece of the 1985 amendments had been omitted.  House                    
  Bill 112 remedied that omission, he noted.                                   
  Number 261                                                                   
  REPRESENTATIVE DAVIDSON referred to a letter from the law                    
  firm of Heller, Ehrman, White and McAuliffe in the members'                  
  bill packets.  (A copy of that letter may be found in the                    
  House Judiciary Committee Room, Capitol Room 120, and after                  
  the adjournment of the second session of the 18th Alaska                     
  State Legislature, in the Legislative Reference Library.)                    
  He asked to what "deviations" the letter referred.                           
  Number 274                                                                   
  MR. PETERSON responded that the "deviations" referred to in                  
  the letter were the omission in SB 193 of the provisions now                 
  contained in HB 112.                                                         
  Number 280                                                                   
  CHAIRMAN PORTER reiterated that HB 112 contained a provision                 
  of the 1985 amendments to the Uniform Limited Partnership                    
  Act which had been omitted from SB 193.                                      
  Number 286                                                                   
  MR. PETERSON concurred.  He added that 33 states had already                 
  adopted the 1985 amendments to the Uniform Limited                           
  Partnership Act.                                                             
  Number 296                                                                   
  REPRESENTATIVE GREEN made a MOTION to MOVE HB 112 out of                     
  committee, with individual recommendations and a zero fiscal                 
  note.  There being no objection, IT WAS SO ORDERED.                          
  CHAIRMAN PORTER adjourned the meeting at 2:10 p.m.                           

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