Legislature(1993 - 1994)
03/22/1993 01:00 PM JUD
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 ART PETERSON, UNIFORM LAW COMMISSIONER, STATE OF ALASKA, 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 recently. 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. ADJOURNMENT CHAIRMAN PORTER adjourned the meeting at 2:10 p.m.