Legislature(2011 - 2012)SENATE FINANCE 532
04/08/2011 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB15 | |
| SB5 | |
| SB27 | |
| SB101 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 15 | TELECONFERENCED | |
| + | SB 5 | TELECONFERENCED | |
| + | SB 27 | TELECONFERENCED | |
| + | SB 96 | TELECONFERENCED | |
| + | SB 101 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 101
"An Act adopting the Alaska Entity Transactions Act;
relating to changing the form of entities, including
corporations, partnerships, limited liability
companies, business trusts, and other organizations;
amending Rule 79, Alaska Rules of Civil Procedure, and
Rules 602(b)(2), 602(c), and 605.5, Alaska Rules of
Appellate Procedure; and providing for an effective
date."
10:11:47 AM
SENATOR JOE PASKVAN, SPONSOR, provided a synopsis of the
legislation. He discussed that during the past 20 years
many new types of business entities, including limited
liability companies and limited liability partnerships, had
been recognized under state law. Consequently, many
businesses used various types of entities in their
organizational structures. He detailed that the relaxation
of federal tax rules that governed entity classification
had led to an increase in the volume of restructuring and
acquisition transactions throughout the various entity
forms. The companies were required to initiate transactions
out-of-state and multiple indirect steps were required
because of the lack of clear statutory structure in Alaska.
The legislation conformed to the Uniform Law Commissioners'
Model Entity Transaction Act (META) and would help to
facilitate transactions between more than one form of
business entity, improve the existing business climate, and
help reduce unnecessary administrative and legal burdens
that were currently imposed. The bill would provide
businesses in Alaska with the opportunity to engage in
cross-entity transactions in-state. The legislation was
initially introduced during the prior session; due to the
complexity of the bill the Departments of Commerce,
Community and Economic Development (DCCED) and Law (DOL)
had worked to fine tune it during the interim.
Senator Paskvan discussed the contents of members'
committee packets and pointed out the zero fiscal note from
DCCED. The packet included a memo drafted by an attorney
that advocated for the update of the Alaska business
statutes and depicted the necessary steps an Alaska
corporation had to take to merge with a limited liability
company: (1) A business was required to form an out of
state or "foreign" limited liability company; (2) The
business's Alaska limited liability company was required to
merge with the foreign company; (3) The surviving entity of
the merger was converted into a foreign corporation
pursuant to the provisions of the other state; and (4) The
corporation would then be merged with the Alaskan
corporation. The intent was to establish a business-
friendly statutory structure that would allow a single
transaction to take place. He quoted from a META summary
that had been prepared by the Uniform Law Commission, which
provided "non-partisan, well-conceived, and well drafted
legislation that brings clarity and stability to critical
areas of state statutory law." He communicated that the
bill had been vetted by the commission, which provided
services that most states could not otherwise afford or
duplicate. Member packets also contained the 2011 suggested
state legislation by the Council of State Governments
(CSG); the council "alerts state elected and appointed
officials to emerging social, economic, and political
trends; offers innovative state policy responses to rapidly
changing conditions; and advocates multi-state problem
solving to maximize resource and competitiveness." He
quoted from a letter from the President and Chief Executive
Officer of Doyon: "As Doyon has grown, its corporate
structure has grown more complex. The passage of this
legislation will help to make some unnecessary complexity
out of transactions and will avoid the need to incorporate
in other jurisdictions where laws are better defined for
complex transactions." He summarized that the bill would
help bring Alaska into mainstream statutory business law.
Co-Chair Stedman referred to the zero fiscal note by DCCED.
10:18:37 AM
DON HABEGER, DIRECTOR, DIVISION OF CORPORATIONS, BUSINESS
AND PROFESSIONAL LICENSING, DEPARTMENT OF COMMERCE,
COMMUNITY AND ECONOMIC DEVELOPMENT, relayed that the
division had spent a significant amount of time comparing
the bill from the prior session with existing statute. The
division and DOL and had worked through their concerns and
were comfortable with the current legislation. He added
that the division would be able to absorb the legislation
with no additional costs.
Senator Stedman asked whether DCCED supported the
legislation. Mr. Habeger replied that the department was
comfortable with the bill.
Senator Olson queried whether there was opposition to the
bill.
Senator Paskvan was not aware of any opposition to the
legislation. He noted that a significant amount of work had
gone into the bill to make it acceptable to all parties.
10:21:14 AM
Senator McGuire wondered whether there were any small
entities that would be negatively impacted by the
legislation. She recalled that the Senate Judiciary
Committee had focused on the requirement that transactions
had to be approved by all interest holders to prevent items
such as hostile takeovers.
Senator Paskvan detailed that no creditors, secured
interests, or consumers would be harmed. The bill worked to
protect the interest of all parties through a business-
friendly, single transaction.
SB 101 was HEARD and HELD in committee for further
consideration.