HB 296-UNIFORM PARTNERSHIP ACT                                                                                 
                                                                                                                                
CHAIRMAN MACKIE called the Senate Labor and Commerce Committee                                                                  
meeting to order at 1:40 p.m. and announced HB 296 to be up for                                                                 
consideration.                                                                                                                  
                                                                                                                                
MR. PAT HARMON, Aide to Representative Pete Kott, said HB 296 is                                                                
the Uniform Partnership Act.  Present statutes are seriously out of                                                             
date and based on the 1914 version.  Two things have changed over                                                               
the years; one is that the individual concept in the 1914 Act is a                                                              
partnership entity and the other is the way the default                                                                         
classification for businesses works.  Now the default                                                                           
classification is a partnership.                                                                                                
                                                                                                                                
MR. ART PETERSON, Uniform Law Commissioner, stepped to the witness                                                              
stand for comments.                                                                                                             
                                                                                                                                
CHAIRMAN MACKIE stated that Mr. Peterson had been before this                                                                   
committee for many years for updating statutes.  They all had a lot                                                             
of respect for his knowledge and the work that he does on these.                                                                
He asked if he could touch on the highlights of this and inform                                                                 
them of significant changes that may or may not have controversy.                                                               
                                                                                                                                
MR. PETERSON said he had a lot of materials from the National                                                                   
Conference.  He said the original Uniform Partnership Act was                                                                   
enacted in all states except Louisiana.  The partnership law of                                                                 
this country is the Uniform Partnership Act plus the court                                                                      
decisions interpreting it.  When that Act changes, Alaska has to                                                                
flow with it or we're going to be doing a number of business                                                                    
entities a great disservice.  There are provisions in there for                                                                 
conversion from a regular partnership to a limited partnership and                                                              
provisions dealing with limited liability partnerships.  This has                                                               
already been enacted in 24 states and four states have enacted the                                                              
1994 version without the limited liability partnership provisions                                                               
that this bill includes.                                                                                                        
                                                                                                                                
The revision reflects modern business practices and more than eight                                                             
decades of court decisions and scholarly analysis in recognition of                                                             
how business is done.                                                                                                           
                                                                                                                                
The basic changes are the statutory statement of the entity concept                                                             
of partnerships changing from the earlier version  of the aggregate                                                             
of individuals concept.  The current law is a confusing mix of the                                                              
two concepts and the bill before them clearly adopts the entity                                                                 
concept and the ramifications of that appear throughout the bill.                                                               
The basic one being, when a partner leaves the partnership, it                                                                  
doesn't collapse as it does under current law.  The partnership                                                                 
will continue and there are provisions for how a partner gets out,                                                              
etc.                                                                                                                            
                                                                                                                                
The Department of Community and Economic Development had one                                                                    
concern that they presented in the House - changing annual reports                                                              
to biennial.  Another changes is the transition period from a five                                                              
year period to a three year period.  Everyone is agreeable with                                                                 
that.  The bill carefully tracks the national version.                                                                          
                                                                                                                                
CHAIRMAN MACKIE noted that there were all "Do Passes" throughout                                                                
the committee process and it passed 36 - 0 in the House.                                                                        
                                                                                                                                
SENATOR KELLY moved to pass CSHB 296 (L&C) from committee with                                                                  
individual recommendations.  There were no objections and it was so                                                             
ordered.