Legislature(2003 - 2004)

05/05/2004 04:22 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 389                                                                                                           
                                                                                                                                
     An Act relating to the conversion of certain                                                                               
     corporations to limited liability companies; and                                                                           
     providing for an effective date.                                                                                           
                                                                                                                                
                                                                                                                                
JANE ALBERTS, STAFF TO SENATOR BUNDE, introduced the bill.                                                                      
                                                                                                                                
MARK HICKEY,  ALEUT CORPORATION, explained  that SB 389  is a                                                                   
straightforward bill.   Section 2 on page 1  allows entities,                                                                   
including  subsidiary corporations  and certain domestic  and                                                                   
foreign corporations,  to convert to the status  of a limited                                                                   
liability company.  He pointed  out that the fiscal notes are                                                                   
zero.  The Native  regional  corporations  are interested  in                                                                   
this  legislation  because  they own  subsidiaries  and  this                                                                   
would  allow the  transfer of  assets.  The conversion  would                                                                   
bring operating  flexibility  and tax  benefits.  Mr.  Hickey                                                                   
discussed the Doyon and Koniag Corporations.                                                                                    
                                                                                                                                
Co-Chair Harris  asked if Co-Chair Williams'  Native regional                                                                   
corporation would be involved. Mr. Hickey affirmed.                                                                             
                                                                                                                                
Representative  Hawker  asked  the definition  of  subsidiary                                                                   
corporation on page  2, line 2.  Mr. Hickey was  unsure if it                                                                   
is defined in statute.                                                                                                          
                                                                                                                                
ROGER DUBROCK,  CHIEF EXECUTIVE  OFFICER, ALEUT  CORPORATION,                                                                   
VIA TELECONFERENCE,  stated that  a "subsidiary  corporation"                                                                   
is implicitly defined  in the language on page  2, lines 2-3,                                                                   
as  "owned  directly or  indirectly  by  one or  more  parent                                                                   
corporations."   A subsidiary  corporation has no  individual                                                                   
shareholders.                                                                                                                   
                                                                                                                                
Representative Hawker  asked if the bill's intent  is revenue                                                                   
neutrality  and facilitation  of the conversion  of the  for-                                                                   
profit entities.  Mr. DuBrock affirmed.                                                                                         
                                                                                                                                
Representative Chenault and Mr. DuBrock discussed the non-                                                                      
qualification  of a  subsidiary  corporation  and whether  it                                                                   
could have its earnings sheltered.  Mr. DuBrock noted that if                                                                   
two corporations  owned the subsidiary  equally, half  of the                                                                   
earnings would flow to each parent  corporation. He discussed                                                                   
losses of the subsidiary.                                                                                                       
                                                                                                                                
Representative  Chenault asked  the ownership requirement  to                                                                   
file a consolidated  tax return. Mr. DuBrock  replied that it                                                                   
must be 80%.                                                                                                                    
                                                                                                                                
Mr. Hickey  commented that the  key is the language  defining                                                                   
the subsidiary  corporation as  owned directly or  indirectly                                                                   
by  one  or  more  parent  corporations.    This  bill  would                                                                   
facilitate the exercise of dissolving the subsidiary.                                                                           
                                                                                                                                
Representative  Foster   MOVED  to  report  SB   389  out  of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal notes.  There  being NO OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
SB  389  was  REPORTED  out  of   Committee  with  individual                                                                   
recommendations  and two previously  published fiscal  impact                                                                   
notes.                                                                                                                          
                                                                                                                                

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