A bill that would have severely hampered the ability of shareholders to obtain basic information about Alaska corporations was postponed by lawmakers.
The little-noticed bill, sponsored by Sen. Lesil McGuire, R-Anchorage, and backed by Alaska Native corporation Arctic Slope Regional Corp., would have effectively allowed companies to withhold information from shareholders about executive salaries and inside transfers of corporate assets or interests to executives.
It would also have imposed unusually burdensome requirements on any shareholder looking for information arguably critical to understanding the performance, financial well-being and outlook of companies formed in Alaska.
ASRC, the largest Alaska Native corporation by gross revenue, was pushing the legislation in relation to a lawsuit it lost before the Alaska Supreme Court last year. Shareholder and former ASRC assistant legal counsel Rodney Pederson brought the suit after ASRC refused to provide him with access to salaries and other payments made to executives.
Pederson said Monday the bill was "not only intended to basically limit the Supreme Court's decision but is also intended to stop me from being able to demand any more inspections of ASRC books and records for the next five years."
Although the bill had roots in the Pederson case, its effects would have spread far beyond ASRC to shareholders of any privately held corporation formed in Alaska.
Aside from effectively barring shareholder access to information on executive compensation, it would have put up barriers to obtaining balance sheets, income and cash flow statements, and shareholder meeting minutes.
Shareholders would have had to submit written requests for such information and travel to a corporation's principal place of business in Alaska to inspect and copy it. Companies would have been able to charge shareholders for accessing the information while also requiring them to sign an agreement limiting its use or disclosure. Violating the confidentiality agreement would have cost shareholders up to $5,000.
The bill also would have subjected shareholders to a provision stating that if the research was intended to uncover misconduct or malfeasance by the corporation or any of its directors, officers or committees, the shareholder would first need to provide evidence of potential wrongdoing.
It would also have lowered the existing penalty for corporations that unreasonably withhold information from shareholders.
Under federal law, publicly traded corporations, from Apple to ExxonMobil, make basic financial information readily available to shareholders and non-shareholders alike. They do so by mail, at meetings, on their websites and through government agencies such as the federal Securities and Exchange Commission.
Companies that are not publicly traded, like ASRC and the 11 other landholding Alaska Native corporations, are subject to the disclosure requirements of the state in which they were formed. Currently the Native corporations send the information to shareholders and the larger ones are required to file annual reports, proxy statements and other materials with the Alaska Division of Banking and Securities.
McGuire on Friday said the Judiciary Committee had introduced the bill, SB77, "to modernize Alaska's books and records," but feedback from Alaskans and businesses encouraged lawmakers to re-examine the bill in the interim period between Legislative sessions.
"We are pulling SB77 at this time so that we can work with the Department of Commerce, Community and Economic Development over the interim to develop language to better suit the needs of Alaskans and their businesses," McGuire said.
ASRC spokesman Ty Hardt said Friday he preferred not to comment as the bill had not had a hearing and could be amended.