The article "Lawmakers drop bill limiting shareholder rights," by Jeannette Falsey published April 8 in Alaska Dispatch News, is written with such journalistic sensationalism it deserves a response because she simply got it wrong.
It is clear the author does not understand SB 77 or current law. The bill would not have "severely hampered the ability of shareholders to obtain basic information about Alaska corporations" -- far from it.
Much of what is misconstrued (written requests must come to the company's registered office to review records, required confidentiality agreements, and penalizing shareholders if they violate confidentiality) is already the clear law in AS 10.06.430 and Alaska Supreme Court case law.
COUNTERPOINT: Kudos to Alaska Dispatch News for exposing threat to shareholders' rights
It is also false that the bill "bar(s) shareholder access to executive compensation" and puts up "barriers to obtaining balance sheets, income and cash flow statements." The right of a shareholder to executive compensation and this kind of financial information is firmly established under Alaska law (see AS 10.06.433 as just one example), and nothing about SB 77 would have changed that.
SB 77 is a good bill that aims to provide clarity and accessibility to both companies and shareholders, especially in light of the significant ambiguities in current Alaska statutory and case law.
First, existing statutory law provides little to no guidance on processes and procedures for books and records requests. The Supreme Court recently addressed some questions about the statute, but significant gaps remain.
Case law is burdensome and difficult to navigate; SB 77 incorporates key holdings of Alaska case law, particularly Arctic Slope Regional Corporation v. Pederson, in one location. This is meaningful and helpful to those who genuinely want to know how and what to request with respect to books and records. Adopting these holdings provides transparency and gives shareholders like ours ready access to the rules that apply.
Second, SB 77 provides shareholders with access to significant books and records, while protecting proprietary and sensitive corporate information and ensuring the privacy of shareholder records.
Finally, SB 77 bucks the trend of many states that have eliminated the award of any monetary penalties to shareholders. Preeminent scholarship and commentary to the Model Business Corporations Act recommend deleting penalty provisions like the ones in Alaska's current law because they are arbitrary and seldom enforced.
In contrast, SB 77 updates and keeps in place a monetary penalty against corporations that do not comply with a valid shareholder request. Alaska's current law allows a court to assess a penalty of up to $5,000, or alternatively, an outdated formula may be used to value the shares held by the shareholder, which cannot readily be done for private companies as shares are not bought and sold.
Such a formula complicates matters even further for Alaska Native corporations, who cannot place a value on the lands transferred as part of the Alaska Native Claims Settlement Act of 1971. SB 77 therefore removes this uncertainty by deleting the alternative penalty method of valuing shares, yet still keeps a bright line $5,000 penalty for violations of books and records law, even though other states are eliminating these kinds of provisions.
The Alaska books and records laws have remained largely unchanged for nearly 25 years. Applying this old, statutory language to modern information requests has created unnecessary and wasteful disputes over the scope of applicable records, the processes to be followed for making and responding to inspection requests, and protecting confidential information.
I will be 42 years old this year; a lot has changed in this world since I was 17 nearly 25 years ago. I have graduated from college, had two children, and am preparing to send my eldest child off to college this fall. Just as I have learned to adapt to modern technology and evolved as a person, so too must our case law and practices. Alaska needs to modernize and catch up with the rest of the country.
ASRC stands by Sen. Lesil McGuire's bill. I am leading the effort internal and external to ASRC to modernize Alaska's books and records laws. I look forward to working with the greater Alaska business community on the bill.
Our support is driven by the need to continue to provide meaningful benefits to our shareholders, employment opportunities for Alaskans and fair and transparent access to corporate information.
As a shareholder of ASRC, it is my personal desire to ensure that our shareholders have that fair and transparent access to corporate records. Unreasonably limiting access is counter to who ASRC is as a company.
Tara Sweeney is the executive vice president of external affairs for Arctic Slope Regional Corporation, Alaska's largest locally-owned and operated company.
The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary(at)alaskadispatch.com.