House Committee on Business, Labor, Economic, & Workforce Development (02/14/2013)

Final
STAFF SUMMARY OF MEETING

HOUSE COMMITTEE ON BUSINESS, LABOR, ECONOMIC, & WORKFORCE DEVELOPMENT

Date:	02/14/2013	ATTENDANCE

Time:	01:39 PM to 04:37 PM	DelGrosso	X
		Exum	X
Place:	LSB A	Hamner	X
		Holbert	X
This Meeting was called to order by		Navarro	X
	Representative Williams	Nordberg	X
		Rosenthal	X
This Report was prepared by		Ryden	X
	Erin Vanderberg	Szabo	X
		Kraft-Tharp	X
		Williams	X
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
HB13-1138 HB13-1193		Laid Over Referred to Appropriations

01:39 PM -- House Bill 13-1138

Representative Lee, prime sponsor, presented House Bill 13-1138, authorizing benefit corporations. He distributed two handouts: a fact sheet and a publication of the Business Law Newsletter, "Benefit Corporations in Colorado" (Attachments A and B). Representative Lee discussed the provisions of the bill. The bill establishes the statutory requirements for a corporation to be created as, or elect to become, a benefit corporation. Representative Lee responded to questions from the committee on the nature of the corporation that the bill addresses and the purpose this new benefit corporation vehicle would serve.

130214 AttachA.pdf

130214 AttachB.pdf

02:07 PM

Questions from the committee continued on the purpose of benefit corporations.

The following individuals testified:

02:16 PM -- John Moye and Herrick Lidstone, representing the Colorado Bar Association (CBA), spoke in favor of the bill. Mr. Moye offered a brief legislative history of corporations in Colorado. Mr. Moye commented that benefit corporations are a safe harbor for entities that want to be socially conscious, but which, under current statutes, would risk liability to corporate officers and directors. Mr. Moye commented that this bill would be an innovative supplement to the Colorado Business Corporation Act. Mr. Lidstone discussed the purpose of the bill. He commented that the benefit corporation vehicle is for corporations who wish to make business judgments independent of maximizing profit.

02:29 PM

Testimony continued from Mr. Lidstone on the differences between C corporations and benefit corporations. Mr. Lidstone responded to questions from the committee on the purpose of benefit corporations.

02:43 PM

Questions continued on the purpose of benefit corporations. Mr. Lidstone stated that for an existing corporation to become a benefit corporation, it would require a two-thirds vote from the board to amend the corporation's articles of incorporation.

02:52 PM -- Collon Kennedy, representing B Lab, spoke against the bill. Mr. Kennedy said that B Lab is a nonprofit organization serving 35 member companies which are dedicated to using business to solve social and environmental problems. Mr. Kennedy stated that model benefit corporation legislation would be a better alternative than this bill. He said model benefit corporation legislation has been enacted in 12 states and the District of Columbia, and that another 14 states are currently considering the legislation. Mr. Kennedy commented that the bill allows any company to become a so-called benefit corporation without altering its business activities and that the new moniker will confuse the marketplace so that investors will not be able to distinguish companies that have a social and/or environmental mission and those who do not. Mr. Kennedy suggested a sub-category of corporation, called "special purpose" corporations, for those corporations who do not have a social and/or environmental mission. Mr. Kennedy responded to questions from the committee.

03:07 PM -- Kim Couponas, GoLite, spoke against the bill. Ms. Couponas commented that her company has invested and continues to invest a great deal money and time on materials from sources that align with her company's environmental and social ethic, as well as auditing the manufacturing centers where the company's product is made, and also donating money to causes the business supports. Ms. Couponas stated that Colorado needs model benefit corporation legislation instead of this bill. She commented that no businesses have asked for the bill and that the bill in its current version is watered-down. She requested that the representatives propose legislation that follows the model benefit corporation legislation.

03:15 PM -- William Callison, representing the CBA, spoke in favor of the bill. He stated that the bill was the result of efforts put forth by leading experts on corporate law. Mr. Callison said the bill would allow needed flexibility in the corporate structure, allowing corporations to express goals other than profit maximization. He responded to the opponents' idea for a sub-category of "special purpose" corporation, stating it would be confusing to investors and that the market is not this refined. Mr. Callison responded to questions from the committee.

03:19 PM -- Steve Schueth, First Affirmative Financial Network, spoke against the bill. Mr. Schueth stated that he agreed with everything in Ms. Couponas testimony before him. He said that the bill creates a benefit corporation, but requires no reporting which investors need. He referred to the 12 states that have passed what he called "real" benefit corporation legislation, and that clarity in terms is important.

03:22 PM -- Peter Dignan, ProtoTest, spoke against the bill. Mr. Dignan stated that he would endorse Ms. Couponas' and Mr. Scheuth's testimony before him. He commented that the only benefit corporations here to testify were all in opposition to this bill.

03:24 PM -- Mark Fisher, InspireCommerce, spoke against the bill. He stated his support for model benefit corporation legislation and commented that benefit corporation legislation needs to set the bar high enough so that people cannot fake it and have it just be a marketing experience.

03:27 PM -- Lee Reichert, representing a business interest, spoke in favor of the bill. Mr. Reichert stated that he is the Deputy General Counsel for Molson Coors. Mr. Reichert stated that the legislation would allow corporations flexibility and that it would be advantageous for small business. Mr. Reichert commented that flexible statute is good for state.

03:31 PM -- Karl Dakin, Regis University, spoke in favor of the bill. Mr. Dakin said he was involved with the Colorado Capital Congress, a nonpartisan civic forum addressing access to capital. Mr. Dakin stated that the bill is flexible and said his opposition to the B Lab approach is that the triple bottom line is not always a possibility for corporations. He stated that this bill would give corporations the option of choosing a focuse -- people, planet, profit -- instead of compelling the corporation to consider all three. Mr. Dakin responded to questions from the sponsor.

03:35 PM -- Robert Keating, CBA, spoke in favor of the bill. Mr. Keating stated that the drafting committee of this bill had written more books on the topic of corporate law than any other state drafting commission. He stated that this is what businesses want to do. Mr. Keating responded to questions from the committee.

03:42 PM

Representative Lee made closing comments on the bill. He said that the main benefit of his bill was flexibility and that the bill was designed by Coloradans for Colorado. Representative Williams, chair, laid over the bill, for action only, at a later date.

03:48 PM -- House Bill 13-1193

Representative Kraft-Tharp and Representative McLachlan, prime sponsors, presented House Bill 13-1193, which creates the Advanced Industries Export Acceleration program (AIEA) to be administered by the Office of Economic Development and International Trade (OEDIT), and distributed a fact sheet to the committee (Attachment C). The AIEA program provides training, access to consulting services, and expense reimbursements for eligible companies. Representative Kraft-Tharp stated that exporting means jobs and economic growth for the state. The sponsors responded to questions from the committee on: programs in other states, return on investment, redundancy of the program, and the bill's reporting requirements.

130214 AttachC.pdf

The following individuals testified:

04:04 PM -- Ken Lund, OEDIT, spoke in favor of the bill. Mr. Lund discussed the economic value of exports and responded to questions from the committee on the logistics of matching and reimbursement provisions of the bill.

04:16 PM -- Sandi Moilanen, OEDIT, was brought to the table to discuss company eligibility. Ms. Moilanen and Mr. Lund responded to additional questions from the committee on: the fiscal note, company eligibility, tax incentives as an alternative to grants, earlier pilot programs, and which states the program is modeled after.

04:24 PM -- Jeff Popiel, Geotech Environmental Equipment, spoke in favor of the bill. Mr. Popiel discussed his company's experience with OEDIT's exporting programs, and how successful his business had become with the assistance from the agency.

04:31 PM

Avram Saunders, Lightning Elimanators, was called to testify. The committee was informed he had to leave due to time constraints.

04:32 PM -- Patrick Boyle, speaking on behalf of the Colorado Competitive Council and the Economic Development Council, spoke in favor of the bill.

04:33 PM

Representative Kraft-Tharp made closing comments.


BILL:	HB13-1193
TIME:	04:36:09 PM
MOVED:	Kraft-Tharp
MOTION:	Refer House Bill 13-1193 to the Committee on Appropriations. The motion passed on a vote of 7-4.
SECONDED:	Rosenthal
		VOTE
	DelGrosso	No
	Exum	Yes
	Hamner	Yes
	Holbert	No
	Navarro	Yes
	Nordberg	No
	Rosenthal	Yes
	Ryden	Yes
	Szabo	No
	Kraft-Tharp	Yes
	Williams	Yes

YES: 7 NO: 4 EXC: 0 ABS: 0 FINAL ACTION: PASS

04:37 PM

The committee adjourned.