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Minutes for HB2401 - Committee on Federal and State Affairs

Short Title

Providing an exception to the quorum requirements for shareholder meetings for certain corporations.

Minutes Content for Thu, Jan 23, 2020

Chairperson Barker opened the hearing on HB2401.  The Revisor provided an overview on the bill (Attachment 1)

Chairperson Barker recognized Representative Eileen Horn as a proponent of HB2401 (Attachment 2).  Representative Horn stated that the decline in grocery stores in rural Kansas is a real and pressing problem.  It is a threat to the health of the citizens of rural communities when they don't have access to healthy food and it is also a threat to the community fabric.  One of the solutions that has been proposed is to help support the formation of grocery co-ops.  A grocery co-op can be a great solution to help members of the community build their own grocery store, be the owners of it, and capitalize it with their own contributions.  This bill reduces an onerous owner requirement relating to shareholder requirements for voting.

Chairperson Barker recognized Representative Highberger as a proponent on HB2401 (Attachment 3).  Representative Highberger is here on behalf of the Community Mercantile, Inc., otherwise known as "the Merc."  It is a cooperatively-structured business that is incorporated as a for-profit corporation under Kansas law.  This bill is narrowly tailored and will allow the Merc to expand its business by amending its articles of incorporation relating to quorum requirements.  A question was asked by Representative Humphries.

Chairperson Barker recognized Valerie Taylor who testified as a proponent of HB2401 on behalf of The Merc Co+op (Attachment 4).  She stated that for The Merc to reach quorum, nearly 2,750 of their over 8,000 owners must participate. Every effort imaginable is made to communicate with the owners, but you cannot make people vote.  She stated that the current law affects The Merc in terms of how much of their community can be invited to join in ownership of their business.  This law, as it is currently written, penalizes the people who do participate and engage in their co-op.  Support of HB2401 will allow The Merc, The Marmaton Market in Moran, Kansas, and future Kansas grocery co-ops to continue to compete with large corporations and to grow local economies. 

Questions were asked by Representatives Eplee and Karleskint, to which Representative Highberger responded. 

Chairperson Barker directed the Committee's attention to the written proponent testimony of Edwin Hecker, Jr. (Attachment 5) and the written neutral testimony of Shahira Stafford on behalf of the Kansas Cooperative Council (Attachment 6).

There being no further conferees, Chairperson Barker closed the hearing on HB2401.