Bill Description: House Bill 708 would clarify the process by which the state creates a corporation; it also would require improperly created corporations to come into compliance. 

Rating: +1

NOTE: House Bill 708 is related to House Bill 643, introduced earlier this session. 

NOTE: The Senate Amendment to House Bill 708 does not change the rating. The analysis has been updated.

Does it in any way restrict public access to information related to government activity or otherwise compromise government transparency, accountability, or election integrity? Conversely, does it increase public access to information related to government activity or increase government transparency, accountability, or election integrity?

House Bill 708 would amend Section 30-501, Idaho Code, to clarify the process whereby the state may create a corporation. It says, "Except as expressly authorized by the legislature through the enactment of general laws or pursuant to subsection (4) of this section, the state shall not file or cause to be filed on its behalf articles of incorporation for any corporation that is provided for in subsection (1) of this section. If any articles of incorporation are filed by the state or on its behalf without the authorization of the legislature as required pursuant to this subsection, the secretary of state shall not accept such articles of incorporation."

It further stipulates that "the state shall not file or cause to be filed on its behalf articles of incorporation for a corporation to carry out a purpose or function in lieu of the state or to receive or expend appropriated funds in furtherance of such purpose or function."

The bill provides exceptions. The state may "create or to authorize the creation of an independent public body politic and corporate" and "associate with a corporation to provide a benefit to the state, provided that the state is not an owner, stockholder, or controlling member of such corporation."

The bill defines "an independent public body politic and corporate" as "an entity that is created in statute to carry out a public purpose; devoid of any private party with the right to control the entity or manage it; and lacking any potential for private parties to change the fundamental structure or public purpose of the entity as provided for in the statute that created it."

House Bill 708 would also create Section 30-502, Idaho Code, to deal with existing "improper state corporations" and provide them with an "opportunity to reform." 

By January 1, 2025, any corporation that "was incorporated prior to the effective date of this section; has assets or liabilities as of the effective date of this section or has valid contractual obligations that could be enforced against it; was created by the state, incorporated by the state, or authorized to be created by the state through some vote or action other than a general law enacted by the legislature; … and was not dissolved or disassociated from the state prior to the effective date of this act" will be required to submit a report to the office of the secretary of state. The report must contain specific information required by this section. 

Once a corporation submits its report, it shall "by statute, be reformed by the legislature as an independent public body politic and corporate" or "dissolve or otherwise disassociate from the state by July 1, 2025." Alternately, the corporation that files the report required above shall provide "a financial report to the office of the state treasurer that shows the assets and liabilities of the corporation for the most recent fiscal year."

"A corporation that does not self-report" as required by this law "or that frustrates the reform or disassociation procedures provided for in this section shall be considered to be in violation of the provisions of section 30-501, Idaho Code, and shall not be recognized as a corporation under Idaho law."

By July 1, 2025, the office of the secretary of state and the office of the state treasurer shall deliver reports on their respective duties in this process to "the governor, the president pro tempore of the senate, and the speaker of the house of representatives."

The primary benefit of this law seems to be increased transparency for corporations created by the state. It could, however, also result in the disbanding of some corporations that fail or choose not to comply. 

(+1)