30 May Doyle repeals shareholder liability
Madison, Wis. – Gov. Jim Doyle, whose “Grow Wisconsin” economic development plans identifies capital investment as a priority for the state, has signed a bill that removes from the books a law that many viewed as an impediment to capital formation
With little fanfare, Doyle signed AB 1163, which was endorsed by various groups, including the Wisconsin Economic Development Association. The law repeals a shareholder liability provision in state statutes that held shareholders of a corporation personally liable for the wages of unpaid workers.
AB 1163 passed the State Assembly by a 60-38 margin, and it passed the Senate on a vote of 18-14. Its chief legislative sponsor was State Rep. Jean Hundertmark, R-Clintonville, now a candidate for Lieutenant Governor.
Hundertmark noted that repeal of shareholder liability was part of several economic development initiatives, including Job Creation II, the Assembly Republican 100-day Agenda, and the Invest in Wisconsin package.
“People in economic development have been testifying for this bill for a long time,” said Hundertmark, whose office was informed of the signing this morning. “I’m glad it was done.”
One of those economic development officials was James Otterstein, president of WEDA, who said its repeal would remove a major statutory impediment that has plagued Wisconsin’s capital investment climate. Under the shareholder liability law, shareholders were personally liable for an amount equal to the total value of their shares for all wages owed to employees for as long as the proceeding six months.
In a May 10 letter to Doyle, Otterstein noted that when out-of-state entities consider investing in a Wisconsin corporation, their legal counsel is required to provide an opinion as to whether or not the investor could be personally liable for any obligations.
Tom Still, president of the Wisconsin Technology Council, praised the governor’s decision. “Wisconsin has put itself at a competitive disadvantage, essentially discouraging investors from making high-risk investments in our state, by threatening them with additional financial liability if a company is unsuccessful,” he said.
Hundertmark, who called shareholder liability a “double-jeopardy” provision, said unpaid workers already are protected under another statute known as the Universal Banking Bill.
Matt Canter, a spokesman for Doyle, said the governor consulted with people on all sides before deciding to endorse the bill. “This will be a way to welcome investment in this state,” he said, “and make sure people are paid and receive the wages they are owed.”
In other legislative action, Doyle signed Assembly Bill 1186, which will enable farm cooperatives to raise additional capital and pursue large facilities that can house cutting-edge farm technology. Doyle said the bill would foster the development of cooperative high-tech business ventures in the biotechnology and bio-medical areas, including new refining facilities for ethanol and biodiesel.