Issuing New Stock in Ancsa Corporations

• Citation: Vol. 34
• Publication year: 2017

§ 33 Alaska L. Rev. 273. ISSUING NEW STOCK IN ANCSA CORPORATIONS

Alaska Law Review
Volume 33, No. 2, December 2016
Cited: 33 Alaska L. Rev. 273

ISSUING NEW STOCK IN ANCSA CORPORATIONS

MAUDE BLAIR ^[*]

BACKGROUND

In the late 1960s, oil was discovered on Alaska's North Slope. A pipeline cutting across the state was planned to pump that oil to an ice-free port and get it to market. This necessitated the settlement of aboriginal land claims, which had been simmering for years. ^[1] To that end, the Alaska Native Claims Settlement Act (ANCSA or "Act") was signed into law on December 18, 1971. ^[2] The Act extinguished aboriginal land claims and created thirteen regional for-profit Alaska Native corporations ^[3] and more than 200 village corporations that generally followed historical ethnic lines. ^[4]

Alaska Native corporations (ANCs) are for-profit corporations organized under the laws of the State of Alaska. ^[5] Under ANCSA itself, these corporations received $962.5 million, retained title to forty-four million acres of Alaska Native traditional land, and now manage this land and money for the benefit of the Alaska Native people who were made shareholders of these new corporations. ^[6] Their operation is governed by state and federal laws, some of which apply to all corporations and some of which are specific to ANCs.

These corporations faced rocky starts as Alaska Native peoples who had traditionally lived subsistence lifestyles now had to learn how to run Western-style companies. Today, though, these unique entities are economic powerhouses: twelve regional corporations and nine village corporations were listed on Alaska Business Monthly's roster of the top forty-nine Alaska companies by gross revenue in 2016. ^[7] Much of this revenue flows back to ANCs' largely Alaska Native shareholders and the economically depressed villages many still live in, in the form of shareholder dividends, scholarships, elder benefits, and jobs.

These ANCSA corporations were originally designed to have special protections for only twenty years, with unrestricted stock then being issued in place of the restricted ANCSA stock. ^[8] Also, because it was a settlement of legal claims, only the people alive at the time the Act was signed were originally made shareholders and intended to benefit from the settlement. ^[9] ANCSA corporations have all remained privately-held corporations whose stock cannot be bought or sold, but rather can only be transferred in statutorily limited ways. ^[10] As these corporations have evolved, however, many have looked for ways to include Alaska Natives who missed the original enrollment deadline and descendants of their original shareholders. Alaska Native cultures all hold respect for elders as a core value, so many have also looked for ways to give an extra benefit to older shareholders.

This article focuses on the considerations and requirements of issuing new stock in ANCSA corporations. To more completely describe that process both in theory and practice, this article will necessarily draw on both substantive law as well as the author's personal experience as an ANC in-house attorney and shareholder.

ORIGINAL ANCSA STOCK

Under the Act as it was originally written, there were two types of stock (called "Settlement Common Stock" after the Act) in the corporations: one for village residents and one for individuals who were not village residents, also called "at-large" shareholders. ^[11] In order to receive the first type of stock, applicants had to meet the statutory definition of "Native," live in one of the villages in the region, and apply for shares with the Bureau of Indian Affairs (BIA) before the deadline the agency set. ^[12] "Native" as defined by ANCSA means:

a citizen of the United States who is a person of one-fourth degree or more Alaska Indian (including Tsimshian Indians not enrolled in the Metlakatla Indian Community) Eskimo or Aleut blood, or combination thereof. The term includes any Native as so defined either or both of whose adoptive parents are not Natives. It also includes, in the absence of proof of a minimum blood quantum, any citizen of the United States who is regarded as an Alaska Native by the Native village or Native group of which he claims to be a member and whose father or mother is (or, if deceased, was) regarded as Native by any village or group. ^[13]

Qualified applicants received 100 shares of stock in the regional corporation and 100 shares of stock in a village corporation. ^[14]

In order to receive "at-large" stock, applicants had to meet the statutory definition of "Native," have ties to the region but not be a resident of a village in the region, and apply for shares with the BIA before the deadline the agency set. ^[15] These shares were generally issued to people who were living outside the region at the time of enrollment but whose family was originally from the region; for example, someone in boarding school or the military at the time of enrollment. ^[16] Shareholders who qualified for "at-large" shares received 100 shares of regional corporation stock and are entitled to a share of Section 7(i) distributions under ANCSA Section 7(j). ^[17]

The BIA, through the Secretary of the Interior, was tasked with preparing the roll of shareholders for each corporation for the two classes of shares above. ^[18] Alaska Natives could appeal their eligibility determination; or, to avoid the hardship of being enrolled in a different corporation from their family members, the determination of which corporation they were to be enrolled in. ^[19] The BIA sent regional corporations a list of their new shareholders along with each shareholder's village corporation or "at-large" status, birthdate, the date of death for some, social security number, shareholder ID number, permanent residence as of April 1, 1970, and blood quantum. ^[20] The corporations then had to issue the appropriate stock to the new shareholders.

ANCSA stock may not be sold, pledged, subjected to a lien or judgment execution, assigned in present or future, or treated as an asset in bankruptcy or other insolvency proceedings. ^[21] The original language of ANCSA would have restricted the stock for twenty years, after which the stock would lose the protections and restrictions the companies had under the Act. As 1991 approached, though, Alaska Native leaders successfully pushed to have ANCSA changed to protect the unique status and restrictions of these corporations for the benefit of their shareholders. ^[22] There is still a provision in ANCSA whereby shareholders can vote to issue non-Settlement Common Stock and make that stock alienable, ^[23] but no ANC has yet opted to do so. Many Native leaders wanted to include their children or those who missed the original enrollment, so they also successfully petitioned to have the Act changed to include ways to issue new ANCSA stock to different classes of shareholders. ^[24]

MISSED ENROLLMENT

In 1967, the more than 200 Alaska Native villages situated across the state's vast lands had no satellite service, but instead depended entirely on fourteen land radio stations that tied into 300 bush radios. ^[25] Eighty-eight villages needed improved telephone service, seventy-two had only "bush" telephone service, and sixteen had no telephone service at all. ^[26] By 1970, 141 of Alaska's 287 village communities still had no satisfactory telecommunication ties. ^[27] Of the 146 with such ties, eighty-four depended on White Alice or less sophisticated systems, and sixty-two were linked to the rest of the world by microwave or cable systems. ^[28]

Further complicating matters was the fact that over twenty Alaska Native languages were spoken in the state at the time of ANCSA's passage, with many of the Native peoples speaking little or no English. ^[29] Translating complicated concepts such as corporate stock ownership was difficult at best. The Vietnam War was also being fought at the same time ANCSA was passed and implemented, and did not end until 1975. Given the state of communications at the time, it was nearly impossible for Alaska Natives serving out of state in the Armed Forces to enroll in an ANCSA corporation by the deadline.

In 1988, ANCSA was amended to allow corporations to issue shares to people who met all of the requirements for original Settlement Common Stock as listed above, but who were erroneously left off the rolls or missed the application deadline. ^[30] Each corporation would determine eligibility for these shares if they chose to create them. ^[31] With respect to the regional corporations, Arctic Slope Regional Corporation (ASRC), NANA, Doyon, Koniag, Sealaska, and Calista voted to create and issue shares to people who qualified for the original ANCSA stock but missed the enrollment deadline. ^[32]

NEW SHAREHOLDERS

ANCSA was a legal settlement, meaning only those Alaska Natives alive at the time the Act was signed were originally considered the settlors. ^[33] Many Alaska Natives felt strongly that their children and grandchildren born after the settlement date should be shareholders of these corporations, too. ^[34] In 1988, Congress amended ANCSA to allow corporations to issue shares to Natives, as defined by the Act, born after December 18, 1971. ^[35]

Over time, intermingling with non-Native groups had decreased the Alaska Native blood quantum in some family lines. In 1992...