Governor Dunleavy has signed House Bill 126, and it is now in effect. The bill reopens the door for dissolved Alaska Native Corporations to be reinstated, and it narrows which ones must file proxy and annual report materials with the State. Alaska Native Corporations that are no longer subject to the state filing requirement still owe their shareholders an annual report under ANCSA.

The Change to Proxy Filings

Before HB 126: An Alaska Native Corporation had to file its annual report, proxies, and proxy statements with the Division of Banking & Securities (the “Division”) if it had more than $1 million in assets and 500 or more shareholders on its current rolls.  It also had to comply with the Division’s proxy regulations that mandated specific disclosures to the shareholders be included in the corporation’s proxy statement.

After HB 126: The asset test is gone, and the 500-shareholder count is now measured by how many shareholders the corporation originally enrolled when it was formed under ANCSA, not how many it has today.

The impact: Because shares have passed down through families over the decades, some Alaska Native Village Corporations now have more than 500 recordholders even though they had fewer than 500 at the start. Those Alaska Native Village Corporations no longer have to file their proxy materials with the Division or comply with the Division’s proxy regulations.  Alaska Native Regional Corporations, and any village corporation that originally enrolled 500 or more shareholders, continue to have to file with the Division of Banking & Securities and comply with its proxy regulations.

If an Alaska Native Corporation Did Not Have 500 or More Original Shareholders, It Does Not Have to Comply With State Proxy Regulations  — Including 3 AAC 08.365

An Alaska Native Village Corporation that falls below the new threshold (i.e., 500 original shareholders) is no longer subject to the Division’s proxy regulations at 3 AAC 08.305–.365. That means it will not need to file its annual report and proxy materials with the Division, or comply with the proxy-statement disclosure and solicitation rules in the Division’s proxy regulations, such as executive-compensation and related-party-transaction reporting.

But Alaska Native Corporations With More Than 500 Shareholders (Original or Not) Still Have to Provide Their Shareholders With an ANCSA Annual Report — and It Mirrors the State “Annual Report”

While an Alaska Native Corporation with less than 500 original shareholders may no longer need to comply with the Division’s proxy regulations, if it has 500 or more shareholders, original or otherwise, it must still give its shareholders an annual report. That obligation comes from ANCSA itself, applies to every Alaska Native Corporation with 500 or more shareholders, and is unaffected by HB 126.  ANCSA requires Alaska Native Corporations with 500 or more shareholders to provide their shareholders with a report that “contains substantially all the information required to be included in an annual report to shareholders by a corporation subject to the [Securities Exchange Act of 1934, 15 U.S.C. 78a et seq.].”

This report must include:

• Audited consolidated financial statements for the year, prepared by an independent accountant, with the accompanying notes;
• A description of the corporation’s operations and principal business activities;
• A summary of the year’s business results and the corporation’s financial condition;
• Management’s discussion of results and known trends or uncertainties that could affect future performance;
• A market-risk assessment where the corporation has meaningful exposure (for example, variable-rate debt, investment holdings, or commodity- or fuel-dependent operations); and
• Information on directors, officers, and dividends.

The Change to Reinstatement

Separately, HB 126 removes the deadline that used to limit when an involuntarily dissolved Native village corporation could be brought back. A dissolved village corporation can now apply for reinstatement at any time. Once reinstated, it and its shareholders are restored to the position they would have held had the dissolution never happened, and actions taken during the dissolution are treated as valid. If the old corporate name is no longer available, the board can adopt a new one on its own.

We also acknowledge the contributions of Olyana Kalytiak-Davis, Summer Associate, in the development of this update.

This article summarizes aspects of the law and does not constitute legal advice. For legal advice with regard to your situation, you should contact an attorney.