The Alaska Native Claims Settlement Act required the Secretary of the Interior to divide Alaska into 12 geographic regions, with each region, as far as practicable, composed of Alaska Natives having a common The Secretary of the heritage and sharing common interests (see fig. 1).Interior was also required to enroll into a region every Alaska Native alive when the Settlement Act was enacted on December 18, 1971, generally according to residence. As defined by the Settlement Act, an Alaska Native is a person with 25 percent or more of Alaska Indian, Eskimo, or Aleut blood or combination thereof (called a blood quantum requirement). Each region in the 1970s established a regional corporation as directed by the Settlement Act, and the Alaska Natives enrolled into the region became its shareholders. Certain Alaska Native villages were also eligible to form village corporations under state law. In addition, Alaska Natives who were not residing in Alaska could elect to enroll in a 13th region. Such a corporation, referred to as the 13th Regional Corporation, was established by a vote of nonresidents, and only those nonresident Alaska Natives who voted for the 13th Regional Corporation’s formation were enrolled in that region and became its shareholders (nonresidents who did not vote for it were enrolled in another region and became shareholders of that regional corporation). Enrolled Alaska Natives received no more than 100 shares of their regional corporation’s stock and, if they were enrolled in a village, no more than 100 shares of their village corporation’s stock. Under the original Settlement Act, shares could be inherited upon a shareholder’s death, but inherited shares entitled the new shareholder to vote only if the shareholder was an Alaska Native with a blood quantum of 25 percent or more. The corporations established under the Settlement Act were to receive title to about 44 million acres of land in exchange for the extinguishment of Alaska Native aboriginal land claims. Specifically, the 12 regional corporations received rights to the subsurface and some surface lands, and certain village corporations received title to surface lands. Under the act, the 13th Regional Corporation is not entitled to any land or subsurface rights. Under section 7(i) of the act, 70 percent of all revenues annually received by each regional corporation from the timber and subsurface resources conveyed to them under the Settlement Act is then divided among the 12 regional corporations according to the number of Alaska Natives enrolled in each region.does not share in this natural resource revenue, known as the 7(i) distribution. In addition, each of the regional and village corporations established under the Settlement Act received a portion of the nearly $1 billion monetary settlement (see table 1). The portion of the settlement money given to each regional corporation was based on the relative number of Alaska Natives enrolled in the region. The 12 regional corporations in Alaska were required to distribute to shareholders each year until 1976 not less than 10 percent of the settlement money and all other net income, including the 7(i) distribution. After 1976, the regional corporations must distribute 50 percent of funds from such sources among the village corporations in the region and regional corporation shareholders who are not residents of those villages.Corporation was required to distribute to its shareholders not less than 50 percent of its settlement money. As a House committee report accompanying the Settlement Act stated, the money provided by the settlement was intended to provide the capital necessary to raise the The 13th Regional standard of living of Alaska Natives—many lived in extreme poverty and underprivileged status—through their own efforts. Although the Settlement Act’s basic structure has not changed in the last 40 years, the act has been amended several times. Some of the amendments pertain to the expansion of eligible shareholders, extended restrictions on the sales of stock, exemptions from federal securities laws, and participation in the Small Business Administration’s 8(a) program, as follows: Expansion of eligible shareholders. The Settlement Act was amended in 1988 to permit the addition of new shareholders under certain circumstances. Specifically, corporation shareholders could vote to amend the articles of incorporation to authorize the issuance of additional shares to (1) eligible Alaska Natives who missed enrollment, (2) Alaska Natives born after the Settlement Act’s enactment, or both. A subsequent amendment in 1992 also permitted corporation shareholders to vote on amending the articles of incorporation to authorize the issuance of additional shares to descendants of Alaska Natives born after December 18, 1971. This provision allows corporations to issue stock to descendants of its original shareholders without regard to blood quantum—as long as shareholders vote to amend the articles of incorporation to authorize such action. Restrictions on sales of stock. The 1988 amendments also extended the prohibition on sales of stock unless and until the shareholders of the corporation decide to allow them. The Senate committee report accompanying the amendments recognized that by the end of 1991— the date when stock could be sold under the original act—many Alaska Native shareholders would not have acquired sufficient experience dealing with corporate activities to sell their stock on the open market without risking the loss of continued Alaska Native corporate ownership.vote to amend the articles of incorporation to lift restrictions on stock sales. Investment Company Act of 1940, 54 Stat. 789, codified as amended at 15 U.S.C. §§ 80a-1 to 80a-64. Small Business Administration’s (SBA) 8(a) program participation. In 1988, the Settlement Act was amended to designate Alaska Native corporations as minority and economically disadvantaged business enterprises owned and controlled by Alaska Natives if Alaska Natives and descendant shareholders represent a majority of both the corporation’s total equity (shares) and voting power. Furthermore, the amendment designated any direct and indirect subsidiary corporations, joint ventures, or partnerships of these Alaska Native corporations as minority and economically disadvantaged business enterprises if Alaska Natives and descendant shareholders represent a majority of both the total equity and voting power of the subsidiaries, joint ventures, or partnerships. Alaska Native corporations’ qualifying subsidiaries, joint ventures, or partnerships are eligible to participate in the SBA’s 8(a) program—one of the federal government’s primary means for developing small businesses owned by socially and economically disadvantaged individuals. Under the 8(a) program, Alaska Native corporations, along with other tribal entities, have been afforded special advantages, which have come under congressional scrutiny in recent years.a high percentage of their revenues from their subsidiaries’ participation in the 8(a) program. The regional corporations are organized as for-profit corporations under Alaska state law and are separate and distinct from the Alaska Native tribal governments recognized by the federal government as Indian tribes. Incorporated under Alaska state law, regional corporations share fundamental characteristics with other corporations in Alaska. For instance, to form a for-profit corporation, articles of incorporation—which contain basic information about the corporation and its structure—must be filed with the state and a fee paid. The articles of incorporation specify, for instance, how many shares the corporation is authorized to issue, whether the shares will be divided into classes, who is eligible to receive shares, and who serves on the initial board of directors. Corporations are required to submit biennial reports to the state containing information about the current board of directors, number of shares issued, and other related information. The state can dissolve corporations involuntarily for several reasons, such as failure to file required biennial reports or pay a biennial corporation tax. The Settlement Act confirms that management of the regional corporations is the responsibility of their boards of directors and generally subjects the Alaska Native regional corporations to state law, although the state does not have a role in overseeing any corporations’ corporate governance or business decisions. According to the Settlement Act’s legislative history, board members and officers were expected to avoid abuses of the act’s intent; any unreasonable staff, officer, board member, consultant, attorney, or other salaries, expenses, and fees; and expenditure of funds for purposes other than those reasonably necessary State corporate law does not authorize in ordinary business operations.the state to oversee such actions of any corporations’ directors, and the act did not establish any oversight mechanism for the regional corporations. Under state corporate law, a corporation’s board of directors—who are fiduciaries of the corporation and owe it the duties of good faith, care, and loyalty—manages the corporation and makes business decisions. The board hires and monitors corporate officers, such as president and secretary. In contrast to the board of directors’ role, shareholders have limited power to participate in management and control of a corporation. Shareholders do not make business decisions for the corporation, but they are responsible for electing the directors who do. Except for the initial board, directors are elected by shareholders at an annual meeting. The elections are usually conducted by an independent third party, such as an accounting firm. In order for a shareholder election (or other action) to be valid, a certain number of shares—specified in state law or the articles of incorporation and known as a quorum—must be voted in person or by proxy at the meeting. Voting by proxy means that a shareholder who cannot attend the annual meeting in person directs someone else—a proxy holder—to vote his or her shares. Shareholders and the corporation can solicit shareholders to serve as their proxy holders in what is known as a proxy solicitation. Proxy solicitations from a corporation generally consist of an annual report to shareholders, a proxy statement containing information on nominees for the board, and a proxy form, among other things. In addition, shareholders must vote to approve any amendments to the articles of incorporation and certain other actions proposed by the board. Shareholders can also make recommendations to the board on various matters by presenting and voting on resolutions at annual meetings. Over the past 40 years, the 12 regional corporations in Alaska have grown into diverse and often large businesses, important to Alaska’s economy.