Opinion ID: 2587489
Heading Depth: 3
Heading Rank: 2

Heading: Issuance of Shares Without Consideration to Original Elder Shareholders

Text: Sierra argues that Goldbelt cannot limit the elder benefit to original shareholders or provide the elder benefit to elders who are no longer shareholders of Goldbelt. She contends that Goldbelt's elder benefit is both under-inclusivebecause it excludes present shareholders who were not original shareholdersand over-inclusivebecause it includes original shareholders who have conveyed away their stock. Sierra argues that restricting eligibility to original shareholders violates AS 10.06.408(a) and corporate law generally. She concludes that the elder benefit diverts the wealth from Goldbelt's present owners in violation of principles of corporate law as well as ANCSA. She argues that although ANCSA preempts Alaska corporate law, and expressly allows discrimination in favor of elder shareholders, it does not allow discrimination in favor of original shareholders. She argues that to preempt state prohibitions against discrimination in favor of original shareholders, ANCSA must expressly trump state law. [10] Finally, she argues that as applied to original shareholders who no longer own stock, the Goldbelt elder stock program is contrary to the shareholders' contractarising from the corporate charter and bylaws and from statutes and common law governing the corporate enterprise which provides for ownership of corporate wealth on a pro rata basis. This, she claims, is an unconstitutional impairment of contract in violation of the Fifth Amendment. We conclude that these arguments are unavailing. [11] As Goldbelt argues, ANCSA permits issuing elder stock without consideration. [12] Nothing in the language or history of the statute indicates that Congress intended to limit the power of Native corporations to issue such stock selectively only to elders who continue to own original shares of settlement common stock. To the contrary, Congress has expressed its intention that the ANCSA amendments be interpreted to effectuate their purpose in empowering Native corporations to identify and meet the specific needs of particular groups of Natives. [13] To effectively meet the needs of particular groups of Natives as Congress intended, Native corporations must have broad discretion to fashion elder benefit programs that meet the needs of elders. The amendment somewhat limits this discretion by prohibiting benefit programs that would aid classes of beneficiaries defined by reference to place of residence, family, or position as an officer, director, or employee of a Native Corporation. [14] The class of beneficiaries relevant in this case, defined as elders who owned original shares of stock, does not fall within this statutory restriction. Moreover, in other parts of the ANCSA amendments, Congress has expressly permitted Native corporations to prefer the beneficiary class of original shareholdersfurther rebutting Sierra's suggestion that Goldbelt's preference for original shareholding elders was not authorized under the statute. [15] As to including elders who are no longer shareholders in the beneficiary class, we conclude that this too was properly within Goldbelt's statutory discretion. One purpose of the ANCSA amendments was to permit stock to be issued to a new generation of Natives or Native elders. [16] Because ANCSA contemplated issuing shares to Natives who had not been among the original shareholders, ANCSA necessarily conflicts with traditional corporate law requiring that only current shareholders benefit. [17] Goldbelt correctly argues that [i]ssuance of such stock would be an impermissible gift, were it not for the overriding provisions of ANCSA. Alaska Statute 10.06.353 provides that shares may not be issued until they are fully paid for, but 43 U.S.C. § 1606(g)(2)(C)(ii) preempts that provision. Alaska's corporation code expressly provides for preemption by ANCSA. [18] In short, ANCSA authorized issuance of elder stock on these terms even though they would otherwise conflict with Alaska's corporation code. We conclude that, if Goldbelt's shareholders authorized issuance of the elder stock, Goldbelt's elder stock program was permitted under ANCSA and is therefore permitted under Alaska law.