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THE BENEFITS OF A BENEFIT
CORPORATION STATUTE FOR
ALASKA NATIVE CORPORATIONS
William Robinson*
A
BSTRACT
In
the forty-five years since the Alaska Native Claims Settlement Act
(ANCSA) created the Alaska Native regional corporation and village
corporations, shareholders and outside observers have criticized the statute’s use
of the traditional corporate form as inappropriate for Alaska Native communities.
The emergence of the benefit corporation entity across the United States may soon
mean that Native corporations have a promising alternative. If Alaska joins the
majority of states that have adopted this new legal entity, Native corporations
would have an opportunity to significantly reform their corporate governance
within the existing framework of ANCSA. This Note will argue that Alaska
should enact a benefit corporation statute because it would give Native
corporations a legal entity that better fits their purpose. As benefit corporations,
Native corporations would commit to pursuing public benefits, and their
directors would be required to consider factors beyond shareholder value in
making decisions.
INTRODUCTION
Forty-five years ago President Richard Nixon signed the Alaska
Native Claims Settlement Act (ANCSA), granting roughly forty-five
million acres of land and about $1 billion to Alaska’s Native population
in exchange for relinquishing any other land claims they might have in
the state.
1
ANCSA also directed the incorporation of regional and village
corporations to manage the resources of Alaska Natives.
2
The larger
regional corporations were required to be organized “for profit” under
Copyright © 2016 by William Robinson.
* J.D. Candidate, Duke University School of Law, 2017; B.A., Public Policy,
Duke University, 2011.
1. Alaska Native Claims Settlement Act, Pub. L. No. 92-203, 85 Stat. 688
(1971) (codified as amended at 43 U.S.C. §§ 1601–1629h (2012)).
2. Id. § 1606(a)–(c).
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330 ALASKA LAW REVIEW Vol. 33:2
Alaska state law.
3
Congress and the Alaska Natives who advocated for
the statute hoped the corporations would foster self-determination
among Alaska Natives, allowing them to serve as stewards of the land
and assets they received under ANCSA.
4
Although many have recognized that ANCSA was a significant
legislative accomplishment for Alaska Natives,
5
both Native corporation
shareholders and outside observers have argued that the corporation was
the wrong legal entity to effectuate the broad objectives of the Native
corporations and ANCSA.
6
Critics of the Native corporation model have
argued that corporate law and its imposition of shareholder primacy is at
odds with Alaska Native culture and many of the broader goals of Native
corporations.
7
For instance, Native corporation shareholders may prefer
that Native corporation directors be required to consider factors other
than maximizing dividends and shareholder value.
8
While ANCSA
3. Id.
4. See DONALD CRAIG MITCHELL, TAKE MY LAND, TAKE MY LIFE: THE STORY OF
CONGRESS’S HISTORIC SETTLEMENT OF ALASKA NATIVE LAND CLAIMS, 1960-1971 541
(2001) (“ANCSA was an unprecedented experiment in Native American
economic self-determination that Alaska Natives actively participated in
crafting.”).
5. See, e.g., id. (arguing that ANCSA was not forced upon Alaska Natives by
Congress, but that Alaska Natives played a major role in advocating for the law);
see also Robert T. Anderson, Alaska Native Rights, Statehood, and Unfinished Business,
43 T
ULSA L. REV. 17, 32 (2007) (ANCSA “has been praised by many in terms of the
amounts of land and money awarded, but others have decried [its] failings with
respect to tribal sovereignty and protection of hunting, fishing, and gathering
rights.”).
6. See Eric C. Chaffee, Business Organizations and Tribal Self-Determination: A
Critical Reexamination of the Alaska Native Claims Settlement Act, 25 ALASKA L. REV.
107, 146 (2008) (arguing that Native corporations should be allowed to operate
with “nonprofit goals”); see also Morgan Howard, Dividends Do Not Define Success
for Alaska Native Corporations, A
LASKA DISPATCH NEWS, Oct. 23, 2014,
http://www.adn.com/article/20141023/dividends-do-not-define-success-
alaska-native-corporations (arguing that Native corporations have a broader
purpose than paying out dividends and should instead value the collective over
the individual in assessing how to benefit shareholders).
7. See, e.g., CERT. OF INC., AHTNA INC., ART. III (June 23, 1972) (stating a
corporate purpose “to promote the economic, social, cultural and personal well-
being of all Natives”); see also Chaffee, supra note 6, at 133 (“One major problem
with forcing Alaska Native communities to adopt the corporate form is that
corporations measure success by financial performance, rather than by success in
land stewardship.”); see also Native corp. charters, etc.; but see Linda O. Smiddy,
Responding to Professor Janda—The U.S. Experience: The Alaska Native Claims
Settlement Act (ANCSA) Regional Corporation as a Form of Social Enterprise, 30 V
T. L.
REV. 823, 825 (2006) (“There is some evidence that Natives have adapted the
business corporation form to reflect both Native cultural traditions involving
collective relationships to land and subsistence economies and a Western culture
characterized by private property, individual rights, and market capitalism.”).
8. See, e.g., Howard, supra note 6 (writing in an op-ed, Howard, a village
corporation director, argues that Native corporations should weigh broader
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2016 THE BENEFITS OF A B CORP STATUTE 331
requires that regional corporations exist as “for profit” entities under
Alaska law, some have argued that Native corporations would be better
off as legal entities that more closely resemble non-profits.
9
For the past
forty-five years, no such quasi-non-profit legal entity has existed in
Alaska,
10
and Native corporations have had no transformative alternative
option to consider.
11
However, that may soon change.
12
In 2016, Alaska’s House of Representatives considered whether to
pass a bill that would have allowed businesses to incorporate as benefit
corporations (commonly referred to as “B Corps”) under state law.
13
If
Alaska had passed the benefit corporation statute, it would have joined
the majority of states that have already enacted similar statutes.
14
Under
the proposed legislation, Native corporation shareholders would have
been able to vote on whether to convert to benefit corporations.
15
If a
Native corporation became a benefit corporation, its directors would be
required to consider a range of factors beyond maximizing dividends and
shareholder value.
16
The Native corporation would also need to commit
to pursuing public benefits, and report biennially on its progress in
furthering these objectives.
17
Directors would risk liability to the public if
they failed to pursue these broad goals.
18
Converting to a benefit
corporation would be a significant legal transformation for a Native
corporation. This Note will argue that, given the criticism of Native
corporations that has persisted since ANCSA’s enactment, Native
corporations and their shareholders should at least have the chance to
consider making this transformation.
Part I of this Note gives an overview of the Alaska Native
corporations, tracing their history and some criticism received in the last
objectives than dividend maximization).
9. Chaffee, supra note 6
, at 146. ANCSA requires Native corporations to be
organized “for profit.” 43 U.S.C. § 1606(d) (2012). Furthermore, the Native
corporations have shareholders while non-profits may not have shareholders. Id.
10. See generally Daniel William Fessler, The Alaska Corporations Code: The
Forty-Ninth State Claims the Middle Ground, 7 ALASKA L. REV. 1 (1990) (explaining
the distinctive aspects of the Alaska Corporations Code).
11. They could potentially become limited liability companies, but their duties
to members would not be dramatically different from their duties to shareholders.
12. See H.R. 49, 29th Leg., 1st Sess. (Alaska 2015) (proposing a new
incorporation method for businesses).
13. Id.
14. R
ESPONSIFY, SOCIAL ENTERPRISE LAW TRACKER,
http://www.socentlawtracker.org/#/bcorps (last visited Sept. 22, 2016) (United
States map displaying state legislation on benefit corporations from 2009 to 2016).
15. Alaska H.R. 49, sec. 2 (amending A
LASKA STAT. § 10.60.010).
16. Id. (amending ALASKA STAT. §§ 10.60.030–10.60.500).
17. Id.
18. Id. (amending ALASKA STAT. § 10.60.300).
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332 ALASKA LAW REVIEW Vol. 33:2
forty-five years.
19
Part II describes the emergence of the benefit
corporation entity in the U.S. and examines the implications of its possible
introduction in Alaska. Part III argues that Alaska should seize the
opportunity to pass a benefit corporation statute, and thus give Native
corporations the chance to consider an alternative legal entity.
I. OVERVIEW OF ANCSA’S ALASKA NATIVE CORPORATIONS
Following Alaska’s first major oil strike in 1957 and its statehood two
years later, oil companies began advocating
20
for resolution of the
uncertainty around Alaska Native land ownership in the state.
21
Congress
enacted ANCSA in 1971 as a comprehensive response.
22
The statute deals
almost entirely with land.
23
Under ANCSA, Alaska Natives gave up “any
claim” they might have to about 360 million acres of land in exchange for
45.5 million acres and $962.5 million.
24
ANCSA required that regional corporations be formed “for profit”
under Alaska law to manage these assets.
25
ANCSA also required the
formation of village corporations, and some assets were transferred to
these local entities.
26
Village corporations typically received the “surface
estate.”
27
Regional corporations received some of the surface estate, but
also acquired the resource-rich “subsurface estate.”
28
19. Anderson, supra note 5, at 31 (“Passage of the ANCSA in 1971 was
undoubtedly the most important event in the history of Alaska Native people
since 1867. If one views it from the perspective of the state and oil companies’
intent on development of oil and gas at Prudhoe Bay, ANCSA was a resounding
success.”)
20. M
ITCHELL, supra note 4, at 3–4; see also Anderson, supra note 5, at 28 (stating
that possibly the most important pressure behind ANCSA’s enactment “was the
fact that the state and federal governments’ effort to construct a pipeline to
transport oil from newly discovered oil fields . . . was thwarted by Native claims
to aboriginal title.”).
21. Chaffee, supra note 6, at 116.
22. Alaska Native Claims Settlement Act, Pub. L. No. 92-203, 85 Stat. 688
(1971) (codified as amended at 43 U.S.C. §§ 1601–1629h (2012)).
23. See DAVID S. CASE & DAVID A. VOLUCK, ALASKA NATIVES AND AMERICAN
LAWS 35 (3d ed. 2012) (describing ANCSA as having a “relatively narrow purpose”
to settle land claims and explaining that the statute “primarily describes the
express procedures whereby land settlement was to be achieved.”) [hereinafter
C
ASE & VOLUCK]; see also Anderson, supra note 5, at 40 (stating that ANCSA did
not address tribal self-governance issues or hunting, fishing, and gathering rights
of Alaska Natives).
24. Chaffee, supra note 6, at 109.
25. 43 U.S.C. § 1606(d); twelve regional corporations were created, plus a
thirteenth for Alaska Natives not residing in Alaska. Id. § 1606(a), (c).
26. 43 U.S.C. § 1607(a).
27. CASE & VOLUCK, supra note 23, at 171–72.
28. Id.
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2016 THE BENEFITS OF A B CORP STATUTE 333
Each Alaska Native person alive on December 18, 1971
29
was entitled
to receive one hundred shares in a corresponding regional corporation.
30
Share transfer was temporarily restricted by ANCSA
31
and later restricted
indefinitely by the so-called 1991 amendments to ANCSA.
32
ANCSA
generally exempted the Native corporations from the federal securities
laws.
33
Further, ANCSA compels the regional Native corporations to
share their timber and subsurface natural resource revenues with each
other proportionally.
34
Regional corporations must also share revenue
with the village corporations.
35
Otherwise, Native corporation
shareholders are treated like other corporate shareholders under the
Alaska Corporations Code.
36
Shareholders elect a board of directors that
owes fiduciary duties, and they count on receiving regular dividend
payments from the corporation.
37
Although their financial track record
has been mixed,
38
Native corporations have developed businesses in oil
29. Native corporations have taken different approaches on whether to issue
shares to younger people. See generally C
ASE & VOLUCK, supra note 23, at 190
(noting that most corporations are weighing these interests in moving forward).
30. § 1606(g)(1)(A).
31. CASE & VOLUCK, supra note 23, at 159.
32. C
OHEN’S HANDBOOK OF FEDERAL INDIAN LAW § 4.07[3][b][ii][C] (Nell Jessup
Newton ed., 2012) [hereinafter C
OHEN’S HANDBOOK] (“The major feature of the
1991 amendments is the indefinite extension of restrictions on alienation of Native
corporation stock.”).
33. 43 U.S.C. § 1625; see also CASE & VOLUCK, supra note 23, at 196 (describing
the amendments to ANCSA that made the exemptions indefinite and detailing
Alaska’s state securities regulations, which are applicable to the largest Native
corporations).
34. § 1606(i)–(m); see also CASE & VOLUCK, supra note 23, at 175–76 (stating that
after extensive litigation over the revenue sharing provision, a settlement to
modify it was ultimately agreed upon).
35. § 1606(i)–(m); see also CASE & VOLUCK, supra note 23, at 175–76 (stating that
after extensive litigation over the revenue sharing provision, a settlement to
modify it was ultimately agreed upon).
36. See, e.g., Rude v. Cook Inlet Region, Inc., 294 P.3d 76 (Alaska 2012) (holding
that a Native corporation did not have to list the candidates not recommended by
its board in its proxy materials). Admittedly, Native Corporations have received
significant special treatment under federal law, such as being able to sell their
taxable losses during the 1980s, C
ASE & VOLUCK supra note 23, at 180–81, and
receive federal contracting preferences, Robert O’Harrow Jr., For Many with Stake
in Alaska Native Corporations, Promise of Better Life Remains Unfulfilled, W
ASH. POST
(Sept. 30, 2010, 10:53 AM), http://www.washingtonpost.com/wp-
dyn/content/article/2010/09/29/AR2010092906318.html.
37. See, e.g., Holmes v. Wolf, 243 P.3d 584 (Alaska 2010) (interpreting the
Alaska Corporations Code in ruling on a plaintiff’s claim for director’s breach of
fiduciary duties against Leisnoi, Inc., a village corporation); see also M
ITCHELL,
supra note 4, at 509 (describing how unemployed Alaska Natives may need to live
off their dividend checks).
38. See Jennifer LaFleur and Michael Grabell, Alaska Native Corporations
Financials,
PROPUBLICA (Dec. 15, 2010, 8:00 PM),
http://projects.propublica.org/tables/alaska-native-corporations-financials