04/04/2023 08:00 AM House COMMUNITY & REGIONAL AFFAIRS

        HB 123-ARTICLES OF INCORPORATION FOR ANCSA CORPS                                                                    
                                                                                                                                
8:03:15 AM                                                                                                                    
                                                                                                                                
CHAIR MCCORMICK announced that the  first order of business would                                                               
be HOUSE  BILL NO. 123, "An  Act relating to an  amendment to the                                                               
articles of  incorporation of a  corporation organized  under the                                                               
Alaska  Native  Claims  Settlement  Act;  and  providing  for  an                                                               
effective date."                                                                                                                
                                                                                                                                
8:03:25 AM                                                                                                                    
                                                                                                                                
TOM  WRIGHT, Staff,  Representative Craig  Johnson, Alaska  State                                                               
Legislature,  presented  HB  123   on  behalf  of  Representative                                                               
Johnson,  prime sponsor.   He  paraphrased the  sponsor statement                                                               
[included  in  the  committee  packet],  which  read  as  follows                                                               
[original punctuation provided]:                                                                                                
                                                                                                                                
     The   Alaska  Corporations   Code,  adopted   in  1989,                                                                    
     requires  corporations existing  before  July 1,  1989,                                                                    
     (which includes  all ANCSA  corporations) to  obtain an                                                                    
     affirmative vote  of at least two-thirds  of the shares                                                                    
     entitled to  vote for the  adoption of an  amendment to                                                                    
     the articles of incorporation.                                                                                             
                                                                                                                                
     Per  current AS  10.06.504(d):  The  requirement of  an                                                                    
     affirmative vote  of at least two-thirds  of the shares                                                                    
     entitled to  vote for the  adoption of an  amendment to                                                                    
     the articles of incorporation  as provided in former AS                                                                    
     10.05.276  shall  remain   in  force  for  corporations                                                                    
     existing before July 1, 1989.                                                                                              
                                                                                                                                
     By contrast,  corporations formed  after July  1, 1989,                                                                    
     including any newly formed corporation  in the State of                                                                    
     Alaska, generally  require only a simple  majority vote                                                                    
     of all outstanding shares for articles amendments.                                                                         
                                                                                                                                
     The  existing language  of AS  10.06.504{d) effectively                                                                    
     handicaps ANCSA corporations  from making amendments to                                                                    
     their  Articles of  Incorporation, unless  an exception                                                                    
     applies.  Most  ANCSA corporations  typically  received                                                                    
     shareholder meeting  quorums in the upper  50% or lower                                                                    
     60% of  the total outstanding shares  eligible to vote.                                                                    
     But as  the years go  on and shares  become distributed                                                                    
     across  larger  numbers  of individual  descendants  of                                                                    
     original  shareholders, quorum  counts are  expected to                                                                    
     continue to decrease.                                                                                                      
                                                                                                                                
     ANCSA and Alaska law  already recognize this phenomenon                                                                    
     by  providing  reduced   voting  thresholds  for  ANCSA                                                                    
     corporations  for  certain specified  matters.  Reduced                                                                    
     voting  thresholds apply  to creation  of a  Settlement                                                                    
     Trust  or amending  the  Articles  of Incorporation  to                                                                    
     issue  new   shares  of  Settlement  Common   Stock  to                                                                    
     descendants  of   original  shareholders,   along  with                                                                    
     amendments to the Articles  of Incorporation to provide                                                                    
     for classification of seats on  the Board of Directors.                                                                    
     There is  no general  catch-all allowing  Alaska Native                                                                    
     Corporations  to amend  the  Articles of  Incorporation                                                                    
     for matters outside these narrow exceptions.                                                                               
                                                                                                                                
     Thus, AS  10.06.504 sets up a  discriminatory, two-tier                                                                    
     regime,  in   which  Alaska  Native   Corporations  are                                                                    
     subjected to an  effectively impossible heightened two-                                                                    
     thirds  voting standard  and are  effectively prevented                                                                    
     from   general   amendments   to  their   Articles   of                                                                    
     Incorporation.  Other,  newly formed  corporations  are                                                                    
     provided   a  more   realistic  50%   voting  standard.                                                                    
     Research reflects  that the 50% standard  is the modern                                                                    
     norm across most states.                                                                                                   
                                                                                                                                
     Based  on  research   of  various  states'  corporation                                                                    
     codes,  and  the  history and  significance  of  ANCSA,                                                                    
     ANCSA   corporations  believe   the   current  law   is                                                                    
     antiquated, and leaves  Native corporations established                                                                    
     under  ANCSA  at  a competitive  disadvantage  compared                                                                    
     with newer corporations.                                                                                                   
                                                                                                                                
8:05:15 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HIMSCHOOT asked for confirmation that the intent                                                                 
of HB 123 is to proactively solve a problem that "isn't exactly                                                                 
happening yet" but is anticipated.                                                                                              
                                                                                                                                
MR. WRIGHT  responded in the  affirmative.  He suggested  that it                                                               
is becoming  a problem,  as not all  shareholder meetings  have a                                                               
two-thirds threshold,  and the  bill seeks to  "put them  in step                                                               
with all other corporations" which  have "a 50 percent, plus one,                                                               
threshold."                                                                                                                     
                                                                                                                                
8:06:11 AM                                                                                                                    
                                                                                                                                
CHAIR MCCORMICK announced that HB 123 was held over.