Over the years, opening enrollment to descendants of shareholders has been a topic of conversation amongst many Alaska Native Corporations including our own. The Board of Directors decided it was time to start the process and made it one of the Corporation’s strategic goals to expand shareholder opportunities and benefits by offering a new class of shares to descendants of shareholders. This decision requires approval of the Choggiung Limited shareholders through a vote.
Related to opening the rolls, at a special meeting in January of 2019, greater than 95% of Choggiung shareholders that participated in the meeting voted to create the Choggiung, Limited Settlement Trust. A noteworthy feature of the Trust shareholders approved allows for the addition of beneficiaries to the Trust that become a Shareholder of the Corporation as a result of descendant enrollment, but has a deadline. In order for the Board of Trustees to carry out adding beneficiaries to the Trust, descendant enrollment must be approved within five years from the initial approval of the Settlement Trust in 2019.
To be proactive and meet the deadline, about one year ago, a Descendant Enrollment Committee was established by the Board to study descendant enrollment and make recommendations. The Committee set four major goals as it set out to structure a new class of shares it felt the Board and ultimately Shareholders could approve; 1. The Corporation & Settlement Trust would aim to continue to pay predictable and ever-increasing dividends or distributions after enrollment, 2. A quorum can continue to be met in the Corporation’s Annual Meeting of Shareholders after opening the rolls, 3. As broad of eligibility requirements as possible should be achieved, and 4. A long-term opportunity for new descendants to enroll following shareholder approval should occur.
The Committee studied all factors they wanted to achieve in detail. To understand how certain structures might affect the goals the Committee set out, they covered the demographics of our shareholders, voting trends, impacts to the corporation and shareholders financially, and had multiple discussions and meetings with legal counsel. They researched and reviewed descendant enrollment options and conducted thorough financial and shareholder impact modeling to study the effects on current shareholders and the corporation. Staff also had multiple discussions with other Native Corporations that have already gone through open enrollment to better understand the process. After this extensive process, the Committee made the recommendation to the Choggiung Board of Directors to open the rolls for Descendant Enrollment. On February 18, 2022, the Board of Directors voted unanimously to approve Resolution 2022-06: Approving an Amendment to the Restated Articles of Incorporation Authorizing the Issuance of New Shares of Settlement Common Stock. This resolution effectively makes a formal recommendation to Choggiung Limited shareholders to vote in favor of the structure described later. If the Articles of Amendment are approved and adopted by a vote of the shareholders at the 2022 Annual Meeting of Shareholders, the effective date for the Articles of Amendment shall be September 26, 2022.
What’s next? Opening enrollment to descendants of shareholders as recommended by the Choggiung Limited Board of Directors must be approved by a shareholder vote which will be included on the Proxy for the upcoming Annual Meeting of Shareholders on September 24, 2022. Outreach on descendant enrollment will occur over the summer and early fall. Shareholders can expect to receive information in the mail and see posts on social media and on our website. Informational Meetings will be held in Dillingham, Anchorage, and Wasilla and can also be attended virtually. Dates for those events and instructions for virtual attendance will be announced later.
In 2021, the Choggiung Board began to consider the issuance of additional shares of settlement common stock. Choggiung has 104,000 original shares of Class A stock.
After multiple discussions, meetings, and careful consideration the Board voted to propose to the Shareholders, an amendment to the Articles of Incorporation to approve the issuance of 80,000 shares of Class B stock in the amount of 25 shares to each lineal descendant of Choggiung Limited shareholders and missed enrollees.
Class B shares will be life estate stock, cannot be gifted or inherited, and will remain non-voting until the recipient shareholder turns 18. Anyone who has enrolled in another village corporation as the result of submitting an application for descendant enrollment is not eligible to receive Choggiung Limited Class B shares.
Choggiung also recommends making missed enrollees (also referred to as “left-outs”) eligible to receive Class B shares. Missed enrollees are Natives who were alive when ANCSA became law on December 18, 1971 and were qualified for original enrollment but missed the original enrollment deadline.
The demographic study (by ISER) estimated that as of January 1, 2022, there are approximately 1,788 living lineal descendants of original Choggiung shareholders, and is estimated that over the next 30 years, 2,351 lineal descendants will be born. While this is a large number of living and expected lineal descendants, what Choggiung’s Board is proposing includes mechanisms to protect the voting power and dividend value of existing shareholders.
If the Amendment Passes
The new shares, if approved by Shareholders, will be issued with the following structure recommended by the Choggiung Limited Board of Directors:
♦ 25 shares per new enrollee
♦ Shares are eligible to receive all benefits of the Corporation and if added as a beneficiary to the Choggiung Limited Settlement Trust, the same access to benefits applies from the Trust
♦ New shares are Life Estate meaning when a descendant passes away, shares will return to the Corporation and can be reissued to newborn descendants and ensures shares will be passed on to original shareholder descendants long into the future.
♦ Shares are entitled to vote once the shareholder reaches the age of eighteen (18)
Eligibility for Class B Stock is as follows:
♦ Born after December 18, 1971
♦ Lineal descendant of an original Choggiung Limited shareholder (child, grandchild, etc.)
♦ Not a shareholder of another Village Corporation (except by gifting and inheritance.)
♦ Missed enrollment: Born before December 18, 1971 and is at least 1/4 Alaska Native Blood Quantum.
Descendant enrollment is a new concept to Choggiung shareholders that will result in changes to the corporation and to shareholders and their benefits. In anticipation of questions about descendant enrollment, we’ve put together a list of answers to frequently asked questions. If you don’t find your questions have been answered here, you can contact Mary Barnes by email at firstname.lastname@example.org or call 907-842-5218.
Q: Who are original Choggiung shareholders?
An individual who was born before December 18, 1971, participated in ANCSA’s original enrollment process, had their names included on the BIA rolls, and were issued 100 shares of original Choggiung settlement common stock. Shareholders who were born after December 18, 1971 who were gifted or inherited shares are not original shareholders.
Q: What is a lineal descendant?
- A person who is the child, grandchild, great grandchild, etc. of an original Choggiung Limited shareholder; descendants must be able to trace a direct ancestor as an original Choggiung shareholder.
- A lineal descendant of a Native, or of an individual who would have been a Native if such individual were alive on December 18, 1971; or
- An adoptee of a Native or of a descendant of a Native, whose adoption occurred prior to his or her majority, and is recognized at law or in equity.
Q: What is a missed enrollee?
A missed enrollee or “left-out” is a Native alive when ANCSA became law on December 18, 1971 and who was qualified for original enrollment as a Choggiung shareholder, but who missed the original enrollment deadline. They must be a citizen of the United States and of ¼ degree or more of Alaska Native blood.
Q: If it passes will there an Alaska Native blood quantum requirement?
No, there will be no blood quantum requirement for descendant enrollment.
Q: If I already own shares as a descendant (through gifting or inheritance) can I still enroll and receive 25 new shares?
Yes, if you are qualified and your application has been completed, verified, and approved, you will receive 25 shares of Class B stock in addition to any original shares you already own. The original Class A stock can continue to be gifted and inherited, but the Class B stock cannot.
Q: Can I enroll if I have shares in another Village Corporation?
You can enroll if you have been gifted or inherited shares from another Village Corporation; however, if you are a descendant who has already enrolled in another Village Corporation who opened enrollment, you are not eligible to enroll with Choggiung.
Q: Will descendant shares (new enrollees) have voting rights?
Class B descendant shares will not have voting rights until the shareholder to whom they were issued reaches the age of 18.
Q: What is Life Estate Stock?
Life estate stock are shares that go back to the Corporation, without compensation, upon the death of the owner of the shares. The shares can then be re-issued to a new descendant in the future. Life estate stock cannot be gifted or passed on by inheritance.
Q: If it passes, when will the enrollment process begin?
If the vote to approve the amendment to open enrollment passes at the Annual Meeting, staff will begin the application process for enrollment in the months following the meeting.
Q: Can I get my shares back that I gifted to my descendants now that they can get their own?
No. ANCSA only allows gifting laterally to brothers and sisters, and downward. Once those shares have been gifted, they cannot be returned to the original shareholder.
Q: If the amendment passes, will my dividend distributions get smaller?
The Board and Management intend to maintain its expectation of ‘predictable and ever-increasing dividends/distributions.’ However, the initial enrollment of shareholder descendants will have a large impact on dividends/distributions. Because funds will be distributed to a larger number of shares outstanding, and because the distribution is dependent on Corporate & Trust financial health, a smaller distribution per share may result.
Q: If the Resolution passes to open the rolls as described, what will the financial impact be on Choggiung?
The financial impact depends on the number of descendants who enroll. Having more shareholders means administrative costs will increase, and dividends will be distributed among a larger number of shareholders.
Q: Will I receive past distributions?
No, new enrollees will not receive past distributions. New enrollees will receive their first distribution once their application has been verified and approved.
Q: What would the voting standard be?
An affirmative vote of shares that represent a majority of shares present or represented by proxy at the Annual Meeting of Shareholders.
Q: How many new shareholders would be enrolled if descendant enrollment takes place?
Choggiung does not have a definite number at this time; however, it is estimated (by the ISER study) that approximately 1,800 descendants would qualify. If the vote passes, the Board has approved 80,000 new shares. Each descendant who enrolls will receive 25 shares which leaves room for up to 3,200 new enrollees and an opportunity for newborn descendants to enroll long after this vote is approved.