Chapter 22
The Corporation as Vehicle

There was no mention of corporations in the first bills introduced in 1967 to settle Alaska Native claims. These bills would have resolved claims through "tribes, bands, villages, communities, associations or other identifiable groups of Eskimos, Indians, and Aleuts." Beginning with the Governor's Task Force bill of 1968, however, business corporations were proposed as the means of carrying out the settlement, and after that time were fully accepted. Indeed, the theme of the 1971 convention of the AFN, the last held before Congress adopted the act, was "In the white man's society, we need white man's tools."

Under the settlement act all of the money and virtually all of the land goes initially to business corporations. It is through these organizations that nearly all of the benefits flow to enrolled Natives. The business corporation is the vehicle of settlement.

The business corporation. The business corporation is organized to earn money. By having a number of people pool their financial resources, the corporation obtains money to purchase equipment and hire persons of specialized skills to carry out money-making activities. Those who put their dollars into the enterprise become stockholders who share in the ownership of the corporation. As owners, they may expect to earn dividends — shares in the profits of the corporation.

While the corporation is a business organization, people and laws treat it, in many ways, as if it were a real person. A corporation may buy or sell goods and services. It collects money and spends it. It makes agreements and it may break them. If it violates a law, it may be charged with a crime. If it is, the corporation is charged with the offense, as though it were a real person; its stockholders are not.

Control systems. Most of the control systems of a corporation are provided for in the State law that allows corporations to be established and in two sets of papers which State law requires: articles of incorporation and bylaws. State law sets out what corporations may do and what they may not do. And, as noted earlier, many of the laws that apply to persons also apply to corporations.

The articles of incorporation are a kind of agreement (which has been approved by the State government) on some rules of control among the people who first set up a corporation. They establish the basic relationship between the stockholders, who are the owners of the corporation, and the company and its management. Anything that the stockholders do not want changed without their say-so should be in the articles. The articles give the stockholders the right to elect directors. All of the rest of the basic control of the corporation is left to the directors whom the majority have chosen.

The bylaws contain most of the rules of control between the directors, who are usually not employees of the corporation, and the officers of the corporation, who are often employees. If the officers are employees, it is they who have responsibility for its day-to-day operation, subject only to broad policy direction from the directors. The bylaws establish the titles and responsibilities of each of the principal officers of the corporation. Bylaws can be amended by the directors at any time.

Law, articles of incorporation, and bylaws define the basic control system for a corporation. Within that framework, the board of directors provides more detailed directions for the management of the corporation. These directions are recorded in the minutes of the directors' meetings.

Other rules, dividing control of the corporation among officers and employees, are contained in operations manuals and in memoranda issued by the officers to employees.

These rules of control, taken together, set out the terms under which corporations are run and identify who gets to make decisions about what.

A system of accountability. Another set of rules — a system of accountability — helps the people who own or manage the corporation to determine how successfully the corporation is performing.

Since the primary purpose of most business corporations is to make profits, their systems of accountability are organized to help determine whether they are. Their books of accounts will show the flow of dollars and things having dollar values in and out of the corporation.

Role of stockholders. All of these books and accounts are normally available for a concerned stockholder to look at for the asking. But most stockholders are content to review the annual report of the corporation — a summary statement of how well the corporation is performing its business — which is usually distributed to all stockholders for the annual meeting.

Although a corporation's stockholders are its owners, the role of stockholders in the life of a typical corporation is a very limited one.

One of the stockholder's most important roles is that of participating in the election of the corporation's board of directors. It is that board, the officers it chooses, and the staff it hires which will determine the course of the corporation's activities. While an elaborate system of control exists for corporations, it is only a framework within which a corporation engages in activities expected to be of benefit to its stockholders. What the corporation sets out to do, and how effectively it accomplishes it, is dependent upon the qualities of judgment and vision brought to the enterprise by corporate leaders.

Even though this role of a stockholder is an important one, a sole stockholder in a large corporation has little voting strength by himself. In order to gain some advantage in selecting directors or taking other action at a stockholders' meeting, groups of stockholders sometimes have agreements among themselves as to how they will vote. Each of several stockholders may give his proxy — his power to vote — to another stockholder for use at an annual meeting. Such a proxy would be "special," binding the holder to vote for a specific candidate for director or a list of candidates named in the proxy. Another kind of proxy is a "general" one, allowing the holder to vote for anyone he chooses to vote for. However, it should be noted that there is no substitute at the annual meeting for the eloquence of the individual stockholder in calling for the election or rejection of persons seeking seats on the board of directors.

The stockholder's right to vote also extends to extraordinary decisions relating to the corporation. One example of such a decision would be a recommendation from the officers that a large part of the assets of the corporation be sold. Another example would be a decision to dissolve the corporation.