§1629e Settlement Trust Option

Summary

Native Corporations may transfer assets (including stock) to a Settlement Trust under state law, except where state law conflicts with this rule and section 1629b. If the corporation wants to transfer all or almost all of its assets, shareholders must approve that transfer by a resolution. Any transfer that breaks that rule is void from the start and a court cannot enforce it. No subsurface estate (underground mineral rights) may be put into a Settlement Trust; trying to do so is void from the start. Transfers are subject to laws about fraudulent transfers and creditor rights. Shareholders can only claim dissenters’ rights under state law if the trust beneficiaries’ rights cannot be sold or given away and a shareholder vote is required by section 1629b(a)(4). Nothing here stops a corporation from other transfers or reorganizations allowed by state or U.S. law. A Settlement Trust must support the health, education, and welfare of its beneficiaries and help preserve Native heritage and culture. The trust cannot run a business, and it generally cannot sell or give away land it gets from the settlor corporation, except back to the settlor or as a homesite of up to 1.5 acres to a beneficiary who is legally a resident of the settlor’s Native village under Alaska law. The trust cannot favor a group made mainly of the settlor’s employees, officers, or directors. The Native Corporation that creates the trust alone picks and, for cause, removes the trustees; trustees must be real people. The corporation may add new beneficiaries who receive Settlement Common Stock issued after the trust was set up without paying the original beneficiaries. The trust is not subject to rules against long-lasting trusts (perpetuities). Lands conveyed keep the protections and rules of this chapter as if still held by the corporation. Timber covered by section 1606(i) that goes into a trust may only be removed to deal with disease, stop spread of pests, fight or prevent fires, or protect public safety, and any revenue is treated under section 1606(i). Transfers do not cancel valid contracts, judgments, liens, or other obligations (including those under section 1606(i)); claims based on those matters can be enforced against the trust just as they could against the corporation. If a transfer does not make the corporation unable to meet those claims or insolvent, and was not done while the corporation was insolvent, the assets moved into the trust are generally protected from court attachment or sale except for lawful trust debts. The trust must not make distributions that would prevent it from meeting those claims; such distributions are void from the start. Shareholder approval is only needed when state law would require it. A beneficiary’s interest and distributions are subject to creditor actions only to the same extent as Settlement Common Stock under section 1606(h).