Decline in natural resource market may reflect Class 7(j) distributions

Published July 2016

Shareholders should prepare for a decrease in Class 7(j) distributions this year. The amount of 7(j) distributions varies depending upon the natural resource net profit of the regional corporations. As the natural resource market declines, Class 7(j) distributions decline alongside of it. While we hope the natural resource market will recover in the near future, we should still prepare for smaller 7(j) distribution for the time being.  

In order to understand section 7(j) distributions, you must understand what section 7(i) of ANCSA is. Section 7(i) states: 70 percent of revenues, net of certain costs, derived by each regional corporation from timber and subsurface estate is to be divided annually among the 12 regional corporations in Alaska in proportion to the number of shareholders enrolled in each.

Section 7(j) of ANCSA requires that 50 percent of the monies received from the Alaska Native Fund and received under Section 7(i) must be distributed to village corporations and at-large shareholders. Seven of the eight village corporations formed under ANCSA and within the Ahtna region merged with the corporation. As a result, the Company now distributes approximately 17 percent of its Section 7(i) distributable receipts.

In order for an individual to receive 7(j) distributions, they must be considered an at-large shareholder. At-large shareholder common stock was issued to original enrollees of Ahtna Inc. who did not enroll with a village corporation. Since the at-large shareholder is not enrolled to a village corporation, they receive the 7(j) money directly.