Hasn’t BBNC already established a settlement trust? How is the new trust different?
BBNC has already established a settlement trust to provide elder’s benefits to the original shareholders. The new trust (the BBNC Settlement Trust), if approved by BBNC’s shareholders, could be used to provide various benefits to BBNC’s shareholders, Alaska Natives and descendants of Natives. These additional benefits cannot be provided through the existing elder’s trust and so the second trust (the BBNC Settlement Trust) is necessary.
What benefits will be provided through the BBNC Settlement Trust?
The Trust Agreement permits the Trustees to provide four specific types of discretionary cash benefits: a Distribution Benefit, an Elder’s Benefit, an Educational Benefit, and a Bereavement Benefit. The Trust Agreement also provides that the Trustees are authorized in their discretion to provide other benefits to (i) the beneficiaries of the Trust, and (ii) to Alaska Natives and descendants of Alaska Natives, and to otherwise preserve the heritage and culture of Alaska Natives. Trustees will decide when and which benefits to fund if needed in the future.
Can the principal of the BBNC Settlement Trust be used to provide these benefits?
Are there any limits on the amounts of benefits that may be provided each year?
No. All distributions are in the discretion of the Trustees of the Trust.
Who will be the Trustee(s) of the BBNC Settlement Trust?
There will be five Trustees of the BBNC Settlement Trust. These Trustees will be persons appointed by BBNC’s CEO. Trustees will also have access to experts, consultants, advisors and BBNC personnel as shall be necessary to accomplish the purposes of this Trust.
What are the tax benefits to BBNC shareholders?
The BBNC Settlement Trust will make a special tax election, which permits BBNC shareholders/beneficiaries to receive an important tax break. Under present law, distributions by the Trust are not anticipated to be taxable to the shareholder/beneficiaries and do not have to be reported on their individual tax returns. By contrast, dividend distributions and most benefits paid by BBNC are normally fully taxable to BBNC’s shareholders due to BBNC’s profitability.
What are the tax benefits to BBNC?
The BBNC Settlement Trust will be taxed at a very favorable rate of 10% on ordinary income, such as interest income, and 0% on capital gains and dividends. By contrast, ANCSA corporations are normally taxed at rates of about 27% unless they have Net Operating Losses (NOLs). This alone produces a significant tax savings on income earned by a settlement trust versus income earned by BBNC.
What will be contributed to the BBNC Settlement Trust?
Contributions will be made to the BBNC Settlement Trust from time to time in the discretion of BBNC’s Board. The present plan is to initially contribute approximately $250,000 to the Trust upon shareholder approval of the Trust as a Settlement Trust. Other contributions after this date are also possible. Once assets are placed in the BBNC Settlement Trust, the assets cannot be returned to BBNC or used for other corporate purposes.
How long will the BBNC Settlement Trust last?
The Trust will last until the beneficiaries and the Trustees jointly take action to terminate the Trust.
Can the BBNC Settlement Trust Be Modified?
There are several ways in which the Trust Agreement can be modified. Certain minor modifications can be made upon a vote of a majority of the Trustees, while major modifications (such as modifications of the benefit provisions and a decision whether to terminate the Trust) will require approval by 2/3rds of the Trustees and a majority of the beneficiaries.
What is the Shareholder Voting Process to establish the Trust?
A majority of BBNC’s voting stock voting on Shareholder Resolution 18-01 must vote to approve Shareholder Resolution 18-01 to create the BBNC Settlement Trust as a Settlement Trust under ANCSA. Each share will have one vote. Cumulative voting will not apply to the settlement trust vote, although it will apply to director elections.
If BBNC’s shareholders vote in favor of the Trust, what does a Shareholder receive in the Trust?
Upon approval of the BBNC Settlement Trust, every BBNC Shareholder will automatically receive “Trust Units” representing their rights as a beneficiary of this Trust. BBNC Shareholders will own the same number of Trust Units in the BBNC Settlement Trust as that shareholder owns in BBNC shares. Thus, if you own 100 BBNC shares, you will own 100 Trust Units in the BBNC Settlement Trust. If the shareholder’s BBNC’s shares are voting, the Trust Units of that shareholder will be voting.
Are BBNC Trust Units transferable?
Trust Units can only be transferred when the corresponding shares of BBNC are permissively transferred and Trust Units cannot be owned independently from the corresponding shares of BBNC. For example, when BBNC shares are transferred through a gift of shares or upon the death of a shareholder, the same number of Trust Units will automatically be transferred to the same person who receives the BBNC shares.
Ready to vote? Visit www.bbncvote.net and log in to vote online! Need your PIN? Call Hutchings & Associates at (907) 563-2727.
Early Bird Deadline: September 12, 5:00 p.m.
Final Voting Deadline: October 3, 5:00 p.m.