Shareholders’ rights in Nunavut

For months the southern media has been reporting on the spectacular bankruptcies of giant U.S. corporations such as Enron, Worldcom and others.

Although the specific circumstances differ in each case, there’s a common thread running through all of these stories — that these companies were run by executives who deceived and manipulated their shareholders.

Publicly held companies whose shares trade on stock markets are required by law, in both Canada and the U.S. to provide complete and accurate financial information to their shareholders, and any other information that could affect the financial well-being of the companies. In the U.S., that includes information about how much is paid to senior company executives. But despite those strict laws and regulations, it appears that many large corporations have been running roughshod over the rights of their shareholders

In theory, all Inuit beneficiaries are the owners of Nunasi Corporation, the birthright corporation for all of Nunavut. Similarly, the beneficiaries of each region are the theoretical shareholders of each regional birthright corporation.

Given all that, now is as good a time as any to ask this question: what kinds of rights — if any — are available to the theoretical shareholders of Nunavut’s Inuit birthright corporations and their various subsidiaries?

Legally, there are none. Ironically, any Inuk able to buy shares in publicly traded northern companies such as Northern Property Real Estate Investment Trust (formerly Urbco), or the North West Company (owner of Northern stores), enjoys far more rights than as a shareholder of an Inuit birthright corporation.

For example, the shareholders of companies like the former Urbco have the legal right to see quarterly financial statements, annual consolidated revenue statements, annual reports, and any other information that could affect the company’s financial prospects.

In fact, any member of the public with access to the Internet can easily find financial information about such companies.

Want to know how much money Breakwater Resources, the owner of Nansivik mine, lost last year? Just go to the company’s Web page and read its 2001 financial statement.

Want to know how Nunasi Corporation did in 2001? Well, if you go to that company’s Web page, you will find consolidated financial statements for 1999 and 2000, but none for 2001.

If you go to Qikiqtaaluk Corporation’s home page, you won’t find any financial statements at all. Instead, on a page called “Fiscal Performance,” you’ll find a few snippets of information that say nothing about whether the company actually made or lost money.

They provide revenue figures for 1998, 1999 and 2000, with more figures about how much money they gave out in compassionate travel donations, and how much their payrolls were worth in those years.

But the most important piece of information — the bottom line — is missing. There’s no information about whether the company made or lost money.

To be fair, there is no legal requirement for Inuit-owned birthright corporations to disclose any information to anyone, even to Inuit beneficiaries. Legally, they are private corporations, with all the rights and privileges enjoyed by any person.

Unfortunately, there are few obligations to accompany these rights.

So it’s to their credit that they sometimes make an attempt to share at least some information with beneficiaries, even if it’s rarely enough to provide a semblance of accountability.

The Qikiqtani Inuit Association also deserves praise for passing new board governance policies at its board meeting in Grise Fiord this spring. From now on, no staff member, including the president of Qikiqtaaluk Corporation, will be allowed to sit on any board, and no one may hold two positions at the same time.

QIA also reaffirmed the idea that QC is a “controlled” organization, and that QIA is ultimately responsible to the beneficiaries for QC’s performance.

Despite this, most beneficiary-owned corporations are as transparent as a piece of glass painted with black enamel.

This is a major issue. In 2000, Nunasi Corporation’s assets were worth $141.6 million. Sales and other revenue in 2000 came to $180.8 million.

That’s a fair bit of wealth, and it’s likely to grow. But how much of it is likely to be redistributed to beneficiaries? And even if they’re kept up to date on the company’s performance, what is the meaning of their ownership anyway?

JB