Advantages & Disadvantages
A Section 17 corporation can provide an attractive business structure for tribes because it establishes a legal entity to conduct and manage business activities separate from the tribe itself. It also segregates tribal governmental assets and liabilities from those of tribal businesses, minimizing the financial risks of the tribe. The assets and property of the business are conveyed to a separate legal entity and can be separately pledged as collateral. Thereby by limiting the liability of Section 17 corporation. It permits a tribe to tailor a waiver of sovereign immunity to fit the specific business activities that will be conducted by the corporation. It also safeguards the decision-making authority of the tribal government governments and assigns the responsibility for operating and managing business activities with the Board of Directors of the corporation and a business manager.
• Entity will have the same privileges and immunity as the tribal government including tribal sovereign immunity
• Segregates the assets and liability of the corporation from tribal assets
• Not subject to federal income tax
• Has 25 year leasing authority for tribal reservation lands and Section 81 approval by the Secretary of the Interior is not required
• Contracts and agreements of the corporation are not subject to Section 81 approval by the Secretary of the Interior.
•The time to obtain a corporate charter issued by the Department of the Interior can be lengthy because of the various steps involved
• Once issued, the charter can only be revoked by an act of Congress
• A Section 17 corporation must be wholly-owned by the tribe--precluding equity ownership in the enterprise by outside investors.