[CCWG-Accountability] Regarding Non-profit and public-benefit legal structure

[Cheryl Langdon-Orr]

It helps (me at least)  enormously Greg...


Thanks


*Cheryl Langdon-O**rr ...  *(CLO)

about.me/cheryl.LangdonOrr
[image: Cheryl Langdon-Orr on about.me]
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On 7 January 2015 at 11:40, Greg Shatan <gregshatanipc at gmail.com> wrote:

> What Bruce has set forth is close to correct.  However, I can't help but
> do a little legal nit-picking.
>
> "Public benefit corporation" is a term used in California (among other
> places) as a term for non-profit corporations generally.  (In New York
> State, we use the term "not-for-profit corporation" to mean basically the
> same thing as a California "public benefit corporation" (and we use the
> term "public benefit corporation" to mean something quite different -- a
> quasi-public corporation like the Metropolitan Transport Authority).)
>  California public benefit corporations are not really "chartered by the
> state" (though New York ones like the MTA are chartered by the state).
>  [Wikipedia isn't always a great source....]
>
> In California, public benefit corporations may be created with or without
> members, or may convert from member to non-member and vice versa.  However,
> a public benefit corporation with members is still a public benefit
> corporation.
> (California also has "mutual benefit corporations" which are non-profit
> but never charitable (and are also not tax-exempt).  Mutual benefit
> corporations are run for the benefit of their members, and not for the
> benefit of the general public.)
>
> The term "member" can also be used to mean people (or organizations) who
> aren't really members.  For instance, when you become a "member" of a
> museum, you are not becoming a member of the corporation (i.e., what some
> in ICANN-land have termed a "statutory member").  These non-statutory
> "memberships" are more for marketing purposes and have no governance role.
>  "Statutory members" on the other hand, have a role in governance (which
> can vary markedly depending on the by-laws of the particular corporation.
>
> Hope this helps.
>
>
> Best regards,
>
> Greg Shatan
> (Speaking for myself, and not giving legal advice as I am not a member of
> the California Bar)
>
> On Tue, Jan 6, 2015 at 6:54 PM, Bruce Tonkin <
> Bruce.Tonkin at melbourneit.com.au> wrote:
>
>> Hello Phil,
>>
>>
>> >>   I would envisage the Board having to be compliance with all
>> Corporate Governance Codes specific to Companies Law in the country of
>> incorporation, subject to a community consensus override. But what is its
>> corporate status - not for profit or for profit - as different codes would
>>  apply ?
>>
>> The legal status  of ICANN is as specified in its articles of
>> incorporation:
>>
>> https://www.icann.org/resources/pages/articles-2012-02-25-en
>>
>> "This Corporation is a non-profit public benefit corporation and is not
>> organized for the private gain of any person. It is organized under the
>> California Non-profit Public Benefit Corporation Law for charitable and
>> public purposes. The Corporation is organized, and will be operated,
>> exclusively for charitable, educational, and scientific purposes within the
>> meaning of § 501 (c)(3) of the Internal Revenue Code of 1986, as amended
>> (the "Code"), or the corresponding provision of any future United States
>> tax code. Any reference in these Articles to the Code shall include the
>> corresponding provisions of any further United States tax code."
>>
>> Also from:
>>
>> http://en.wikipedia.org/wiki/Public-benefit_nonprofit_corporation
>>
>> "A public-benefit non-profit corporation  is a type of non-profit
>> corporation chartered by a state government, and organized primarily or
>> exclusively for social, educational, recreational or charitable purposes by
>> like-minded citizens.  Public-benefit nonprofit corporations are distinct
>> in the law from mutual-benefit nonprofit corporations in that they are
>> organized for the general public benefit, rather than for the interest of
>> its members."
>>
>> I believe it was deliberately set up as public benefit rather than a
>> member organization - to avoid the situation where the members become
>> limited to say gTLD registries and registrars and hence it ends up
>> operating primarily for the benefit of the domain name registration
>> industry.
>>
>> Any move away from a public-benefit corporation to a membership
>> corporation - would need to carefully consider how to ensure that the
>> members are reflective of the broader Internet community and don't become
>> limited to a few members as interest in "ICANN" drops over time.   I.e. a
>> failure scenario of membership organisation is what happens to the
>> membership base over time and how it can be protected from capture.    I
>> have seen some membership based ccTLDs get into problems when their
>> membership becomes dominated by domain name investors for example.
>>
>> Regards,
>> Bruce Tonkin
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>
>
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