[CCWG-ACCT] member organization and single membership structure

Greg Shatan gregshatanipc at gmail.com
Thu Jul 9 17:50:17 UTC 2015


I don't think anyone has suggested any "wooly, inchoate structures," in the
event that SO/AC's may elect to create, become or empower a legal entity.
First, it has generally been discussed that each SO/AC would be free to
choose the place and type of entity should they elect the legal entity
route.  Second, the structures discussed have included:

1.  California Unincorporated Association
2.  Nonprofit Corporation (which could be established in any US state,
including without limitation California, and also has equivalents in many
(if not most) non-US jurisdictions)
3.  Limited Liability Company (ditto)

These all seem non-wooly and "choate" to me.

Greg

On Thu, Jul 9, 2015 at 12:21 PM, Nigel Roberts <nigel at channelisles.net>
wrote:

> Very interesting and helpful comments.
>
> Here's where I am at. I was, for about four years, a Board Member of a
> non-profit, ICANN-like organisation in the UK. (The Radio Society of Great
> Britain -- see www.rsgb.org).
>
> That was originally founded by some bloke named Marconi, and some of his
> chums in 1913, but it was incorporated as a company Limited by Guarantee in
> the 1920s, which it remains this day.
>
> The liability of each member (there are no shareholders) is limited to an
> amount that is set in the Articles. In the case of very old organisations
> like this, it's just one pound!.
>
> The Members control the board by election, and the Board, just like the
> ICANN Board, has a fiduciary duty.
>
> Now, I'm NOT suggesting that individual SOs establish themselves under
> English or Scottish law as this sort of incorporated non-profit (which is
> PARTICULARLY suited to a membership model), nor indeed as the more modern
> Community Interest Company (CIC).
>
> But what I'm saying is that my instincts, as shown by Edward's very scary
> but accurate scenario, are to avoid woolly, inchoate, structures and prefer
> well-defined (and, to be honest, inexpensive) formal structures such are
> provided for in the law of most European states.
>
> My two eurocents.
>
>
>
>
> On 09/07/15 16:15, Edward Morris wrote:
>
>> Hi Nigel,
>>
>> I'm in the U.K. and have raised the issue in the past,  but only to
>> suggest that because of this some SOAC's might want to consider the more
>> complex formation of a PBC as an option going forward.
>>
>> You are correct about the status of UA's in the UK (Scotland as well as
>> England and Wales - different legal system, as you know). The same holds
>> true in Finland, the country where I received the bulk of my legal
>> education. Over time, though, in both countries the courts would
>> eventually recognise the liability protection afforded by California law
>> as a matter of comity. Long term, I don't see a problem. That said, I'm
>> pretty sure that were I to want to sue someone involved in a SOAC in the
>> UK for actions of the SOAC I'd be able to get through a Directions
>> Hearing and force a trial upon the other party. That's why
>> indemnification is particularly important if UA's are used going forward.
>>
>> Might I also respectfully suggest that most of us are already part of
>> UA's, albeit of the non registered variety. I would suspect I could make
>> the case that the NCSG, NCUC and GNSO, all of which I'm active in, could
>> currently be construed as UA's under British law and elsewhere and thus
>> I could already be held liable  for the actions of these organs. I don't
>> see where any of the proposed structures would make my individual
>> situation worse going forward.
>>
>> Kind Regards,
>>
>> Ed Morris
>>
>>
>> On Thu, Jul 9, 2015 at 3:20 PM, Nigel Roberts <nigel at channelisles.net
>> <mailto:nigel at channelisles.net>> wrote:
>>
>>     One of the leading authorites on this matter, and the real dangers
>>     of UA structures is the Gillingham Bus Disaster case (RE GILLINGHAM
>>     BUS DISASTER FUND [1958] Ch 300)
>>
>>
>> https://books.google.com/books?id=s5h4LUHhYC0C&pg=PA145&lpg=PA145&dq=Gillingham+Bus+Disaster+appeal+judgment&source=bl&ots=rGrH81jGKn&sig=jCRoZq2-tiGTN7MUuzoteOS0oPw&hl=en&sa=X&ei=r4KeVbjAHIT2UpHHi4AL&ved=0CCQQ6AEwAQ#v=onepage&q=Gillingham%20Bus%20Disaster%20appeal%20judgment&f=false
>>
>>     Happy reading.
>>
>>
>>
>>
>>     On 09/07/15 15:17, Nigel Roberts wrote:
>>
>>         Unincorporated associations in English, and Scottish law
>>         explicitly have
>>         unlimited liability. There is no registration involved, they
>> simply
>>         exist as a matter of law. So if you and I formed a bridge club
>>         at our
>>         local pub, and invited members, that would automatically be a
>>         UA, would
>>         NOT have legal personality, and the members, and more
>>         particularly, the
>>         officers, would have UNlimited liabtliy
>>
>>         The assets of the UA are held on trust, in the legal name of the
>>         officers, for the purposes of the UA.
>>
>>         I am assuming the difference here is that a California
>>         unincorporated
>>         assocation is not an unregistered entity but is a creature of
>>         statute
>>         (state law), giving limited liability following a registration
>>         process.
>>
>>         Is that correct?
>>
>>
>>         Nigel
>>
>>         PS: I apologise for not having read every single email that was
>> sent
>>         before I joined this list last week; as my law professor (a High
>>         Court
>>         judge said: "Nothing is obvious to everybody").
>>
>>         On 09/07/15 15:07, Greg Shatan wrote:
>>
>>             Nigel,
>>
>>             A California unincorporated association is a limited
>>             liability vehicle,
>>             as it is in certain other jurisdictions.  If we were to go
>>             down the
>>             route of have SO/ACs be/create/empower (three different
>>             options) a legal
>>             entity, one would expect a choice to be made that would
>>             shield SO/ACs
>>             and their members from unlimited legal liability (and there
>>             are a
>>             variety of options to do so).  While this should be implicit
>>             by now in
>>             this discussion, since it has been explicitly discussed in
>>             the past, I'm
>>             glad for the opportunity to make it explicit once again.
>>             Suggesting
>>             someone cross the street is not equivalent to telling them
>>             to walk into
>>             traffic.
>>
>>             Greg
>>
>>             On Thu, Jul 9, 2015 at 9:40 AM, Nigel Roberts
>>             <nigel at channelisles.net <mailto:nigel at channelisles.net>
>>             <mailto:nigel at channelisles.net
>>
>>             <mailto:nigel at channelisles.net>>> wrote:
>>
>>                  Greg, all
>>
>>                  I have a deadly serious question.
>>
>>                  Why would any Member of an SO voluntarily submit to the
>>             danger of
>>                  unlimited monetary liability?
>>
>>                  So why is anyone even considering UA status for more
>>             than 10 seconds?
>>
>>
>>                  Nigel
>>
>>                  See
>>
>>
>> http://www.scvo.org.uk/setting-up-a-charity/decide-on-a-structure/voluntary-or-unincorporated-association/
>>
>>
>>
>>                  On 09/07/15 14:35, Seun Ojedeji wrote:
>>
>>                      On Thu, Jul 9, 2015 at 1:34 PM, Greg Shatan
>>                      <gregshatanipc at gmail.com
>>             <mailto:gregshatanipc at gmail.com>
>>             <mailto:gregshatanipc at gmail.com
>>             <mailto:gregshatanipc at gmail.com>>
>>                      <mailto:gregshatanipc at gmail.com
>>             <mailto:gregshatanipc at gmail.com>
>>                      <mailto:gregshatanipc at gmail.com
>>             <mailto:gregshatanipc at gmail.com>>>> wrote:
>>
>>                           Seun,
>>
>>                           Can you point where this understanding and
>>             learning comes
>>                      from? I
>>                           don't think any of this is correct, unless you
>> are
>>                      referring to a
>>                           "council" where each SO/AC is a statutory
>>             member of the
>>                      corporation.
>>
>>
>>                      Yes indeed thats what i was referring to
>>
>>                           This is not the case in the "single member
>>             model," where
>>                      there is
>>                           only one statutory member.
>>
>>
>>                      Okay thanks for clarifying that for me. So if i get
>>             this
>>                      correctly; does
>>                      it mean one of the SO/AC will be a member and then
>>             every other
>>                      SO and AC
>>                      exercise their powers through that single member?.
>>             Specifically
>>                      which of
>>                      the SO/AC will be member in the single member model?
>>
>>                      However if one of the SO/AC won't have to become a
>>             member but
>>                      the entire
>>                      council becoming a UA to fulfill membership
>>             requirement, how
>>                      will that
>>                      address some SO/AC not wanting to enter into such
>> legal
>>                      formality? also
>>                      how will accountability of the council be ensured
>>             as it could
>>                      then mean
>>                      creating a mini-ICANN board as the council members
>>             would have
>>                      the voting
>>                      rights, independence et all. Perhaps the council
>>             can be limited
>>                      by its
>>                      governing document, but how will removing council
>>             members for
>>                      instance
>>                      be in effect if the populating source(SO/AC) is not
>>             a UA.
>>
>>                      Perhaps its not as complicated as i am imagining it
>>             so it will
>>                      be good
>>                      to hear some clarifications.
>>
>>                      Regards
>>
>>
>>                           Greg
>>
>>                           On Thursday, July 9, 2015, Seun Ojedeji
>>                      <seun.ojedeji at gmail.com
>>             <mailto:seun.ojedeji at gmail.com>
>>             <mailto:seun.ojedeji at gmail.com <mailto:seun.ojedeji at gmail.com
>> >>
>>                           <mailto:seun.ojedeji at gmail.com
>>             <mailto:seun.ojedeji at gmail.com>
>>                      <mailto:seun.ojedeji at gmail.com
>>             <mailto:seun.ojedeji at gmail.com>>>> wrote:
>>
>>                               I understand the powers would be bestowed
>>             on the council
>>                               individuals and not their source position;
>>
>>                               For instance one of the option is to
>>             populate the
>>             community
>>                               council with leaders of SO/AC, which IMO
>>             would be the
>>                      cheapest
>>                               route in this model so they would be
>>             occupying a
>>                      virtual seat
>>                               and exercise those powers when required.
>>             It would also
>>                      allow the
>>                               various SO/AC internet accountability
>>             mechanisms
>>             apply to
>>                               council including removal of members.
>>
>>                               However, I then learnt that the council
>>             cannot be
>>             formed by
>>                               SO/AC leader positions but rather to the
>>             occupants of
>>             that
>>                               position. This would mean having to
>>             rewrite the
>>                      bylaw/document
>>                               forming the council often since leaders of
>>             those
>>                      positions are
>>                               dynamic and could change at anytime. Will
>>             be good to
>>                      know if
>>                               that is no longer the case
>>
>>                               Regards
>>                               Sent from Google nexus 4
>>                               kindly excuse brevity and typos.
>>
>>                               On 7 Jul 2015 2:56 pm, "Roelof Meijer"
>>                      <Roelof.Meijer at sidn.nl
>>             <mailto:Roelof.Meijer at sidn.nl> <mailto:Roelof.Meijer at sidn.nl
>>             <mailto:Roelof.Meijer at sidn.nl>>>
>>                               wrote:
>>
>>                                   Interesting, we’re back on the subject
>>             of a single
>>                      member
>>                                   structure. It was written off before
>>
>>                                   Cheers,
>>
>>                                   Roelof
>>
>>                                   From:
>>                      <accountability-cross-community-bounces at icann.org
>>             <mailto:accountability-cross-community-bounces at icann.org>
>>
>>             <mailto:accountability-cross-community-bounces at icann.org
>>             <mailto:accountability-cross-community-bounces at icann.org>>>
>> on
>>                                   behalf of Roelof Meijer
>>             <roelof.meijer at sidn.nl <mailto:roelof.meijer at sidn.nl>
>>                      <mailto:roelof.meijer at sidn.nl
>>             <mailto:roelof.meijer at sidn.nl>>>
>>                                   Date: woensdag 22 april 2015 15:56
>>                                   To: "avri at acm.org
>>             <mailto:avri at acm.org> <mailto:avri at acm.org
>>             <mailto:avri at acm.org>>"
>>                      <avri at acm.org <mailto:avri at acm.org>
>>             <mailto:avri at acm.org <mailto:avri at acm.org>>>,
>>
>>               "accountability-cross-community at icann.org
>>             <mailto:accountability-cross-community at icann.org>
>>                      <mailto:accountability-cross-community at icann.org
>>             <mailto:accountability-cross-community at icann.org>>"
>>
>>               <accountability-cross-community at icann.org
>>             <mailto:accountability-cross-community at icann.org>
>>                      <mailto:accountability-cross-community at icann.org
>>
>>             <mailto:accountability-cross-community at icann.org>>>
>>                                   Subject: Re: [CCWG-ACCT] member
>>             organization and
>>             single
>>                                   membership structure
>>
>>                                   Hi Avri,
>>
>>                                   The sole membership construction, is a
>>             possibility
>>                      described
>>                                   in the legal document in several
>>             places: the
>>                      comments by the
>>                                   legal experts on the PCCWG mechanism
>>             template (page
>>                      64) and
>>                                   the Community Council mechanism
>>             template (page
>>             69). I
>>                                   sent several emails about it to the
>>             WP1 list,
>>                      suggesting to
>>                                   look in the possibility as indeed it
>>             would not
>>                      necessitate
>>                                   every SO and AC to become a legal
>>             entity. And, as
>>                      you do,
>>                                   suggesting: "make the „Community
>>             Council” the sole
>>                      member of
>>                                   ICANN (and thus a formal legal
>>             entity), consisting
>>                      of either
>>                                   the SO and AC chairs or SO/AC elected
>>                      representatives” (from
>>                                   an email of 14 April).
>>
>>                                   And I would think it would enable the
>>             SO’s and AC’s
>>                                   themselves to continue appointing
>>             directors, as
>>                      they do now.
>>                                   But that’s just guessing, based on the
>>             fact that
>>                      the SO’s
>>                                   and AC’s themselves would not change
>>             status
>>
>>                                   Best,
>>
>>                                   Roelof
>>
>>                                   From: Avri Doria <avri at acm.org
>>             <mailto:avri at acm.org>
>>             <mailto:avri at acm.org <mailto:avri at acm.org>>>
>>                                   Organization: Technicalities
>>                                   Reply-To: "avri at acm.org
>>             <mailto:avri at acm.org> <mailto:avri at acm.org
>>             <mailto:avri at acm.org>>"
>>                      <avri at acm.org <mailto:avri at acm.org>
>>             <mailto:avri at acm.org <mailto:avri at acm.org>>>
>>                                   Date: woensdag 22 april 2015 15:09
>>                                   To:
>>             "accountability-cross-community at icann.org
>>             <mailto:accountability-cross-community at icann.org>
>>                      <mailto:accountability-cross-community at icann.org
>>             <mailto:accountability-cross-community at icann.org>>"
>>
>>               <accountability-cross-community at icann.org
>>             <mailto:accountability-cross-community at icann.org>
>>                      <mailto:accountability-cross-community at icann.org
>>
>>             <mailto:accountability-cross-community at icann.org>>>
>>                                   Subject: Re: [CCWG-ACCT] member
>>             organization and
>>             single
>>                                   membership structure
>>
>>                                   Hi,
>>
>>                                   On 22-Apr-15 08:26, Roelof Meijer wrote:
>>
>>                                       2)
>>                                       What I find quite frustrating is
>>             that I have
>>                          raised the
>>                                       point of the possibility (or not)
>>             of a single
>>                          membership
>>                                       structure – an option mentioned by
>>             Sidley and
>>                          Adler &
>>                                       Colving in their legal advice –
>>             several times
>>                          by now
>>                                       without getting any substantial
>>             reaction. I am
>>                          not aware
>>                                       that any serious effort to
>>             investigate this has
>>                          led to a
>>                                       formal write-off.
>>
>>
>>                                   In some way that might lessen the
>>             complexity of
>>                      making most
>>                                   SOAC an individual legal entity.
>>
>>                                   How would it work?  Would we continue
>>             to appoint
>>                      Directors
>>                                   just as we do now?
>>
>>                                   Or would there need to be some sort of
>>             Members
>>                      Council that
>>                                   took actions, working simliarly to the
>> the
>>                      executive board
>>                                   or community council idea?
>>
>>                                   thanks
>>
>>                                   avri
>>
>>
>>
>>
>>
>>
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>>                      --
>>
>>
>> ------------------------------------------------------------------------
>>
>>                           /Seun Ojedeji,
>>                           Federal University Oye-Ekiti
>>                           web: http://www.fuoye.edu.ng
>>                           Mobile: +2348035233535 <tel:%2B2348035233535>
>>             <tel:%2B2348035233535>
>>                           //alt
>>
>>             email:<http://goog_1872880453>seun.ojedeji at fuoye.edu.ng
>>             <mailto:seun.ojedeji at fuoye.edu.ng>
>>                      <mailto:seun.ojedeji at fuoye.edu.ng
>>             <mailto:seun.ojedeji at fuoye.edu.ng>>
>>                           <mailto:seun.ojedeji at fuoye.edu.ng
>>             <mailto:seun.ojedeji at fuoye.edu.ng>
>>                      <mailto:seun.ojedeji at fuoye.edu.ng
>>             <mailto:seun.ojedeji at fuoye.edu.ng>>>/
>>
>>                               The key to understanding is humility - my
>>             view !
>>
>>
>>
>>
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