Re: [CCWG-ACCT] member organization and single membership structure

July 9, 2015

      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@channelisles.net
<mailto:nigel@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=Gilling...
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@channelisles.net <mailto:nigel@channelisles.net>
            <mailto:nigel@channelisles.net
            <mailto:nigel@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-...
On 09/07/15 14:35, Seun Ojedeji wrote:
On Thu, Jul 9, 2015 at 1:34 PM, Greg Shatan
                     <gregshatanipc@gmail.com
            <mailto:gregshatanipc@gmail.com>
            <mailto:gregshatanipc@gmail.com
            <mailto:gregshatanipc@gmail.com>>
                     <mailto:gregshatanipc@gmail.com
            <mailto:gregshatanipc@gmail.com>
                     <mailto:gregshatanipc@gmail.com
            <mailto:gregshatanipc@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@gmail.com
            <mailto:seun.ojedeji@gmail.com>
            <mailto:seun.ojedeji@gmail.com <mailto:seun.ojedeji@gmail.com>>
                          <mailto:seun.ojedeji@gmail.com
            <mailto:seun.ojedeji@gmail.com>
                     <mailto:seun.ojedeji@gmail.com
            <mailto:seun.ojedeji@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@sidn.nl
            <mailto:Roelof.Meijer@sidn.nl> <mailto:Roelof.Meijer@sidn.nl
            <mailto:Roelof.Meijer@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@icann.org
            <mailto:accountability-cross-community-bounces@icann.org>
<mailto:accountability-cross-community-bounces@icann.org
            <mailto:accountability-cross-community-bounces@icann.org>>> on
                                  behalf of Roelof Meijer
            <roelof.meijer@sidn.nl <mailto:roelof.meijer@sidn.nl>
                     <mailto:roelof.meijer@sidn.nl
            <mailto:roelof.meijer@sidn.nl>>>
                                  Date: woensdag 22 april 2015 15:56
                                  To: "avri@acm.org
            <mailto:avri@acm.org> <mailto:avri@acm.org
            <mailto:avri@acm.org>>"
                     <avri@acm.org <mailto:avri@acm.org>
            <mailto:avri@acm.org <mailto:avri@acm.org>>>,
"accountability-cross-community@icann.org
            <mailto:accountability-cross-community@icann.org>
                     <mailto:accountability-cross-community@icann.org
            <mailto:accountability-cross-community@icann.org>>"
<accountability-cross-community@icann.org
            <mailto:accountability-cross-community@icann.org>
                     <mailto:accountability-cross-community@icann.org
            <mailto:accountability-cross-community@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@acm.org
            <mailto:avri@acm.org>
            <mailto:avri@acm.org <mailto:avri@acm.org>>>
                                  Organization: Technicalities
                                  Reply-To: "avri@acm.org
            <mailto:avri@acm.org> <mailto:avri@acm.org
            <mailto:avri@acm.org>>"
                     <avri@acm.org <mailto:avri@acm.org>
            <mailto:avri@acm.org <mailto:avri@acm.org>>>
                                  Date: woensdag 22 april 2015 15:09
                                  To:
            "accountability-cross-community@icann.org
            <mailto:accountability-cross-community@icann.org>
                     <mailto:accountability-cross-community@icann.org
            <mailto:accountability-cross-community@icann.org>>"
<accountability-cross-community@icann.org
            <mailto:accountability-cross-community@icann.org>
                     <mailto:accountability-cross-community@icann.org
            <mailto:accountability-cross-community@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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--
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/Seun Ojedeji,
                          Federal University Oye-Ekiti
                          web: http://www.fuoye.edu.ng
                          Mobile: +2348035233535 <tel:%2B2348035233535>
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The key to understanding is humility - my
            view !
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