On 16/06/2015 07:45, Mathieu Weill wrote:
Dear Colleagues,
Please find attached a follow-up legal memo on unicorporated associations,
Dear Leon and the Legal Team, Thank you for the very helpful memo of 15th June. I have some supplementary questions, that ask you to expand on the following statement in the memo: "Neither the Chart nor this summary address possible alterations or constraints to member rights that could be accomplished through other legal mechanisms. For example, while members have a statutory right to “bring suit” under the California Nonprofit Public Benefit Corporation Law, this can be limited through bylaw provisions and member agreements that provide for internal dispute mechanisms to be utilized first and/or provide for binding arbitration, instead of litigating in court". Read in isolation, without a clear understanding of this statement, the chart appears to describe statutory powers for members that are quite restrictive. However while we have analagous statutory provisions here in the UK, we also often make use of membership agreements (in private non-listed companies anyway) that significantly alter the practical effect of the statute. Moreover, here in the UK at least, companies that work this way usually require people to enter into such an agreement as a precondition for being admitted into membership of the company. The "membership agreement" effectively becomes just another form you must sign when being appointed as a member, but having signed it you are bound by its provisions. Before reading too much into the Chart, I think we need to understand what is possible in Californian law in this respect. By way of example, the chart suggests that members cannot give up the power to dissolve the company. This rule, as stated, is likely to severely limit the range of structures for membership that we would consider appropriate for ICANN, and may well persuade some people that a membership model should not be considered at all. However, if a membership agreement could waive this power, or set a stiff requirement such as "95% of members voting in favour" or "unanimous consent of all members" then that looks very different, and much less likely to constrain our decision. Similarly, the powers to appoint and remove directors run directly into potential conflict with the powers we are creating in the Bylaws, which would perform that same function in a different manner. However, if the members, by way of a membership agreement, can delegate these powers then there need be no conflict with the structure we are designing. So my questions are: Q1. Can the powers set out in section 1 ("Mandatory Member Rights that Cannot Be Altered or Constrained") be waived, delegated, or the manner of their exercise be otherwise regulated by members by means of a membership agreement, or are they utterly immutable and inalienable in all respects? Q2. If a membership agreement can regulate the use of members' statutory powers, is there a general rule that covers how a membership agreement may regulate the use of members' statutory powers (for example, that members are free to make any such arrangements as they may agree to)? Q3. If question 2 cannot be answered generally, what are the restrictions on what a membership agreement might say in respect of the use of each the powers in section 1? Q4. Can the Bylaws or Articles directly include a requirement that no person shall be admitted to membership of the company without first entering into an identified membership agreement? Can this take precedence over other provisions in the Bylaws giving certain persons a right to be admitted to membership (or a right to appoint someone to membership)? Q5. Alternatively, can the Bylaws or Articles include a requirement that no person shall be admitted to membership of the company without the consent of the Board? And if so, can the Board condition their consent on whether the prospective member first enters into the membership agreement? Q6. Can such a membership agreement be irrevocably binding, in the sense that a member who has agreed to it cannot subsequently denounce it and then exercise the statutory powers of membership in a manner consistent with the statute but inconsistent with his commitments unders the membership agreement? Q7. Can such a membership agreement be self-modifying? Thank you for your consideration of these questions, Respectfully yours, Malcolm Hutty. -- Malcolm Hutty | tel: +44 20 7645 3523 Head of Public Affairs | Read the LINX Public Affairs blog London Internet Exchange | http://publicaffairs.linx.net/ London Internet Exchange Ltd 21-27 St Thomas Street, London SE1 9RY Company Registered in England No. 3137929 Trinity Court, Trinity Street, Peterborough PE1 1DA