Re: [gentoo-project] Merging Trustees and Council / Developers and Foundation

[Rich Freeman]

On Fri, Jan 6, 2017 at 7:10 AM, Andreas K. Huettel <dilfridge@g.o> wrote:
>
> * Developers have to (?) become members of a US-based foundation in order to
> be able to vote for the board.
> One side is how many (US law) legal obligations follow from membership; I'd
> guess not many, but it should be clarified. This is probably the smaller
> issue.
> The other side is that we can't predict worldwide legal impact, and that it
> may well be disadvantageous for someone in another country to officially be
> member of a US legal body.
>

Being a "member" of the Foundation is like holding stock in a US
corporation.  It gives you partial ownership in a sense of the
Foundation (though especially if we become 501c-whatever that
ownership is somewhat limited), and it gives you the right to vote on
its affairs.  Since we're non-profit you don't get the benefit of
dividends.

Generally speaking under US law people who are merely shareholders in
an organization are greatly shielded from liability.  There are some
exceptions but I don't think they'd ever apply to an organization of
our size, maybe if we had 3 members and they were constantly colluding
to do something illegal it would be different.  In a company where you
can own multiple shares there are also some rules that apply to people
who own a large portion of the total ownership, but that also will
never apply here since Foundation members are all equal.

So, while I can't speak for the laws of every country out there, if
you can legally own shares of a US stock, you can probably be a member
of the Foundation without any concerns.  Disclaimer: I am not a lawyer
and contrary opinions are welcome.

I would note that I don't think developers should be /required/ to be
members so much as that they are able to be members on request, and
that people who cease to be devs also cease to be Foundation members.
That effectively makes the voting constituency the same even if in
practice not everybody votes.  If the Council/Trustees are merged then
choosing not to be a member effectively means you're not voting at
all, but I don't see a problem with that since devs aren't required to
vote today.

>
> * Board members have a different legal status.
> It may become impossible for some of our developers to be elected to the
> Gentoo "board", since the legal position may lead to conflicts of interest
> with real-life work.
> [I'd have to research that, but it's not impossible that even as a civil
> servant I'd have to get that officially approved by the "Free State of
> Bavaria".]

So, the stuff I wrote above applies to members, and not the board.
Under US law the board of a company does have responsibility to run it
properly.  If they're really negligent they could be subject to US
criminal law, and if they don't govern the Foundation well they could
also be civilly liable to its members (yes, members of the Foundation
can sue the Trustees for not doing a good enough job under US law,
though most like the Foundation would end up paying the bills up to a
point).  To the extent that they're doing their job they're not liable
for stuff the Foundation does, so if Gentoo ends up in some copyright
dispute and loses it is the Foundation that would pay the bills, and
not the Trustees.  Of course, if the reason it lost was because we had
a lousy copyright policy some members could try to sue the Trustees
personally to get some of that money back for the Foundation (err,
guess I should get that policy done).

You didn't mention officers, but they can also have responsibilities.
If they're really negligent they could be criminally liable, and if
they do stuff like embezzle they could be civilly liable to the
Foundation.  While our officers aren't employees you could look at
their responsibilities a bit like that.  Of course, the fact that they
aren't paid by the Foundation and professionals in the field would
probably greatly aid them in their defense, since it is a bit hard for
the board to sue a volunteer treasurer for negligence when they're the
ones who decided not to hire a CPA.

And as you point out it is common for companies to require disclosure
of board memberships by its employees, or advance permission.  Usually
this is only an issue if there is a conflict of interest of some kind.
If you were a manager at a company like Google there would probably be
more concerns than if you were a manager at a company like DHL.

>
> * Anyone now running for trustees can run for council and be involved in all
> aspects of Gentoo oversight.
>
> * There is only one controlling body (I guess whether we name it "board" or
> "council" doesn't matter).

I think it is worth implementing this concurrently with a full vote
for all seats so that there is a fresh mandate.  We haven't decided
how many seats/etc there should be.  It really doesn't matter if you
see this as being the "new council" or the "new trustees" - whatever
we call it the new board inherits the responsibilities of both, and
anybody in either set of roles today (or somebody new entirely) could
end up on it.

I only mention this because I have seen some debate about which board
is more fit to do this or that.  If there is a fresh election it is a
moot point because people can look at the new list of responsibilities
and vote for whoever they think will handle it best.

>
> * The part of Gentoo where mistakes are fatal (IRS filings, corporate status,
> trademarks, financial statements) is handled by professionals (or not relevant
> anymore).
> [Robin is doing a great job of handling our finances at the moment, and it's
> good that the trustees are very active now. As in all volunteer organizations,
> we can't take that continuously for granted though.]
>
> * The Gentoo "council" or "board" does not involve any legal status which can
> make it difficult for anyone to run.
>

++ in general.  As with any project at times the Foundation has had
its ups and downs, and real-world governments don't really make
allowances for that.

If for a moment there is a lull in Foundation interest then an
umbrella org can make sure the bills get paid and the filings get done
and the books are always in order, and maybe that is the full extent
of Foundation activity.  If at other times there is a lot of interest
in activity then that interest can be focused on growing the
Foundation and doing interesting things with our money, while the
baseline activities continue to have professional oversight.

It basically frees Gentoo volunteers to focus more on things like
organizing an annual dev conference and less on filing 990s.  You
can't do the former unless the latter is in order, and people are
going to be a LOT more willing to sponsor stuff if we have a fairly
solid compliance posture financially.

> The end result in terms of self-administration is not that much different from
> Matthew's proposal. The legal construct, however, is very much different.

++

Either way we have a central governance.  This model also extends well
if we want to have similar legal entities in other countries (assuming
there is some advantage to doing so).  You could have a project to
manage this stuff, and sub-projects per country.  However, it is
important to maintain one overall governing board on top of everything
so that we don't run into conflicts.  We don't want our non-profit
that runs booths in Japan fighting with our non-profit that runs
booths in India/etc.

Again, that all depends on whether we really benefit from foreign
incorporations.  The administrative burden goes away with the umbrella
org, but there might or might not be other benefits, and I don't think
those are really the focus here but I think this is a model that could
scale out well.

-- 
Rich