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

[Daniel Campbell]

On 01/06/2017 06:47 AM, Rich Freeman wrote:
> 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.
>

My primary concern over an umbrella corporation or a sponsor is that it
robs us of ownership. How would such a business decision go? We give all
the assets to SPI or some other org, pay them some percentage of our
revenue, and act like everything's square? What happens when SPI decides
we aren't paying them enough? I would hope whatever contract gets
written up would *not* include them keeping our assets after a breach.

It also forces us to become dependent on an entity that may or may not
have our interests in mind. I suppose we have to do that already with
whoever hosts our hardware, unless robbat or others have direct physical
access to our infra. I'm liking the idea that it would free us to do
other, more interesting and libre software-related things, but is a
corporation that also manages other distros a good way to go? Too much
(real, legal) power centralized into a single group isn't my idea of a
smart move and could well ruin us without some strong protections in our
contract.

In short, I don't want to see the work you, I, or the dozens of other
Gentoo devs become locked up or destroyed because we signed a deal with
a corporation. This is one of the cases I would wholly suggest legal
counsel with, and be willing to pay that extra fee to get either a good
contract or good advice on how to restructure.

Perhaps having a legal understanding of Gentoo's situation would better
indicate what metastructure we need to have to best facilitate our legal
obligations and continue serving our community.
-- 
Daniel Campbell - Gentoo Developer
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