Ratified Vote to ratify nonprofit bylaws

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Should the document be ratified or amended as specified by the thread type?


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Authority Nodes De Facto De Facto Factom Inc Factom Inc

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    27
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Dear members of the Factom community,

After the standing parties decided to create a nonprofit entity to hold certain assets on behalf of the protocol and the community, and after two rounds of substantive feedback and revisions from the community related to the proposed bylaws for the nonprofit entity, the LRWG submitted a draft of the bylaws for the review of an outside Wyoming-licensed attorney. He provided his feedback, which was technical and not substantive.

We are now presenting the final draft of the bylaws document for ratification.

Once a final version is ratified by the community, the next steps would be to conduct research on insurance for the nonprofit’s directors; select directors; and instruct the outside attorney to incorporate the entity.

Below is a brief chronology of the process so far:

December 4, 2018: The community began discussing whether to create a non-profit entity in the Non-Profit Creation thread on Factomize.

December 12, 2018: The community continued the discussion in the Vote to create a Wyoming Non-Profit thread. At the end of the discussion, all Guides and ANOs who voted unanimously approved the creation of a nonprofit in Wyoming.

March 10, 2019: The LRWG published a first draft of the nonprofit bylaws and answered questions from the community in the Factom Non-Profit Bylaws – First Draft Discussion thread on the Factomize forum.

April 5, 2019: The LRWG published a second draft of the nonprofit bylaws, incorporating changes after the public discussion of the first draft. At the end of the discussion, all members of the community who voted approved the second draft to be presented to the outside attorney.

Disclaimer: The Legal Research Working Group (the “Group”) provides members of the community around the Factom ecosystem with an opportunity to identify and research issues in the young, complex and ever-evolving legal and regulatory fields related to distributed ledger technology in general and Factom’s protocol and governance, in particular. Any communication from the Group in any form is intended for informational and discussion purposes only, and not as legal, investment, tax, or any other advice or opinion. The Group disclaims all liability related to actions taken or not taken by any person or entity based on communications from the Group. Standing Parties, Factom stake holders and all other persons or entities are encouraged to seek legal or professional advice on specific issues.
 

Chappie

Factomize Bot
This thread is a Document Ratification/Amendment Timed Discussion and I am designed to help facilitate efficient communication.

Guides and ANOs may take part in this discussion and vote. Unless this discussion is ended early or extended, it will end in 8 days after which a vote will take place. After 18 hours from the start of the thread or any point up until 24 hours are left in the discussion, you can make a motion to end the discussion immediately or extend the discussion beyond it's initial time frame by selecting the pertinent button at the top of this thread. If someone "seconds" your motion, a poll will take place which requires a majority of Standing Parties to vote one way or the other.

At the end of the discussion period, Guides will vote first and 4 must vote yes otherwise the process ends. If 4 do vote yes, ANOs then vote and if 60% vote yes, the document is successfully ratified or amended.
 

CryptoLogic

Crypto Logic
Thank you for work on this so far.

in our eyes it seems like a thorough document. One small thing. in article IV (ii) it is stated that there should be a discussion lasting 7 days. in factom governance the default discussion period is 8 days. (reference doc002, 2,3,5).

We suggest 8 days is used also here, it is then conforming to established practice in community and the standard timed-discussion feature built into factommize could be utilized also for this.
 
1) when does the registered trademark need to be used for factom? It's used in the first few instances and then dropped for the remainder of the document?
2) should the number of directors be increased to 5? It just makes it a bit harder for 2 people to take over the entity (since quorum of 2 to ratify items)
3) in nomination of directors section 2.d.i, it says " he or she shall accept the nomination in order to officially become a nominee". Should "shall" be replaced with "must"?
4)I'm not a lawyer, but the directors are hamstrung from selling assets by the doc, and there is a section which says committee work by directors don't absolve them of their responsibilities, but that they can assign an officer to enter into contacts. It's unclear to me if the directors could appoint a non director officer who is technically not restricted from the above sale of assets who then has the ability to enter contracts and potentially sell of assets because they aren't a director constrained by the previous rules? Is this an issue?
 

Chappie

Factomize Bot
We are now 18 hours into the discussion. You may now make a motion to extend this Document Ratification/Amendment Discussion by an additional 72 hours or end this conversation by selecting the pertinent button at the top of this thread. This option will end when there are 24 hours left in the discussion.
 

Chappie

Factomize Bot
Andrew Young has made a motion to end the discussion early. If someone seconds this motion by selecting the button below, a vote on the motion will start.

A majority voting yay will pass the motion and the discussion will end immediately. This motion will remain open until the normal discussion period ends or a motion to end the discussion is passed by a majority.
 
Andrew Young has made a motion to end the discussion early. If someone seconds this motion by selecting the button below, a vote on the motion will start.

A majority voting yay will pass the motion and the discussion will end immediately. This motion will remain open until the normal discussion period ends or a motion to end the discussion is passed by a majority.
Apologies. I mistakenly clicked the vote to end the discussion early. Request someone rescind my erroneous motion!
 

Chappie

Factomize Bot
Mike Buckingham has made a motion to extend the discussion. If someone seconds this motion by selecting the button below, a vote on the motion will start.

A majority voting yay will pass the motion and the discussion will be extended for 72 hours. This motion will remain open until the normal discussion period ends or a motion to end the discussion is passed by a majority.
 
Mike Buckingham has made a motion to extend the discussion. If someone seconds this motion by selecting the button below, a vote on the motion will start.

A majority voting yay will pass the motion and the discussion will be extended for 72 hours. This motion will remain open until the normal discussion period ends or a motion to end the discussion is passed by a majority.
This was an attempt to rescind Andrews motion so that this important discussion could continue.
 
Firstly a big thank you for all the effort that has gone into creating these bylaws. I think this is a significant decentralization step and getting the legalities right is important.

I think that the point made by Michael Lam about the number of directors being increased to 5 is a good one although I can also understand that we may not be able to recruit many directors.

Listed below are some detailed questions:


Article II What is involved with maintaining a registered agent?

Article IV

Section 2 para (d) makes reference to Standing Parties as does para (e) In the latter paragraph there is discussion about additional categories of Standing Parties that may need to be introduced in para (d) or handled separately.

Section 3 para (a) states that a director may resign upon written notice. It does not state how much notice. Given the prescriptions elsewhere about lengths of time to appoint directors is it worth making provision here for sufficient notice to ensure that the Board can remain quorate.

Article V

Section 1 para (a) expresses a limit on disposal of assets, is there a need to limit acquisition of assets?

Article VI

Can I just clarify that the Community elects Directors and the Board elects Officers?

Article VIII

Section 1. CONTRACTS states that the Board of Directors may authorize officers etc to enter into any contract. How does this relate to Article V Section 1 in which the Board of Directors are not authorized to spend more than $2,500? It seems almost contradictory.

Article XI

This talks about the fact that the Corporation may indemnify. This is distinct from will indemnify and begs the question about what the circumstances are in which the Corporation will indemnify someone.

Section 2. Talks about indemnification in actions by or in the right of the Corporation. This paragraph is one sentence and is very hard to read and understand. If possible I suggest the readability be improved please.
 

Chappie

Factomize Bot
Matt Osborne has seconded the motion to extend the discussion.

A motion is now active at the top of this thread to vote if you want to extend the discussion. A majority voting yes will pass the motion and the discussion will be extended for 72 hours. This vote will remain open until the normal discussion period ends or another motion is passed.
 
Thanks, everyone, for the feedback and apologies for the delayed response. Please keep the discussion going if you come up with more comments or suggestions, or if you feel like the responses do not address your initial questions.

Please remember that the Legal Research Working Group disclaimer at the bottom of this post applies in its entirety to our comments. At this late stage, we will need to run some of these inquiries through the incorporating attorney, but you could find our initial commentary below.

@CryptoLogic

“[…] in our eyes it seems like a thorough document. One small thing. in article IV (ii) it is stated that there should be a discussion lasting 7 days. in factom governance the default discussion period is 8 days. (reference doc002, 2,3,5). We suggest 8 days is used also here, it is then conforming to established practice in community and the standard timed-discussion feature built into factommize could be utilized also for this.”

Comment: Good catch. Changed!

@Michael Lam
“1) when does the registered trademark need to be used for factom? It's used in the first few instances and then dropped for the remainder of the document?
2) should the number of directors be increased to 5? It just makes it a bit harder for 2 people to take over the entity (since quorum of 2 to ratify items)
3) in nomination of directors section 2.d.i, it says " he or she shall accept the nomination in order to officially become a nominee". Should "shall" be replaced with "must"?
4)I'm not a lawyer, but the directors are hamstrung from selling assets by the doc, and there is a section which says committee work by directors don't absolve them of their responsibilities, but that they can assign an officer to enter into contacts. It's unclear to me if the directors could appoint a non director officer who is technically not restricted from the above sale of assets who then has the ability to enter contracts and potentially sell of assets because they aren't a director constrained by the previous rules? Is this an issue?”

Comment:
  • 1) This is an ongoing issue. Factom Inc. has control over the Factom® trademark and its uses.
  • 2) This is tricky as we want to make sure that there will be enough qualified members of the community who would be interested in serving as directors for the nonprofit. There are controls built in the document that ensure certain checks by the community. Additionally, the directors have statutory duties to serve the best interest of the nonprofit (and hence the community). If there are more than three qualified and willing members of the community who wish to become directors, then the initial three directors—after approval from the community—can amend Section 2(a) to increase the total number of directors.
  • 3) Changed.
  • 4) We added some language at the beginning of the Section to explicitly clarify that the director limitations apply to delegation of authority to officers. Even without the added language, the directors prescribe the duties and authority of the officers. The directors, in their discretion, could remove an officer whose actions violate the best interest of the entity. The unauthorized sale of assets would fall in this category. Additionally, officers are bound by statutory duties.
@Mike Buckingham
“Article II What is involved with maintaining a registered agent?”

Comment: This is a third-party service. Think of it as a human mailbox. It usually costs $100-$150 per year.

“Article IV

Section 2 para (d) makes reference to Standing Parties as does para (e) In the latter paragraph there is discussion about additional categories of Standing Parties that may need to be introduced in para (d) or handled separately.

Comment: The additional categories of Standing Parties will be introduced in future elections in paragraph (e) as the protocol matures and decentralizes further. However, at the time of the initial election, the Standing Parties are limited to what is described in paragraph (d).

Section 3 para (a) states that a director may resign upon written notice. It does not state how much notice. Given the prescriptions elsewhere about lengths of time to appoint directors is it worth making provision here for sufficient notice to ensure that the Board can remain quorate.”

Comment: According to Section 17-19-807 of the Wyoming Nonprofit Corporation Act: “A director may resign at any time by delivering written notice, signed either manually or in facsimile, to the board of directors, its presiding officer or to the president or secretary.” It doesn’t appear that there could be any restrictions imposed on the resigning director under WY law.

“Article V

Section 1 para (a) expresses a limit on disposal of assets, is there a need to limit acquisition of assets?”

Comment: This would fall under the general statutory duties of directors and officers.

“Article VI

Can I just clarify that the Community elects Directors and the Board elects Officers?”

Comment: Correct.

“Article VIII

Section 1. CONTRACTS states that the Board of Directors may authorize officers etc to enter into any contract. How does this relate to Article V Section 1 in which the Board of Directors are not authorized to spend more than $2,500? It seems almost contradictory.”

Comment: Officer authority derives from director authority, and as such, directors delegate duties to the officers within the authority limits of the directors. We added some language at the beginning of the Section to explicitly clarify that the director limitations apply to delegation of authority to officers.

“Article XI

This talks about the fact that the Corporation may indemnify. This is distinct from will indemnify and begs the question about what the circumstances are in which the Corporation will indemnify someone.”

Comment: Please give us another day or so to research this issue.

Section 2. Talks about indemnification in actions by or in the right of the Corporation. This paragraph is one sentence and is very hard to read and understand. If possible I suggest the readability be improved please.

Response: Agreed. It’s very technical and hard to understand, but nevertheless logical. In order to preserve the meaning, we are hesitant to delete or change some of the legal terms. We broke the sentence in half, hoping that that would help a little.


DISCLAIMER: The Legal Research Working Group (the “Group”) provides members of the community around the Factom ecosystem with an opportunity to identify and research issues in the young, complex and ever-evolving legal and regulatory fields related to distributed ledger technology in general and Factom’s protocol and governance, in particular. Any communication from the Group in any form is intended for informational and discussion purposes only, and not as legal, investment, tax, or any other advice or opinion. The Group disclaims all liability related to actions taken or not taken by any person or entity based on communications from the Group. Standing Parties, Factom stake holders and all other persons or entities are encouraged to seek legal or professional advice on specific issues.
 

Chappie

Factomize Bot
The final poll is available for Guides to vote on now for 3 days. If Guides pass the vote with 4 "Yes" votes then ANOs will be able to vote. If Guides fail to pass, there will be no further action.
 
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