[NCUC-DISCUSS] [CCWG-ACCT] Memo on Fundamental Bylaws & Legal Liability of Members

[Seth Johnson]

I need some documentation of this theory.  Can you send the document
you posted?  I am aware that you are calling attention to the prospect
of losing liability protections, which I am also interested in.  But I
believe you are making your claim based on the document you originally sent.

I guess I need to see Section 5151 to make out your claim properly too.

It makes zero sense to say that changing the fundamental bylaws of
corporations in general must be subjected to the approval of the board
created by the corporation.  Unless you have some clear statement that
California actually requires all corporations to take that form (or
Section 5151 somehow sets the corporation into a very unique frame),
I'm sorry but what you're saying lacks basic sense, can't work in an
ordinary legal regime.  Perhaps there could be a type of corporation
where California locks it into that form, but California would still
have to provide for people to be able to set up other kinds of
corporations where members have recourse to amendment.

There's a basic distinction between foundational documents and what
might be legally expected of an entity created by such documents.

Section


Seth

On Sun, Jun 21, 2015 at 1:07 PM, Arun Sukumar
<arun.sukumar at nludelhi.ac.in> wrote:
> Hi Seth,
>
> 1. The creation or deletion of bylaws relating to ICANN's corporate
> activities is a corporate activity in itself. I'd be surprised if a court
> finds otherwise, especially if on precedent the board has been doing this
> all the while.
>
> 2. Section 5151 is clear - I'm not disputing the member's power to restrain
> the board from changing bylaws. However, this provision does not grant
> members the right to do it either. And as Jordan highlighted, this does not
> seem to the intention of the proposal - however, the board would still have
> a veto on the process of changing bylaws. If it says no, where would the
> community draw its right from to go ahead anyway? Does the draft proposal
> address this?
>
> arun
>
> On Sun, Jun 21, 2015 at 3:18 AM, Seth Johnson <seth.p.johnson at gmail.com>
> wrote:
>>
>> Hi, I'm not getting this document in Arun's message, apparently now
>> forwarded to NCUC.  Could someone forward it?
>>
>> I want to see whether I can see how or whether it argues that
>> "corporate activities" do include fundamental bylaws changes.
>>
>> I'm not sure what I think about the matter in the area of corporate
>> bylaws, but it's certainly viable to distinguish the regular processes
>> of a government from its founding acts.  Amendment processes to
>> fundamental acts are regarded the same way.
>>
>> Arun, and perhaps the article he sent, seems to be referring to
>> background California law as a basis for a view that everything
>> happens, including fundamental bylaws acts, through the Board -- which
>> strikes me as implausible.  I think that "corporate activities" means
>> the acts of the corporate entity created by the bylaws -- not
>> activities such as those establishing that entity.
>>
>> And I would say the passage Jordan posted reads very clearly this way:
>>
>> 5150.  (a) Except as provided in subdivision (c), and Sections 5151,
>> 5220, 5224, 5512, 5613, and 5616, bylaws may be adopted, amended or
>> repealed by the board unless the action would materially and
>> adversely affect the rights of members as to voting or transfer.
>>    (b) Bylaws may be adopted, amended or repealed by approval of
>> members (Section 5034); provided, however, that such adoption,
>> amendment or repeal also requires approval by the members of a class
>> if that action would materially and adversely affect the rights of
>> that class as to voting or transfer in a manner different than that
>> action affects another class.
>>    (c) The articles or bylaws may restrict or eliminate the power of
>> the board to adopt, amend or repeal any or all bylaws, subject to
>> subdivision (e) of Section 5151.
>>
>> It says the board can do it, then it says the members can do it.  It
>> continues to say these acts by either path can restrict the power of
>> the board to do these acts.
>>
>> All of this is consistent with setting up a foundation which serves to
>> limit the regular activities of the corporate entity, a basic function
>> of fundamental bylaws.
>>
>>
>> Seth
>>
>>
>>
>> On Sat, Jun 20, 2015 at 4:20 PM, Jordan Carter <jordan at internetnz.net.nz>
>> wrote:
>> > hi Arun
>> >
>> > Thanks for this thoughtful contribution.
>> >
>> > I was interested in the difference between this memo's conclusions
>> > regarding
>> > the power to approve fundamental bylaws, and those of the legal firms
>> > retained by the CCWG. Their view is clearly that in a member structure,
>> > members can have approval rights for bylaws changes. The memo you have
>> > circulated seems on first glance to conclude that they cannot.
>> >
>> > Am I reading this right or is it just a matter of the way it is
>> > expressed?
>> >
>> > best
>> > Jordan
>> >
>> > On 20 June 2015 at 16:32, Arun Sukumar <arun.sukumar at nludelhi.ac.in>
>> > wrote:
>> >>
>> >> Hello all,
>> >>
>> >> Please find attached a memo/primer from the National Law University,
>> >> New
>> >> Delhi explaining the idea of Fundamental Bylaws and examining its basis
>> >> in
>> >> California law. The document also has some research on what's known in
>> >> some
>> >> jurisdictions as courts "lifting the corporate veil", an action that
>> >> potentially exposes members to legal liability.
>> >>
>> >> Hope this is useful to those who are following the CCWG's work. This is
>> >> simply to supplement the legal advice CCWG is getting from both law
>> >> firms.
>> >>
>> >> Best,
>> >> Arun
>> >>
>> >> --
>> >> -
>> >> @arunmsukumar
>> >> Senior Fellow, Centre for Communication Governance
>> >> National Law University, New Delhi
>> >> Ph: +91-9871943272
>> >>
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>> >> Accountability-Cross-Community at icann.org
>> >> https://mm.icann.org/mailman/listinfo/accountability-cross-community
>> >>
>> >
>> >
>> >
>> > --
>> > Jordan Carter
>> >
>> > Chief Executive
>> > InternetNZ
>> >
>> > 04 495 2118 (office) | +64 21 442 649 (mob)
>> > jordan at internetnz.net.nz
>> > Skype: jordancarter
>> >
>> > A better world through a better Internet
>> >
>> >
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>> >
>
>
>
>
> --
> -
> @arunmsukumar
> Senior Fellow, Centre for Communication Governance
> National Law University, New Delhi
> Ph: +91-9871943272