Re: Fwd: Re: Memorandum of association

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Re: Fwd: Re: Memorandum of association

Scott Keir
Hello all

Here's my two-penneth (tax-deductable):

On Monday, January 2, 2006, at 01:35  pm, James D. Forrester wrote:

> James D. Forrester wrote:
>> Diane Cabell wrote about the AoA:
>>>> You may, as a separate matter, require the vote of a supermajority
>>>> to pass any resolution at the meeting.  A simple majority vote is
>>>> required for votes at meetings of the directors [See Sec. 33(e)].
>>>> You may wish to add a mirror of 33(e) to Sec. 16.  You can adjust
>>>> Sec. 16's voting requirement to 75% but bear in mind that a
>>>> supermajority requirement can often result in a frozen corporation
>>>> unable to muster enough votes to take action.  While you may want
>>>> broad support for some types of votes, you certainly don't want to
>>>> be held up on more mundane activities.
>
> Possibly. Thoughts, anyone? I'm not wholly enamoured with the idea,
> personally.

Have it so that the majority of people who can be bothered to turn up
to an AGM can make the decisions, approve the accounts etc - ie a
simple majority vote of those present.

I'm not too clear on what the membership will be - eg will they just be
people who sign up to a mailing list, or promise money to a certain
level? In the event that we have many passive/sleeping members, we
don't want their inactivity to freeze the company.

>>>> 2. Sec. 9(d) and (e)
>>>>
>>>> It is generally risky to condition the corporation's activities on
>>>> the presence of any single individual.  A dissatisfied (or ailing)
>>>> Treasurer could simply fail to appear and hold up all the
>>>> proceedings, even those that don't affect the budget (such as
>>>> election of officers, appointment of additional directors,
>>>> amendment of bylaws, etc.).  The directors have all the rights and
>>>> obligations of a treasurer.  They may delegate these to an
>>>> officer, if they choose.  Generally, it is accomplished by
>>>> enacting a set of bye laws for the corporation that specifies the
>>>> titles of the officers and their duties and empowers each as
>>>> appropriate.  The members of the corporation, on the other hand,
>>>> are not generally responsible for the day-to-day operations of the
>>>> company and you don't want to hold up those activities until the
>>>> membership (often a very large class of individuals) holds its
>>>> meeting.
>>>>
>>>> Instead of requiring the physical presence of a Treasurer, or
>>>> allowing
>>>> one individual to hold up the proceedings of the corporation, it
>>>> might
>>>> be more appropriate to enact a bye law that sets objective standards
>>>> for voting on budgetary items.  For example, requiring that any vote
>>>> having a direct effect on expenditures should, _where possible_, be
>>>> reviewed and reported on by the Treasurer in advance.  See Sec.
>>>> 38(b)
>>>> as an example of objective language. The law requires the Directors
>>>> to
>>>> take certain actions by certain dates (including filing annual
>>>> reports
>>>> with Companies House and the Charity Commission and, of course,
>>>> filing
>>>> tax returns), so it would be risky to make that review mandatory.
>>>> Otherwise the company might be in violation of the law because a
>>>> disgruntled Treasurer doesn't want to cooperate.  Sec. 34(a) and (d)
>>>> present the same problem.
>
> Possibly. The thing is, a great deal of the point behind Wikimedia UK
> is
> to raise money for grants to give organisations for charitable purposes
> (the Wikimedia Foundation would likely be the main beneficiary, yes,
> but
> certainly not the only one), and in such circumstances, the Treasurer
> is
> going to be absolutely vital; as we're quite a geographically
> spread-out
> organisation, it would be very hard to have the entirety of the
> Directors all "in the loop" 100% on every detail at every moment,
> whereas a Treasurer would necessarily be involved in everything of that
> sort, and so be a final authority.
>
> How about adding something to Clause 31 saying that any Director can be
> removed by the rest of the Directors in a vote in a DM? That would
> allow
> unhelpful Treasurers to be replaced quite easily.

You do not want to be 100% reliant on all decisions being made with one
person present. If the Treasurer is the only person of importance, why
have anyone else there?

Sorry, I'm being facetious. But if you decide that every meeting has to
have the person called the Treasurer there, then it will frustrate you.

In company law and charity law, all directors and all trustees are
equally financially liable and responsible for the organisation,
whether they label themselves Chair, Treasurer or Honorary Biscuit
Officer or whatever. It is a good idea for the trustees/directors to
have specific roles, just as in any other team, but in the interest of
succession planning and engineering redundancy, its good for there to
be some overlap, and some flexibility.

In an Annual General Meeting (which is the most common form of General
Meeting this organisation will have), the usual role of a Treasurer is
to present the accounts (we spent X, we got in Y, we're doing fine or
we're going bankrupt) and call for approval of the accounts by the
members (hands up). It is a Good Idea if they are there, but if their
train breaks down, or they get stuck in a tube tunnel, or they have a
heart attack outside the venue, or.. or... then it is a Good Idea if
there is some flexibility to allow the Chair or another to fill in,
rather than having to cancel the entire Annual General Meeting (and
then having to wait at least 3 weeks for the next one). At the last
meeting of Directors before the AGM, the Treasurer should have talked
through the accounts with the other Directors, so everyone should have
a rough idea of what all the figures mean anyway.


>>>> Note: If you intend to open a UK bank account, the directors will
>>>> need
>>>> to delegate the authority to do so to some specific individual.  The
>>>> bank may require that the resolution contain particular language and
>>>> name the specific individual.  Check with your bank first.
>
> The resolution would be post-creation of the company, though, so I
> assume we wouldn't need to fix this until then; we'd make any necessary
> changes before submitting to the Commission, though, so it shouldn't be
> a problem.

Some Articles (or Memos, I can't remember which at this hour) have this
in their documentation - alternatively this could be stated in the
documents that the Directors will create financial procedures for the
operation of the company at its first meeting, and these will be
published to members.

For charities, it is frequently the case that expenditure authorisation
(ie the signing of cheques) is made by two Directors, any two of four
[often a named list, eg Treasurer, Chair, Vice-Chair, Vice-Treasurer].
Two of three is common too, but this can make things hairy when one of
the signatories leaves and the paperwork to replace them takes ages (I
speak from experience).

>>>> 4. 11(a) doesn't make sense to me.
>>>>
>>>> The Charity Commission template uses the simple statement "General
>>>> meetings shall be chaired by the person who has been appointed to
>>>> chair meetings of the Directors."
>>>>
>>>> Note: Directors are not necessarily members of the company unless
>>>> you
>>>> require this elsewhere in the document.  The UK concept of a charity
>>>> is that the directors are the trustees who act to direct a
>>>> operations
>>>> that, in turn, benefit the membership.  An example is a bunch of fat
>>>> cats who decide that the world needs another soup kitchen for the
>>>> deserving poor.  The fat cats are generally the directors/trustees
>>>> and
>>>> the deserving poor are generally the members.  The rights of the
>>>> members of a charity are more limited than those of a commercial
>>>> share-holder organization. The reason is that the directors are
>>>> responsible for funding the operation and may decide, if they see
>>>> fit,
>>>> to change the beneficiaries of their operations (perhaps turn it
>>>> into
>>>> a library if they decide that the deserving poor are getting too
>>>> fat).
>>>> Even for shareholder organizations, the members generally have very
>>>> few powers over daily operations.
>
> I have no problem with it - GMs are chaired either by the Director who
> chairs DMs, or a Member who the Directors have chosen so to do. It's
> simple enough.

But why would you want this? In almost every organisation, GMs are
usually chaired by the Chair of the Board of Trustees/Directors etc or
someone similar.
If you want it as described in your para above, then the current clause
confuses meetings (of Directors) and General meetings. How about:

General meetings shall be chaired by the person who has been appointed
to chair meetings of the Directors or the member appointed by the
Directors to chair General meetings.

> We might want to add something about Directors having to also be
> Members, though, yes; 31(c) implies it, of course ("A Director shall
> cease to hold office if he [...] ceases to be a member of the
> Company").

If Directors are implicitly to be members then it would be good to
state this explicitly, checking that that doesn't impact on who we were
envisaging would be members and who would be directors.

>>>> 5. Sec. 15 permits membership votes without a face-to-face meeting
>>>> as
>>>> does Sec. 37 for meetings of directors.  Very handy.  You may wish
>>>> to
>>>> add (either in this section or in a new clause at the end of the
>>>> document) that electronic and facsimile signatures shall be
>>>> considered
>>>> as valid signatures wherever signatures are required by the
>>>> Articles.
>>>> This would allow you to get faxed copies when you want to take a
>>>> vote
>>>> without holding a general meeting.  The downside is that the
>>>> signatures are easier to forge, so it may be a tough choice.  Where
>>>> the membership and directors are few and well-known to each other,
>>>> electronic sigs are pretty safe.
>
> Electronic signatures as specified as legally binding under UK law are
> quite (read: very) complicated, and, as discussed, I don't think we
> want
> fax signatures to be used. What are others' opinions?

You might wish to clarify with Dianne whether electronic signatures in
the context of the UK law stuff, or just as in a signature sent
electronically.  I'm not sure what the legitimacy of a signature mark
sent via fax machine is, versus one I've scanned in or just put at the
bottom of my email.

Hope that helps

Scott
Scott Keir + [hidden email] + 44 (0) 7811 266225


               
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Re: Fwd: Re: Memorandum of association

Chris McKenna
On Sat, 7 Jan 2006, Scott Keir wrote:
>
> I'm not sure what the legitimacy of a signature mark sent via fax machine is,
> versus one I've scanned in or just put at the bottom of my email.
>

I know that faxed signatures were fine for MAFF/Defra to do all sorts of
stuff during the Foot and Mouth Crisis. I presume that if it is fine for a
government dept to do this then it would be fine for private organisations
to do so as well. IANAL though.

--
Chris 'Awkward' McKenna

[hidden email]
www.sucs.org/~cmckenna


The essential things in life are seen not with the eyes,
but with the heart

Antoine de Saint Exupery

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Re: Fwd: Re: Memorandum of association

Andrew Walker-3
In reply to this post by Scott Keir
Hi All,

my views on the AoA issues are below. In short I agree with Scott, as
we don't have to have a treasurer, we can not expect them to be
present. Also, I think I know who the members will be.

On 1/7/06, Scott Keir <[hidden email]> wrote:

> Hello all
>
> Here's my two-penneth (tax-deductable):
>
> On Monday, January 2, 2006, at 01:35  pm, James D. Forrester wrote:
> > James D. Forrester wrote:
> >> Diane Cabell wrote about the AoA:
> >>>> You may, as a separate matter, require the vote of a supermajority
> >>>> to pass any resolution at the meeting.  A simple majority vote is
> >>>> required for votes at meetings of the directors [See Sec. 33(e)].
> >>>> You may wish to add a mirror of 33(e) to Sec. 16.  You can adjust
> >>>> Sec. 16's voting requirement to 75% but bear in mind that a
> >>>> supermajority requirement can often result in a frozen corporation
> >>>> unable to muster enough votes to take action.  While you may want
> >>>> broad support for some types of votes, you certainly don't want to
> >>>> be held up on more mundane activities.
> >
> > Possibly. Thoughts, anyone? I'm not wholly enamoured with the idea,
> > personally.
>
> Have it so that the majority of people who can be bothered to turn up
> to an AGM can make the decisions, approve the accounts etc - ie a
> simple majority vote of those present.
>
> I'm not too clear on what the membership will be - eg will they just be
> people who sign up to a mailing list, or promise money to a certain
> level? In the event that we have many passive/sleeping members, we
> don't want their inactivity to freeze the company.
>

The members are (1) all the people who sign the MoA and AoA and (2)
anybody who applies to the directors and is given membership and obeys
the rules (to be written by the directors). I imagine those rules will
involve some amount of money changing hands (a subscription) and one
of the first tasks after writing the rules will be to get the people
who signed the articles to agree to become members under the new
rules. The directors may have more than one category of membership -
and some may not give members the right to vote or attend meetings.

As I understand it, votes at the AGM and EGM will be by simple
majority of those who both turn up and vote. If 10% of a membership of
100 turn up to a meeting, two people vote for a motion, one votes
against and seven abstain the motion is carried.

> >>>> 2. Sec. 9(d) and (e)
> >>>>
> >>>> It is generally risky to condition the corporation's activities on
> >>>> the presence of any single individual.  A dissatisfied (or ailing)
> >>>> Treasurer could simply fail to appear and hold up all the
> >>>> proceedings, even those that don't affect the budget (such as
> >>>> election of officers, appointment of additional directors,
> >>>> amendment of bylaws, etc.).  The directors have all the rights and
> >>>> obligations of a treasurer.  They may delegate these to an
> >>>> officer, if they choose.  Generally, it is accomplished by
> >>>> enacting a set of bye laws for the corporation that specifies the
> >>>> titles of the officers and their duties and empowers each as
> >>>> appropriate.  The members of the corporation, on the other hand,
> >>>> are not generally responsible for the day-to-day operations of the
> >>>> company and you don't want to hold up those activities until the
> >>>> membership (often a very large class of individuals) holds its
> >>>> meeting.
> >>>>
> >>>> Instead of requiring the physical presence of a Treasurer, or
> >>>> allowing
> >>>> one individual to hold up the proceedings of the corporation, it
> >>>> might
> >>>> be more appropriate to enact a bye law that sets objective standards
> >>>> for voting on budgetary items.  For example, requiring that any vote
> >>>> having a direct effect on expenditures should, _where possible_, be
> >>>> reviewed and reported on by the Treasurer in advance.  See Sec.
> >>>> 38(b)
> >>>> as an example of objective language. The law requires the Directors
> >>>> to
> >>>> take certain actions by certain dates (including filing annual
> >>>> reports
> >>>> with Companies House and the Charity Commission and, of course,
> >>>> filing
> >>>> tax returns), so it would be risky to make that review mandatory.
> >>>> Otherwise the company might be in violation of the law because a
> >>>> disgruntled Treasurer doesn't want to cooperate.  Sec. 34(a) and (d)
> >>>> present the same problem.
> >
> > Possibly. The thing is, a great deal of the point behind Wikimedia UK
> > is
> > to raise money for grants to give organisations for charitable purposes
> > (the Wikimedia Foundation would likely be the main beneficiary, yes,
> > but
> > certainly not the only one), and in such circumstances, the Treasurer
> > is
> > going to be absolutely vital; as we're quite a geographically
> > spread-out
> > organisation, it would be very hard to have the entirety of the
> > Directors all "in the loop" 100% on every detail at every moment,
> > whereas a Treasurer would necessarily be involved in everything of that
> > sort, and so be a final authority.
> >
> > How about adding something to Clause 31 saying that any Director can be
> > removed by the rest of the Directors in a vote in a DM? That would
> > allow
> > unhelpful Treasurers to be replaced quite easily.
>
> You do not want to be 100% reliant on all decisions being made with one
> person present. If the Treasurer is the only person of importance, why
> have anyone else there?
>
> Sorry, I'm being facetious. But if you decide that every meeting has to
> have the person called the Treasurer there, then it will frustrate you.
>
> In company law and charity law, all directors and all trustees are
> equally financially liable and responsible for the organisation,
> whether they label themselves Chair, Treasurer or Honorary Biscuit
> Officer or whatever. It is a good idea for the trustees/directors to
> have specific roles, just as in any other team, but in the interest of
> succession planning and engineering redundancy, its good for there to
> be some overlap, and some flexibility.
>
> In an Annual General Meeting (which is the most common form of General
> Meeting this organisation will have), the usual role of a Treasurer is
> to present the accounts (we spent X, we got in Y, we're doing fine or
> we're going bankrupt) and call for approval of the accounts by the
> members (hands up). It is a Good Idea if they are there, but if their
> train breaks down, or they get stuck in a tube tunnel, or they have a
> heart attack outside the venue, or.. or... then it is a Good Idea if
> there is some flexibility to allow the Chair or another to fill in,
> rather than having to cancel the entire Annual General Meeting (and
> then having to wait at least 3 weeks for the next one). At the last
> meeting of Directors before the AGM, the Treasurer should have talked
> through the accounts with the other Directors, so everyone should have
> a rough idea of what all the figures mean anyway.

I agree with Diane and Scott here. We may want to have an accounts
director and a fund raising director - we would then be in trouble if
the articles required that somebody called a treasurer turned up.


>
> >>>> Note: If you intend to open a UK bank account, the directors will
> >>>> need
> >>>> to delegate the authority to do so to some specific individual.  The
> >>>> bank may require that the resolution contain particular language and
> >>>> name the specific individual.  Check with your bank first.
> >
> > The resolution would be post-creation of the company, though, so I
> > assume we wouldn't need to fix this until then; we'd make any necessary
> > changes before submitting to the Commission, though, so it shouldn't be
> > a problem.
>
> Some Articles (or Memos, I can't remember which at this hour) have this
> in their documentation - alternatively this could be stated in the
> documents that the Directors will create financial procedures for the
> operation of the company at its first meeting, and these will be
> published to members.

Or we could expect that the directors will create finical procedures
and, if they don't require it by an ordinary motion at the first AGM.

> For charities, it is frequently the case that expenditure authorisation
> (ie the signing of cheques) is made by two Directors, any two of four
> [often a named list, eg Treasurer, Chair, Vice-Chair, Vice-Treasurer].
> Two of three is common too, but this can make things hairy when one of
> the signatories leaves and the paperwork to replace them takes ages (I
> speak from experience).
>
> >>>> 4. 11(a) doesn't make sense to me.
> >>>>
> >>>> The Charity Commission template uses the simple statement "General
> >>>> meetings shall be chaired by the person who has been appointed to
> >>>> chair meetings of the Directors."
> >>>>
> >>>> Note: Directors are not necessarily members of the company unless
> >>>> you
> >>>> require this elsewhere in the document.  The UK concept of a charity
> >>>> is that the directors are the trustees who act to direct a
> >>>> operations
> >>>> that, in turn, benefit the membership.  An example is a bunch of fat
> >>>> cats who decide that the world needs another soup kitchen for the
> >>>> deserving poor.  The fat cats are generally the directors/trustees
> >>>> and
> >>>> the deserving poor are generally the members.  The rights of the
> >>>> members of a charity are more limited than those of a commercial
> >>>> share-holder organization. The reason is that the directors are
> >>>> responsible for funding the operation and may decide, if they see
> >>>> fit,
> >>>> to change the beneficiaries of their operations (perhaps turn it
> >>>> into
> >>>> a library if they decide that the deserving poor are getting too
> >>>> fat).
> >>>> Even for shareholder organizations, the members generally have very
> >>>> few powers over daily operations.
> >
> > I have no problem with it - GMs are chaired either by the Director who
> > chairs DMs, or a Member who the Directors have chosen so to do. It's
> > simple enough.
>
> But why would you want this? In almost every organisation, GMs are
> usually chaired by the Chair of the Board of Trustees/Directors etc or
> someone similar.
> If you want it as described in your para above, then the current clause
> confuses meetings (of Directors) and General meetings. How about:
>
> General meetings shall be chaired by the person who has been appointed
> to chair meetings of the Directors or the member appointed by the
> Directors to chair General meetings.
>
> > We might want to add something about Directors having to also be
> > Members, though, yes; 31(c) implies it, of course ("A Director shall
> > cease to hold office if he [...] ceases to be a member of the
> > Company").
>
> If Directors are implicitly to be members then it would be good to
> state this explicitly, checking that that doesn't impact on who we were
> envisaging would be members and who would be directors.
>
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