Quoting Petros ([email protected]): > Maybe I should have broadened it with "reliability issues" (e.g. if I > step on your foot when you carry a beamer and sue me for 1 Mio Dollars).
I'll assume you mean 'liability issues', even though I'm having great fun imagining what 'reliability issues' might have meant in this context, instead. Our experience over at Silicon Valley Linux User Group was that computerists got all up in arms over the concept of legal liability and immediately jumped to radical fixes for the alleged huge threat such as reaffiliating under the SBAY.ORG corporate umbrella based on the untested supposition that (1) SBAY.ORG had general liability insurance, (2) that SVLUG's membership special protection, and (3) that general liability insurance would protect them. And it turns out that all three assumptions were mistaken: SBAY.ORG lied about having such insurance (and nobody checked on them), there was no realistic vast legal threat to the membership in the first place, and general liability insurance _if_ it existed (which it didn't) would not have have helped SVLUG's membership anyway. But that points out the larger problem: Computerists by and large have zero understanding of legal liability, but they know they fear it, and therefore tend to do goofy and semi-random bizarre things they are told will help. Actually, no, that's not quite right: Zero would be an improvement, as they know things that just aren't correct, such that learning would require first bringing the computerist _up_ to zero. Before you ask, yes, I spent several years formally studying business law to pass the USA's Certified Public Accountant three-day examination (what in many Commonwealth countries is called chartered accountancy). No, I am not an attorney, and in particular am not your or LUG's attorney. Here is the nub of the matter for 'liability issues': It revolves aroudn the notion of torts, one person having failed a positive duty towards another or having committed a civil (as opposed to criminal) wrongful act towards that person, injuring that other person's interests. Plaintiff and defendant(s) each pay to argue yea or nay, and a judge or jury decides on a preponderance of the evidence whether plaintiff has proved the need for defendant to pay him/her money to make him/her whole (a remedy at law) or to do a specific act (writ of mandamus) or not do a specific act (injunction) to fix the situation (a remedy at equity). Standard tactics when representing a plaintiff is to include everyone you can think of as co-defendants. Standard immediate court counter-tactic of such defendants is to file a demurrer motion (name or motion may differ locally) to be removed from the case, saying to the judge 'Sorry to hear about Fred's broken ankle, but I simply wasn't the one who broke it.' Fred's lawyer might advise Fred to sue not only Sally the SVLUG volunteer who dropped a boat anchor on his foot but also every individual he could think of involved with SVLUG in any capacity, and also SVLUG itself as an unicorporated association -- or, hypothetically if that were to occur, as an incorporated association. In the second of those scenarios, corporation law limits the potential payout from SVLUG itself to the amount of SVLUG's net assets. Fred would not be able to seek ownership of every SVLUG member's personal bank account. In the former scenario (no incorporation), Fred could in theory go after each member's personal assets and not just SVLUG's, _if_ he is able to convince the judge that SVLUG _as an institution_ is responsible for the dropping of that boat anchor. _If._ And thereby hangs the tale. Judges are seldom entirely stupid, and tend to insist that liability involve close proximate cause. That is, just because everyone in SVLUG knows Sally does not make SVLUG as a whole liable for Sally deciding to drop that boat anchor. It would take a very impressive showing that, say, a midnight gathering of SVLUG stakeholders had met in a graveyard and said 'Sally, we order you to drop a boat anchor on Fred's foot' and recorded that decision in the meeting minutes for posterity. Absent midnight graveyard meetings and large boat anchors, catastrophic group legal liability is really not very likely, and the usual rule applies that you are unlikely to held accountable for wrongful acts unless you, y'know, did them. > Anyway, for the ski club mentioned the insurance premium is a > significant expense but it makes people being involved feeling safer. Yes, quite. Some time, do have a look into what specifically is covered, and who is covered. > Well, is there any reason for incorporation? > > Please let me know. You know, you _could_ have looked this up. There can be many benefits to incorporation that apply to particular enterprises (and other collective efforts), but almost none apply to all such groups, because many by their nature would not apply to, say, SVLUG. With that extremely large disclaimer, I will address your overly broad question: o liability shield of the (limited) sort I have no detailed a couple of times o tax benefits o easing transitions of long-term management, perptuating the entity, clear ownership structure/governance o easier raising of equity or loan capital and transfer of finds o easier name protection under trademark law Disadvantages include: o double taxation o ongoing fees o significantly greater recordkeeping _______________________________________________ luv-main mailing list [email protected] http://lists.luv.asn.au/listinfo/luv-main
