Re: [Talk-GB] UK OSM Community Interest Company (UK local chapter)

[Brian Prangle]

A week has gone by and the legal opinion on our AoA has attracted two
comments, both from proposed interim directors, so I'm proposing to
consolidate these and communicate with the lawyers for an early resolution.
I don't think the issue warrants a conference call judging by the level of
interest.

On 29 September 2016 at 00:34, Robert Whittaker (OSM lists) <
robert.whittaker+...@gmail.com> wrote:

> On 26 September 2016 at 11:35, Brian Prangle  wrote:
> > Now that SotM has finished we should have time to concentrate on the pro
> > bono legal review of our Articles of Association. I'll give it a week for
> > folk to fnd time to look at this. If there's a deal of contention on any
> > issue then we'll have  a concall to resolve it, if not then I'll proceed
> to
> > send off the documents and fee to register us at Companies House.
>
> I'd already had a look through and made some notes, and I think I've
> got broadly similar points to Rob's.
>
> * The change in 8.1 appears to be broadening the Director's powers
> significantly. (I thought we'd agreed that they should have all powers
> in the end anyway, but perhaps I'm mistaken. Is the change there from
> before the lawyers got the document perhaps?)
>
> * The conflicts of interest stuff in 20.x seems to have been watered
> down a bit. While it's true that old 20.2.1 and 20.2.2 can be
> over-ridden by the directors anyway, I think it's probably better to
> retain them on a matter of principle. Old 20.1 and 20.2.3 seem to have
> been genuinely lost, and I think they're sensible provisions that we
> should maintain.
>
> * The dropping of old 23.4 and the wording of new 23.3 appears to
> allow non-members to be Directors, which is presumably not what we
> want. Although new 25.1.7 could restrict to Ordinary and Associate
> members. (Although can you cease to be something you've never been in
> the first place?) It would be better to be clear in 23.3 if Directors
> have to be ordinary members.
>
> * It's not clear to me why the 9-year maximum term has been dropped
> from old 24.4. If this isn't for legal reasons, it should probably be
> reinstated.
>
> * New clause 24.3 is very confusing, and I'm not completely sure what
> its effect is supposed to be. A literal reading, seems to say that any
> director who retires and isn't re-elected, and isn't forced to stay on
> to keep up the number under 24.4, and isn't defeated in a re-election
> attempt, may (if they wish) stay on another year(ish) until the
> following AGM. This seems odd to have... At the very least this clause
> needs clarifying.
>
> * The changes between old 23.3, 23.5 and new 23.3 have changed the STV
> voting for a set number of directors into a simple resolution in
> favour or against each individual standing. I don't think this is what
> we want. In our discussions we wanted to have the number of Directors
> fixed in advance of the meeting, and then elect the best people to
> fill the vacant positions.
>
> * Original clauses 28/29 -- We decided we wanted to exclude
> non-natural persons from being company members, so I think that needs
> to be put back unless there's a legal problem with doing so. While I
> can see the logic in simplifying things by combining clauses on
> "Ordinary Members" and "Associate Members", I think they actually may
> make things more complicated and harder to untangle, particularly if
> we ever want to change anything for one class of membership and not
> the other at any point in the future. I also think the lawyers have
> erred in their changes, as I couldn't see anything to clarify that
> only Ordinary Members are members of the company for the purposes of
> the Companies' Act. (The clauses mention a "members' register", but
> the definition of "Ordinary Member" implies that "members" include
> both sets.)
>
> * New 37 has changed the meaning of old 39.1 completely. If directors
> have to be members anyway, then new 37 is a bit pointless, though I
> could see the logic in having it just in case things change. Unless
> there are legal reasons not to, having something about allowing other
> people to attend and speak would be good I think -- even if that's the
> default position anyway.
>
> Best wishes,
>
> Robert.
>
> --
> Robert Whittaker
>
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Re: [Talk-GB] UK OSM Community Interest Company (UK local chapter)

[Robert Whittaker (OSM lists)]

On 26 September 2016 at 11:35, Brian Prangle  wrote:
> Now that SotM has finished we should have time to concentrate on the pro
> bono legal review of our Articles of Association. I'll give it a week for
> folk to fnd time to look at this. If there's a deal of contention on any
> issue then we'll have  a concall to resolve it, if not then I'll proceed to
> send off the documents and fee to register us at Companies House.

I'd already had a look through and made some notes, and I think I've
got broadly similar points to Rob's.

* The change in 8.1 appears to be broadening the Director's powers
significantly. (I thought we'd agreed that they should have all powers
in the end anyway, but perhaps I'm mistaken. Is the change there from
before the lawyers got the document perhaps?)

* The conflicts of interest stuff in 20.x seems to have been watered
down a bit. While it's true that old 20.2.1 and 20.2.2 can be
over-ridden by the directors anyway, I think it's probably better to
retain them on a matter of principle. Old 20.1 and 20.2.3 seem to have
been genuinely lost, and I think they're sensible provisions that we
should maintain.

* The dropping of old 23.4 and the wording of new 23.3 appears to
allow non-members to be Directors, which is presumably not what we
want. Although new 25.1.7 could restrict to Ordinary and Associate
members. (Although can you cease to be something you've never been in
the first place?) It would be better to be clear in 23.3 if Directors
have to be ordinary members.

* It's not clear to me why the 9-year maximum term has been dropped
from old 24.4. If this isn't for legal reasons, it should probably be
reinstated.

* New clause 24.3 is very confusing, and I'm not completely sure what
its effect is supposed to be. A literal reading, seems to say that any
director who retires and isn't re-elected, and isn't forced to stay on
to keep up the number under 24.4, and isn't defeated in a re-election
attempt, may (if they wish) stay on another year(ish) until the
following AGM. This seems odd to have... At the very least this clause
needs clarifying.

* The changes between old 23.3, 23.5 and new 23.3 have changed the STV
voting for a set number of directors into a simple resolution in
favour or against each individual standing. I don't think this is what
we want. In our discussions we wanted to have the number of Directors
fixed in advance of the meeting, and then elect the best people to
fill the vacant positions.

* Original clauses 28/29 -- We decided we wanted to exclude
non-natural persons from being company members, so I think that needs
to be put back unless there's a legal problem with doing so. While I
can see the logic in simplifying things by combining clauses on
"Ordinary Members" and "Associate Members", I think they actually may
make things more complicated and harder to untangle, particularly if
we ever want to change anything for one class of membership and not
the other at any point in the future. I also think the lawyers have
erred in their changes, as I couldn't see anything to clarify that
only Ordinary Members are members of the company for the purposes of
the Companies' Act. (The clauses mention a "members' register", but
the definition of "Ordinary Member" implies that "members" include
both sets.)

* New 37 has changed the meaning of old 39.1 completely. If directors
have to be members anyway, then new 37 is a bit pointless, though I
could see the logic in having it just in case things change. Unless
there are legal reasons not to, having something about allowing other
people to attend and speak would be good I think -- even if that's the
default position anyway.

Best wishes,

Robert.

-- 
Robert Whittaker

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Re: [Talk-GB] UK OSM Community Interest Company (UK local chapter)

[Rob Nickerson]

Thanks Brian,

Some bits make sense, some deletions that I don't understand and some
confusingly written legalese added (typical and expected). Notes below. I'd
appreciate responses on the seven (7) highlighted sections given how much
time I/we committed to this and that many of these are our specific
insertions following discussion as a group on the phone calls.

**Powers* (Articles 6 and 8)*

   - Makes sense. No need to list things out here.
   - Is the new 8.3 the CIC requirements or something additional?

---

**Conflicts of interest* (Article 20)*
So, I understand that you are saying that the sections that have been
deleted are unnecessary duplication. This seems true of some bits (20.2.1,
20.2.2, 20.3), but not others including:

   - 20.1 - Directors and Connected persons cannot be employees, and
   - 20.2.3 - A max of half of the directors can supply good or services to
   the company at any time.

I vaguely care about the first (20.1) so would be great if we can get
comment on this. Post deletion is it now possible or stopped by another
rule?

---

**Directors* (Articles 23, 24 and 37)*

The old 23.4 stated that Directors must be members. Deleted but this is
retained by clause 25.1.7 (new numbers) so fine.

The election method (Single Transferable Vote) has been deleted. Why? To me
it seems sensible to have this documented somewhere. If not in AoA then
somewhere else. This may be a question better directed back at the pro bono
lawyers (if they are taking questions).

The new 24.1 is very confusing...! Notes:

   - "one-third of the Directors who are subject to retirement by rotation"
   -> Is this just one-third of all Directors? Or are some Directors not
   "subject to retirement by rotation"? This seems important. The following
   note then follows on. I'd like to know where "subject to retirement by
   rotation" is defined please.
   - "provided that if in any year the number of Directors who are subject
   to retirement by rotation shall be two, one of such Directors shall retire"
   -> Assuming we have minimum of 5 directors and all are "subject to
   retirement by rotation" then this situation (just 2 directors "subject to
   retirement by rotation" will never happen). This text is very long and
   confusing for what is simply 'at least one mus retire'!

The old 24.4 (max service of 9 years) has been deleted. Why? (this was a
group decision/insertion)

All the wordy insertions seem to be to close the "what if not enough
Directors left" loophole. Bloody confusingly written but fine.

Do you mean Article 37 (list of changes)? If yes, I do not understand the
deletion of text from this section (Attendance and speaking by Directors
and non-members). Can we re-insert the following text from the original
template articles please:

36.2 (template AoA number) The chair of the meeting may permit other
persons who are not members of the Company to attend and speak at a general
meeting.


---

**Membership* (Articles 27 and 29)*

This is the changes that I least understand. You noted that there is now no
distinction between members being persons or corporate entities (although
Directors can slot them in the right place). This is precisely what we
wanted to enforce.

> However, if you would like to retain specific wording from the original
version please let us know.

Yes, please!

Also what is the consequence of the removal of "An Associate Member is not
a member of the Company for any purpose of the Companies Act"? This, I
think was copied from the OSMF.

Quite frankly I do not understand why this whole section was changed. Yes
it was long, but it was clear. It was also based on OSMF texts. Now it
takes ages to un-pick the proposed test to understand what we as a group
really intend!

I'd be tempted to ask if we could restore this section. Was it legally
incorrect or are we just changing for the sake of change (different peoples
preferences) here?

*---*

**Meetings* (Article 30)*
I note they have inserted that AGMs must be within 6 months of the
accounting reference date. In fact I added this same template text at one
point. Jerry pointed out a concern and it got cut. May be worth asking
rechecking Jerry's concern:

Not a good idea, this means accounts have to be done by 4 months from YE;
this could be one hell of a thing to stick to.


May be worth engaging with Jerry directly on this or asking the lawyers if
we can retain greater flexibility. Ultimately I think we should be
achieving this timeline anyway and if not something has gone wrong!

Best regards,

p.s. Best to double check all the red text from the original template
articles still exists now that we have gone through more edits!!

*Rob*
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[Talk-GB] UK OSM Community Interest Company (UK local chapter)

[Brian Prangle]

Hi everyone

Now that SotM has finished we should have time to concentrate on the pro
bono legal review of our Articles of Association. I'll give it a week for
folk to fnd time to look at this. If there's a deal of contention on any
issue then we'll have  a concall to resolve it, if not then I'll proceed to
send off the documents and fee to register us at Companies House.

Regards

Brian

*Powers* (Articles 6 and 8)

We have simplified the powers to reflect that the articles allow the CIC to
do “all such lawful things…without limitation”.



*Conflicts of interest* (Article 20)

If there are specific concerns within the wording deleted from Articles
20.2 and 20.3, please let us know.  We have deleted the wording since all
transactional conflicts would need to be approved by the board.



*Directors* (Articles 23, 24 and 37)

We have introduced the AGM concept into Article 24 to propose a governance
structure whereby 1/3 of the board retires annually by rotation, is this OK?



*Membership* (Articles 27 and 29)

We have simplified the approach on membership and removed some duplicate
provisions:

· We have made a distinction between Ordinary and Associate Members
only in that Associate Members cannot vote; please see Article 40.1.

· We have not distinguished between natural person members and body
corporate members for the purposes of Ordinary Membership.  Under Article
27.3, every member is to be approved by the board.  However, if you would
like to retain specific wording from the original version please let us
know.



*Meetings* (Article 30)

We have used standard AGM wording here which we think is appropriate but
please let me know if you have any queries.


I hope that helps.  Let me know if you have any additional questions or
would like to discuss any of the above in further detail.


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