[Hcoop-discuss] Re: [hcoop] Bylaws amendment voting has begun

[ntk at seas.upenn.edu]

I'm replying to this on the hcoop-discuss list since I think users at hcoop.net 
is being phased out.

Quoting Franklin Gordon Bynum <fbynum at usc.edu>:

> I'm concerned about the implications of section 203, especially when
> considered with number 602.  How will the "total amount of the member's
> business" be measured?  Time, where everyone gets an equal share every
> month/day/year?  Or dues paid?

This would generally just be the total amount of money that the coop charges 
you, whether for bandwidth or otherwise.  I'm using the wording of IRS 
regulations and literature, and given that I reference 501(c)(12) elsewhere 
this should not be considered too ambiguous.

> For example, if I run up a huge bandwidth bill I am increasing my stake
> in the co-op.  Could a user running up a huge stake ever interfere with
> the operation of the coop?  Maybe not as enumerated in the bylaws, but
> are there external legal issues that will follow with this provision?

This was a large concern for me, but I believe the answer is no.  This stake 
only has to do with aggregate "ownership" in the coop's equity, not decision-
making power.  For one thing we don't issue shares.  For another decision-
making is "one member one vote" in our bylaws.  Just about all you can do with 
your stake is demand your share in the event the coop is dissolved and 
liquidated.  There may be other circumstances, such as if the coop earns large 
capital GAINS in selling something that you have a stake in, but that's not 
really an issue for us as we aren't investing in anything, servers and such 
are depreciable assets.

> And if my membership ends, can I demand compensation for my interest, in
> effect getting my money back?

No, this is provided for both in our corporate structure and in the IRS 
regulations.  If you own stocks in Microsoft, you can't storm into a board 
meeting and say "I own 1 millionth part of Microsoft, give me my millionth 
part."  In our case, first of all we have no stocks so your ownership interest 
is not transferable or sellable (at least not directly, I suppose under 
contract law you could certainly assign your interest to someone else), and 
there is no corresponding decision-making power vested in your interest.  In 
essence the board is the steward of your stake in the coop, and you always get 
the same vote in board elections as any other member.  I invite you to read 
the publications I referenced in my earlier email if you are interested, they 
go into more detail than I can here.

> Or worse, filing suit and costing the
> coop gobs of money?

Well, there's no law against someone filing a suit, amendment or no 
amendment.  Anyone on earth could claim right now that they were harmed in 
some bizarre way by the coop (perhaps viewing our homepage's vast blankness 
induced a seizure?) and file suit against us in some court, forcing us to at 
least respond with a motion to dismiss in order to avoid a default judgment.

Anyone who would have standing to sue under the new bylaws would have the 
exact same standing to sue as before, as a part owner of the coop.  The only 
possible difference is that the damages they could ask for might be 
proportionally different, but the cost of defending against the suit would 
remain about the same.

-ntk