Bill: Draft LEA Foundation Amendment Act

[Talion77]

A
BILL
To

Amend the Legal Entity Act to establish a framework for Foundations​

The people of the Commonwealth of Redmont, through their elected Representatives in the Congress and the force of law ordained to that Congress by the people through the constitution, do hereby enact the following provisions into law:

1 - Short Title and Enactment

(1) This Act may be cited as the 'LEA Foundation Amendment Act'.

(2) This Act shall be enacted immediately upon its signage.

(3) This Act has been authored by Talion77.

(4) This Act has been co-sponsored by Representative TrueDarklander.

2 - Reasons

(1) We do not have a system to dedicate assets to a purpose, which are not owned by anyone after that.

(2) To achieve this, this amendment tries to incorporate BGB §§ 80–88 of German Law into the LEA.

3 - Amendments to the LEA

The following Section shall be inserted into the Legal Entity Act following Section 9 - Limited Liability Companies, following sections being renumbered concurrently:

…

10 - Foundation

(1) The Foundation shall be regarded as an Incorporated Entity.

(2) The formation instrument of the Foundation is the Charter of Foundation.

(3) The Foundation shall have no members, nor is it owned by anyone.

(4) The Foundation’s assets shall be applied exclusively to its stated purposes as set forth in the Charter of Foundation. Any other use of its assets shall be unlawful and may be challenged before a court of law.

(5) The Members of the Board of Trustees shall be listed on the Incorporated Entity summary together with their title, class or group.

(6) On any vote there shall be a quorum of at least 50% of the voting power where abstentions shall be counted as a vote.

(7) Formation:

(a) The founders shall file a Charter of Foundation.

(b) There may be multiple founders.

(c) If the Charter of Foundation fails verification, then the Department of Commerce shall provide a clear reason.

(d) If the Charter of Foundation passes verification:

(i) A Company Docket shall be opened.

(ii) The Secretary of the DOC or their delegate shall sign the Charter of Foundation in the Company Docket.

(iii) The Foundation shall begin its existence from the point the signature of the Charter of Foundation has been posted in the Company Docket.

(8) Charter of Foundation

(a) Mandatory contents:

(i) The name of the Foundation;

(ii) The name of the founders;

(iii) The purposes of the foundation;

(iv) The initial capital dedicated to the Foundation by the founders;

(v) Any provision for the management of the Foundation and for the conduct of the affairs of the Foundation;

(vi) Any provision creating, defining, limiting and regulating the powers of the Foundation, the directors, and the founders;

(vii) Any provision regulating the appointment and dismissal of directors.

(b) Optional contents:

(i) Provisions requiring the vote of a larger number of the Members of the Board of Trustees, than is required by this Act;

(ii) A provision limiting the duration of the Foundation's existence to a specified date otherwise the Foundation shall have perpetual existence;

(iii) A provision setting inactivity requirements and the actions to be taken if a Member of the Board of Trustees is inactive.

(1) By default

(a) The inactivity requirement shall be a minimum of 6 hours in the last 30 days;

(b) The Member of the Board of Trustees shall be dismissed.

(2) A Member of the Board of Trustees in violation of inactivity requirements shall be notified at least 72 hours before dismissal.

(iv) A provision setting the first directors.

(c) Amendments:

(i) The Charter of Foundation may be amended by a majority vote of the directors, except that any amendment affecting the powers or duties of the Founder shall require the Founder’s written consent.

(9) Bylaws:

(a) The Bylaws of a Foundation may regulate any matter concerning the Foundation, provided that such authority is delegated to the Bylaws by the Charter of Foundation and does not conflict with applicable law.

(i) Any reference by the law to the Charter of Foundation shall include the Bylaws if the subject matter is delegated to the Bylaws.

(b) In case of conflict between the Bylaws and the Charter of Foundation, the latter shall prevail.

(c) Unless otherwise provided by the Charter of Foundation, the Board of Trustees may amend the Bylaws with a majority vote.

(d) If there are Bylaws, they shall be added to the Incorporated Entity summary and any amendments must be posted to the company docket.

(10) Board of Trustees

(a) The affairs of every Foundation shall be managed by or under the direction of a Board of Trustees, except as may be otherwise provided in this Act or in its Charter of Foundation. If any such provision is made in the Charter of Foundation, the powers and duties conferred or imposed upon the Board of Trustees shall be exercised or performed to such extent and by such person or persons as shall be provided in the Charter of Foundation.

(b) Unless otherwise restricted by the Charter of Foundation or Bylaws, the Board of Trustees shall have the authority to fix the compensation of directors.

(c) Any Member of it or the entire Board of Trustees may be removed, with or without cause, by a majority of the founders unless otherwise provided by the Charter of Foundation

(d) The founders shall be the first Members of Board of Trustees until a Board of Trustees is elected if there are no first Members of it set in the Charter of Foundation

(e) Members of the Board of Trustees shall have a fiduciary duty of care and loyalty to the Foundation

(f) The appointment and removal of directors must be posted in the Company Docket to take effect.

(11) Board of Trustees liability:

(a) Duty of care mandates that a person shall:

(i) act in good faith

(ii) act on an informed basis

(iii) with the care that a reasonable person in a similar position and circumstance would exercise

(iv) in a manner that is in the best interest of the Foundation

(b) Duty of loyalty mandates that a person shall put the interest of the Foundation before their own personal interests and act in good faith

(i) The duty of loyalty shall have the rebuttable presumption of being met if the person has disclosed their conflicts of interest.

(c) Fiduciary duty shall mean the duty of care and the duty of loyalty

(d) The business judgement rule presumes that the requirements for the duty of care and the duty of loyalty have been met, subject to clear and convincing evidence proving otherwise.

(i) Courts shall not substitute their own notions of what is or is not sound business judgment if the requirements of fiduciary duty have been met.

(12) Legal:

(a) Contractual counterparties and third parties may presume that a Member of the Board of Trustees who legally binds the Foundation, shall be within their power to do so.

(i) The Foundation shall be legally bound even though the Member of the Board of Trustees was without power to sign. The Member may be sued civilly for the damages.

(ii) The Foundation shall not be legally bound if the contractual counterparties and third parties clearly knew the Member was without power to sign.

(13) Receivership

(a) powers of the trustee:

(i) Suspend founder access to information

(ii) Suspend any voting requirements set by the law.

(iii) Suspend any voting rights.

(14) Dissolution and winding up

(a) Unless otherwise defined in the Charter of Foundation, the process of dissolution shall go as following:

(i) The process may be started by the Board of Trustees with the adoption of a resolution advising dissolution

(ii) If adopted the resolution shall be posted in the Company Docket and the founders shall be notified

(iii) All founders must approve the dissolution

(iv) The Foundation shall post a certificate of dissolution in its company docket

(b) Dissolution must always be approved by all founders. Non-responsiveness in the Company Docket for a period of one-hundred and sixty-eighth hours by all founders shall be considered collective approval.

(c) A dissolution resolution shall override any provision set in the Charter of Foundation

(d) The approval or rejection of the proposed dissolution resolution must be posted in the Company Docket

(e) The dissolution resolution shall be executed

(i) This must at least do the following:

(1) End all contracts

(2) Pay off all creditors

(3) Finish all lawsuits

(4) Liquidate all assets

(5) Distribute all remaining cash according to the dissolution resolution

(a) By default this shall be to the stated purpose of the Foundation

(g) If the dissolution resolution has been fully executed, a Certificate of Dissolution shall be filed in the Company Docket.

(i) The Secretary of the DOC shall sign this Certificate of Dissolution after verifying the dissolution resolution has been fully and lawfully executed.

(ii) The Foundation shall end its existence on the point the signature of the Certificate of Dissolution has been posted in the Company Docket

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Section then 12 shall be amended as follows:

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12 - Non-profit

(1) The non-profit must be a member-based LLC or a Foundation and will inherit provisions as such.

(2) It must have a clear goal in the Certificate of Formation or Charter of Foundation.

(3) It must keep its non-profit character at all times. This shall include but not limited to:

(a) Revenue may not be distributed

(b) Any compensation must be reasonable

(c) All transactions must be done at arms length standards

(4) Non-profits may be made tax exempt, but must adhere to the following:

(a) Non-profits must keep transaction and accounting records

(b) Non-profits must submit financial reports according to a reasonable schedule set by DOC

(c) DOC may take this exemption away in case of misconduct or non-compliance

(5) Upon voluntary windup and dissolution any net leftovers shall be transferred to the government or given back
to the donors or founders, the latter only in case of a Foundation, up until their total donated amount.

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