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A
BILL
To
Provide for legal entities
BILL
To
Provide for legal entities
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 “Legal Entity Act” or the “LEA”.
(2) This Act shall be enacted upon signature
(3) This Act has been authored by Senator Omegabiebel and Vice-President Multiman155
(4) This Act has been co-sponsored by Senator Omegabiebel
2 - Reasons
(1) There were a lot of small fixes, too many to apply individually making it easier to just restate it
(2) The previous version was quite confusing with how it was structured
(3) Several clarifications needed to be made.
(4) The removal of public defenders for companies
(5) fixes a possibly endless quorum fail loop
(6) clearer wind up and dissolve procedures that protects creditors more
(7) removes interest based LLCs
(8) adds consolidation and merger procedures
3 - Definitions
(1) For the purposes of this Act, the following definitions shall apply:
(a) Outstanding Shares. Means all shares not in possession of that company.
(b) Authorised Shares. Means all shares authorised by the Certificate of Incorporation.
(c) Formation Instrument. Means the instrument that forms the legal entity.
(d) Person. Means a natural person or a legal entity.
(e) Individual. Means a natural person.
(f) Entity. Means a legal entity.
(g) Winding Up. Means the process of dissolving the company.
(h) Registered Name. Means the name of a legal entity on the formation instrument.
(i) Shareholder. Means the holder of a share of a corporation.
(j) Member. Means the member of an LLC.
(k) Manager. Means the manager of an LLC.
(l) Characteristic. Means the voting powers, full or limited, or without voting powers and in such designations, preferences and relative, participating, optional or special rights and qualifications, powers, conditions, obligations, limitations or restrictions.
(m) Resolution. Means a decision that is voted on.
(n) Filed in the Company Docket. Means posted as a post in the Company Docket thread corresponding to an entity.
(o) Registered Shares. Means the shares registered to a person in the Company Docket.
(p) Consolidation. Means a procedure whereby any two (2) or more entities consolidate into a new entity incorporated by the consolidation.
(q) Consolidated Entity. Means the new entity into which two (2) or more constituent entities are consolidated.
(r) Constituent Entity. Means an existing entity that is participating in the merger or consolidation with one (1) or more other corporations.
(s) Agent. Means a person, including other entities, directors, managers, officers, and employees, directly acting on behalf of the legal entity. This does not include legal representation, shareholders, or members.
PART I: LEGAL ENTITIES
1 - Powers of a Legal Entity
(1) In addition to the powers enumerated in this section, every legal entity, its shareholders, members, and agents shall possess and may exercise all the powers and privileges granted by this Act or by any other law or by its formation instrument, together with any powers incidental thereto, so far as such powers and privileges are necessary or convenient to the conduct, promotion, or attainment of the business or purposes irrespective of benefit set forth in its formation instrument.
(2) Subject to any limitations provided in this Act, any other law of Redmont, its formation instrument, a legal entity shall, in furtherance of its purposes irrespective of benefit to the legal entity and whether or not enumerated in its formation instrument, have power to:
(a) have perpetual succession;
(b) have a seal, and to alter such seal at its pleasure, and to use it by causing it or a facsimile to be affixed or impressed or reproduced in any other manner;
(c) Sue and be sued in all courts and participate, as a party or otherwise, in any judicial, administrative, or other proceeding, in its name as legal entity;
(d) purchase, receive, take by grant, gift, or otherwise, lease or otherwise acquire, own, hold, improve, employ, use and otherwise deal in and with, real or personal property, or any interest therein, wherever situated;
(e) sell, convey, lease, exchange, transfer or otherwise dispose of, or mortgage or pledge, or create a security interest in, all or any of its real or personal property, or any interest therein;
(f) purchase, take, receive, subscribe for, or otherwise acquire, own, hold, vote, employ, sell, lend, lease, exchange, transfer, or otherwise dispose of, mortgage, and pledge, bonds and other obligations, shares, or other securities or interests issued by others, whether engaged in similar or different business, governmental, or other activities;
(g) make contracts, give guarantees and incur liabilities, borrow money at such rates of interest as the entity may determine, issue its notes, bonds, and other obligations, and secure any of its obligations by mortgage or pledge of all or any of its real or personal property or any interest therein, wherever situated, in any currency;
(h) lend money, invest and reinvest its funds, and take and hold real and personal property as security for the payment of funds so loaned or invested, in any currency;
(i) do business, carry on its operations, and have offices and exercise the powers granted by this Part in any jurisdiction within or outside of the Commonwealth of Redmont;
(j) to elect, appoint or remove members, and agents of the legal entity, define their duties, set their compensation and to indemnify this personnel;
(k) be an incorporator, shareholder, member, or agent of any corporation, company, LLC, or other enterprise;
(l) Renounce any interest or expectancy of the entity in, or in being offered an opportunity to participate in, specified business opportunities or specified classes or categories of business opportunities that are presented to the corporation or 1 or more of its officers, directors, or shareholders;
(m) Participate with others in an Incorporated Entity, or in any transaction, undertaking or arrangement which the participating legal entity would have power to conduct by itself, whether or not such participation involves sharing or delegation of control with or to others;
(n) make donations for the public welfare or for charitable, educational, scientific, sporting, health, civic, or similar purposes;
(o) In case of an Incorporated Entity, adopt, amend or repeal the formation instrument or bylaws
(p) in case of an Incorporated Entity, pay profit sharing plans, stock bonus plans, stock option plans and other incentive plans for any or all of its agents;
(q) In case of an Incorporated Entity, wind up and dissolve itself;
(r) in case of a corporation, purchase, receive, take, or otherwise acquire, own, hold, sell, lend, exchange, transfer or otherwise dispose of, pledge, use and otherwise deal in and with its own shares;
2 - Miscellaneous
(1) Jail time on a legal entity shall be converted into an additional fine of 10 penalty units per minute of jail time.
(2) Governmental Entities shall not be issued any criminal punishment other than the declaration of guilt.
(a) This provision shall not affect the courts power to issue injunctions, orders and such measures to enforce these orders and injunctions.
(b) Government entities may be held civilly liable for torts arising from violations of criminal law.
(3) Legal entities shall be a legal person with separate rights and liabilities, strictly distinct from their shareholders, members, and agents.
(4) It shall be mandatory for an Incorporated Entity to have a corresponding in-game company in the business plugin.
(a) The owner of the in-game company shall be set by the Incorporated Entity. Ownership of an in-game company in the business plugin associated with an incorporated entity shall, subject to rebuttal by balance of probabilities, not be used to presume that in-game owner is a shareholder, member, or agent of that Incorporated Entity.
(b) The Incorporated Entity may request DOC to forcefully change the owner of the in-game company at its pleasure.
(5) No person may register a company with the business plugin where the name could cause serious confusion with an already existing legal entity
(6) The Department of Commerce may change the owner of, or disband, an in-game company used to carry on or disguise regulated financial activity in contravention of the Financial Institutions Enforcement Act.
3 - Receivership
(1) A legal entity in receivership shall be led by a receiver.
(2) A government entity can only be placed in receivership on its financial affairs. Any receivership provision under this section shall be limited as such.
(3) A receiver shall have the power.
(a) of the directors, managers, officers, shareholders and members in a cumulative manner, and in case of an Incorporated Entity, without restriction of the formation instrument;
(b) to control all assets and liabilities;
(c) to suspend or restrict the voting powers of a shareholder or member;
(d) to suspend or restrict any direct or indirect control or voting power over the legal entity either through contracts, equity or debt instruments or any other instrument, even the control or voting power guaranteed by law;
(e) to suspend or restrict any control or power by a director, manager or officer.
(4) A receiver may not increase the limit of personal liability assumed by a person of an Incorporated Entity.
(5) A receiver may not change the payout resulting from the winding up and dissolution of an Incorporated Entity.
(6) A legal entity may only be placed into receivership by a process defined by law.
(7) A court may place a legal entity into receivership to enforce a court order.
(8) A receiver shall be immune from civil liability for actions taken in good faith in the exercise of their powers as receiver.
(a) This immunity shall not apply where the receiver:
(i) commits a criminal offence; or
(ii) acts outside the scope of their authority as receiver.
(9) A receiver shall owe no fiduciary duty to shareholders, members, directors, officers, creditors, or any other stakeholder of the legal entity in receivership.
(a) The receiver's duties are owed exclusively to the court or authority that appointed them and to the proper administration of the receivership.
(b) Actions taken by a receiver in the exercise of their powers shall not be subject to challenge on the basis of breach of fiduciary duty.
(10) A receiver may also be appointed under the Financial Institutions Enforcement Act over an operation carrying on regulated financial activity, together with the relevant assets of its operators, whether or not the operation is a legal entity. Such a receiver holds the powers and immunities provided in this section.
(11) The Department of Commerce may apply to the Federal Court to place a legal entity into receivership where the entity is insolvent, is being used to commit fraud, or persistently and seriously violates the law. Where creditor or customer funds are at immediate risk, the Department may impose an interim receivership for no longer than 72 hours pending the Court’s decision.
PART II: GOVERNMENTAL ENTITY
1 - General
(1) A governmental entity shall be formed by:
(a) executive order;
(b) law;
(c) town bylaw; or,
(d) town constitution.
(2) The governmental entity shall exist from the enactment of the formation instrument until the dissolution of the entity.
(3) Governmental entities shall be exempt from all taxes except as expressly otherwise defined by law
(4) If not defined, the director or directors of a governmental entity shall be either:
(a) each person in a body of equal persons, notwithstanding the possibility of a chair and/or vice chair or equivalent position being elected or appointed out of that body; or if not present,
(b) the most senior person leading the entity.
(5) For the avoidance of doubt, the existing entities are:
(a) The executive departments;
(i) The Secretary of a department is the director of that department.
(b) Towns;
(c) Town departments and other entities created by a town bylaw or constitution;
(d) The Federal Reserve Bank
(i) All members of the FRB Board shall be considered directors of that public entity.
(e) The Judiciary
(i) The judiciary shall be regarded as a single governmental entity
(ii) All justices of the Supreme Court shall be directors of the governmental entity
(f) The House of Representatives
(i) The Speaker of the House shall be the director of the House of Representatives.
(g) The Senate
(i) The President of the Senate shall be the director of the Senate.
(h) Congress
(i) The presiding officer of the House of Representatives and the Senate are the directors of Congress.
(i) Any other existing entities defined by the avenues of governmental entity formation.
2 - Legal Representation
(1) The Department of Justice shall be the legal representative of the executive departments.
(2) Any other governmental entity may request lawyers from the Department of Justice.
(a) The Department of Justice may only reject this request upon extraordinary reason.
(i) For the avoidance of doubt, the extreme overload on the Department of Justice shall be considered an extraordinary reason.
(b) Owing to the separation between the DOJ and non-department governmental entities, the Department is to give special deference to the wishes of the governmental entity in the course of representation, rather than substituting its own judgement.
(c) Governmental entities other than government departments may seek outside legal counsel.
(3) Executive departments may not sue each other.
PART III: INCORPORATED ENTITY
1 - Company Docket
(1) It shall be the function of the company docket to keep a record of filings of the Incorporated Entity.
(2) This shall be a thread in the Company Register.
(3) All Company Dockets in the Company Register shall be public.
(4) The title of the thread shall be the registered company name.
(5) Information recorded in the Company Docket shall be immutable and permanent, even if the Incorporated Entity does not exist anymore.
(a) Immaterial mistakes (such as typographical errors) may be corrected shortly after posting, but may not alter the meaning or the spirit of the record.
(b) The underlying medium for documents and other files must also reflect immutability and permanence. Google Docs links, for example, may not be used to store documents recorded in the Company Docket.
(c) The Incorporated Entity Summary shall be exempt.
(6) The Company Docket may be used for resolutions, votes, announcements and other communication related to the Incorporated Entity.
(7) The Department of Commerce (DOC) shall have the power to reject any formation of an Incorporated Entity for a clear and justifiable reason related to the formation filings.
(8) The following filings shall at least be filed in the Company Docket:
(a) Any amendments where the amendment filing must contain the version of the document before and after the amendment of:
(i) The formation instrument; or,
(ii) the bylaws;
(b) Any summons of the Incorporated Entity;
(c) Any verdicts on cases where the Incorporated Entity is a Plaintiff or Defendant;
(d) The appointment, election, removal or resignation of a director, manager, or officer and must mention their name and title
(9) Any action for which a filing in the Company Docket is needed shall only come into effect from the point the filing is posted unless otherwise provided by law
(a) This shall not be construed as preventing provision where the action goes into effect
(b) It shall be the responsibility of the Incorporated Entity to make sure the filings are filed where filings must be done under:
(i) Part III section 1(8)(a)(i)
(ii) Part III section 1(8)(a)(ii)
(iii) Part III section 1(8)(c)
(iv) Part III section 1(8)(d)
2 - Incorporated Entity Summary
(1) The Incorporated Entity Summary shall be the first post in the Company Docket and shall be updated without undue delay by the incorporated entity to contain the most recent information listed below:
(a) The registered name of the company;
(b) the name of the in-game company;
(c) the directors;
(d) the officers and their title;
(e) the latest version of the formation instrument;
(f) Any ongoing court cases; and
(g) Any ongoing regulatory enforcement actions.
(2) An Incorporated Entity Summary may contain a designee to whom legal correspondence should be delivered.
3 - Fiduciary duty
(1) An agent of an Incorporated Entity must act:
(a) in good faith;
(b) on an informed basis;
(c) with the care that a reasonable person in a similar position and circumstance would exercise; and
(d) in a manner that is in the best interest of the Incorporated Entity and by extension the shareholders or members.
(2) An agent shall have the rebuttable presumption of acting in a manner that is in the best interest of the Incorporated entity where they have a conflict of interest and has disclosed this conflict or this conflict is known to the relevant parties.
(3) The court shall presume that the fiduciary duty has been met subject to rebuttal by clear and convincing evidence proving a breach with damages.
(4) The contractual parties, the shareholders or members of the Incorporated Entity, the creditors of the Incorporated Entity where it is insolvent, and the Department of Commerce, may use breach of fiduciary duty as a claim in legal action.
(5) A court shall not substitute its own judgement in matters of business judgement, except where there has been a breach of fiduciary duty or criminal or illegal conduct
4 - Legal Process
(1) Summons for an Incorporated Entity must:
(a) Summon an individual designated to receive legal communications on behalf of a firm within a firm’s Incorporated Entity Summary; or,
(b) Summon the directors of that Incorporated Entity; or,
(c) if there are no registered directors, summon all persons having voting power through registered shares or memberships if the total amount of persons with voting power is less than or equal to 10; or,
(d) summon the persons holding the biggest voting power through registered shares or memberships until, if possible, a cumulative of more than 50% of the total voting power in the Incorporated Entity is reached.
(2) Any other legal process or communication may be presumed to be delivered, if delivered:
(a) to an individual designated to receive legal communications on behalf of a firm within a firm’s Incorporated Entity Summary; or in the absence of such a designee, through a director with at least 1 in-game join the previous 30 days; or
(b) through a post on the company docket.
(3) The court clerk (or, alternatively, the presiding judicial officer) shall file the summons in the Company Docket.
(a) The summons shall only become active from the point that the summons is filed in the Company Docket
5 - Bylaws
(1) The Bylaws of an Incorporated Entity may regulate any matter concerning the entity, provided such authority is delegated to the Bylaws by the formation instrument.
(2) Any reference by the law to the formation instrument shall include the Bylaws if the subject matter is delegated to the Bylaws.
(3) In case of conflict between the Bylaws and the formation instrument, the formation instrument shall prevail.
(4) Unless otherwise provided by the formation instrument, the Board of Directors may amend the Bylaws with a majority.
6 - Voting
(1) This section shall apply unless otherwise provided by law or formation instrument.
(2) The quorum for a resolution shall be 50% of all voting power where explicit, affirmative abstentions are counted towards the quorum.
(a) Where a resolution fails due to quorum, the persons eligible to vote shall be sent notification and the resolution may be reposted after 72 hours (unless waived by majority by total voting power). For 10 days thereafter, quorum requirements shall be suspended for that resolution.
(3) The counting of votes shall be by voting power, not by individual shares or membership.
(4) The resolution must be open for vote for 48 hours.
(5) The resolution must be posted in a place that the relevant voters can access and can vote.
(a) For the avoidance of doubt, the posting of a resolution in the Company Docket shall always be considered to meet the above requirement.
(6) Any shareholder, member, manager, or director may call for a resolution to be voted upon.
7 - Access to information
(1) Unless otherwise provided by the formation instrument, each manager and each director shall have unrestricted and absolute access to information regarding the status of the business, financial condition of the Incorporated Entity and other information regarding the affairs of the corporation as is just and reasonable
(2) Unless otherwise provided by the formation instrument, shareholders and members shall have reasonable access to information regarding the status of the business, financial condition of the Incorporated Entity and other information regarding the affairs of the corporation as is just and reasonable
(a) The directors and officers of an incorporated entity shall have the right to keep confidential from shareholders and members, for such period of time as the director or officer deems reasonable, any information for which:
(i) the director, officer, or manager reasonably believes to be in the nature of trade secrets; or
(ii) the director, officer, or manager in good faith believes that the disclosure of such information is not in the best interest of the Incorporated Entity or could damage the Incorporated Entity or its business; or
(iii) the director, officer, or manager is required by law or by agreement with a third party to keep confidential.
8 - Agency
(1) Contractual parties and third parties may presume that a director, officer, or manager who legally binds the Incorporated Entity shall be within their power to do so.
(a) The Incorporated Entity shall be legally bound even though the director or officer was without power to sign. The director or officer may be sued civilly for the damages.
(b) The Incorporated Entity shall not be legally bound if the contractual counterparty or third party knew or had been sent notice the director, officer or manager was without power to sign.
9 - Merger or Consolidation
(1) Two or more Incorporated Entities may merge or consolidate as provided in this section.
(2) A Certificate of Merger or Consolidation shall set forth:
(a) the name of each constituent entity, and if the name of any of them has been changed, the name under which it was formed; and the name of the surviving entity, or the name, or the method of determining it, of the consolidated entity;
(b) the terms and conditions of the proposed merger or consolidation, including the manner and basis of converting the shares or membership interests of each constituent entity into shares, bonds, membership interests or other securities of the surviving or consolidated entity, or the cash or other consideration to be paid or delivered in exchange for shares or membership interests of each constituent entity, or a combination thereof;
(c) in case of merger, a statement of any amendment to the formation instrument of the surviving entity to be effected by such merger;
(d) in case of consolidation, the documents to be filed for the formation of the consolidated entity; and
(e) such other provisions with respect to the merger or consolidation as deemed necessary or desirable.
(3) When such merger or consolidation has been effected:
(a) a surviving or consolidated entity shall thereafter, consistent with its formation instrument as altered or established by the plan of merger or consolidation, possess all the rights, privileges, immunities, powers, and purposes of each constituent entity;
(b) all the property, real and personal, including subscriptions to shares or membership interests, causes of action and every other asset of each constituent entity shall vest in such surviving or consolidated entity without further act or deed;
(c) the surviving or consolidated entity shall assume and be liable for all the liabilities, obligations, and penalties of each constituent entity;
(d) no liability or obligation due or to become due, claim or demand for any cause existing against any such constituent entity, nor any shareholder, member, officer, director, or manager thereof, shall be released or impaired by such merger or consolidation;
(e) no legal action then pending by or against any such constituent entity, or any shareholder, member, officer, director, or manager thereof, shall be abated nor be discontinued by such merger or consolidation, but may be enforced, prosecuted, settled, or compromised as if such merger or consolidation had not occurred, or such surviving or consolidated entity may be substituted in place of any constituent entity;
(f) in the case of a merger, the formation instrument of the surviving entity shall be automatically amended to the extent, if any, that changes are set forth in the plan of merger;
(g) in the case of a consolidation, the statements set forth in the Certificate of Consolidation and which are required or permitted to be set forth in the formation instrument of an Incorporated Entity formed under this Act, shall be its formation instrument; and
(h) unless otherwise provided in the Certificate of Merger or Consolidation, a constituent entity which is not the surviving entity or the consolidated entity ceases to exist and is dissolved.
(4) A Certificate of Merger or Consolidation shall be filed in the Company Docket of each constituent entity to effect such merger or consolidation.
(5) The Certificate of Merger or Consolidation shall come into effect upon signature of the DOC Secretary or their delegate upon successful verification that the Certificate is lawful.
10 - Dissolution and winding up
(1) Unless otherwise defined by law or by the formation instrument:
(a) The dissolution process shall be started by the adoption of a resolution advising dissolution by the directors.
(b) Such resolution shall be posted in the company docket.
(c) In order to approve the dissolution, shareholders or members must vote with at least a simple majority in approval.
(d) Following a shareholder vote in approval of a dissolution resolution, the Incorporated Entity shall wind down its affairs and post a Certificate of Dissolution in its company docket.
(2) Dissolution must be approved by shareholder or members resolution
(3) The approval of a dissolution resolution must be posted on the company docket.
(4) A dissolution resolution may contain and set out the process of winding up; this shall be binding.
(5) The dissolution resolution shall not override the formation instrument or the bylaws.
(6) The winding up of an Incorporated Entity shall be publicly announced by the DOC in #government-announcements (or any successor channel) and shall request any contractual parties, shareholders, members, creditors, and other persons with an interest to contact the wound-up company. This announcement must contain the names of the directors.
(a) All persons that do not contact the Incorporated Entity, its directors, or the DOC within 30 days following such announcement shall be regarded as giving up any claim voluntarily and permanently. The Incorporated Entity shall give direct notice of the winding up to every creditor known to it.
(7) winding up shall consist of:
(a) ending all contracts;
(b) paying off all creditors and debts;
(c) finishing all lawsuits;
(d) liquidating all assets or distributing all assets according to the dissolution resolution and the formation instrument, by default:
(i) in the case of a corporation, equally among the shareholders in proportion to their shares; or
(ii) in the case of an LLC, equally among the members in proportion to their membership interests as defined in the formation instrument, or if not defined, equally among all members.
(8) A fully wound-up company shall file a Certificate of Dissolution in the Company Docket
(a) The Secretary of the DOC or their delegate shall sign this Certificate of Dissolution after verifying the company has been fully wound up.
(b) The Incorporated Entity shall end its existence upon the signature of the Certificate of Dissolution posted in the Company Docket.
(9) The Department of Commerce, or a creditor owed a debt that is due and unpaid, may apply to the Federal Court to wind up and dissolve an Incorporated Entity that is insolvent or has abandoned its business, and the Court may appoint a receiver to conduct the winding up.
(10) Any transfer, distribution, or payment made by an Incorporated Entity to a shareholder, member, director, officer, or related party while insolvent, or that leaves the entity unable to pay its debts, may be set aside by the Federal Court and recovered for the benefit of creditors.
11 - Liability
(1) An Incorporated Entity shall be solely liable for its own debts, obligations and liabilities.
(2) Notwithstanding any other law, unless liability for an Incorporated Entity’s debts, obligations or liabilities has been assumed by the person against whom liability is asserted, no shareholders, members, or agents of an Incorporated Entity, or other person, shall be liable for the Incorporated Entity’s debts, obligations or liabilities, whether arising in contract, tort or otherwise,:
(a) solely by reason of being a shareholder, member, or agent of the Incorporated Entity; or
(b) by the acts or omissions of any other shareholder, member, or agent of the Incorporated Entity.
(3) The failure of an Incorporated Entity to observe the usual formalities or requirements relating to the exercise of its powers or management of its business is not a ground for imposing personal liability on the shareholders, members, and agents for liabilities of the Incorporated Entity.
(4) Any person may voluntarily assume liability for any or all debts and obligations of the Incorporated Entity.
(5) Acts, omissions, decisions, or resolutions of shareholders acting in their capacity as such shall be attributable exclusively to the Corporation and shall not be attributed, individually nor collectively, to any shareholder.
(6) In discharging their duties, a shareholder, member, or agent shall be fully protected in relying in good faith upon the records of the Incorporated Entity and upon such information, opinions, reports, or statements presented to the Incorporated Entity by any of the Incorporated Entity’s directors, officers, managers, employees, or by any other person as to matters the person reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Incorporated Entity.
(7) Notwithstanding subsections (1) to (3), a court may impose personal liability for the debts, obligations, or liabilities of an Incorporated Entity on a shareholder, member, or agent who used the Incorporated Entity to commit fraud, to evade the law or an existing obligation, or as a mere instrument or alter ego with which their own affairs were commingled. The Department of Commerce may bring such a claim.
PART IV: CORPORATION
1 - Certificate of Incorporation
(1) The Certificate of Incorporation shall be regarded as the formation instrument of the corporation.
(2) The Certificate of Incorporation shall set forth all of the following:
(a) the name of the corporation;
(b) the name of the company in the business plugin;
(c) the name of the incorporators;
(d) the nature of the business to be conducted or promoted;
(i) It shall be sufficient to state, either alone or with other businesses or purposes, that the purpose of the Corporation is to engage in any lawful act or activity for which Corporations may be organized under the Laws of Redmont, and by such statement all lawful acts and activities shall be within the purposes of the Corporation, except for express limitations, if any.
(e) per share class:
(i) the name of the share class if more than one class;
(ii) the amount of shares authorised to be issued;
(iii) the par value per share
(3) The Certificate of Incorporation may set forth:
(a) Any provision for the management of the business and for the conduct of the affairs of the Corporation;
(b) Any provision creating, defining, limiting and regulating the powers of the Corporation, the directors, the officers, the third parties, and the shareholders, or any class of the shareholders
(c) Provisions requiring the vote of a larger portion of the shares or of any class thereof, or of any other securities having voting power, or a larger number of the directors, than is required by this Act;
(d) A provision limiting the Corporation’s existence otherwise the Corporation shall have perpetual existence;
(e) A provision imposing personal liability for the Corporation on its shareholders to a specified extent and upon specified conditions;
(f) A provision setting the conditions for forfeit of the shares by shareholders or by the corporation from the shareholders;
(g) A provision setting the characteristics of the share classes, and agents; and/or
(h) A provision setting the first directors.
2 - Amendment of the Certificate of Incorporation
(1) An amendment shall not affect any existing cause of action in favor of or against the corporation, nor any pending legal action to which it is a party.
(2) In the event that the corporation’s name has been changed, then no legal action which is brought by or against the corporation under its former name shall be abated for that reason.
(3) Any amendment to the Certificate of Incorporation increasing personal liability for the Corporation on its shareholders shall need notice to be posted in the Company Docket and notice to be given to the affected shareholders. Each shareholder must explicitly accept the personal liability increase, otherwise it is suspended for those who did not accept.
(4) The holders of the outstanding shares of a class shall be entitled to vote as a class upon a proposed amendment needing at least a majority in each class, whether or not entitled to vote thereon by the Certificate of Incorporation where the amendment seeks to:
(a) increase or decrease the aggregate number of authorised shares of such class;
(i) This shall not apply if otherwise defined by the Certificate of Incorporation prior to the issuance of any shares of that class.
(b) increase or decrease the par value of the shares of such class; or
(c) alter or change the powers, preferences, or special rights of the shares of such class so as to affect them adversely.
(5) Unless otherwise provided by the Certificate of Incorporation, amendments to the Certificate of Incorporation may be adopted by a shareholder resolution.
3 - Officers
(1) This section shall apply unless otherwise provided by the Certificate of Incorporation.
(2) The corporation shall have such officers as the Board of Directors requires.
(3) Officers shall be appointed and removed at the pleasure of the Board of Directors.
(4) All officers as between themselves and the corporation shall have such authority and perform such duties with respect to the management of the corporation as may be provided by the Board of Directors.
4 - Shares
(1) A Corporation shall have one or more shares of one or more classes outstanding which, single or combined, shall have full voting powers. Any action violating this provision shall be null and void.
(2) There shall not be fractional shares.
(3) Shares with different share class characteristics shall be considered different share classes.
(4) Shares authorized but not outstanding shall be considered in the ownership of the company.
(5) The shareholder shall be liable for the part of the par value of the share that has not been paid up yet.
(6) Shares of a Corporation’s stock shall neither be entitled to vote nor be counted for quorum purposes if such shares belong to:
(a) The Corporation;
(b) Another Incorporated Entity controlled directly or indirectly by the Corporation
5 - Share Certificates
(1) A corporation may issue share certificates to its shareholders, unless otherwise provided in the Certificate of Incorporation.
(2) A share certificate must:
(a) be issued as an in-game written book;
(b) have the registered name of the corporation, or an abbreviation where too long, as the title;
(c) this book itself be signed by any director at the time of its issue; and
(d) the book must at least have as content:
(i) the full name of the corporation;
(ii) the unique serial number of the certificate;
(iii) the class of the shares; and
(iv) the name of the shareholder.
(3) Where shares are issued under a share certificate, the unique serial number of the certificate, amount of shares and share class shall be recorded in the share register
(4) This section shall not apply to purely decorative and non-binding share certificates
(5) The creation and destruction of share certificates and subsequent amendments in the share register must be filed in the Company Docket without undue delay by the corporation, and must mention:
(a) the class name of the shares (if more than 1 class)
(b) the amount of shares
(c) the unique serial number of the certificate
(6) Shares may not be issued or held to bearer. Every share must be registered to a named holder in the share register, and any bearer instrument purporting to represent shares is void.
6 - Directors
(1) The business and affairs of every Corporation shall be managed by or under the direction of a board of directors, except as may be otherwise provided in this Act or in its Certificate of Incorporation. If any such provision is made in the Certificate of Incorporation, the powers and duties conferred or imposed upon the board of directors shall be exercised or performed to such extent and by such persons or bodies as shall be provided in the Certificate of Incorporation.
(2) Unless otherwise restricted by the Certificate of Incorporation or Bylaws, the board of directors shall have the authority to set the compensation of directors.
(3) The incorporators shall be the first directors until directors are appointed if there are no first directors set in the Certificate of Incorporation
7 - Election of Directors
(1) This section shall apply unless otherwise defined by law or by the Certificate of Incorporation.
(2) Directors shall be elected and removed by shareholder resolution.
(3) There shall be no limit of board of director seats.
8 - Share Register
(1) All corporations shall have a share register.
(2) The share register shall be in the incorporated Entity Summary and shall keep a record of all shares.
(a) Where shares are owned through an exchange, then the exchange shall be listed as custodian in the share register, and the share register may be considered incorporated by reference.
(b) The share register shall have a rebuttable presumption of containing actual share ownership.
(c) All share transfers of registered shares, except where the shares stay in the custodianship of an Exchange, must be filed in the Company Docket and state:
(i) share class;
(ii) share amount;
(iii) transferor; and,
(iv) transferee.
(3) Contents:
(a) an entry of registered shares must contain:
(i) the class name of the shares (if more than 1 class)
(ii) the amount of shares
(iii) the name of the shares
(b) an entry of shares by certificate must contain
(i) the class name of the shares (if more than 1 class)
(ii) the amount of shares
(iii) the unique serial number of the certificate
(4) An Incorporated Entity shall, on the request of the Department of Commerce, disclose the beneficial owners of its shares, being the natural persons who ultimately own or control them, including where the shares are held through a nominee, custodian, or exchange.
PART V: LIMITED LIABILITY COMPANY
1 - Certificate of Formation
(1) The Certificate of Formation shall be regarded as the formation instrument of the Limited Liability Company.
(2) The Certificate of Formation shall set forth:
(a) the name of the Limited Liability Company;
(b) the name of the company in the business plugin, if applicable;
(c) the name of the incorporators;
(d) the nature of the business to be conducted or promoted;
(i) It shall be sufficient to state, either alone or with other businesses or purposes, that the purpose of the Limited Liability Company is to engage in any lawful act or activity for which Limited Liability Company may be organized under the Laws of Redmont, and by such statement all lawful acts and activities shall be within the purposes of the Limited Liability Company, except for express limitations, if any.
(3) The Certificate of Formation may set forth:
(a) Any provision for the management of the business and for the conduct of the affairs of the LLC;
(b) Any provision creating, defining, limiting and regulating the powers of the LLC, the managers, the third parties, and the members, or any class of the managers or members
(c) Provisions requiring the vote of a larger portion of the members or of any class thereof, or a larger number of the managers or of any class thereof, than is required by this Act;
(d) A provision limiting the LLC's existence otherwise the LLC shall have perpetual existence;
(e) A provision imposing personal liability for the LLC on its members to a specified extent and upon specified conditions;
(f) A provision setting the conditions for admission and removal of members, managers or any class thereof;
(g) A provision setting the member class or agent characteristics; and
(h) A provision setting the first members or managers.
2 - Amendments to the Certificate of Formation
(1) An amendment shall not affect any existing cause of action in favor of or against the LLC, nor any pending legal action to which it is a party.
(2) In the event that the LLC’s name has been changed, then no legal action which is brought by or against the LLC under its former name shall be abated for that reason.
(3) Any amendment to the Certificate of Formation increasing personal liability for the LLC on its members shall need notice to be posted in the Company Docket and notice to be given to the affected members. Each member must explicitly accept the personal liability increase, otherwise it is suspended for those who did not accept.
(4) Unless otherwise provided by the Certificate of Formation, amendments to the Certificate of Formation may be adopted by a member resolution
3 - Membership
(1) Unless otherwise provided in the Certificate of Formation, members shall be admitted by unanimous vote.
(2) Members with different characteristics shall be different member classes.
4 - Member register
(1) All LLCs shall have a member register.
(2) The membership shall not go into effect until the member register is updated.
(3) The member register shall be put into the Incorporated Entity Summary and shall keep a record of all members.
(a) The member register shall have the rebuttable presumption of membership.
(b) All membership admittance, resignation or removal must be filed in the Company Docket and state:
(i) The action;
(ii) the name of the member; and,
(iii) member class.
5 - Managers
(1) Unless otherwise provided in the Certificate of Formation, a person may be designated manager by resolution of members.
(2) Managers shall be regarded as directors.
(3) Managers with different characteristics shall be different manager classes.
PART VI: MISCELLANEOUS ENTITIES
1 - Sole Proprietorship
(1) Sole proprietorships shall be the in-game companies without an associated Incorporated Entity.
(2) Sole proprietorships shall still be regarded as a legal entity.
(3) All assets and liabilities of the sole proprietorship shall be regarded as assets and liabilities of the owner of the sole proprietorship.
(4) Sole proprietorships shall not have any liability or bankruptcy protection independent of that of their director.
(5) The director of a sole proprietorship shall always be the owner of the in-game company.
(6) DOC shall effect the disbandment of a sole proprietorship within reasonable time if requested by the owner
2 - Non-profit
(1) The non-profit must be a member-based LLC and will inherit provisions as such.
(2) It must have a clear goal in the Certificate of Formation.
(3) It must keep its non-profit character at all times. This shall include but not limited to:
(a) Revenue may not be distributed to its members.
(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 tax-exempt non-profits 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 the DOC.
(c) The DOC may take this exemption away in case of misconduct or non-compliance.
(5) Upon voluntary windup and dissolution, any net leftovers shall be (i) transferred to the government, (ii) transferred to another registered non-profit, or (iii) given back equally to the non-profit’s donors up to their total donated amount.
PART VII: REGULATION AND ENFORCEMENT
1 - Administrative Sanctions
(1) Administrative sanction must be coercive and strictly not punitive.
(2) To compel compliance with this Act, DOC may:
(a) issue public warnings, censures and reprimands; or
(b) pursue civil administrative enforcement against individuals and legal entities.
(3) A warning shall be given at least 24 hours before any administrative sanction is assessed, unless for a clear and justified reason.
(a) The warning does not have to contain the administrative sanction that might or will be assessed, but must cite this section.
(b) A warning must only be given per matter and not per offence or administrative sanction to be applied.
(c) Such warnings shall contain the matter about which an administrative sanction shall be assessed, including steps to remedy the issue.
(4) Nothing in this section shall be construed to prevent transparent communication to the public.
(5) The Department’s administrative sanction powers under this section extend to the enforcement of the Financial Institutions Enforcement Act.
2 - Removal of Inactive Entities
(1) The DOC may disband sole proprietorships if they are inactive.
(a) There must be 5 days notice given to the owner through in-game mail prior to disbanding
(b) Specific inactivity requirements may be set by the DOC. Any implementation of such requirements must serve a compelling governmental purpose and be reasonably tailored towards achieving that purpose.
(c) The sole proprietorship shall be liquidated and the net leftovers transferred to the owner
(2) The DOC may put a company in receivership, wind it up and dissolve it if it is persistently inactive.
(a) Specific inactivity requirements may be set by DOC but shall not include playtime and must be clear and objective.
(b) There must be 5 days notice given to the shareholders or members through at any of the following if applicable:
(i) discord if applicable;
(ii) in-game mail; or,
(iii) messages in the forums.
3 - Rulemaking by the DOC
(1) The DOC shall have rulemaking power to regulate:
(a) procedures and filings in the company docket;
(b) The naming of companies;
(c) the format of filings; and
(d) financial reports of non-profits.
(2) All rules must suit a legitimate government purpose and be reasonably tailored to achieve such a purpose.
4 - Disqualification of Persons
(1) The Department of Commerce may apply to the Federal Court to disqualify a person from acting as, or forming, a director, manager, or officer of any legal entity for a specified period, where the person has committed fraud, persistently breached this Act, or was an agent of an entity wound up for misconduct or insolvency.
(2) A disqualified person who acts in a prohibited capacity contravenes this Act.
5 - Investigation and Records
(1) The Department of Commerce may, for the purpose of investigating compliance with this Act, require a legal entity or its agents to produce books, records, filings, and information relevant to the investigation.
(2) Failure to comply permits the Department to draw adverse inferences and to pursue administrative sanctions.
PART VIII: TRANSITION
1 - General
(1) Interest-based LLCs must be converted to corporations within 30 days of the enactment of this Act
(a) Before conversion, these entities shall still exist as legal entities, regulated by the text of the repealed Legal Entity Act.
(b) Where not converted within this deadline, these entities shall be placed under receivership by the DOC with the DOC as receiver, and either be converted or dissolved.
(2) All entities existing under the repealed Act shall be regarded as continuing to exist under this Act.
(3) Nothing in this bill shall be construed as affecting any existing legal action
(4) Operating agreements existing under the repealed Legal Entity Act shall automatically become part of the Certificate of Formation
2 - Replacement
(1) The Legal Entity Act will be repealed and replaced with this Act.
(2) This Act shall be merged with the Legal Entity Act on the forums
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