FYI.
Attached the legal feedback (in German). I'll try a quick and dirty translation as best I can. If things are too obfuscated as a result, let me know:
1. Certified Open Ltd already exists and the MoU should prepare the collaboration of OFE, FSFE and a third party inside Certified Open and document the planning. The precise structure is still open. On FSFE's side the activitly will be taxed as economic activity, and will be coordinated with FSFE's tax consultants.
2. In my opinion the MoU should be more clear on how to split the cost of the preparation phase. This in particular concerns
a) the general cost for lawyers/notary and register in relation to issues of association/organisation law, in particular if FSFE should become partner/member in the Certified Open Ltd;
b) the costs for the time invested by the partners and that should be reimbursed from income to the Ltd. For this it might be useful to be concrete in terms of daily/hourly rates, and possible a maximum amount for pre-invested time and travel expense. Additionally: What happens if this does not work and no sufficient income is generated.
3. The MoU creates the impression that more than one third party should be involved. If this only concerns a single third party, that should be clarified and the party should be named, if possible.
4. Legal consequences in case one partner leaves are still unclear. Why the "notice period" in a)? What should happen within the 6 months if one party starts to block things -- is this not more an obstacle than the partner leaving immediately? Who covers the cost to that were incurred until that point?
In b) the three months period makes no sense, imho. If a party leaves, there is no way the remaining parties could be stopped from continuing things in any way they please.
5. There should be some word on the applicable law and place of court if the MoU should be legally enforceable or if you want to document seriousness. If this is only as a "reminder" it is not necessary.
6. Maybe it would be beneficial to add a sentence that shaping of Certified Open will be done by a commonly agreed upon statute.
Since my German is non existent I've worked from your translation! Comments inserted below
- Certified Open Ltd already exists and the MoU should prepare the collaboration of OFE, FSFE and a third party inside Certified Open and document the planning. The precise structure is still open. On FSFE's side the activitly will be taxed as economic activity, and will be coordinated with FSFE's tax consultants.
Gt No comments.
In my opinion the MoU should be more clear on how to split the cost of the preparation phase. This in particular concerns
a) the general cost for lawyers/notary and register in relation to issues of association/organisation law, in particular if FSFE should become partner/member in the Certified Open Ltd;
Gt I think this is covered by the split of responsibilities? In that since it is already established as a ltd by guarantee company the only(??) need is to bring you in as Directors. There is no equity. But we probably do need to update MemArts and any statutes. Bob can you comment/advise?
b) the costs for the time invested by the partners and that should be reimbursed from income to the Ltd. For this it might be useful to be concrete in terms of daily/hourly rates, and possible a maximum amount for pre-invested time and travel expense. Additionally: What happens if this does not work and no sufficient income is generated.
Gt Probably correct in terms of defining rates at least. We had already recognised this by inserting the phrase on costs ( actual expenditure and hourly rates) being agreed by Board before committment).Maybe we need to define a six monthly budget to build this in?
- The MoU creates the impression that more than one third party should be involved. If this only concerns a single third party, that should be clarified and the party should be named, if possible.
Gt As an update on the TOFe project (the potential third party)we are now moving to a position of not having a formal new organisation representing the current partners, but using an updated position of the OFE partner relationship, whereby such partners would be expected to become a CO franchisee. It would still make sense to have one of them represented on the CO board but maybe as a non exec Director?
Legal consequences in case one partner leaves are still unclear. Why the "notice period" in a)? What should happen within the 6 months if one party starts to block things -- is this not more an obstacle than the partner leaving immediately? Who covers the cost to that were incurred until that point?
In b) the three months period makes no sense, imho. If a party leaves, there is no way the remaining parties could be stopped from continuing things in any way they please.
Gt valid points. I think we were trying to ensure that one party couldn't walk away from their responsibilities leaving the other unprotected. I'm struggling to remember the rationale for point b)?
- There should be some word on the applicable law and place of court if the MoU should be legally enforceable or if you want to document seriousness. If this is only as a "reminder" it is not necessary.
Gt Do we need this?
- Maybe it would be beneficial to add a sentence that shaping of Certified Open will be done by a commonly agreed upon statute.
Gt Probably correct, back to comment on point 2 above. again Bob your input?
Rgds G
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|| On Fri, 25 May 2007 09:36:10 +0100 || "Graham Taylor" graham@openforumeurope.org wrote:
- In my opinion the MoU should be more clear on how to split the
cost of the preparation phase. This in particular concerns
a) the general cost for lawyers/notary and register in relation to issues of association/organisation law, in particular if FSFE should become partner/member in the Certified Open Ltd;
gt> Gt I think this is covered by the split of responsibilities?
I would have thought so, too.
Apparently our lawyer would like a more explicit form. I am not sure I know how OFE is handling this internally, so I couldn't comment on that, but it seems our lawyer is essentially worried about potential financial liabilities arising from the startup of the CO Ltd in relation to legal fees or such.
I am not entirely sure how to handle this. Maybe it could be expressed by adding "including start-up investments for Ltd"?
Would that work? Graham? Bob? Do you have input?
b) the costs for the time invested by the partners and that should be reimbursed from income to the Ltd. For this it might be useful to be concrete in terms of daily/hourly rates, and possible a maximum amount for pre-invested time and travel expense. Additionally: What happens if this does not work and no sufficient income is generated.
gt> Gt Probably correct in terms of defining rates at least. We had gt> already recognised this by inserting the phrase on costs ( actual gt> expenditure and hourly rates) being agreed by Board before gt> committment).Maybe we need to define a six monthly budget to gt> build this in?
I'm not entirely sure. I guess our lawyer wanted us to define everything now, so all factors are known, but ultimately I am not sure this is entirely feasible.
The "has to be agreed upon by board" should provide some measure of security. Maybe we could add "market-proportional" to say that it should not be from outer space.
That would turn the sentence into
1.Costs will be claimed by Parties based on actual costs incurred (time+expenses), expenditure and rates should be market-proportional and are to be agreed by Board before commitment.
Not sure whether "market-proportional" makes sense in English.
- The MoU creates the impression that more than one third party
should be involved. If this only concerns a single third party, that should be clarified and the party should be named, if possible.
gt> Gt As an update on the TOFe project (the potential third party)we gt> are now moving to a position of not having a formal new gt> organisation representing the current partners, but using an gt> updated position of the OFE partner relationship, whereby such gt> partners would be expected to become a CO franchisee.
I see. Thanks for the update.
gt> It would still make sense to have one of them represented on the gt> CO board but maybe as a non exec Director?
Ok. Then we can rephrase that third party bit a bit then.
I took out TOFe entirely, and made this a general "third party" bit with a substantial majority (if there is less than that, it would seem any such decision/assignment would be disruptive).
- Legal consequences in case one partner leaves are still
unclear. Why the "notice period" in a)? What should happen within the 6 months if one party starts to block things -- is this not more an obstacle than the partner leaving immediately? Who covers the cost to that were incurred until that point?
In b) the three months period makes no sense, imho. If a party leaves, there is no way the remaining parties could be stopped from continuing things in any way they please.
gt> Gt valid points. I think we were trying to ensure that one party gt> couldn't walk away from their responsibilities leaving the other gt> unprotected.
True, I tried to make that clearer.
If it ever came to such a conflict, an amicable solution outside the MoU would probably be the best solution, though. So our lawyer is right on that one... but the idea here is probably to express an intention.
gt> I'm struggling to remember the rationale for point b)?
Expression of intention and common understanding, IIRC.
I struck out the three months and added the "common understanding" introduction. This should make it clearer. Otherwise it could go.
- There should be some word on the applicable law and place of
court if the MoU should be legally enforceable or if you want to document seriousness. If this is only as a "reminder" it is not necessary.
gt> Gt Do we need this?
I'm not sure and am willing to ignore this one as legal paranoia.
- Maybe it would be beneficial to add a sentence that shaping of
Certified Open will be done by a commonly agreed upon statute.
gt> Gt Probably correct, back to comment on point 2 above.
True. I would see this covered under
"5. Changes to Certified Open governance require agreement of all Parties."
as such statutes would seem a matter of governance to me.
Including all of the above, things now look as follows:
Maybe we can clear those last points next week? Then Graham and I may be able to sign on 18 June when we meet in Brussels.
Regards, Georg