SPI and the case of dissolution

[Mark R Dobyns Jones]

I also meant to send this to the list, Thursday morning. MJ

---------- Forwarded message ----------
From: Mark R Dobyns Jones <markrdjones at gmail.com>
Date: Oct 25, 2006 11:58 AM
Subject: Re: SPI and the case of dissolution
To: martin f krafft <madduck at debian.org>


On 10/25/06, martin f krafft <madduck at debian.org> wrote:
> Hi,
>
> I wonder how SPI handles the case of dissolution; if the entire
> organisation became incapacitated, what happens to the trademarks?
> Or how do you guard against the dissolution?
>
> I am sorry if this is blunt, but I could not figure it out from the
> bylaws and I am new in this area and trying to make sure I don't
> screw the founding of Debian Switzerland up.
>
> If Debian Switzerland dissolved, everything we hold would be
> transferred to SPI.
>
> --
>  .''`.   martin f. krafft <madduck at debian.org>


I'll try for a very brief and not entirely accurate introduction to
this huge topic.

The short answer is corporate life has its risks.

Note that dissolution refers to the a very narrow moment: the instant
and process a corporate body goes out of existence, and a great deal
happens before then for nearly any corporate body.

There is guidance on the SPI "corporate charter" or "articles of
organization"; SPI's charter calls itself "certificate of
incorporation." The corporation is a New York State (U.S.A.) corporate
body, so dissolution process would involve New York State laws and
processes.
See: http://www.spi-inc.org/corporate/certificate-of-incorporation

Since SOFTWARE IN THE PUBLIC INTEREST, INC. elected to obtain tax
exempt status via U.S. federal laws, it was required to specify in its
charter, that in the case of  dissolutions, its remaining assets go to
similar tax exempt organizations, termed 501(c)(3) organizations after
the U.S. Federal tax law that specifies a particular kind of tax
exempt organization.

Here's the charter's reference to dissolution procedures:

NINTH: In the event of dissolution, all of the remaining assets and
property of the organization shall, after payment of all necessary
expenses thereof, be distributed to organizations that qualify under
Section 501 (c) (3) of the Internal Revenue Code of 1986, or
corresponding provisions of any subsequent Federal tax laws, or to the
Federal government, or State or local governments for a public
purpose, subject to the approval of a Justice of the Supreme Court of
the State of New York.

For a voluntary winding up of the affairs of an organization (a term
conceivably referring to five-  to twenty-year process), which occur
in planned way, various appropriate and intentional business-like
actions can be taken to set up projects, assets and so forth into new
corporate bodies appropriate to the mission of those projects, and the
mission of the original corporation. Long long before dissolution is
approached.

(If SPI were subject to an involuntary process that led tor
dissolution, speculatively, via a  bankruptcy proceeding or successful
suit in which all of the assets were turned over to some other entity,
those processes would occur before the dissolution of the corporation
as a category of "necessary expenses" noted in section NINE in the
charter.)

In the corporate world, nothing is forever, and for that matter, no
sovereign nation is forever.

One guards against dissolution by having good corporate practices,
staying solvent, having clear decision making processes, preventing
intractable or unresponsive individuals from becoming members the
board, and staying out of trouble generally, keeping required filings
and reports to sovereign authorities up to date, and having an
activity and mission that is self sustaining.

On the question of trademarks, and other assets, there are a variety
of means to hold them outside the reach of typical kinds of corporate
disaster, but this makes for a more complicated permission to use or
license those assets.

~Mark Jones