[Osmf-talk] Possible AoA Amendment #2: Your boss can't force you to vote a certain way

Edward Bainton bainton.ete at gmail.com
Fri Nov 6 22:51:03 UTC 2020

I’m new as an OSMF member and have no opinion on whether there is a problem
here to be solved. But as a charity trustee I have some knowledge in the
UK’s Companies Act, and on that basis I would not support the motion as
it’s worded. I agree a full legal review is needed – and I would extend
that to the existing AoA as well.

The chief problem I see is that the proposed text (a) appears to run
counter to the Companies Act, and in any case (b) is not legally certain.

(a) In law, the members of a company are, *ipso facto*, those whose names
appear in the register of members kept by the company (s. 112 Companies Act
2006 <https://www.legislation.gov.uk/ukpga/2006/46/part/8>). But 17(5)
would have a person’s membership end *latae sententiae
<https://en.wikipedia.org/wiki/Latae_sententiae>*. The Foundation (board or
members) would not know of the fact – indeed, it may even be that the
member herself is unaware, if she signs an employment contract without
noticing a clause that restricts her extracurricular activities.

(b) The new clauses turn on matters of fact. As a minimum, they should make
clear exactly who is to determine those facts and how, and that the company
must remove the person’s name from the register if the relevant person
comes to the relevant conclusion. If this is not made clear, it will be a
question that has to be settled by an English court: this would be
fabulously expensive, so the elephants would have the advantage.

I think in any case the facts that would determine 12(6) and 17(5) are so
hard to discover that this is the wrong approach. An ex-navy officer
providing security for cargo ships was asked how he would deal with a ship
boarded by pirates. He said he would give the ship up. Horrified, his
interviewers asked why. He said the ship was lost by then – what they
should have asked is how he would prevent them getting onto the ship in the
first place. This is a similar situation: a sockpuppet member will simply
say the right things to get their membership, and once they have it, they
have their vote.

Once ‘takeover’ members have reached sufficient numbers, their power is
total. Under the current articles the board can expel a member if they have
a ‘reasonable opinion’ that the member’s conduct is likely to be harmful –
say, if they are mounting a takeover. But this decision can be appealed to
a member’s meeting whose decision is final, and those members are not
required in the articles to act reasonably. The section of the AoA on
expulsions and appeals appears loosely worded, but it seems at least a
possible reading that the person would remain a member to vote in favour of
their own appeal – so even if the whole takeover bloc were expelled, they
could simply vote themselves back in. (My own view is that the whole AoA
should be reworked for legal clarity.)

I would tentatively suggest a better approach may be to require ID and a
declaration of interests by prospective members, with a significant
personal financial penalty (recoverable at law) if they are found (by a
defined process) to have made a false declaration. Existing members should
have to renew that declaration every year. The register should be
constantly visible to all members, together with habitual IP addresses of
members and whatever other forensic information might help suspicious
patterns in membership to be noticed early. There should be provision for
the board (or perhaps a minority of members) to suspend meetings and voting
while a full investigation can be conducted. I also wonder if a federal or
partly federal structure (of local-chapter members) would help – probably
this has been discussed before?

In any case, happy to help as a "knowledgeable amateur" on companies law if
I can be useful.

Edward / eteb3
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