Re: PROPOSAL UPDATED: Incorporate the Veres One Non-Profit Foundation

Hello Veres One Community Group,

It's been almost a week since I sent the updated proposal to incorporate 
the Veres One Foundation in Canada. Please reply with +1, -1, or 0, with 
an explanation if you choose to include one, before the end of the day 
if you have an opinion on the proposal.

So far we have:

Six -- +1's
Two -- 0's
Zero -- 1's

More specifically:

*Kilnam Chon*: "Canada sounds better than others"

*Kaliya Young*: “Canada seems like the best option. They (the Canadians) 
are doing really good identity work too.”

*Joe Andrieu*: +1, “Canada is alright”

*Manu Sporny*: +1, agreed. The country has a fairly excellent track 
record wrt.
identity work, the government is progressive wrt. privacy…

*Dave Longley*: +1

*Adam Lake*: +1

*Christopher Allen*: 0, Abstain

*Melvin*: “Not a stake holder in this, but Estonia sounds like an 
exciting option”

I am interpreting Melvin as a Zero--Melvin, please correct me if this is 
wrong. I believe you are a stakeholder since you are part of the CG and 
have interest in the work. You are a stakeholder if you want to be.

Kind Regards,

Adam


On 8/10/2018 12:04 AM, Adam Lake wrote:
>
> **
>
> *Hello Veres One Community,*
>
> *
>
> It sounds like we may have consensus around the proposal to 
> incorporate the Veres One Foundation in Canada.
>
>
> The proposal is more specifically:
>
>
> “UPDATED PROPOSAL: After doing more research into the various country 
> options for incorporation my proposal has changed somewhat. I propose 
> that we incorporate in Canada to start with and leave the next country 
> of incorporation more open ended. Canada may end up being a good long 
> term home for the Veres One Foundation. The CG and the Board can 
> decide where, when, and if the Veres One Foundation should migrate to 
> another jurisdiction at a later date.”
>
>
> Since this is the first proposal and decision we are making together 
> as a community it might be good to review the decision making process 
> <https://veres.one/network/governance/>.
>
>
> We are in the second stage of the decision making process, 
> “consideration”. I would like to request that in order to determine if 
> we do in fact have consensus that members reply with +1 to show 
> support for the proposal or -1 to express opposition to sending the 
> proposal to the Board for ratification.
>
>
> Anyone with remaining objections or concerns please raise them in the 
> next week, by the end of business Thursday the 16th.
>
>
> If there are not any objections we can send the proposal to the Board 
> of Governors for ratification late next week.
>
>
>
> Kind Regards,
>
>
> Adam
>
> *
>
> On 8/6/2018 3:12 PM, Adam Lake wrote:
>>
>> Dorothy,
>>
>> I will do my best to fulfill your request. Not being a international 
>> nonproft lawyer and the differing definitions and regulations in each 
>> jurisdiction make the analysis difficult. My focus has not been on 
>> the specific term used for the designation, nonprofit, foundation, 
>> society, ect... but the other considerations of startup and operating 
>> costs, whether we'll qualify for tax exemption, if the country is 
>> stable and viewed as a neutral arbiter, and whether said designation 
>> will require that Veres One continue to operate based on it's 
>> nonprofit mission.
>>
>> Generally speaking, as I understand it, nonprofit is a broad term 
>> that encompasses the term and designation of "Foundation". The 
>> definition of a Foundation differs from country to country.
>>
>> *Canada*
>>
>> Unlike the US and Switzerland Canada has a more specific definition 
>> for "Foundation"; it is limited to "Charities".  If we choose to 
>> incorporate Veres One in Canada it will still have the option of 
>> identifying itself as a Foundation (since that is the term most 
>> familiar to our prospective Global user base) but Veres One would 
>> technically be designated as a Nonprofit "Society" for legal purposes.
>>
>> Here is a good resource 
>> <https://www.canada.ca/en/revenue-agency/services/charities-giving/giving-charity-information-donors/about-registered-charities/what-difference-between-a-registered-charity-a-non-profit-organization.html> 
>> that defines Charities and Nonprofits in Canada and following is the 
>> essential text from this source:
>>
>> Registered charities and non-profit organizations (NPOs) both operate 
>> on a non-profit basis, however they are not the same.
>>
>> _Registered charities_ are charitable organizations, public 
>> foundations, or private foundations that are created and resident in 
>> Canada. They must use their resources for charitable activities and 
>> have charitable purposes...
>>
>> _Non-profit organizations_ are associations, clubs, or societies that 
>> are not charities and are organized and operated exclusively for 
>> social welfare, civic improvement, pleasure, recreation, or any other 
>> purpose except profit.
>>
>> *Estonia *
>>
>> Under Estonia law, depending on their purpose, nonprofits can be 
>> designated as charities, community associations, charitable projects, 
>> civil society organizations, or foundations. I am not finding 
>> definitions of these designations but my understanding based on 
>> feedback from a contact in Estonia is that the Veres One nonprofit 
>> model would be designated as a Nonprofit Foundation in Estonia.
>>
>> I can further search for definitions for the various nonprofit 
>> designations in Estonia if it seems necessary to our analysis and 
>> incorporation discussion.
>>
>> Please let me know if you require additional information and I will 
>> expand my research.
>>
>>
>> Kind Regards
>>
>> Adam
>>
>>
>>
>> On 8/6/2018 1:16 PM, dorothyg wrote:
>>> Kindly explain the difference between Foundations and 
>>> Not-for-profits under both Estonian and Canadian law. Thanks in 
>>> advance.  A quick table listing features is enough.
>>> best
>>>
>>> On Monday, 6 August 2018, 14:11:31 GMT, Adam Lake 
>>> <alake@digitalbazaar.com> wrote:
>>>
>>>
>>> Dorothy,
>>>
>>> Yes, we can incorporate in Canada even though none of the Board 
>>> resides there. It just requires domiciliary services, an address 
>>> where papers can be served if for whatever reason we ever get sued. 
>>> This is the case for Switzerland and Estonia as well.
>>>
>>> I was hoping that Estonia would be a more straight forward and 
>>> affordable option as well and that we could perform all required 
>>> tasks through their online eGoverment services. It turns out that 
>>> eGov services are not comprehensive for Foundations like they are 
>>> for for-profit entities. That being said, Estonia is my 2nd or 3rd 
>>> choice too.
>>>
>>> I hope we can make a decisions soon as well!
>>>
>>> Adam
>>>
>>> On 8/5/2018 3:32 PM, dorothyg wrote:
>>> On the basis of the facts you present Canada does make the most 
>>> sense. Can you clarify if they are ok with Boards that do not have 
>>> Canadians? I was surprised the operating costs were so high for 
>>> Estonia. I was leaning that way until your mail.
>>>
>>> I hope we can come to a decision soon. I go with Canada now, Estonia 
>>> would be my second choice.
>>>
>>> best regards
>>> Dorothy
>>>
>>>
>>> On Sunday, 5 August 2018, 15:43:51 GMT, Adam Lake 
>>> <alake@digitalbazaar.com> <mailto:alake@digitalbazaar.com> wrote:
>>>
>>>
>>> **
>>>
>>> *The Veres One Community Group is currently discussing the topic of 
>>> where to incorporate the Veres One Foundation. We would like to make 
>>> this decision before we go into production. The original proposal 
>>> was to incorporate in the US because it is the most cost effective 
>>> and presents the least unknowns for those overseeing the 
>>> incorporation process. Once incorporated, we would then move the 
>>> Veres One Foundation operations to Switzerland once the Foundation’s 
>>> cash on hand hit a particular threshold. In response to this 
>>> proposal, several other countries were mentioned as candidates for 
>>> incorporation. The following details are my findings and analysis to 
>>> date. *
>>>
>>> *
>>> *
>>>
>>> UPDATED PROPOSAL: After doing more research into the various country 
>>> options for incorporation my proposal has changed somewhat. I 
>>> propose that we incorporate in Canada to start with and leave the 
>>> next country of incorporation more open ended. Canada may end up 
>>> being a good long term home for the Veres One Foundation. The CG and 
>>> the Board can decide where, when, and if the Veres One Foundation 
>>> should migrate to another jurisdiction at a later date.
>>>
>>>
>>> Overall, it was not particularly easy to discover the requirements 
>>> to incorporate as a Foundation in the various counties identified as 
>>> good candidates by the group. I have included data points that I was 
>>> able to acquire.
>>>
>>>
>>> I believe it is important to note that while Veres One is a 
>>> nonprofit that it is also a lean startup. Cost effectiveness and 
>>> simplicity are critical in the early stages. Achieving traction and 
>>> sufficient revenue to grow is the first phase. Once Veres One 
>>> achieves traction and a stable base of revenue, the community and 
>>> the Board can always decide to migrate operations and incorporate in 
>>> a more preferable jurisdiction.
>>>
>>>
>>> It would be ideal for Veres One to move forward with incorporation 
>>> as soon as possible as not to miss the target of going into 
>>> production by the end of Q3 2018. It is also imperative that Veres 
>>> One become an independent organization and that decision making 
>>> authority related to governance be separated from Digital Bazaar.
>>>
>>>
>>> The country of incorporation provides a legal framework for the 
>>> organization to operate but it does not have a lot of weight in 
>>> shaping the character of the organization. The Community, Advisors, 
>>> the Board, and the Foundation’s governing principles shape the 
>>> character of the organization. While the country of incorporation is 
>>> important it is not likely to determine the success of the project.
>>>
>>>
>>> Following are the notes on the costs and considerations for 
>>> incorporating in each country mentioned. Note, all cash values are 
>>> in USD.
>>>
>>>
>>>
>>> Canada
>>>
>>>
>>> Costs: Startup, $5K-10K, more likely closer to $5K, with assistance 
>>> from an Canadian law firm.
>>>
>>>
>>> Operating, $5.5 - $7.8K at most for first year, less after that 
>>> because we will better understand the compliance requirements and 
>>> won’t need as much legal advisement.
>>>
>>>
>>> Tax Rates: Tax Exempt, but we can’t issue tax receipts to 
>>> individuals. Organizations and foreign foundations can still donate 
>>> to the Veres One Foundation and write the donation off of their 
>>> taxable income.
>>>
>>>
>>> Familiarity: Familiar, we have a point of contact and an advising 
>>> law firm.
>>>
>>>
>>> Neutral: Yes
>>>
>>>
>>> Stability: Excellent
>>>
>>>
>>> Human Rights: Excellent
>>>
>>>
>>> Pros: One of the positives of starting in Canada vs the US is that 
>>> we may want to continue operations there, whereas if we incorporate 
>>> in the US we expect to later transfer operations from the US to 
>>> Switzerland or some other country.
>>>
>>>
>>> Cons: $2K-$7K more to incorporate and $4.5K - $6.8K more to operate 
>>> in first year than in the US.
>>>
>>>
>>> United States
>>>
>>>
>>> Costs: Startup $3K, Operating $1K/year
>>>
>>>
>>> Tax Rates: Tax Exempt
>>>
>>>
>>> Familiarity: Very Familiar, fewest unknowns
>>>
>>>
>>> Neutral: Somewhat
>>>
>>>
>>> Stability: High, but potentially litigious
>>>
>>>
>>> Human Rights: Good
>>>
>>>
>>> Pros: United States is an attractive option because it is familiar 
>>> to those that will be incorporating and administering the Veres One 
>>> Foundation and because the startup and operating costs are low.
>>>
>>>
>>> Tax exemption is easy to obtain, good for early donations if the 
>>> opportunity arises.
>>>
>>> Political concerns should not affect the Foundation.
>>>
>>>
>>> Incorporating in the US where startup costs are approximately $3K 
>>> and operating costs for low revenue foundations are less that $1K 
>>> per year.
>>>
>>>
>>> Cons: The United States is not generally viewed as a neutral 
>>> arbiter. There is historical baggage associated regarding governance 
>>> of technical infrastructure for the Internet (e.g. ICANN)..
>>>
>>>
>>>
>>> Estonia
>>>
>>>
>>> Costs: Startup, ~$1000, includes drawing up the articles of 
>>> association and other documentation as well as state fee, does not 
>>> include applicable translations. Operating Costs, $8.4K-$11.3K/year
>>>
>>>
>>> Tax Rates:20% VAT, would likely get tax exemption
>>>
>>>
>>> Familiarity:Somewhat familiar, some unknowns
>>>
>>>
>>> Neutral: Yes
>>>
>>>
>>> Stability: Good
>>>
>>>
>>> Human Rights:Good
>>>
>>>
>>> Estonia is not known for being a neutral country or for its civil 
>>> rights but there doesn’t seem to be any red flags or concerns in 
>>> these areas either.
>>>
>>>
>>> Pros:Estonia is increasingly known for its innovation in digital 
>>> services including it’s eGovernment  and eResidency programs. Veres 
>>> One being incorporated in Estonia could increase the chances that 
>>> the Estonian government would use Veres One identifiers but country 
>>> of incorporation is unlikely to be a significant factor in their 
>>> adoption.
>>>
>>>
>>> Incorporation can be settled in a matter of days once all the 
>>> paperwork is prepared.
>>>
>>>
>>> Cons: Tax exemption is likely but not guaranteed.
>>>
>>>
>>> Estonia has not automated, through their eGovernment services, all 
>>> aspects of starting and operating a nonprofit Foundation like they 
>>> have for for-profit entities. This means that some of the 
>>> administrative tasks such as filing certain documents and 
>>> bookkeeping would need to be done within Estonia. This results in 
>>> higher costs than what was previously estimated when we thought we 
>>> could start and operate the Foundation exclusively through their 
>>> eGovernment services.
>>>
>>>
>>> If all board members are foreigners, appointment of a contact person 
>>> in EE is required.
>>>
>>>
>>>
>>> Switzerland
>>>
>>>
>>> Costs: Startup, $65K Operations, $10K/year
>>>
>>>
>>> Tax Rates:Tax Exempt within 6 months
>>>
>>>
>>> Familiarity: Not particularly familiar but have done a lot of due 
>>> diligence and feel comfortable with incorporating here if we decide to
>>>
>>>
>>> Neutral:High
>>>
>>>
>>> Stable:Very
>>>
>>>
>>> Human Rights:High
>>>
>>>
>>> Pros: Switzerland is globally viewed as a neutral country and is 
>>> home to many international non-profits and UN agencies. Swiss 
>>> cultural support for civil society organizations is strong.
>>>
>>>
>>> They have been easy to work with and I feel comfortable executing on 
>>> incorporation in Switzerland if and when the Veres One Community 
>>> decides that it's the appropriate course of action.
>>>
>>>
>>> Cons: Swiss incorporation requires $65K USD in startup costs and up 
>>> to $10K USD per year in operating costs. This includes $50K for a 
>>> capital requirement that could be placed in a Swiss bank account and 
>>> used for operations.
>>>
>>>
>>> Swiss incorporation also presents additional regulatory risks since 
>>> the Maintainer/Founders (Digital Bazaar) are US-based and the 
>>> nonprofit Foundation would be Swiss-based. The risks are minimal and 
>>> the additional costs are not astronomical but it would be far more 
>>> lean and cost effective to incorporate in the US or Canada, or 
>>> Estonia to start with.
>>>
>>>
>>>
>>> Liechtenstein
>>>
>>>
>>> Costs: N/A
>>>
>>>
>>> Tax Rates: N/A
>>>
>>>
>>> Familiarity:Low
>>>
>>>
>>> Neutral: Good
>>>
>>>
>>> Stable:Very
>>>
>>>
>>> Human Rights: Good
>>>
>>>
>>> Pros:Liechtenstein has a favorable environment for blockchain and 
>>> cryptocurrencies.
>>>
>>>
>>> Cons: It is a monarchy which does not send the right message for a 
>>> multistakeholder global public utility.
>>>
>>>
>>>
>>> Iceland
>>>
>>>
>>> I had trouble getting information about Iceland. I could not find 
>>> basic details about starting a Foundation in Iceland. The attorneys 
>>> that I corresponded with were not willing to provide me with many 
>>> details without first giving them a retainer. It does sound like it 
>>> is possible to incorporate the Veres One Foundation there but it’s 
>>> unclear what value Iceland provides over other countries that would 
>>> be worth going through the extra trouble and costs of incorporating 
>>> there.
>>>
>>>
>>>
>>> Umbrella Org, Internet Governance Forum or Internet Society
>>>
>>>
>>> The idea of operating the Veres One Foundation under another 
>>> foundation, more specifically the Internet Governance Forum and the 
>>> Internet Society was mentioned. The advisement I received on this 
>>> option was “ whether the Veres One Foundation could be incorporated 
>>> under ISOC or the IGF: the answer to the latter is not, as legally 
>>> this would not be possible (the IGF has no separate legal entity - 
>>> it is a platform convened by the UN Secretary-General). ISOC could 
>>> be an option in theory, I suppose, but it would be too mind 
>>> bogglingly complex to consider.
>>>
>>>
>>> Multi-country
>>>
>>>
>>> It is an option to incorporate the Veres One Foundation in multiple 
>>> countries. This is more of a phase II option.
>>>
>>>
>>> -- 
>>> Adam Lake
>>> Director, Business Development
>>> Digital Bazaar
>>> Veres.io
>>> 540-285-0083
>>>
>>> -- 
>>> Adam Lake
>>> Director, Business Development
>>> Digital Bazaar
>>> Veres.io
>>> 540-285-0083
>>
>> -- 
>> Adam Lake
>> Director, Business Development
>> Digital Bazaar
>> Veres.io
>> 540-285-0083
>
> -- 
> Adam Lake
> Director, Business Development
> Digital Bazaar
> Veres.io
> 540-285-0083

-- 
Adam Lake
Director, Business Development
Digital Bazaar
Veres.io
540-285-0083