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

On 16 August 2018 at 20:16, Adam Lake <alake@digitalbazaar.com> wrote:

> 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.
>

Ok thanks! :)  I'm happy to go with zero as I dont want to get in the way
of consensus :)


>
> 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> <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> <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
>
>