Vermont is now on the path to becoming "the Delaware of the Net." Professor David Johnson and a team of New York Law School students helped to draft the nation’s first legislation that will make it easier to form and operate companies online, creating new opportunities for distributed work and innovation via the Internet. The Governor of Vermont recently signed Digital Corporate Transactions H.0458 into law. Johnson’s work with the State of Vermont is part of a larger project to foster a new type of economic production by allowing flexible collaboration among self-selecting, transient online groups.
Imagine a group of people all
around the country who want to find a way to share their collective
expertise and start a consulting practice together without meeting face-to-face?
Imagine people from around a neighborhood who already know each other face-to-face and want to have a way to open a bank account without the expense and hassle of a full-blown corporation?
Imagine the team that seeks
the limited liability protections of the corporate form but wants to
contribute know-how not capital to form an entity?
Vermont may be the answer for these digital age entrepreneurs.
Alison Clarkson introduced the "Digital Corporate Transactions" (H.0458) into the Vermont house. It was subsequently integrated into "H.0888, Miscellaneous Tax Documents." Governor Jim Douglas signed the bill into law on June 6, 2008.
Professor Johnson and his team of students at New York Law School’s Institute for Information Law & Policy endeavor to foster a new type of economic production by allowing flexible collaboration among self-selecting, transient online groups.
They drafted legislative provisions and also analyzed the tax implications of the pending legislation. In addition, they have started to plan for future virtual companies by drafting model operating agreements, developing the business plan for a service organization to host and support virtual companies and brainstorming the graphical interfaces for a virtual company headquarters.
The key features of a virtual company are:
--Participants in virtual companies will pool their attention and effort, not capital
--Groups can come together online to create a legal entity that has the ability to own property (including the intellectual property they create together), open a bank account and contract with third parties
--Participants will govern their own affairs, rather than relying on a Board of Directors or Officers or other forms of top down management.
Metanomics article here.
Inc. Magazine article here.
James Au and New World Notes here.
A transcript of Professor Johnson's
testimony before the Vermont Legislature is available here.
A recent essay about the current status of the Virtual Companies project is available here.
Prof. Oliver Goodenough of Vermont Law School, the Berkman Center at Harvard Law School and the Vermont Bar Association provided substantial assistance. The Virtual Company project is part of a capstone class offered by the Institute for Information Law and Policy at NYLS. For more information visit the Do Tank.