Let’s co-create a legal structure to protect for-purpose companies
On October 3rd, 2017, Thomas Thomison was in Paris to present Encode, his new company. Tom was the co-founder of holacracy together with Brian Robertson. Now Tom focuses on elaborating a new legal structure (you know: Corporations, Limited Companies, Limited Liability Partnerships, Not-for-profit corporations…) dedicate specifically to organizations that operate under holacracy. Tom works with firms in the US, in the Netherlands, in Germany, in Austria. But no firm has shown interest in my country, France, so far.
After I met Tom, I wondered if it was necessary to create a new legal form of corporation to work together in a more democratic way, no matter if you prefer holacracy, teal organizations, self-organizations, etc. So I made some research on the French legal aspects of work.
Companies are made for shareholder value only
I realized that, from a legal perspective, a corporation is an association of investors who share their means to make money. The purpose of corporation is value creation only, not to follow an evolutionary purpose.
No hierarchy: no employment!
Still from a legal perspective, an employee is a person with a specific vendor contract with a corporation, that includes hierarchical constraints. In December2015 our highest legal jurisdiction, called Cour de Cassation, has decided that a project manager who had an employee contract and had been periodically paid for years by his employer was indeed not an employee because he couldn’t prove he ever received hierarchical instructions and he couldn’t prove he had ever been controlled. Wow! Is it in France only?
Could self-management be illegal?
As an employee, you should be told what to do, you should not take initiative, you should be controlled. I think it is the best way to encourage the replacement of people by automats, robots and Artificial intelligence. What do you think?
Then I thought of the consequences on all the teal initiatives that Frederic Laloux talks about and all the liberated initiatives that Isaac Getz talks about. They will all be terminated one day when a leading stakeholder (such as a shareholder or a CEO) will say: “From now, everyone does what I say”. It will be crazy from a motivational perspective, but it will be much more legal than self-management.
Therefore, I believe we need a new legal structure, not only to develop holacracy, but to protect any kind of democratic organizations of work. Let’s discuss it on Loomio. I put together my ideas of what a new legal form of corporation could look like. Here are my ideas to get started, but let’s move forward.
Requirements for a for-purpose company
The means and the goal
Partners create a company for a shared, peaceful purpose, which makes sense for them, which serves the dignity of women and men and the environment: it is the purpose. Partners decide together the purpose of the company. The purpose must be set by partners to launch the company. The purpose is evolutionary. Shareholder value cannot be the purpose per se. Shareholder value is not the goal but a means of ensuring that the company is able to pursue its purpose, i.e. to serve people in general.
Partners
Partners are exclusively people, who freely decide to help each other through the company because they share its purpose. Legal entities cannot count among the partners, since they are not free to make decisions. New partners are co-opted by the existing partners. A partner contract is written and signed by the parties. Partner are free to leave the organization. Partners may decide to terminate a partnership for a legitimate reason specified in the by-laws.
The support relationship
Relationship among partners is based on mutual support. Support consists of providing assistance, know-how, ideas, attitude, or any resources to partners and clients. Partners are free to decide who they serve. Partners are free to accept or refuse the support of another. Partners may cooperate to support or receive support. Support is assessed by the receiver. The support relationship, which characterizes this type of company, is opposed to hierarchical constraints which defines the wage-earning system. The company shall not have employees.
Compensation
Each partner is paid according to the support accepted by his / her colleagues and clients. Compensation is individual. It may include variable benefits depending on collective results. There is no salary (this would be an employee contract). There is no earning per share. Partners decide the amount of their compensation. The amount of compensation depends on mutual assistance and value created for clients (i.e. value added).
Assets and shares
The company owns its assets. There is no ownership. There are no shares. When the company is terminated, its assets may be allocated to other company under the same legal form, as decided by the partners.
