Drafting the Membership Agreement

So, I just started combing the draft Membership doc, and very quickly got to the clause: "1.3 No partnership: Nothing in these Terms creates any partnership, agency, or joint venture relationship between MCCU and any Member or between any two or more Members."
To which I added the comment: "I think this may have to change if we are a LLP multi-stakeholder co-op, probably just remove this as the partnership element would be covered the the Membership agreement?"

But that got me thinking: If we're going to set up the UKMCN as a LLP multi-stakeholder co-op, do we actually need BOTH a "Membership agreement" AND a set of "Multi-stakeholder co-op rules"?

I'm now wondering if we could JUST have Multi-stakeholder co-op rules, which incorporate the rules about what a "trading member" can do, as well as what the other classes of member can do...?

Which leads neatly onto the question, what types of "member classes" do we imagine our LLP multi-stakeholder co-op having?

I was thinking just

• "Businesses" - A standard trading member
• "Workers" - That work for the co-op, running the exchange
• "Investors" - With no more than 10% of the vote
• "Advocates" - Who help guide and support the co-op

But Dil was suggesting "software builders" should be another class...
And I'm not so sure about that... since I don't think they should be given any specific rights... To me, software developers would either be workers of the co-op, or suppliers... but do they deserve a seperate membership class?
Maybe we need a "Partners" category too, for Orgs like FiL, or NEF? But to me they are probably Advocates, like our lovely Advisory Group

What do you all think?

I would suggest we take advice

I also think we need some legal guidance. Maybe Cliff Mills at Anthony Collins would give a bit of pro bono or we could ask first the Co-ops UK legal team.

I could ask Richard Murphey www.taxresearch.org.uk if he's interested in helping...

sure - please do - any help we can get will be useful

Another key way forward is of course to have a period of time when we invite people in as Associate members and then later after a probationary period these can be approved as full members. They would need to apply of course to be full members and committed thereby to our mission, values and principles.

My approach, which I am acting upon, is essentially to go 'Back to the Future' in terms of both the institution and instrument through which credit is created, exchanged and returned.

This recent presentation to fintech students at Strathclyde University (business school) and Stirling University (Data Science) set out my thinking.

https://www.slideshare.net/ChrisJCook/protocols-promises-power-061118

Firstly (and note I used to design financial instruments for a living) I define an innovative (but not new) instrument - the Credit Obligation. This is the Dark Matter of the global economy, and pre-dates all other instruments except the Proof of Payment/Receipt. It is essentially a promise issued in exchange for value received from the acceptor, which the acceptor (or subsequent assignee A>B>C>D) may present in payment for goods and services supplied in the future by the issuer. The holder has no right to demand delivery of money (debt), or of goods and services (derivative), and has no ownership right to assets and revenues (equity).

The expressions, "Tax Return" (return of discounted prepaid sovereign credit obligations in payment for tax) ; Rate of Return (rate over time at which credit obligations could be returned and discount realised) and even 'stock' (the split tally record of the obligation) evidence the Credit Obligation historically as a financial instrument.

The issuance of credit obligations requires trust: over the centuries we saw temples, governments, and then banks become risk/trust intermediaries. The Community Fintech approach is to use simple risk, cost, surplus and data sharing protocols between individuals as trust frameworks.

So in terms of institution, I propose Unlimited Companies with the following stakeholders: Credit Issuer; Creditor (Credit Acceptor/Assignee); Credit Service Provider and finally, a Custodian.

The reason that the Company may be unlimited in liability is that there will be no external liability, since credit instruments will be issued, assigned and returned within the Unlimited Company. (Note here re regulatory issues, that my experience of regulation commenced at the outset in 1986 and included 15 years experience at the highest global level).

Credit instruments may be denominated in energy (if issued by an energy service provider) and such an Energy Credit Obligation will in my view give rise to forms of universal reserve currency. Credit instruments issued by people, and by land-owners will be denominated in the local unit of account, like the Swiss WIR, which is essentially people-based credit denominated in CHF, but backed by the value of Swiss land/buildings etc via security over business assets (hence the longevity of the WIR).

I envisage several types of settlement: firstly, settlement by fiat currency, secondly, chain settlement A>B>C>D>A of people-based P2P credits; third, settlement by land rental credits (currency local by definition), fourth, settlement by (universal) energy credits returnable in payment for energy as a commodity or energy as a service and finally, voluntary settlement in exchange for 'loyalty point' tokens which carry no unit of account.

There is a paradigm shift here, which makes this approach difficult to 'grok' without actually experiencing it. The proposed multi-stakeholder Unlimited Company is essentially an association of sovereign individuals which does not own anything, employ anyone, contract with anyone or do anything. It links together people who then agree additional protocols in respect of asset use, investment and control; risk and cost sharing and so on. Rather than being an institution as an organisation, which alienates people and suffers from a principal/agency management problem, it is an institution as agreement to a common purpose.

I'm currently working on proof of concepts - beginning with energy - in Sark, to enable that fascinating island to jump from the 16th C to the 21st C with none of the intervening bollocks which put us all in the shit we are in.

Anyone interested in joining in, please let me know.

Chris, as you know, I am keen on this approach - both in terms of legal structure and investment mechanic. Th MCN will not (at least as currently envisaged) have access to a fundamental utility 'keystone' member, such as an energy producer.
However, it seems possible to me to devise a Credit Obligation of the kind you describe which is backed by the level of activity in the Mutual Credit Network. Crudely, I see it working like this:

• Investors in the project receive TCO (Trade Credit Obligations) units in return for their money.

• These are convertible into positive Trade Credit units within the network at some multiple (giving a rate of return on investment ).

  • Crucially, the quantity of TCOs that can be converted in any time period is governed by the trade volume within the network in the previous period, set at some small fraction of volume - so that introduction of new credit is no more than mildly inflating.

• Of course, as TCOs are converted, and investors' accounts are credited, the central account is debited in equal amount. Essentially, the central account is allowed to run a deficit that is strictly controlled in accordance with the activity in the economy.

• TCOs are tradeable. Investors can most easily increase their rate of return by increasing the buying power of the Trade Credit unit - that is, by making the MCN successful.
  This model will be most attractive if the proposition of the Federation of MC Networks is the vehicle for investment - that it is the volume and value of inter-trading between networks that underpins the value of TCOs.

Oli - I was thinking something similar. I think that's really interesting - I don't know the answer, but would like to hear what others with more experience think.
Chris - I'd need that translated / simplified. Is it mutual credit? How would we explain it to potential members?

Chris you are a genius but as Chris says, it needs a bit of translation. I do understand the language but others will struggle and it took me a while to get with you on this. So I wonder if you could share your model for how this would work with Social Care delivery and how mutual credit can engage local authorities. I am working on Social Co-operative solutions with two Forums - one in England and one in Wales. Perhaps sharing your model for Scotland could help Tom, Dave and my colleagues to see how this could actually work.