Tag Archives: Laws Legality

Sociocratic Bylaws

CertificateExamples of Sociocratic Bylaws

Both two examples of sociocratic bylaws posted on Sociocracy.info are based on legally filed documents. They that sociocratic principles and practices can be specified and legally approved. The Bylaws for a Sociocratic Business are based on those of a LLC registered in Delaware. The Bylaws for a Sociocratic Organization is based on the bylaws of an advocacy organization incorporated in Washington DC.

Bylaws for sociocratic organizations and associations differ from those of sociocratic businesses only in tone and the specific provisions for each business or organizational model. Public corporations will have investors, for example, and non-profit associations will have members. Each will require specifying the rights of their stakeholders.

These examples may be adapted for associations, clubs, corporations,  intentional communities, condominiums, cooperatives, small businesses, etc. Some clauses may not apply and others will need to be amplified or added to meet the legal requirements of your county, province, or state.

The sections that specify sociocracy as the governance structure and consent as the method of decision-making, however, are usually the same. Titles may change to follow the customary practice in a particular field, but this is not a substantial difference.

Powers of the Board of Directors

People are most often concerned about the requirements for a Board of Directors that has certain powers. Typically a Board has life and death power over an organization while a sociocratic Top Circle does not. A Top Circle has unique responsibilities, as does a Board, but does not have the power to dissolve or sell the business or organization.

Most requirements for Boards can be accommodated by stating that the Board of Directors is identical to the Top Circle and by understanding that the Board may be responsible by law for certain decisions but that doesn’t mean it has to have the sole power to make them. These decisions can be delegated. The role of the Board becomes to ratify the decisions ensuring that they were made using proper process and assuming shared responsibility for the outcome.

Majority Vote

The second concern is the typical requirement of majority vote for most if not all decisions of the Board. The minimum for majority vote is usually 51% of those present and voting, or 50% plus one when 50% produces a fraction. The requirement of consent is 100% of those present and consenting. Since the 51% majority is included in the 100% consenting, this requirement is satisfied.

Part of the reason majority vote is required is to ensure that a minimum number of members have approved a decision. Some organizations require a “super majority” of 80% or even 98%. Another reason for requiring majority vote is to ensure that decisions get made. The majority can decide to move forward when there is dissension that endangers the organization.

The same conflict might occur in sociocratic organizations, but they use a different solution. When consent cannot be reached, the decision goes to an expert, one who is a member of the Board if appropriate, or to another expert capable of making an informed decision.

Legal Advice

These examples are for reference only.  Laws differ significantly between jurisdictions. Professional legal advice is required to ensure that the laws protecting your organization have been addressed and that your bylaws have been properly and unambiguously worded. A missing comma can dramatically and disastrously change the meaning.

In addition to helping you understand what is included in bylaws, these examples will help you draft your own bylaws for your lawyer and then modify them as advised. This allows your organization to make many of its decisions before becoming overwhelmed with external expectations and legalese.

Plain English

For decades, Plain English has been taught as the standard in the legal field. But because they are still in the computer, many law firms are still using boiler plate legal phrases from the mid 20th century. Insist that your documents be written in Plain English.

Plain English for Lawyers by Richard C. Wydick has been the accepted reference for over 25 years and maybe helpful.

Writing bylaws may seem like a tedious chore but it is a document that defines your organization and gives everyone a common understanding of how the organization will function.

Self-definition that is hard and that is the core of bylaws.

Laws and Policies: The Differences

Drop Cap Letter Q Won’t the prescriptive Norms in sociocracy and the Constitution in Holacracy impose the rule of law, which will quickly devolve into the rule of lawyers? The more arcane and opaque the law is, the more tyrannical that law becomes.

My response to this requires a distinction between laws and policies. Laws and policies are the same in that both govern future actions and decisions. Laws  are made by governments to govern the actions of citizens of countries or parts of countries—cities, states, etc. They are enforced by various branches of the government—agencies, courts, etc.

Policies are made by organizations to govern their own internal decision-making and operations. It is up to the organization and its members to enforce them. Unless the law specifically states otherwise, an organization’s policies must be within the requirements of the law.

A citizen can sue a government over unjust laws, or sue an organization over policies that are not  in accordance with the law, but cannot sue an organization for not following its own internal policies as long as those policies are within the law.

 Laws

The laws that lawyers’  address, are arbitrary and obscure. They are not necessarily based on what works and not regularly reviewed. Old laws, even 10 years old, can be based on out-dated conditions and don’t make sense, but they are still enforceable. For various reasons, they may not have made sense when they were adopted, or they made sense for one particular group but are applied universally.

The aim of a law is not always clear, and if not, the test is whether the law is still in force, not whether it has a purpose or achieves an aim .

Sociocracy & Holacracy: Testing What Works

The question about laws and lawyers was asked in the context of a comparison between sociocracy and Holacracy and the enforcement of their “laws.” This is where we get into the weeds.

The major influences on the sociocratic Norms are from engineering and physics, cybernetics, and mysticism. (Quaker faith on sitting together to reach consent). The major influences on Holacracy  are sociocracy, computer software design, and mysticism. (Ken Wilber on ego vs higher purpose).

All the respective languages and applications—electrical engineering, computer software design, cybernetics, and mysticism— are based on testable processes. They change when new information is available. Sociocracy and Holacracy use these languages to define the processes used to achieve aims or purposes. Both have an easy test—if a practice isn’t  working, the process either wasn’t understood or is being applied incorrectly.

Making Laws and Policies

The international sociocratic center has a process for certifying individuals and organizations but has no control over the use of the word sociocracy. The principles of the sociocratic circle-organization method have been adapted and modified in many ways in organizations that call themselves sociocratic. And are also used pristinely in organizations that don’t call themselves sociocratic. They are used by many management consultants who may call it by other names. As long as they do not imply that they are certified by the international organization, they are functioning lawfully.

It is not the same for the word Holacracy. Holacracy also has a certification program, but it is also a registered trademark. Individuals and organizations have to be certified or given approval to say they use Holacracy. Since trademarking is a law, the use of Holacracy without permission can bring in the lawyers and the case taken to court. The test is whether permission was given, not whether an organization is properly following the constitution. Here we are back to laws, lawyers, and judges. It is a violations of the law or isn’t it? Did the use happen or not? The question is not “did the use achieve a positive result?”

Some have suggested that this is the reason the Holacracy Constitution is so dense and written in legalese—so it can be used in litigation. Certainly a lawyer was involved because the language had to have been studied for years to be used so obscurely. An easier basis for legal action, however, is simply the use of the word in any way that might confuse Holacracy with other methods of governance or imply connections without permission.

The Tyranny of Laws

Only certification and trademarking are protected by law. Then disputes can be argued in court and the government enforce the decision.  Lawyers will make the arguments.

When the aim is to govern organizations that are effective and harmonious, the law has no place, but policies do. Policies are agreements within organizations. Members of organizations work more effectively and harmoniously if they have expectations that are shared and understood, and based on what works to help them work effectively.  Effectiveness and harmony require resilience, the ability to adapt to new situations, and full control over self-organization.

I think no one will argue that neither laws nor lawyers encourage self-organization.

For extra credit:

The word holarchy was  created by Arthur Koestler in , published in 1967, to describe a hierarchy of holons, self-organizing units that are both a part and a whole. There is no trademark on holarchy.

 

Are Sociocratic Corporations Legal?

Sociocratic corporations are perfectly legal. All the laws that constrain corporate functioning can be met while applying sociocratic values, principles, and methods.

Laws governing corporations, both for profit and not for profit, are generally written to prevent abuses that corporations have committed in the past, often with investors’ or donors’ money. In writing the law, the government is presenting its solution to that problem. If you can determine what the law intended to prevent, you will have a good guide to functioning within the law and build a sociocratic structure.

For example, in the US, there is often a requirement that the Board of Directors function by majority vote. The law was intended to ensure that “at least” a majority were in favor of an action. It is a minimum standard, not a maximum standard. Consent contains within it the majority. There is no contradiction in the numbers.

Corporate legislation requires an organization to have a Board of Directors with full authority to govern the organization, but the board can delegate its authority. This is what higher circles do when they create lower circles.

The legal protection for investors and donors is that if the lower circles do not carry out their delegated duties, the Board has the authority to take control. The Board can delegate authority as long as it retains responsibility for the results. This is also perfectly sociocratic since a higher circle can decide to eliminate a lower circle that is not functioning properly.

Even if you are confronting an old law that protected someone 200 years ago, however, the worst thing you can do is to try to convince the government that they are wrong at the same time you are trying to become incorporated. Get legally incorporated, then demonstrate the superiority of the sociocratic structure. Until you have done that, no one will listen to you.

We had this problem with cohousing communities getting approved by town zoning boards. Most cohousing communities are legally structured as condominiums. There are very clear laws about “common interest” real estate in which each owner has a percentage interest. Instead of explaining how the cohousing project met all the legal requirements for condominiums and was financially sound, groups were going to banks and zoning boards talking about shared meals, consensus decision-making, supportive environments for children, changing the world, recycling, etc.

This information was distracting the banks and boards and creating uncertainty about totally sound real estate developments. Cohousing groups were routinely turned down until they found a conventional developing partner, a very sympathetic banker, or began sounding like the legally established condominium that they were.

To ensure that you are both within the law and not undermining the self-optimizing sociocratic structure, you only need a lawyer and a sociocratic consultant with the level of training required to set up a complex organization.