1st “Delaware” Company Cloned On Blockchain by J X STARR

1st “Delaware” Company Cloned On Blockchain by J X STARR

Remember back in the day when “IBM clones” were all the rage? It was heralded as a giant leap forward in the proliferation of home computing. In part because it knocked the gate wide open to increased competition and innovation in that sector.

Remember back in the day when “IBM clones” were all the rage? It was heralded as a giant leap forward in the proliferation of home computing. In part because it knocked the gate wide open to increased competition and innovation in that sector. Nowadays hardly anyone has or uses an “IBM” personal computer and nearly everyone is running a device not manufactured by the “International Business Machines Corporation.” This is the case regardless of the operating system in use be it “Microsoft” or “Apple” or “Linux” based. The latter being open sourced with many “clones” or varieties.

The legal world is no different. Take for example the British Virgin Islands. Sir Richard Branson’s Necker Island is situated in a jurisdiction which due to its size and proactive management has utilized cloning of the legal kind. The International Business Companies Act, 1984 was largely modeled on the most successful tax haven in the World being in Vice-President Joseph Robinette “Joe” Biden, Jr. adopted home state of Delaware. The 1984 Act which is arguably antithetical to Eric Arthur Blair a/k/a George Orwell’s 1984 was replaced by the BVI Business Companies Act (No 16 of 2004) which was modeled after a New Zealand statute according to Wikipedia.org.

If another jurisdiction and in particular if a foreign competing jurisdiction can engage in legal cloning why can’t individuals? Laws and most legal judgments are a matter of public record and are or should be in the public domain.

Do-It-Yourself company formation has been around for quite some time and in most cases small business owners seldom need the services of an Attorney to form popular entities such as the Limited Liability Company or the Business Corporation.

One of the easiest and most user-friendly jurisdictions is in the state which first boldly decriminalized marijuana. The Rocky Mountain state enables just about anyone with a willing Colorado registered agent or a valid Colorado street address for its residents to file in mere minutes and in most cases for as little as $50.00. Occasionally they run $1.00 fee sale specials for Corporations and LLCs. Hint, hint, Mr. Williams!

Other states generally require a trip to the post office to mail in documents. The Sunshine state thankfully does not, but makes up for its lack of a state income tax by charging $125.00 to file. The process in Florida is not as instantaneous as it is in Colorado. Although Florida’s Limited Liability Company laws are some of the best and most seasoned in the United States since Tallahassee was the second state in the Union to enact Limited Liability Company legislation.

Florida essentially cloned its laws after former Vice-President Richard Bruce Cheney’s adopted home state of Wyoming which was the first to adopt LLC laws in order to limit the personal liability of oil and gas wildcats in the late 1970’s. Unfortunately, Wyoming does not offer the kind of e-filing that its neighbor Colorado permits. The other drawback is the $100.00 filing fee for Corporations and LLCs which makes it more expensive than Delaware. Except if you are a Corporation which could be subject to a Franchise Tax which Delaware imposes and Wyoming does not.

Both jurisdictions do require the filing of annual reports to the state for taxes. New Mexico does not have such an annual reporting requirement for Limited Liability Companies organized under its laws. A trip to the post office is sadly still a part of the deal to do business with Santa Fe.

In an age of digital just about everything, it is incredulous that greater technological innovations have not come to business law. The rise of Blockchain technology as evident by Bitcoin and now Ethereum along with other practical forms of disruptive decentralized technologies have ushered in a mad rush to “let’s decentralize everything possible.” One such example is my own citizenship in Bitnation. Yes, Bitnation is decentralizing the nation-state as we know it. Nobody is forced to join and everybody is free to leave. Bitnation is the epitome of a consensual non-abusive and voluntary relationship. Just like the largest hotelier owns no hotels and the largest taxicab company owns no automobiles Bitnation to my knowledge owns no land.

Bitnation has a written Constitution like most countries, but it is the first to have done so on a blockchain. By design Bitnation does purposely lack a formal legislature and a formally codified body of laws because the choice of law is left up to the individual. Liberty and responsibility are twins.

As an entrepreneur that has spent thousands of euros on incorporation filing fees over the decades, I am dismayed by the fact there is no goldilocks jurisdiction. No combination of Colorado’s tech savvy registration with New Mexico’s lack of annual reporting to Wyoming’s “genesis block” with respect to limited liability legislation and Delaware’s all important Court of the Chancery. The “FUBU” or for us by us Court for the Fortune 500 and all of the rest of us wannabes.

Anarcho-capitalists, blockchain enthusiasts, the curious, the entrepreneurial, and increasingly just about everyone in the know is raising their own flags by launching Decentralized Autonomous Organizations or DAOs not to be necessarily confused with Daoism. Apart from Bitnation companies like the startup Slock.It has embraced this form of stateless entity formation. The concept and idea of stateless corporations and entities aren’t new, profound, or even revolutionary. In 2013 a company was formed by J.B. Allen called First Blockchain Incorporated. Stateless entities, in general, are not a new phenomenon. Just ask the Romani people of today or the Jews prior to 1948. The Kurds are another prime example and are acting in several countries rather autonomously in spite of inept centralized capitals hundreds of kilometers away from their homeland.

Fundamentally individuals either have the right to contract, to assemble peacefully including for commercial purposes or they do not. Most of the time sole proprietorships and unincorporated businesses are permitted to carry on without formal registration even in the developed world.

Unfortunately, such operations are seldom scalable and put the principals of the business at greater risk for personal damages than had the enterprise limited its liability to the amount of capital its owners put into it. Why should a government have a monopoly on the ability to provide this kind of personal protection? At least, if there is a right to contract. Why can’t individuals draft agreements among or between themselves to accomplish the same goal? Better still why can’t individuals clone bodies of law? But somehow sun-drenched tropical paradises with pearl white sandy beaches and crystal clear waters can do so with impunity.

If Bitcoin lets us be our own bank then I propose being your own jurisdiction. In fact, I have done so by forming a DAO of my own for my startup consultancy firm eponymously named. Without further ado, I’d like you to meet the world’s first “Digital Delaware Clone” or DDC which is a subset in the Decentralized Autonomous Organization nomenclature and it is called J X STARR PARTNERS. Unlike most other DAOs including Slock.It or whose assets or tokens are listed on Omni, Counterparty, BitShares, NXT, or elsewhere I have gone further by deliberately modeling my DAO after the grand-daddy of business entities the Delaware Corporation.

This was done when I specifically selected to insert language into my company’s founding document to read “when applicable, feasible, necessary and proper shall adhere to the decorum and precepts of the Delaware General Corporation Law.” At which point I did clone the “DeoxyriboNucleic Acid” of Delaware’s company laws in 129 characters just under Twitter’s 140 character limit.

Also unlike most other DAOs, I proudly plaster my terrestrial mailing address and I use it as the Registered Office for the “Digital Delaware Clone.” This gives my DAO more “meat” and more “teeth.” The reason for this is because a critically key component of being in business and recognized as such is the ability to sue and be sued. The processing of legal papers electronically is still very much in its infancy. Not that I want to encourage anyone to sue J X STARR PARTNERS, but hiding behind Tor browsers, generic contact forms, and private Whois listings doesn’t help someone with a legitimate grievance or gripe. Not that I besmirch usage of those services as they can be vital to keep purveyors safe and in some cases alive.

The conventional responsa to the polemic I’ve put forth is that rating and reputation systems will take care of legitimate grievances. Think of a more comprehensive expanded version of Amazon, eBay, Ripoffreport.com, and Yelp. The theory holds that people will vote with their money and reward companies with independently verifiable and trustworthy reputations. Companies that mistreat customers will be publically shamed by a digital version of Arnold Diaz. Fair enough.

Free-market sages also champion usage of arbitration agencies such as the kind big players in the cable television, cell phone, and credit card industries routinely employ. This can be a more cost-effective manner of adjudicating controversies. Plus it unclogs the courts and depending on the circumstances can protect the privacy of victims better as proceedings are not necessarily published in the public record. Regrettably my favorite online based arbitration agencies namely Judge.Me and eQuibbly.com are no longer actively in business. So I was unable to insert their recommended arbitration clauses into my company’s founding document.

My country Bitnation still does not have its arbitration service up and running yet otherwise, I would have selected to place it in my company’s founding document. Instead, I opted for a tech savvy tropical paradise and designated the London Court of International Arbitration in Mauritius as the arbitration agency for J X STARR PARTNERS. If cases can’t be done online then a trip to a beautiful country sure beats a trip to the cold of Delaware or London. Granted, J X STARR PARTNERS is more of a proof of concept enterprise at this point and so a beachside massage at Flic en Flac after wrapping up a case is probably out of the cards in the near future.

Future clients of J X STARR PARTNERS will be able to reach us not only via e-mail but the postal mail and, if necessary, can serve us with legal papers. They can take us to a task at a mediation and arbitration hearing. These added layers of accountability, openness and transparency are only fitting with respect to the blockchain’s battle cry of trust nobody.

The entirety of J X STARR PARTNERS founding document has been signed at BlockSign.com, and then further recorded and notarized on the blockchain by Stampery.com and finally recorded an additional time as well as announced on “Twitter” by Originstamp.org. Moving forward I will incorporate usage of Bitnation’s Notary into my contracts and documents, it was simply easier to display the flowery aesthetically pleasing notarial certificate that Stampery.com generates.

Delaware does not require Certificates of Incorporation to be signed before a Notary. In fact, no American state has such a requirement! As one that has been a victim of identity theft several times, I view my actions as a defensive move to prevent myself from once again being victimized. This is why I notarized some of my personal vital information in a fashion similar to that of the founding document for J X STARR PARTNERS.

My Digital Delaware Clone will not have to file annual reports with anyone and will be far easier to maintain. I will not have to worry about it being administratively dissolved for failure to pay annual fees or having to pay a Registered Agent money each year. The “Certificate of Good Standing” will remain intact on the blockchain so long as the blockchain exists. The possibility of corporate identity theft is greatly diminished.

There is more information about my Digital Delaware Clone publicly available for free then there is for literally hundreds of thousands of entities currently registered in Delaware. Privacy is important and so too is openness and transparency. Let the individual in the market decide which is more valuable on a case by case basis.

Best of all I’ve saved my compatriots at Bitnation hours of mind-numbing debate about which series of corporate laws to adopt or not in just 129 characters. In the near future, there are likely to be “Digital Seychelles Clones” and “Digital Cook Islands Trust Clones” among the many other varieties. A one size fits all policy simply doesn’t and won’t cut it.

Startups can now and should now avail themselves of the finest legal code possible as well as that most relevant to them. The new sector in the company formation industry will be that of coders not of javascript but of law that will customize founding documents accordingly. Some will be lawyers and others will not. Be your own jurisdiction!

As for J X STARR PARTNERS since I am not yet skilled enough to create assets or tokens on Ethereum I used Colored Coins via Coinprism.com and NXT to issue stock. None of which is for sale due to the fact that this is a proof of concept enterprise at this stage and the fact I quite frankly don’t need the money. There are also regulatory considerations. However, more companies like Buongiorno Caffe from South Africa are likely to raise money through decentralized asset sales on venues like NXT and soon on Ethereum. For now, most crypto-assets are highly illiquid and suffer from low volume. This will change as awareness is raised and public interest is perked – pun intended.

Who is going to create the second Digital Delaware Clone?

Source – https://medium.com/@jxstarr/1st-delaware-company-cloned-on-blockchain-a0aad788ed4e#.yhee1e232