[ncc-services-wg] turning the NCC into a "regular' company

I would rather wait to see what the NCC might report back on this.

Joao

On 28 Oct 2010, at 12:55, Jim Reid wrote:

> On 28 Oct 2010, at 11:17, João Damas wrote:
> 
>> that is kind of a broad link that may or not have reason to be. Companies pay taxes on profits. In the absence of profit no tax is due (VAT is passed through, right?). So one could even argue that an LLC-type RIPE NCC would be cheaper as it would be a burden to accumulate huge reserves (which is where the current form seems to have most of its benefits) and so lower fees would be in order.
> 
> Well Joao, the first problem with this scheme is the NCC would presumably first have to raise its fees in order to build up huge reserves which would enable it to fund lower fees. Though if the NCC was making healthy profits, I'm sure the organisation and/or membership will find a way to spend these on special projects and get back to break-even. Call it the financial variation on Parkinson's law.
> 
> The next problem is if the NCC was to demutualise it may well have unpleasant consequences. Like speculators buying up shares to take a controlling interest in the company or to swipe the cash reserves as a special dividend. There are obvious parallels with what happened to UK financial organisations that demutualised in the 1980s and 1990s. Carpet-baggers swooped in, raided the reserves and cashed out.
> 
> Another issue is this LLC scheme probably needs a public limited company because its shares would have to be openly traded so anyone can become a shareholder rather than a member as at present. That makes the organisation open to capture. It would also have to act in the best interests of its shareholders. Which might not be the same as the best interests of the current membership or the broader Internet: "we can save tons of costs and get bigger dividends by no longer funding that pesky root server". Public companies have higher burdens for financial reporting and audits too.
> 
> Even if the NCC was to become an LLC, I doubt it would make much difference to fees in the long run. Assuming the membership/shareholders remained stable and the organisation continued along its current path, it's unlikely we'd see much change from the existing financial regime or a broadly break-even annual budget and one year's cash as reserves.
> 
> Still, it would be interesting for someone to do a proper cost/benefit analysis. It wouldn't hurt to question or review establishes wisdom every now and then.