Subject: Re: The NetBSD developers agreement
To: None <>
From: Johan A.van Zanten <>
List: netbsd-users
Date: 09/05/2006 17:33:42
Charles Shannon Hendrix <> wrote:

> Maybe someone can explain the root justification for a few things to end
> users of NetBSD:

 I'm just another user, but i know a little bit about some of these issues
because i've been through the process of using a U.S. subchapter-S
corporation to do (unix sysadmin) consulting, and i know people who
have setup 501(c)3 (non-profit entities capable of accepting donations.

> 	- why do we need a corporate entity?

 One important thing is that in the law, "corporation" != "for-profit
business".  Corporations can be non-profit or for-profit.

 If an entity (project like NetBSD, for example) starts to receive money
or assets, or interact with other businesses like banks or colocation
facilities, it's much easier if it's a recognizable type of entity that
other business and the government are used to dealing with.  For example,
trying to open a bank account in the name of a group that has no
governmentally-recognized status can be difficult in the U.S. (I'm
speaking from experience. Maybe my experiences were with unusually dumb
bankers, but they happened none-the-less.)

  One way (there may be others, i don't know, IANAL, but my Dad is) to
gain this status is to incorporate as a non-profit corporation.  That may
sound weird, but it seems to be how most U.S. states setup non-profit

 If you want to look up NetBSD, you can do here:

 According to the State of Delaware (where NetBSD is incorporated) it's a
non-profit or religious organization.  (I'm refraining from making the
obvious jokes about holy wars here.)

 If a project like NetBSD wants to take donations that could be (U.S. IRS)
tax-deductible for some of the donators, then i think they need to be a
"501(c)3" which is the section of tax law regarding charities that are

 I don't know of any other way to get that tax-deductible benefit for the
U.S. people making donations, than to get the 501(c)3 status

 I don't think incorporating as a non-profit is required to get 501(c)3
status, but it is *one* of the ways, and it's the most commonly used
method i know of.

 I had a question about why NetBSD was incorporated (as a non-profit) in
Delaware, and i'm still not entirely sure why it is, but i don't think
there's an nefarious or evil reason why it is. Delaware is the most common
U.S. for corporations to incorporate in.  At one point in time, Delaware
may have had require less taxes from the corporations.  I don't think
that's true now.  Various other source on the web also indicate that
Delaware now has more case history regarding corporations than other
states, and because they courts and judges are more experienced, their
decisions are speedier or more reasonable. There could be other aspects of
Delaware law that are favorable to some sort of corporations.  But in the
context of this current debate, it sounds like Hannum was still heavily
involved with the project when TNF was incorporated in Delaware.

 To any members of the TNF reading this: It might be easier to determine
who was involve with the incoporation if you would put your articles of
incorporation up on your website, like the FreeBSD Foundation people did:

.. maybe they are already up somewhere, but i couldn't find them
easily. (They aren't with the Bylaws.)  If anything, i think it is a
little unusual for non-profits (or for-profits) to publish their articles
of incorporation, but it would probably help make the organization seem
less secretive.

 I also had an earlier question about why the developer agreement
specified that it was to be governed by the laws of New York state. It's
very common for U.S. legal agreements or contracts to specify which
U.S. state's laws govern the agreement or contract, because laws vary from
state to state. So when writing a contract, most lawyers will add that
clause, and specify the U.S. state in which they have passed the bar, or
are most familiar with the laws.  (There's sort of a homefield advantage
thing, too, because if things ever do go to trial, i know that many
lawyers think they might get better treatment from the courts of the state
where they are incorporated in, or where the do a lot of business.)

 It's also possible that they might specify a state because they want a
specific -- more favorable -- set of laws for a "tactical" legal reason.

  I received one answer which said that the lawyer who wrote the agreement
was a NY lawyer and that's where a lot of NetBSD developers are.  That
seems reasonable.

 Because i'm paranoid, i went to, to see if they might
be a NY corporation.  They say their HQ is in Virginia.  Virginia's
Corp. Commission Clerk says that Wasabi Systems is an active Subchapter S
corporation there, but that it's state of incorporation is actually
Delaware. (Certain factors require a corporation to register with a
State.  One of those factors is if you are employing people working in a
office in that state.)

 According to to the same Delaware site above, Wasabi Systems is a
Delaware corporation.

 So, in terms of addressing paranoia, i don't see any unusual connection
between the NY State and Wasabi Systems.