[DRAFT] Bitshares Cooperative Whitepaper v.01

[JWF]

I'm currently doing some reading on the LLC-Cooperatives. I am only on the surface of my research, but here is an example of something I'm finding.

www.uwcc.wisc.edu/info/legal/llc.pdf

In 2001, Wyoming enacted the Wyoming Processing Cooperative Statute. Similar
laws have been adopted in three other States: the Minnesota Cooperative Associations Act in
2003; and the Iowa Cooperative Associations Act and the Tennessee Processing Cooperative
Law, both taking effect in 2005. While entities formed under these statutes are called
cooperatives and have some characteristics of traditional cooperatives, these new acts also
borrow liberally from limited liability company laws. Thus they are referred to here as “LLCCooperative”
statutes.
Each of these statutes provides for a new cooperative business model allowing two
classes of voting stock--patron member and investor member. Entities formed under these
laws are unincorporated associations and, like LLC’s, are eligible under the IRS check-the-box
regulations to be taxed as a partnership under Subchapter K of the Internal Revenue Code.
The intent of these laws is to attract equity from investors who do not patronize the
cooperative, thus providing an additional source of equity capital to the business. Each law
sets slightly varying limits in the areas of patron governance and financial rights. Most of the
associations formed to date are patron-based and have not taken advantage of the opportunity
to include investor members.
Relying on information provided by their respective Secretaries of State, we have
identified 22 new “cooperatives” formed under these statutes through the end of 2005. The
breakdown by States is: Wyoming 4, Minnesota 17, Tennessee 1, and Iowa 0. The web site
for the Wyoming Secretary of State mistakenly lists four out-of-State cooperatives that have
merely filed papers to do business in Wyoming as reorganized under that State’s new law.
Sixteen of the 22 new associations are currently operating in some fashion and one is
awaiting State regulatory approval to participate in its designated line of business. In four
instances the business venture did not materialize and the association is not now and is not
likely to become operational in the future. Thus far we have been unable to find any
information on one association and assume it also is not operational.
The scope of the Wyoming law is limited to agricultural purposes. The Minnesota law
can be used by firms in any line of business. Information technology firms and innovative
agriculturally-based marketers have been its primary users.
The Tennessee and Iowa laws focus on value-added agricultural associations, but can
be used to organize a business for any other lawful purpose. Both statutes are newly enacted
and, as this is written, only one entity has been formed under them, a Tennessee cotton
marketing association.
Following is a summary of information about each of the new businesses formed,
gleaned from State government sources, company websites, and other sources. In each
subsection the firms are listed by State in chronological order by date of enactment of the new
State law and, under the State, in the order their organizational documents were filed with the
State.

((A single selection from the list))

CoopMetrics
606 N. Greensboro, Suite D1
Carrboro, NC 27510
Web: www.coopmetrics.coop
Filing Date: 8/1/2003
CoopMetrics is an information sharing alliance, formed by cooperative consultants, to
facilitate improvements in member companies operations by working in partnership to build
virtual chains of similar enterprises. Members access comparisons of financial and operating
data within a framework of peer collaboration, allowing them to take advantage of the
knowledge and experience of their industry peers and make improvements in their
organization. CoopMetrics is a hybrid consumer/worker/LLC--45 percent is owned by
investors, 35 percent by the workers, and 25 percent by customers. Profits at the end of the
year are refunded to each group in proportion. If there is more than one investor their 45
percent would be divided between them proportionally. The workers’ share is allocated based
on hours worked, and customers’ in proportion to the amount of their purchases.

[freebit]

Good !

[luckybit]

The Bitshares Cooperative

Purpose:


Structure:


Procedures:

What the Bitshares Cooperative may enable

Connecting Bitshares DACs under a legal umbrella:


Decentralized reputation and identity services:


Decentralized insurance services:


Decentralized financial services:

Rewarding loyal members

Dividends: In the form of profit sharing programs or gift cards which represent a certain percentage of the production. This aspect is novel but we can learn a lot by looking at Swarmcorp. Swarmcorp currently gifts swarm token holders with a percentage of Comiccoin gifts swarm token holders with a percentage of Comiccoin [/url]which can be redeemed for comic books. Members of a cooperative can receive Patronage Dividends which are cash amounts in proportion to what they purchased such as what is done in the GrangeCoop example. A primer on Patronage Dividends describes the concept as “membership is ownership”.

Vouchers:

Rebates: This could include conditional rebates where delegates act as oracles.

Stipends: (for developers)

Patronage Points: (generosity credits or reputation points)

Friends of Bitshares (partnerships)

Other cooperatives:

Corporations:

Governments:

Educational institutions:

Non-government organizations:

Non-profits:

High net worth individuals:


https://docs.google.com/document/d/14k4zKjt8rkY1I5aYFVSdxiDqyHofhAmo0VQfLzDyKkE/edit

Please contribute if you think it's a good idea. This thread is for discussing what should go in the whitepaper or for contributing to it.