Tags: virtual company, virtual corporation, virtual llc.
This month Vermont passed a very progressive law allowing for the formation of virtual companies. This may not seem so unusual at first. Many states, including Hawaii, have adopted measures that allow flexibility for corporations, limited liability companies, or other entities to use the internet or other electronic means to file documents electronically with governmental agencies, to accept and apply electronic signatures, and to hold corporation shareholder and director meetings by “remote communication” if authorized in bylaws. However, this Vermont law is the first entire piece of legislation to be dedicated entirely to the concept of a legal entity created and maintainable entirely in virtual space. This means that an entity would not necessarily have to have a “physical” location or address to meet certain other requirements that typically apply to LLC’s and corporations. The idea driving this new type of entity is a desire to allow loose collaborations that are widespread on the web (i.e., Wikipedia, Ebay groups, etc.) to have a legal existence and framework from which to work. Many groups in cyberspace do not fit into the hierarchal model of corporations of limited liability companies, with directors, ceos, and the like, yet they can be very influential and have the ability to create valuable ideas and products by collaboration. To grow, these collaborations could benefit from many of the conventions of regular business, such as opening bank accounts, borrowing money, raising capital, and securing intellectual property rights such as patents and copyrights. The Vermont law has just passed and already there is substantial buzz about it, including international buzz. Second Life is one of the applications mentioned on blogs as an application whose users may benefit financially from a virtual company. One of the originators of the law, Professor David R. Johnson of New York Law School, provides his detailed description of the project, including an objective list of things that may go wrong with the new law, at this location. There is also a blog called “Do Tank” maintained by the New York University Law School Institute for Information Law and Policy describing the project, with links to related press sites. I have no doubt this concept will take off an mushroom into a useful tool for use internationally. The real question is how can we be involved in this and profit from it as well in my little corner of the world?