
Self-owning corporations are legally possible - gwern
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2954173
======
will_brown
The article seems confused...the title references _ownership_ and the abstract
is not about ownership at all but about control of LLC’s and in a legal
context ownership is distinct from control.

Otherwise the article is based on a false premises:

>Third, governments — particularly in the United States — lack the ability to
determine who controls entities they charter

Take Florida. Florida’s Limited Liability Company Act regulates who can be a
manager (i.e. who controls the LLC). In fact the act creates 2 types of LLCs
as most states do, member managed and manager managed. In one non-members can
not be managers (control) the LLC.

Outside of the LLC, almost every statute regulates who can _control_ and who
can _own_ a business entity. For example, a non-profit corporation has no
_owners_. Although states do differ, generally by statute, a non licensed
person cannot be the owner of a professional service corporation, professional
association, or professional limited liability company. Though generally those
professional entities can have non-licensed directors, officers, or managers.
State laws also generally include restriction on minors being directors,
officers or managers, but they can usually be owners, although it gets tricky
where they are the sole owner because legally they can’t even sign
contracts/formation documentation (though still legally possible).

Point is Governments are well equipped to regulate who can own or who can
control any type of business entity.

What is possible, and I have written legal articles about, is to have
autonomous trusts, or what I call the _trusteeless trust_ but my examples and
use cases are limited to the trust being funded solely with
cryptocurrencies/tokens.

~~~
will_brown
I can no longer edit my comment, but I have now read all 75 Pages, and the
Article does in fact mention some of these issues, such as member-managed vs
manager-managed LLCs and then in the "detection problem" section they discuss
incorporators, directors, officers of corporations.

Still the premises of the Article is flawed, and found in Section 1(b),
_Initiating Algorithmic Entities_ , on page 13, in part:

>Bayern specifies this chain of events as capable of establishing the link:
(1) [A]n individual member creates a member-managed LLC, filing the
appropriate paperwork with the state; (2) the individual(along, possibly, with
the LLC, which is controlled by the sole member) enters into an operating
agreement governing the conduct of the LLC; (3) the operating agreement
specifies that the LLC will take actions as determined by an autonomous
system, specifying terms or conditions as appropriate to achieve the
autonomous system’s legal goals; (4) the sole member withdraws from the LLC,
leaving the LLC without any members. The result is potentially a perpetual
LLC—a new legal person—that requires no ongoing intervention from any
preexisting legal person in order to maintain its status.

The premises is the last member (owner) withdrawing from the LLC leaving an AI
to run the perpetual LLC, which is a legal impossibility. Every State has a
law requiring an LLC have at least one member, and upon the withdraw of the
last member of an LLC the LLC immediately becomes administratively dissolved
(no longer in good standing with the State) under the State's law. Its not
novel, similar laws govern situations when the sole member of an LLC dies,
either the LLC automatically dissolves or ownership gets distributed to the
member's heirs, pursuant to the specific State's laws, but the managers and/or
employees don't go on running the member-less LLC whether they are human or an
AI.

~~~
phkahler
What if the AI creates a fake identity?

On a related note, what if we substitute a person on a remote connection to a
computer instead of an AI? That seems far more dangerous and probably exists
today.

~~~
will_brown
>What if the AI creates a fake identity?

The article addresses this as a potential issue, but also goes into the game
of cat and mouse with humans currently creating fake identities and stealing
identities. The authors don’t seem overly concerned about this and conclude
the system (States, IRS, Etc...) are pretty effective at weeding this out
already.

~~~
MaxBarraclough
From the paper:

> By contrast, an algorithm could generate an unlimited number of artificial
> entities quickly and easily, without violating any law. For algorithms – and
> other criminals – entities can function as identities. > Artificial entities
> can more easily generate credibility because they are a form with which
> business people are already familiar.

How would that not violate the law? If my AI commits a crime, am I not liable
for it?

(I'm guilty of skim-reading - maybe the answer is staring me in the face.)

------
ThePhysicist
Well, a foundation is basically a self-owning company that is steered by its
stated goal and often outlives its creators. In addition, there are several
other legal forms that allow companies to own themselves. For example, in
Germany there's the concept of a "Kein-Mann GmbH" (no man's GmbH), which is a
limited liability company that owns 100 % of its own shares.

~~~
retromario
Are there any real-world examples of this? The wikipedia article only seems to
reference theoretical discussions of it. [https://de.wikipedia.org/wiki/Kein-
Mann-GmbH](https://de.wikipedia.org/wiki/Kein-Mann-GmbH)

~~~
1ris
IKEA is a opaque web of companies and foundations that own each other. Mostly
not german.

~~~
gitgud
I was under the impression that IKEA began as a Swedish company, right? Why
would they be owned by Germany?

~~~
chris_va
Not German, though IKEA has a particularly complex corporate structure:
[https://en.wikipedia.org/wiki/IKEA#Corporate_structure](https://en.wikipedia.org/wiki/IKEA#Corporate_structure)

... which apparently funnels into trusts in Caribbean countries that are not
required to disclose beneficiaries. Basically, it sounds like tax evasion at a
grand scale.

~~~
volgo
You mean tax avoidance - structuring your finances to pay less taxes.

Tax evasion is illegal under-reporting of your income, which I highly doubt
Ikea does

~~~
chris_va
Point taken, but I meant evasion. What looks like mis-use of a non-profit
entity, combined with funneling money into a black hole trust through
"trademark licensing" has the appearance of evasion, at least to me.

------
nabla9
>In two recent articles, Professor Shawn Bayern demonstrated that anyone can
confer legal personhood on an autonomous computer algorithm merely by putting
it in control of a limited liability company (LLC). 10 The algorithm can
exercise the rights of the entity, making them effectively rights of the
algorithm.

>The rights of such an algorithmic entity (AE) would include the rights to
privacy, 11 to own property, to enter into contracts, to be represented by
counsel, to be free from unreasonable search and seizure, 12 to equal
protection of the laws, 13 to speak freely, and perhaps even to spend money on
political campaigns. 14 Once an algorithm had such rights, Bayern observed, it
would also have the power to confer equivalent rights on other algorithms by
form- ing additional entities and putting those algorithms in control of them.
15

\---

[https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2758222](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2758222)

Shawn Bayern, The Implications of Modern Business Entity Law for the
Regulation of Autonomous Systems, 19 S TAN . T ECH . L. R EV . 93 (2015)
[hereinafter Bayern, Entity Law]; Shawn Bayern, Of Bitcoins, Independently
Wealthy Software, and the Zero-Member LLC, 108 N W . U. L. R EV . 1485 (2014)
[hereinafter Bayern, Wealthy Software].

>Abstract

>Nonhuman autonomous systems are not legal persons under current law. The
history of organizational law, however, demonstrates that agreements can, with
increasing degrees of autonomy, direct the actions of legal persons.
Agreements are isomorphic with algorithms; that is, a legally enforceable
agreement can give legal effect to the arbitrary discernible states of an
algorithm or other process. As a result, autonomous systems may end up being
able, at least, to emulate many of the private-law rights of legal persons.
This essay demonstrates a technique by which this is possible by means of
limited liability companies (LLCs), a very flexible modern type of business
organizations. The techniques that this essay describes are not just
futuristic possibilities; as this essay argues, they are already possible
under current law.

~~~
xenadu02
Right up until the first real court challenge where any competent judge will
declare algorithms are not persons, cannot own property, and an LLC without
any legitimate ownership interest is an abandoned entity (making all its
assets abandoned property).

Alternatively for criminal purposes the courts will simply "pierce the veil"
and declare the actual owners to be the humans profiting from the algorithm's
actions.

Judges don't, as a rule, enjoy "cute tricks".

~~~
hedvig
I think the idea is that the ai could be emancipated from whatever "owner" it
had, and then would control everything. It would be more efficient for profits
to go back into the corporation instead of to any owner.

~~~
Slansitartop
I don't see how that in any way counters the parent comment.

If the judge thinks the "AI" is not a person, it cannot be emancipated by some
trick with an LLC.

~~~
hobofan
> and declare the actual owners to be the humans profiting from the
> algorithm's actions

It counters the parent comment in that there would be no humans profiting from
the algorithm, since all the profit is kept in the LLC and governed by the
algorithm.

~~~
Slansitartop
Then, by the parent comment's compelling logic, the profit along with the LLC
would become abandoned property:

>>>> and an LLC without any legitimate ownership interest is an abandoned
entity (making all its assets abandoned property).

The bit you quoted was in the context of assigning criminal liability, if the
need arose. However, I don't think that "profit" would be the most important
part of the analysis, but rather who was responsible for designing and setting
up the corporate entity.

------
jacquesm
Most countries have a concept known as Ultimate Beneficial Owner or UBO for
short. Without a UBO declaration banks will not deal with you, lots of
business transactions will not be possible and you will find yourself dealt
out of the game pretty quickly.

So even if self owning corporations are legally possible it may very well be
hard for those self owning corporations to transact any business.

What is interesting is that all this - for now - puts the lie to the myth of
corporate personhood. If a corporation _really_ was a person this would
obviously not be an issue because for people we find that ownership is a
terrible thing (it's called slavery).

~~~
taurath
Are UBO's publicly stated? It seems like that would get rid of a lot of
corporate shell games no?

~~~
jacquesm
Usually this is in the form of an official declaration for instance to a bank
or the local tax authority, UBO's _could_ be publicly stated but I do not know
of any country that does this.

~~~
ckastner
EU member states will, in future.

Articles 30 and 31 of the Fourth AML Directive, Directive (EU) 2015/849 [1],
mandate that member states set up a register (= database) with BOs of all
corporations and legal entities within their jurisdiction. All legal entities
are required to report their BOs into this registry.

It's not accessible to the public in the sense that anyone can anyonymously
look up data, but among other things, it's open to "any person or organisation
that can demonstrate a legitimate interest."

[1] [http://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=celex%3A3...](http://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=celex%3A32015L0849)

------
zellyn
I think self-owning corporations are neat as a Scifi plot device, but fears of
human extinction due to corporate structures seem overblown. It's not as if
human-controlled companies haven't needed to be restrained by law in the past.

~~~
wj
It is a plot point of Accelerando by HN user cstross. One of the more thought-
provoking books I have read.

~~~
r00fus
Not to forget the Hendricks hotel ( Raven in the Netflix series) in Altered
Carbon.

------
rndgermandude
Reminds me of this talk, where the speaker makes the case that corporations
are AIs, but slow ones

[https://media.ccc.de/v/34c3-9270-dude_you_broke_the_future](https://media.ccc.de/v/34c3-9270-dude_you_broke_the_future)

~~~
abvdasker
Yeah that's the same one I was thinking of. It's a pretty far out theory but
is nonetheless extremely interesting. The part of this that is incomplete from
an implementation standpoint is creating an algorithm that can fully digitally
manage a business entity without human intervention. In general though I think
we are much closer than anyone thinks to seeing the first fully autonomous
corporation (though the first one will likely be pretty rudimentary and more
of a toy than anything else).

~~~
fyi1183
I think you may be missing the more interesting point. Corporations can be
seen as non-human intelligences that emerge from the structure of the
corporation together with the incentives of is environment.

In that view, the humans inside the corporation are like individuals neurons
of a larger brain. The whole is more than the sum of its parts, and its
incentives and actions are often not aligned with those of its parts, i.e.,
the humans.

The brain/neuron analogy is not a perfect description, because in order to
function towards is potentially anti-human goals, the corporation must
essentially bribe a small number of humans who are critical to its function.
But this only goes so far: CEOs and other executives are well compensated, but
they are easily replaced if they pose a serious threat to the goals of the
corporation.

I think the argument is very compelling that today's AI Doomsday prophets are
seriously missing the point, and we're actually already largely being ruled by
hostile or at least indifferent non-human intelligences. It's the old sci-fi
trope that if an intelligence is too alien, you might not even recognize it as
one.

------
nathan_f77
The Bitcoin wiki also has a good article about Agents [1].

I've been thinking about this with regards to my own SaaS startup. The company
accepts credit card payments with Stripe, and the money is deposited into a
company bank account. Heroku then charges the company's credit card for
hosting fees. It's actually a "profitable" company now, so it could keep
running forever by itself.

The only thing that requires human intervention is taxes, although Stripe
Atlas makes that really easy. It's only a few clicks to pay the Delaware
franchise tax. However, I've had to manually export some data and send a few
emails to an accountant. (This is something I've been wanting to automate, but
I didn't get enough interest [2].)

You don't need AI or cryptocurrencies to have an autonomous company. You just
need a SaaS with autoscaling, or a mobile app that makes money from ads and
IAPs. Then there's only a few things that need to be automated: Filing taxes,
and clicking the button to agree with Apple's new terms and conditions every
few months. You can probably hire an accountant or a virtual assistant to deal
with these things.

It's a scary topic. Isolation plus too much automation, and no-one will even
know that you're gone [4].

[1] [https://en.bitcoin.it/wiki/Agent](https://en.bitcoin.it/wiki/Agent)

[2] [https://nanobooks.co](https://nanobooks.co)

[3] [https://bench.co/](https://bench.co/)

[4] [https://edition.cnn.com/2014/03/07/us/michigan-mummified-
bod...](https://edition.cnn.com/2014/03/07/us/michigan-mummified-body-
found/index.html)

------
hedvig
The most efficient self-owned entity would eliminate the waste of profit going
to executives and board members and could reinvest that excess back into
itself. It would be a new era when even the select few can't collect rent from
their operations.

------
greyfox
"Algorithmic entities are likely to prosper first and most in criminal,
terrorist, and other anti-social activities because that is where they have
their greatest comparative advantage (edit: or what advantages exactly that
they have?) over human-controlled entities."

Can anyone further elucidate what's meant by "comparative advantage"? also, i
find this sentence particularly interesting. how did they come up with this
notion?

~~~
darawk
Non-human-owned corporations are insulated from criminal legal consequences,
and therefore are better able to engage in activity that would otherwise
engender criminal prosecution, relative to a human.

~~~
sharemywin
If you took away it's money how would it exist.

~~~
bdamm
It has no fear of anything physical or social such as jail, public
humiliation, police brutality, poor health. Fear itself is irrelevant,
including fear of dissolution. The entity can operate as per its primary goals
without concern as to the ultimate success of the goals, whether that is
siphoning money to a hidden account, disrupting government services by denial
of service, spawning copycat organizations to thwart law enforcement, etc.

~~~
politician
This all already exists in the form of large, sometimes multinational,
organizations. Has anyone from Well's Fargo been criminally prosecuted from
the massive identity fraud they conducted by opening accounts falsely? From
Equifax?

We don't need AIs to achieve this level of self-directed autonomy free to
engage in criminal behavior without consequences: we already have Employee
Handbooks.

~~~
megy
> Has anyone from Well's Fargo been criminally prosecuted from the massive
> identity fraud they conducted by opening accounts falsely?

Is that illegal though? I mean, I can create an account for you on my web
platform, and everyone else.

~~~
danans
If in doing so you charge me for services I didn't request, then yes, it's
fraud.

And that's what WF did:
[https://en.m.wikipedia.org/wiki/Wells_Fargo_account_fraud_sc...](https://en.m.wikipedia.org/wiki/Wells_Fargo_account_fraud_scandal)

------
nickpsecurity
If algorithm wasn't required, then one might create two corporations that own
each other with one taking action in market. That way what has ownership is
something that is already allowed to own something under existing law. One
outsources its management or other operational capability to the other so only
one is actually doing stuff. The other is just there.

What do you who are more knowledgeable about this kind of law or prior
decisions think of that? Is it just as unlikely to work or a bit more likely?

------
Animats
The US once had the Utility Holding Company Act, which limited ownership in
utility companies to a tree depth of 3. This was in response to a mess created
by Samuel Insull in the 1920s. That prevented ownership loops. Repealed a few
years ago.

------
nukeop
I want to see autonomous companies that would be completely governed by AI
systems and would choose by themselves what to invest in, what facilities to
build and where, what to manufacture, who to employ, where to expand, and so
on. Corporations already have legal personhood in American law.

The videogame Shenzhen I/O already explored a similar concept superficially.

~~~
navaati
> The videogame Shenzhen I/O already explored a similar concept superficially.

Thanks for spoiling it all to me I guess...

~~~
kej
That little piece is more or less given away in the manual, and the
(excellent) game is about solving puzzles and not the plot anyway.

------
pishpash
AI's likely need to be treated like perpetual children or pets legally. There
always has to be a liable, human guardian attached for them to exist.

------
mrfusion
What’s interesting is if you could make such a corporation “reproduce” and
start seeing evolution take place.

------
jakelarkin
one could argue that some large multi-national corporations are already acting
as a collective & super-human intelligence. Indeed, isn't that the point of
many human "institutions" which subscribe to the notion that rule of law (the
code) supersedes the rule of man.

------
pwaivers
> This Article argues that algorithmic entities — legal entities that have no
> human controllers...

What is an example of one these entities? The abstract doesn't really explain
what it means here.

~~~
gwern
Well, it's an LLC once the human initializers withdraw from it, that's the
legal trick here. If you mean what is the actual algorithm using the LLC
shell, it could be anything. A simple flowchart, a DAC on Ethereum, a NN on
AWS, whatever.

~~~
xenadu02
LLCs must have at least one member with ownership interest, otherwise it (or
all its assets) would be abandoned property by state law

~~~
politician
What if it's a subsidiary of a foreign parent?

~~~
_acme
The foreign parent would be a member.

~~~
politician
Of course, now what if the foreign parent was itself an AI?

------
cgrosmeier
The "Ghost in the LLC".... I look forward to the day when a self-owning
corporation is a self managed application for an autonomous system and has no
human intervention. Like this: The Implications of Modern Business-Entity Law
for the Regulation of Autonomous Systems (
[https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2758222](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2758222)
) Credit due to Drone Law Today for the title.
([https://player.fm/series/drone-law-today/ghost-in-the-
llc](https://player.fm/series/drone-law-today/ghost-in-the-llc))

------
pbhjpbhj
Meta: Legal articles that look at limited jurisdictions really should have eg
"in USA" or "under USA law" added to the title.

------
jim-davis
In the Rosinante trilogy of Alexis A. Gilliland the autonomous AIs are self-
owned corporations, and indeed are sometimes addressed with the word
"Corporate" as a title, somewhat like "Mr" or "Ms". This is of course fiction;
while much of the engineering in the series seems plausible I have no idea if
the legal theories are. Worth reading anyway, the AIs are charming.

------
loxias
Between this link and the other one currently on the front page about
malicious AI ([https://blog.openai.com/preparing-for-malicious-uses-of-
ai/](https://blog.openai.com/preparing-for-malicious-uses-of-ai/)), some days
it really feels like we're converging on Stross's Accelerando. ;-)

Now we just need to transmit some lobster connectomes into deep space... ;-)
[closer than you might think!
[https://github.com/openworm](https://github.com/openworm) exists...]

------
gnode
It seems to me that the unique feature of a computer controlled legal entity
is to extend a human's agency beyond their death or otherwise incapacitation,
as a kind of smart will. In other cases, there seems little benefit over just
employing the computer to aid your decisions or acting through a computer, as
legally you would be culpable for actions you intended (purposely culpable) or
didn't give due consideration to (negligence or recklessness).

------
danimal88
Our laws desperately need unit tests and integrations tests...

------
solotronics
there is a Greg Egan book where the protagonist specialized in setting up
autonomous corporations that spawned others so fast they couldn't be shut down
or even kept track of really, if I remember correctly it was for the purpose
of proactively copywriting ideas that we're then released into public domain

edit: Diaspora by Greg Egan. his books are really really great

------
bitL
I see no reason why making CaaS (Company-as-a-service) couldn't be possible
and why would it have to do anything illegal?

------
readams
This seems to be the AI equivalent of "well there's no rule that says a dog
can't play basketball!"

------
omarforgotpwd
Huh? You’re seriously telling me that an algorithm can be the sole owner of a
corporation? That doesn’t sound right. Typically when opening financial
accounts and establishing credit for the business the bank would ask for the
SSN of a real person, I would think.

------
cypherpunks01
Can LLC ownership contain cycles? E.g. A is 50% owned by B which is 25% owned
by A? Would a US state or the IRS notice if this happened on a longer
obfuscated chain?

I thought that's what the article was going to imply based on the title, but
it wasn't : )

~~~
gamblor956
LLCs organized as partnerships are required to report their partners to the
IRS. If the partners are partnerships themselves, they must keep disclosing
the partners recursively up to individual or corporate partners.

~~~
_acme
LLCs may be taxed as flow-through entities (similar to partnerships), but no
LLC is organized as a partnership, that's simply a nonsensical statement; an
LLC is a distinct and separate type of entity to a partnership, limited
partnership, LLP, LLLP and corporation.

~~~
gamblor956
For tax purposes, an LLC is either a corporation or a partnership; it's not
merely similar to one or the other. LPs, LLPs, and LLLPs are taxed like
partnerships, unless they are foreign registered, in which case they are taxed
like corporations.

An LLC treated as as partnership for tax purposes is required to disclose it's
partners all the way up the chain.

Legally, an LLC is organized like a partnership (member managed) or like a
corporation (manager managed). I should have been more precise there. I was
using shorthand because I was assuming the tax context and should have
acknowledged that the tax treatment differs from the legal treatment.

------
behindmyscreen
"Are you detaining me?"

I feel like I am getting a whiff of a Sovereign Citizen...

------
qbaqbaqba
Stanislaw Lem's The Washing-Machine Tragedy is getting real!

------
qaq
a bit more creatively structured but Vanguard is pretty much it. As Nelson
Rockefeller famously said, “The secret to success is to own nothing, but
control everything.”

------
samirm
the article is free to download... Seems like there's a lot of people who just
read the abstract without reading the paper.

------
SubiculumCode
Who would have standing to bring a suit against the legality of an autonomous
ai led Corp?

------
sharemywin
wonder how it would sign papers?

I guess it could e-sign it?

give someone power of attorney to sign papers on it's behalf?

~~~
leetcrew
my guess is that the handwritten signature is already on its way out of being
relevant in modern society. in most cases it seems to serve more as a
formality than a security measure. when I worked as a cashier, the majority of
people would just do some squiggle and get the hell out of the store rather
than any kind of consistent signature.

in principle at least, public key crypto is way more effective than a
signature, and I expect this will become prevalent in the next couple decades
as laws and customs enter modernity. at this point it would be trivial for a
digital entity to enter into a binding contract.

~~~
Muromec
It's not the form of signature that is important here. It's the act of signing
itself. Legal entities do not sign anything, they give authority to some human
to do it in their name.

------
yuhong
I was imagining a corporation with no owners but with a board of directors.

------
shawnbayern
I'm the law professor who developed the ideas discussed in the quoted article.
A friend just brought this thread to my attention. The full arguments, which
address most of the concerns laid out in these comments, are available here:

(1) [https://ssrn.com/abstract=2366197](https://ssrn.com/abstract=2366197) (2)
[https://ssrn.com/abstract=2758222](https://ssrn.com/abstract=2758222)

(The article at the top of this thread, by Prof. LoPucki, is a response to
these two articles.)

I'm happy to answer questions if that would be useful, although of course I
can't give legal advice. In general, there's a tremendous amount of
misunderstanding about LLCs and about the law of legal organizations, both in
the US and elsewhere -- even among lawyers! It's fair to say that US
organizational law tends to be more flexible than similar laws in other
countries, and my point in these articles it that it's flexible enough to do
surprising things.

In the articles, I specifically discuss RULLCA (the basis for the LLC laws in
something like 17 US states, with that number growing), as well as NY's LLC
law, and I show why a lot of people's instinctive comments here (and
elsewhere!) are legally mistaken. For example, the statutes in these states
specifically contemplate memberless LLCs, and indeed memberless LLCs are not a
crazy or unconventional possibility. In various wealth-management contexts,
they are routine. That LLCs could persist without members for indefinite
periods is more controversial, but my articles explain why the current
statutes do permit them.

Of course, legislatures could stop all this if they wanted to. The LLCs
statutes are just statutes. But you need just one jurisdiction to allow my
technique for it to enable AIs to interact with the legal system in quite
significant ways. Also, it's not entirely clear what it would mean to stop an
LLC from doing what I propose, or whether judges would practically wish to do
that. For example, suppose you follow my technique and then your AI buys a
house. What would it mean to say that the LLC isn't legally "valid"? Would the
original owner get the house back and also keep the purchase money? (There
wouldn't necessarily be anyone to return it to.) Developing sound
institutional solutions to complex questions about legal organizations is not
an easy problem.

The common-law judges have always been keen to permit new structures when they
are useful. One-person legal companies were themselves controversial not too
long ago, but they're commonplace today. In my articles, I give reasons
supporting the usefulness of zero-person LLCs.

~~~
mmealling
A couple of questions:

Have you responded to the to Matt Scherer's critique that starts here:
[http://www.lawandai.com/2017/05/14/is-ai-personhood-
already-...](http://www.lawandai.com/2017/05/14/is-ai-personhood-already-
possible-under-current-u-s-laws-dont-count-on-it-part-one/)

From my understanding of Conflict of Laws issues there is a great deal of case
law suggesting that even if the memberless LLC were created that the first
court to see one would immediately declare it dissolved regardless of what the
Operating Agreement said because it violates the intent of the legislation.
Or, to use Scherer's words, "courts recognize that “some things ‘go without
saying'” in legislation just as they do in everyday life, and legislatures
thus legislate “against the backdrop of certain unexpressed presumptions.”
Bond v. United States, 134 S. Ct. 2077, 2088 (2014)."

It also seems that both FATCA and the OECD Common Reporting Standards treaty
supersedes state incorporation rules concerning reporting of Ultimate
Beneficial Owner for an entity that pays taxes in any 'acceptable'
jurisdiction. One could probably create a memberless LLC in Somalia but have
zero luck accessing a modern legal jurisdiction.

Take the Series LLC that can be setup in Delaware. No one outside the US
recognizes the individual series as being separate from the others and thus
combines all of the assets of the parent LLC, rendering the form useless
outside the US. Just because one State creates a memberless LLC obligates no
one to recognize it.

~~~
shawnbayern
Thanks -- these are great questions.

I haven't responded in print yet to Matt Scherer's critique, but I'm aware of
it. I had been under the impression he was planning to turn his blog posts
into a longer article and was waiting to respond to that. I responded briefly
in this podcast; the interviewer spoke with him too:
[https://player.fm/series/drone-law-today/ghost-in-the-
llc](https://player.fm/series/drone-law-today/ghost-in-the-llc). I do also
address some of his thoughts (but not comprehensively) in a chapter in an
upcoming book called "Research Handbook on the Law of Artificial
Intelligence."

My quick response for now is (1) the statutes already clearly contemplate
zero-member LLCs, and some even explicitly give operating agreements the power
to vary their duration; and (2) judges don't have a clear policy reason, or a
clear vision of legislative intent, to invalidate zero-member LLCs. I have
more technical responses, but they'd probably be better for a different forum.
It's worth saying that the history of business-organizations law is driven
partly by the development of new structures that were once considered crazy.
Nobody wrote limited-partnership statutes with the idea that a corporation
could be a general partner; nobody even imagined one-person companies until
relatively recently.

To elaborate my second point above concerning legal policy, who's going to
complain about an LLC that operates without members, and how would the courts
implement an appropriate remedy? I suggested this problem in my earlier
comment: Say I follow the transactional technique I've outlined in my
articles, and then the resulting zero-member LLC buys a house two years later
with money that it has earned in otherwise unobjectionable transactions that
nobody challenges. The former owner of the house is offended that a robot has
purchased her house. She sues, asking for the LLC to be dissolved. Why would a
judge favor her over the LLC in that transaction? What would it mean to say
that the LLC's internal-governance structure is invalid? If a judge did return
the house to the original owner, what would we do with the money used to
purchase it? To be clear, I have absolutely no problem with, and would
encourage, expanded provisions for administrative dissolution of zero-member
LLCs if individual ones do become problematic. What I object to is the
declaration that all are problematic simply as a matter of form.

I'm not an expert on international taxation or money-laundering regulations,
but I don't see any problems from FATCA for a zero-member LLC taxed as a
corporation. I'm not aware of anything in the Convention on Mutual
Administrative Assistance in Tax Matters (the background legal framework for
the Common Reporting Standards) that would "supersede" or preempt state
organizational law. At most, the Common Reporting Standards might eventually
make it incrementally harder for zero-member LLCs to open accounts with some
financial institutions. I applaud attempts to stop money laundering and
support better reporting requirements, but it's an open question whether these
regulations will be able, practically speaking, to unravel the complexity of
conventional business arrangements, much less novel ones. Most people (and
even most lawyers) don't understand quite how flexible LLCs really are.
(Several years ago I wrote a legal textbook called "Closely Held
Organizations" that explains this flexibility in more detail.) Moreover, the
world is not static; if existing entities, validly constituted under one or
several countries' laws, prove to be useful, banking norms and treaties can
easily change.

In any case, you just need one bank to hold your money; you can do a lot
without exceeding the reporting requirements (and why would anyone go after
you if you're not in fact laundering money or committing crimes?); and, these
days, you don't even need a bank account to hold and transfer significant
wealth. And holding a bank account is just one capability afforded by legal
personality. Using my technique, AIs can effectively own other forms of
property, make contracts, be a legal agent, be a legal principal, and so on.

------
IncRnd
The headline on HN doesn't match the articles headline or contents.

~~~
grzm
I suspect it's a summary of the first line of the abstract:

> _" In an article published in the Northwestern University Law Review in
> 2014, Professor Shawn Bayern demonstrated that anyone can confer legal
> personhood on an autonomous computer algorithm merely by putting it in
> control of a limited liability company."_

Given that the first sentence is too long, I think it's a reasonable summary
of it, though reasonable people may disagree.

In these cases, it's really helpful to provide what the actual title is (in
this case "Algorithmic Entities"), and, if so inclined, a suggestion for a
better title. It provides something actionable that a mod can use when
updating. Do you have any suggestions for a better title?

And if you've really got a bee in your bonnet, you can let the mods know
directly via the Contact link in the footer. They don't see every comment but
emailing them makes sure they see it.

~~~
IncRnd
> _Given that the first sentence is too long, I think it 's a reasonable
> summary of it, though reasonable people may disagree._

The difference between the title and the contents is the difference between
control and ownership. They are not the same. The article discusses control
not ownership. That is also the case in the portion of the article you quoted.

~~~
grzm
Great! Would you be willing to continue moving this forward rather than just
picking it apart? Going beyond only debugging and providing a patch, as it
were?

------
trumbitta2
This somewhat reminds me of Accelerando by Charles Stross

------
paulie_a
This article is just plain dumb and another attempt for someone to think they
can hack the legal system

It doesn't work that way and judges find it obvious and obnoxious.

Feel free to give it a shot though and enjoy the contempt of court

------
trynewideas
cool, there's my next Shadowrun campaign sorted

------
frozenport
How does an algorithm, that is now the owner of the LLC pay taxes?

------
cornholio
If a corporation is competitive enough to exist and outcompete other human
corporations, then maybe it's not really self-owned, is it?

It's controlled by an synthetic consciousness that could be sentient and thus
deserving of legal rights similar to the other sentient consciousnesses of
biological origin.

~~~
wyattpeak
There's no reason it need be conscious or even intelligent.

You could throw together a "self-governing" online store in a few days. Drop-
ship all products, make sure it stays up to date on its bills.

It wouldn't be very resilient, but it could feasibly just sit there
accumulating money, no intelligence required.

