Why we chose a CIC in the UK

The Neos Foundation CIC is the result of many months of research and discussions within the team about what our legal entity is supposed to be. This is the first of a couple of blog posts that will explain our choice in more detail.

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How we set our priorities

When the Neos Project became independent it was clear to us that a huge challenge was ahead for the team. Quite suddenly we did not have funding, infrastructure, a brand or supporting teams any more. What we did have, were two solid products, a dedicated core team and a passionate community.

With these limited resources we had to make tough choices about our priorities. It was always clear to us that trust in the project was, and is, what we wanted to build. So in parallel to the huge Neos 2.0 release we established the minimum of infrastructure and funding we could think of, to be able to connect with our community and raise some funds to focus on our next big step: our brand and website relaunch.

Don't get us wrong, we did discuss about a legal entity pretty much from the start, but the team very quickly agreed, that

  1. we did not want to be stuck with a "temporary" solution,
  2. we did not want to establish a legal entity "just to have one",
  3. we wanted to focus our energy on more important topics, e.g. establishing our brand and developing our products.

Guiding principles for our legal entity

When we started to look into the legal entity topic we discussed quite a lot within the team to define guiding principles for it. We wanted to incorporate learnings from previous experiences and make sure that it "felt like Neos". We concluded that the following points should apply to a Neos legal entity:

  • it should be a protective shield for the Neos Project (e.g. trademarks, brand)
  • it should provide a way of funding, independent from any single agency
  • money should not dictate the development of Neos and Flow
  • it should be accessible to every community member (e.g. everything in English)
  • it should be as big as we need it to be, but as small as it can possibly be
  • its function is purely administrative - the legal entity does not develop the software and it does not make decisions about it
  • membership in the legal entity should be based on contribution and activity, not on a sum of money
  • a position in the legal entity should be seen as a burden rather than a sought after privilege

Some of these points may seem strange at first sight, others outright naive and we will explain them in more detail in follow up posts.


Why a Community Interest Company?

We are aware that a community interest company is not a well known form of legal entity. While that could discourage some potential supporters, the CIC has some great benefits in its core:

  • its purpose, the "community interest" is evident right in its name, officially regulated and needs to be proven regularly
  • it is not for private gain - number four of our articles explicitly states: "The Company is not established or conducted for private gain: any surplus or assets are used principally for the benefit of the community."
  • it has an asset lock, meaning that any assets (especially money) acquired by the CIC have to be used for the benefit of the community and cannot be transferred elsewhere, unless approved by the regulator
  • every legal document is in English by default
  • it requires comparatively few formal positions that could result in greed for supposed power
  • compared to a foundation in its formal sense, a CIC does not require a big amount of monetary funds to get started

The result is very close to our guiding principles and our hope is, that the Neos Foundation CIC will see only limited bureaucracy and very high transparency.


Why the UK?

Of course you are wondering why we chose the UK as location for the Neos Foundation CIC. To be clear: no, we did not have our heads stuck in the sand for the past year. And while there are certainly big questions connected to Brexit, we still feel that the UK is a good choice, because

  • the community interest company is a form of legal entity that exists specifically in the UK,
  • we want to be clear that Neos is an international project with an international team, where English is the first language,
  • CIC law is UK law, so Brexit will not change the fundamentals of what we value about the CIC form.

As the Neos Foundation CIC will not sell anything or provide a service from the UK, any trade regulations imposed with have little to no effect on us. Cross border money transfers could become more expensive, but we face those already today with team members in Russia or Switzerland and they are normal operating costs for international teams. Should these costs rise to significant levels, we will find a solution.

To be on the safe side we checked with our lawyers that if the worst case scenario occurs and the UK is no longer available to host the Neos Foundation, we can transfer it to another organizational form in another country e.g. a German e.V.

We want to make this point clear: the Neos Foundation will not sell, market or develop Neos, but the Neos Team will. That may seem like a small difference, but it means a lot to us team members. We ourselves are directly responsible for the success of Neos and our Foundation can help us achieve our goals.


More to come

As we continue the setup of our CIC we will be able to share more information. In addition, we will publish further posts in the next weeks explaining our intentions and ideas in more detail.

Please share your thoughts and feedback with us at hello@neos.io!