Comment by aimazon
7 months ago
Yes. A CIC is just a limited company with some additional community interest obligations. You can set up a limited company to shield yourself from liability (i.e: if your website is sued by a user, your personal assets aren't at risk) and only in exceptional cases (where serious lawbreaking is involved) could you be held personally liable.
Rightly or wrongly, limited companies in the UK provide a high degree of protection for wrongdoing. Defrauding HMRC out of hundreds of thousands of pounds and suffering no consequence is happening day in day out. An Ofcom fine is nothing by comparison.
1. Thanks for this very helpful information about how some seemingly quite simple legal manoeuvring can be used to dodge 99% of this law.
2. Doesn't the fact that simple legal manoeuvring can be used to dodge 99% of this law make the law (and laws like it) farcical on its face? Merely an elaborate set of extra hoops that only serves to punish the naive, while increasing everyone's compliance costs?
The law is designed to target large companies that aren't seen as doing enough to prevent harm on the internet. Setting up a CIC doesn't dodge the law, the legal entity (the CIC) remains accountable for conduct on the website. Setting up a CIC removes the risk from the individual website operator because they're no longer operating the website, instead the website is operated by a separate legal entity. The website could still be held accountable for violating the law but the consequence would be the CIC is fined, not the individual behind it. The same principle as any limited liability company.
In the U.S. we have the concept of "piercing the corporate veil" whereby if you can prove that a LLC (effectively a corporate entity created to shield owner's liability) is a flimsy legal device whose only intent is to skirt laws like this one, you are able to go after the LLC owner personally anyway.
Does the UK have a similar concept?
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>the consequence would be the CIC is fined
Does this in practice mean that the original human person would have to pay that fine? What would the consequences likely be for the original human person?
If those consequences remain severe, then it's not a simple legal manoeuvre after all. This reduces farcicality, but also means there's no way for an individual to safely run this kind of website.
If those consequences round to zero, my next question would be: Can a large company spin up a CIC just to shield itself in the same way? (If so, it seems the farce would be complete.)
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How would that work if someone set up a CIC, used it to rent a VPS and did some grey-hat hacking activities?
If the person committed a criminal offence under the Computer Misuse Act then they would face criminal sanctions, personally.
The Online safety bill gives Ofcom the power to levy regulatory fines, not criminal sanctions, so is very different