Comment by akoboldfrying
7 months ago
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?
In a case like the forums in question though you wouldn't set up the LLC so you can skirt the law. You'd set up the LLC and make a good faith attempt to comply with the law.
It may turn out that it is too much work to comply and so you might still need to shut down, but with the LLC you've got a lot more leeway to try without personal risk.
Yes it has the concept. But like the previous poster said, it can only be used in very serious criminal wrongdoing.
>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.)
In practice the person would not have to pay the fine. The company would. If the company had no cash to pay it then it could be forced into insolvency.
No a large company can't spin up a CIC to run a business website (because it is not community interest), but it doesn't need to, it is already a limited liability company. However this is not a farce, the limited liability applies to the shareholders, not the company. The company gets fined, and has to pay the fine or risk having its assets siezed.... then the shareholders have lost their company. The liability of the shareholders is limited to the shareholders invested amount, ie the shareholders can't lose any more than they put in. So if the fine was more than the company can afford, the shareholders lose their company, but don't have to pay the rest.
It is not a farce, because losing a profit earning company is bad for a shareholder
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