Sociocratic corporations are perfectly legal. All the laws that constrain corporate functioning can be met while applying sociocratic values, principles, and methods.

Laws governing corporations, both for profit and not for profit, are generally written to prevent abuses that corporations have committed in the past, often with investors’ or donors’ money. In writing the law, the government is presenting its solution to that problem. If you can determine what the law intended to prevent, you will have a good guide to functioning within the law and build a sociocratic structure.

For example, in the US, there is often a requirement that the Board of Directors function by majority vote. The law was intended to ensure that “at least” a majority were in favor of an action. It is a minimum standard, not a maximum standard. Consent contains within it the majority. There is no contradiction in the numbers.

Corporate legislation requires an organization to have a Board of Directors with full authority to govern the organization, but the board can delegate its authority. This is what higher circles do when they create lower circles.

The legal protection for investors and donors is that if the lower circles do not carry out their delegated duties, the Board has the authority to take control. The Board can delegate authority as long as it retains responsibility for the results. This is also perfectly sociocratic since a higher circle can decide to eliminate a lower circle that is not functioning properly.

Even if you are confronting an old law that protected someone 200 years ago, however, the worst thing you can do is to try to convince the government that they are wrong at the same time you are trying to become incorporated. Get legally incorporated, then demonstrate the superiority of the sociocratic structure. Until you have done that, no one will listen to you.

We had this problem with cohousing communities getting approved by town zoning boards. Most cohousing communities are legally structured as condominiums. There are very clear laws about “common interest” real estate in which each owner has a percentage interest. Instead of explaining how the cohousing project met all the legal requirements for condominiums and was financially sound, groups were going to banks and zoning boards talking about shared meals, consensus decision-making, supportive environments for children, changing the world, recycling, etc.

This information was distracting the banks and boards and creating uncertainty about totally sound real estate developments. Cohousing groups were routinely turned down until they found a conventional developing partner, a very sympathetic banker, or began sounding like the legally established condominium that they were.

To ensure that you are both within the law and not undermining the self-optimizing sociocratic structure, you only need a lawyer and a sociocratic consultant with the level of training required to set up a complex organization.