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Ask HN: Dynamically creating corporations

8 points by wj ↗ HN
One of the plot points of Accelerando by Charles Stross is that corporations could be created and shutdown dynamically like one might spin up more EC2 instances. Like today corporations could own each other and hire people.

I can't help but feel this is inevitable (particularly if we are transitioning to a "gig economy") and that the first country that successfully builds the framework will more than move the needle on their economy. (I could see Estonia being the first as an extension of their e-residency program.)

The two biggest obstacles would probably be taxation and liability. A blockchain might help in establishing the ownership chain to ensure that the proper parties are taxed the proper amounts. But how do you hold a company liable when their existence was mere microseconds? Do you pierce the limited liability shield and pass the lawsuit up the blockchain until it reaches an active corporation or human?

Curious as to any answers to those questions or thoughts on the concept in general.

3 comments

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1123581321
Two thoughts:

1. Right now, you can't evade liability by shutting down a corporation.

2. Law firms will have the technology to act just as quickly as other corporations. If a secretary of state's office can accept a complete corporate formation via API call, then court systems will probably be able to accept case filings similarly.

wj
Thoughts in response:

1. I shut down a LLC about four or five years ago. I definitely didn't think about it at the time but it seems a bit wrong that it can be willed back into existence by a lawsuit. It can't defend itself without any assets to pay lawyers or members so to defend against the lawsuit would require piercing the shield and going after the former members assuming they are still alive (which in this case they all still are).

2. I think you are exactly right with that thought.

That example can even be extended that the tax office can be notified of each transaction the corporation enters and have a ledger of revenue, expenses, and deductions that need to settled before the corporation can be spun down.

One thing that I hadn't thought through is that the only reason to keep a corporation going is the hope of future earnings (or for tax/liability reasons but it all comes back to money). Without that potential it is shut down. Maybe it is a moot point. Why use your own resources to sue a company that has nothing to give you?

1123581321
Good thoughts. I also shut down a corp (S-Corp) in the last few years and had similar misgivings. But theoretically, if the veil is pierced, whatever assets the corp returned to shareholders should be available for legal defense. Or if the corp still existed and in the red, shareholders would be lending money anyway to defend it and stave off personal liability. If neither corp nor shareholders have enough assets to defend themselves, that is its own sort of protection (the play dead, or actually dead, strategy.)

I'm not disagreeing with you; just adding to it.