Legal Basics

• Articles of Incorporation are the primary rules for governing the management of a corporation.
• Bylaws spell out specific rules for the operation of a corporation, are drafted by the corporate founder or its directors in accordance with its Articles of Incorporation.
• Additionally, California's Nonprofit Religious Corporations law, under which CSI was formed and is regulated, sets specific requirements for religious corporations.
• For example, all affairs and activities of a California religious corporation must be exercised by and under the direction of a board of directors. California Corporations Code Section 9210.
• These are not mere legal formalities but form the basis for special privileges afforded nonprofit entities, including tax-exempt status, which can be revoked for non-compliance; not to mention the duties and obligations to LRH to fulfill his wishes. Failure to abide undermines the legal right of RTC to enforce its rights to the trademarks and advanced materials, it's raison d'être.
• A trust agreement is a legal document in which one entrusts property to another for the benefit of a third person or entity. LRH gave his rights in Scientology trademarks and Advanced Materials to RTC subject to the right of CST to purchase them for a nominal sum should RTC fail in its duties.