To Amend Bylaw Section 1.5, etc., to Unify in the Bylaws and Revise Corporate Formation Requirements for Instrumental Entities of Corporate Synod and Agencies of the Synod

Official Workbook overture source text

9-06 
To Amend Bylaw Section 1.5, etc., to Unify  
in the Bylaws and Revise Corporate Formation 
Requirements for Instrumental Entities  
of Corporate Synod and Agencies of the Synod 
Rationale 
In the triennium now drawing to a close, the Board of Directors 
(BOD) has identified a number of reasons to address the 
requirements the Bylaws place on corporate Synod and agencies of 
the Synod (Bylaw 1.2.1 [a]) when they create or utilize additional 
corporations to do aspects of their work. Presently, these 
requirements are stated in part in Bylaw section 1.5 and in part in 
1981 Resolution 5 -07, “To Provide Guidelines for New 
Corporations,” aspects of which were not superseded by 2016 Res. 
9-02A, “To Assu re Uniformity of Relationship and Asset 
Disposition Language in Governing Documents of Corporate 
Agencies of the Synod.” Faced with a number of challenges and a 
few opportunities, as well, the BOD invited input from the 
Synodwide corporate and trust entities of the Synod, the educational 
institutions and districts, and the Office of International Mission, 
and, with the involvement of the Office of the Secretary and legal 
counsel, through the course of many meetings, developed the 
following proposal, which attempts to address the following issues 
in the following ways: 
1. Challenge: Requirements stated outside the Bylaws, in 
1981 Res. 5-07, are often forgotten until review of 
documents by the Commission on Constitutional Matters 
(CCM) and/or the BOD, and do not reflect modern business 
needs or conventional wisdom about corporate formation. 
Solution: All requirements are being integrated into Bylaw 
section 1.5 and have been reviewed in view of experience 
with recent test cases, including the LCEF Canada 
Corporation, Concordia Risk Solutions, and the great 
variety of foreign mission corporations presently in use and 
contemplated. Previous requirements not incorporated in 
the Bylaws (notably, 1981 Res. 5-07) will be retired. 
2. Challenge: Regulations dating from 1981 or even 2016 
have proven in the past triennium not best to serve the 
needs of the Synod regarding regulation of its agencies. In 
some cases, the language required to be present in 
governing documents has either not been included or, 
where included, has not been strong enough, in a modern 
legal situation, to accomplish intended purposes; in other 
places, requirements are not those that modern prudence 
would suggest from standpoints of corporate law or 
business needs. Solution: Requirements have been 
extensively reviewed and revised in light of decades of 
experience by the BOD and in reviews by the CCM. 
3. Challenge: Regulations only contemplated corporate Synod 
and agencies of the Synod forming more agencies, all 
subject in the same respect to non-waivable requirements of 
Bylaw section 1.5 (except that the BOD could waive or 
modify requirements about certain statements in agency 
governing documents, Bylaw 1.5.3.6). Neither LCMS 
International Mission entities formed overseas for mission 
purposes, nor modern private equity partnerships fit this 
model, although both are necessary. Treating only agencies 
in the bylaws allows the possibility of agencies asserting 
they can create instrumental legal entities that are not 
subject to agency requirements, or creating as agencies 
entities that should not be agencies. Finally, relaxing 
requirements for all agencies to allow certain exceptions 
would weaken the Synod’s ability to regulate all its parts by 
its Constitution, Bylaws, and resolutions. Solution: The 
proposal develops a richer taxonomy of “instrumental 
entities,” described below, granting the BOD authority to 
grant certain exceptions for agencies below the level of 
synodwide corporates, districts, educational institutions, 
etc., and to allow formation of certain, specific types of 
instrumental entities as other than agencies when the 
agency conventions do not make sense. 
4. Opportunity: The Lutheran Church Extension Fund (LCEF) 
and certain districts and educational institutions of the 
Synod have begun to explore the development or 
redevelopment of real property, in part, for commercial 
purposes, and in part, to sustain or expand ministry 
opportunities in locations where they otherwise could not 
be sustained or in connection with opportunities related to 
the contemplated developments. Doing so requires the 
creation of entities that are neither Synod agencies (as there 
would be involvement of commercial developers and 
investors) nor purely passive, “detached,” investment 
vehicles. Because there is no mechanism for formation of 
these special-purpose entities at present, even if there is a 
very good business and ministry case for such an effort, the 
BOD has no option to allow it to proceed. Solution: The 
proposal, in the aforementioned taxonomy, allows a 
category of special-purpose entity, presently limited to a 
narrow scope of initial possibilities, instances of which 
must be approved by the Synod BOD. 
The most important feature of the proposal is the development of a 
taxonomy of “instrumental entities” (defined below) that may be 
established, acquired, or entered into by corporate Synod and 
agencies of the Synod, and a definite set of regulations applic able 
to each. These may be outlined as follows (compare proposed 
Bylaw 1.5.1 below): 
1. Agencies of the Synod (existing category): These are 
“instrumentalities…, whether or not separately 
incorporated, which the Synod in convention or its Board 
of Directors has caused or authorized to be formed to 
further the Synod’s Objectives (Const. Art. III)” (Bylaw 
1.2.1 [a]). Every corporation formed by corporate Synod or 
an agency of the Synod is expected to be authorized by the 
BOD or convention (1981 Res. 5-09) and therefore to be, 
2026 Convention Workbook
458 STRUCTURE AND ADMINISTRATION