Hedera Hashgraph, LLC is a limited liability company organized under Delaware law in the United States. The LLC is made up of — and is owned and governed by — the LLC members, who we refer to collectively as the Hedera Hashgraph Council, the Council, or the Governing Council. The current list of Council members is here.
While the Council members own Hedera Hashgraph, LLC, they do not own the coins in the Hedera treasury account. Each Council member holds an equal ownership interest in the LLC, but the ownership interest is somewhat unusual in that it confers governing rights without economic rights. As a result, the Council members own and govern Hedera Hashgraph, LLC, this governance involving making decisions about the management of the network, including decisions about the staking and sale of coins from the Hedera treasury account, but membership does not give a Council member individual ownership of or rights to those coins or their economic value.
Each member of Hedera Hashgraph, LLC becomes party to the LLC’s operating agreement, makes a capital contribution of US $100, and receives an equal ownership interest in the LLC. Governing decisions are made on a one-member, one-vote basis, so each member has 1/N influence on governance decisions, where N is the current number of members. At scale, there will be 39 members, and each member will have 1/39 (2.56%) ownership of Hedera. When a member’s term ends, the member is repaid its US $100 capital contribution and relinquishes its ownership interest, which then is transferred to a new Council member. This time-limited, rotating membership is designed to avoid calcification and to ensure continued diversified ownership and governance.
Importantly, Council members’ ownership interest is different from traditional equity ownership, because the operating agreement is written so that interests in the LLC do not confer any corresponding economic rights. Each Council member’s ownership interest gives the member a vote on key governance matters, including management of the Hedera treasury account. It does not, however, give the Council member traditional equity rights, such as a right to profits or to a share of Hedera’s value, including the value of hbars in treasury, whether or not the value of the LLC and/or the coins appreciates. (Even in the event of a dissolution of Hedera Hashgraph, LLC, Council members do not receive any distributions of the residual value.) Members own and are responsible for the governance of Hedera Hashgraph, LLC, but do not own a right to receive any share of the LLC’s profits or assets — including the coins held in treasury.
Hedera Hashgraph, LLC owns the majority of the hbars that are held in the Hedera treasury account. The remaining hbars in the treasury account are allocated to or owned by third parties but are held in treasury while they are locked up under the terms of those agreements (e.g., SAFT holders, founders, employees). Control over the treasury account is decentralized to the Council members, whose ownership interests in the LLC give them the right to make important governing decisions, such as where the coins are staked and the schedule for selling the Hedera-owned coins.
Concretely, the ability of each Council member to influence decisions about the treasury account operations will manifest as the decision by each Council member to apply (or not) their private key to a m-of-n multi-signature transaction that specifies the operation. (There may be a period of transition as Council members are on-boarded and generate their private keys, during which time decisions would be made by a traditional vote of members. However, requiring Hedera governance transactions to be signed by the diversified set of Council members is an important component of the governance model.)