[CCWG-ACCT] Documents for Posting for CCWG-ACCT

Mon Oct 5 06:36:01 UTC 2015

Dear Alan:

You asked the following question:

Although it has no direct impact on the current discussion, could you please further elaborate on your statement at the top of page 2 that the corporation can be dissolved by a simple majority of a minimal quorum (5/9/16). The California statute [1900.5.a and 1900.5.a(7)] seems to state that for dissolution, a majority of directors must sign a certificate of dissolution. That would imply that 9 were required (presuming the Board had its full complement of voting directors at that time).

The sections that you cite in the excerpt above relate to California's General Corporation Law, which applies to business corporations, rather than its Nonprofit Public Benefit Corporation Law, which applies to ICANN.  Since the two laws are roughly parallel, though, we understand your point regarding who signs the Certificate of Dissolution.  That final step in the dissolution process can only be understood in the context of how the entire dissolution process works.

The relevant statutory requirements are in Sections 6610 et seq. of the Nonprofit Public Benefit Corporation Law, which is part of the California Corporations Code.  As mentioned in footnote 1 of the memorandum, Section 6610(b) provides that, in a corporation without members such as ICANN is today, a corporation may elect by approval of the board to wind up and dissolve.  This approval could legally take place at a meeting at which a bare quorum of the Board were present; a majority of those present would then be enough to elect dissolution.  No higher voting requirement is imposed by the law or by ICANN's current governing documents.  It is this vote that is the key board action necessary to start the process of dissolving the corporation.

The next step, described in Section 6611, is the requirement to file with the California Secretary of State a certificate evidencing this election to dissolve.  This certificate may be signed by two officers (it could instead be signed by a majority of the directors then in office, but this is not required; two officers is sufficient by law).   We assume that even the mere filing of a Certificate of Election to Dissolve would be extremely disruptive to ICANN.

Section 6613 makes it clear that after these initial steps, the dissolution process commences.  That is, the affairs of the corporation are wound up, and the assets of the corporation are liquidated and/or distributed as required by the law and its Articles of Incorporation.  (Before any assets are distributed, the election to dissolve can be revoked, as provided in Section 6612.)  When the corporation's affairs have been completely wound up, the final step occurs: filing a Certificate of Dissolution with the Secretary of State to end the corporation's existence by dissolution.  As Section 6615 provides, this Certificate must be signed by a majority of the directors then in office.  This is the requirement you refer to in your question.  It is true that, depending on how many directors are still in office at this stage, it is possible that more directors would need to sign the Certificate of Dissolution than the number who earlier authorized the dissolution.  However, since the Certificate of Dissolution is not filed until the very end of the dissolution process, its signature requirement does not prevent the dissolution process from being initiated by the Board under the scenario discussed above.

We hope this clarifies the legal requirements for dissolving a non-member nonprofit public benefit corporation.

Rosemary

Rosemary E. Fei
Adler & Colvin
235 Montgomery Street, Suite 1220
San Francisco, CA 94104
415/421-7555 (phone)
415/421-0712 (fax)
rfei at adlercolvin.com
www.adlercolvin.com

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From: Holly Gregory
Sent: Sunday, October 04, 2015 4:59 PM
To: Alan Greenberg; leonfelipe at sanchez.mx; thomas at rickert.net; mathieu.weill at afnic.fr; accountability-cross-community at icann.org
Cc: Sidley ICANN CCWG; ACCT-Staff; ICANN-Adler; Rosemary E. Fei
Subject: RE: [CCWG-ACCT] Documents for Posting for CCWG-ACCT

Hi Alan, Thanks for your question.  The footnote we provided explained that section and addresses your question. Rosemary will send along a further explanatory note to clarify (as our expert on California not for profit law).  Kind regards, Holly

Sent with Good (www.good.com<http://www.good.com>)

________________________________
From: Alan Greenberg
Sent: Sunday, October 04, 2015 04:47:39 PM
To: Gregory, Holly; leonfelipe at sanchez.mx<mailto:leonfelipe at sanchez.mx>; thomas at rickert.net<mailto:thomas at rickert.net>; mathieu.weill at afnic.fr<mailto:mathieu.weill at afnic.fr>; accountability-cross-community at icann.org<mailto:accountability-cross-community at icann.org>
Cc: Sidley ICANN CCWG; ACCT-Staff; ICANN at adlercolvin.com<mailto:ICANN at adlercolvin.com>
Subject: Re: [CCWG-ACCT] Documents for Posting for CCWG-ACCT
Holly,

Although it has no direct impact on the current discussion, could you please further elaborate on your statement at the top of page 2 that the corporation can be dissolved by a simple majority of a minimal quorum (5/9/16). The California statute [1900.5.a and 1900.5.a(7)] seems to state that for dissolution, a majority of directors must sign a certificate of dissolution. That would imply that 9 were required (presuming the Board had its full complement of voting directors at that time).

Alan

At 02/10/2015 03:38 PM, Gregory, Holly wrote:

Thomas, Mathieu and Leon and CCWG,,
 In addition to slides comparing the Sole Member, Sole Designator and Board Proposal from last week (which we understand did not get posted yet) , we are providing a memo as requested in LA that discusses how the statutory rights of a member can be constrained in the Sole Member model.
Kind regards, Holly and Rosemary

HOLLY GREGORY
Partner

Sidley Austin LLP
+1 212 839 5853
holly.gregory at sidley.com<mailto:holly.gregory at sidley.com>

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