[CCWG-ACCT] Recommendation 4 - Board Removal Liability - Proposed Indemnification Language
Mathieu Weill
mathieu.weill at afnic.fr
Thu Feb 4 21:06:17 UTC 2016
Dear Holly, Dear Sam,
The current status on this waiver / indemnification language is :
- The Board heard the concerns raised by the CCWG and has agreed
in principle to indemnification but is still in objection to a waiver
- Icann Legal and CCWG Independent Legal Advisors obviously have
different perspectives on the indemnification, the relevant causes of
action, level of protection, etc.
Our group will have to come to a conclusion, at the requirement level at
least, during our next meeting on Tuesday. Until then, can Icann Legal and
Sidley and/or Adler coordinate to try and resolve their differences ahead of
the call ? At the very least, jointly highlighting in advance of the meeting
which requirement questions should be addressed by the CCWG would be very
helpful to a constructive discussion.
Best regards,
Mathieu
De : Gregory, Holly [mailto:holly.gregory at sidley.com]
Envoyé : jeudi 4 février 2016 15:00
À : thomas at rickert.net; mathieu.weill at afnic.fr; 'León Felipe Sánchez Ambía';
'Accountability Cross Community'; 'ACCT-Staff'
Cc : icann at adlercolvin.com; Sidley ICANN CCWG; 'Samantha Eisner'; Kevin
Espinola
Objet : Recommendation 4 - Board Removal Liability - Proposed
Indemnification Language
Dear Co-Chairs, Members, Participants and Staff,
We have reviewed the proposed language sent by ICANN Legal yesterday
regarding a new indemnification bylaw designed at protecting certain
participants in efforts to remove directors or recall the full Board from
legal claims. We have also reviewed the sample Guidelines for Due
Diligence in Board Removal Discussions that ICANN Legal provided. We have
the following concerns and observations:
1. The indemnification language in the current ICANN bylaws (pasted below
for your reference) largely tracks the statutory limits and standards for
indemnification for a California nonprofit public benefit corporation and is
broader – and therefore more protective to the covered persons – than the
proposed new additional provision. Under the new additional provision
proposed by ICANN Legal covered persons would have less protection with
respect to claims resulting from efforts to remove directors and recall the
full Board than would be provided under the current provision to protect
covered persons from claims. In our view, the concerns raised by the
CCWG-Accountability about protection from claims brought by directors is
better served by relying on the current bylaw provision (with some minor
clarifications explained below). The current bylaw already provides
significant indemnification from legal claims:
ARTICLE XIV: INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND OTHER
AGENTS
ICANN shall, to maximum extent permitted by the CNPBCL, indemnify each of
its agents against expenses, judgments, fines, settlements, and other
amounts actually and reasonably incurred in connection with any proceeding
arising by reason of the fact that any such person is or was an agent of
ICANN, provided that the indemnified person's acts were done in good faith
and in a manner that the indemnified person reasonably believed to be in
ICANN's best interests and not criminal. For purposes of this Article, an
"agent" of ICANN includes any person who is or was a Director, Officer,
employee, or any other agent of ICANN (including a member of any Supporting
Organization, any Advisory Committee, the Nominating Committee, any other
ICANN committee, or the Technical Liaison Group) acting within the scope of
his or her responsibility; or is or was serving at the request of ICANN as a
Director, Officer, employee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise. The Board may adopt a resolution
authorizing the purchase and maintenance of insurance on behalf of any agent
of ICANN against any liability asserted against or incurred by the agent in
such capacity or arising out of the agent's status as such, whether or not
ICANN would have the power to indemnify the agent against that liability
under the provisions of this Article.
We recommend that, rather than adding the proposed new provision that would
provide less protection for claims relating to efforts to remove directors
or recall the full Board, this current language be clarified to add in the
list of covered persons / entities in the first parenthetical, “any person
acting in his or her capacity as a representative of the Empowered
Community,” thereby clarifying that the Empowered Community and its
representatives are indemnified agents. We also recommend clarifying that
an indemnified agent includes any person who is or was serving as an
appointed member of an ICANN body (such as a member of a cross-community
working group or a Review Team).
2. If a new provision is added – which as indicated above would not be our
preference – we recommend broadening that new provision to include all
causes of action and removing the qualifications contained in paragraphs 2-5
(see the attached markup). The indemnification process in this section
should be parallel to that applicable to ICANN officers and directors; for
example, an SO/AC chair who is sued for defaming a director should not have
to jump through more hoops than an ICANN officer would if they were sued for
defaming an SO/AC chair. Note also that if an agent has been successful on
the merits in defending a suit brought by a director, he or she would be
entitled to indemnification related to the expenses associated with that
defense pursuant to Section 5238(d) of the California Corporations Code
regardless of the bylaw; any attempt to impose additional qualifications in
the Bylaws in that scenario would not be valid.
3. We note that providing Guidelines for expected behavior of community
participants may have positive benefits but care must be taken that they are
not drafted to discourage community participants from taking action in a
specific area. To avoid any potential chill on efforts to seek removal of
directors or recall the full Board – and in the interests of encouraging
positive behavior from community participants generally – consider whether
it would be beneficial to have the Guidelines (as may be revised by
CCWG-Accountability after due consideration) apply to all discussions
within ICANN, not just a carved-out set of circumstances where the community
is participating in the director removal or Board recall processes.
Kind regards,
Holly and Rosemary
HOLLY J. GREGORY
Partner and Co-Chair
Global Corporate Governance & Executive Compensation Practice
Sidley Austin LLP
+1 212 839 5853
holly.gregory at sidley.com
From: Samantha Eisner [mailto:Samantha.Eisner at icann.org]
Sent: Wednesday, February 03, 2016 7:06 AM
To: accountability-cross-community at icann.org
Cc: icann at adlercolvin.com; Sidley ICANN CCWG
Subject: Recommendation 4 - Board Removal Liability - Proposed
Indemnification Language
Dear CCWG -
To further the discussion on Recommendation 4, Board Removal Liability, I am
providing two documents on behalf of ICANN.
First is a proposed addition to ICANN’s Bylaws that specifically allows for
indemnification for statements made in the Board removal process (in
initiation of the Community Forum, during the Community Forum, or in written
rationale) that were made in good faith and with due diligence as to
veracity. This language reflects the CCWG’s suggestions made during the 26
January call that limiting indemnification only to written rationale was
probably not enough.
Second, we are providing some thoughts on how we can assist community
members participating in a removal process in assessing the good faith
nature of their assertions as they are participating. We think that
developing some guidelines will give participants confidence in working
through the Board removal process.
Thanks,
Sam Eisner
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