[CCWG-ACCT] Responses on Draft Articles of Incorporation

[Samantha Eisner]

Dear CCWG Members and participants:

During last week’s CCWG call, a few questions were raised on the Articles of Incorporation that are currently out for public comment, and written responses were requested to supplement the answers I provided on the call.

Below please find some input.

Best regards,

Sam


Article 1 - Future v. further laws

Any reference in these Articles to the Code shall include the corresponding provisions of any furtherfuture United States tax code.

Response: ICANN agrees with the modification to the word “future” as explained by Adler.  This is a clarification that makes it clearer that the Articles will be considered in alignment with future changes to the Code.


Article 2 - May v. Shall on global public interest

Questions were raised about the phrase “may be determined” as it is used in this Article

, the Corporation shall, except as limited by Article 54 hereof, pursue the charitable and public purposes of lessening the burdens of government and promoting the global public interest in the operational stability of the Internet by (i) coordinating the assignment of Internet technical parameters as needed to maintain universal connectivity on the Internet; (ii) performing and overseeing functions related to the coordination of the Internet Protocol ("IP") address space; (iii) performing and overseeing functions related to the coordination of the Internet domain name system ("DNS"), including the development of policies for determining the circumstances under which new top-level domains are added to the DNS root system; (iv) overseeing operation of the authoritative Internet DNS root server system; and (v) engaging in any other related lawful activity in furtherance of items (i) through (iv)., as such global public interest may be determined from time to time by the multistakeholder community through an inclusive bottom-up multistakeholder community process, by carrying out the mission set forth in the bylaws of the Corporation (“Bylaws”).

Concerns were raised regarding the permissive use of the term “may” as opposed to the term “shall”, which would make this a requirement.  As discussed on the CCWG call, this phrase is not used here to describe either a permissive consideration or mandatory requirement, but is instead drafted to convey that the global public interest that is determined by the multistakeholder community may change from time to time as needed.

Response: Given that the language that is currently in the draft Restated articles may cause confusion, if the CCWG-Accountability wished to note this issue in a public comment, ICANN would support changing language to “as such global public interest is determined from time to time”.

Article 3 – Applicable local law

The CCWG-Accountability asked for further inputs on the modification of the language now at Article 3:

The Corporation shall operate in a manner consistent with these Articles and its Bylaws for the benefit of the Internet community as a whole, carrying out its activities in conformity with relevant principles of international law and applicable international conventions and applicablelocal law and, to the extent appropriate and consistent with these Articles and its Bylaws, through open and transparent processes that enable competition and open entry in Internet-related markets. To this effect, the Corporation shall cooperate as appropriate with relevant international organizations.


Response: As discussed with the CCWG, the movement of the term “applicable” to modify “local law” seems to be a more precise statement.  To the extent that any international conventions are applicable to ICANN, they become so by virtue of applicable local law.  As ICANN is not an IGO, it is not a party to nor are international conventions directly applicable to ICANN.

Article 2 – Organized v. incorporated; Insert that ICANN is headquartered in California

Brett Schaefer suggested "replacing “organized” with “incorporated” in the second sentence and adding an additional sentence affirming the current location of the headquarters of ICANN."

Response:  There is no legal difference between the term “organized” or “incorporated” in this instance.  They both would demonstrate that ICANN is created pursuant to California law, and using either term, ICANN is bound to file its Articles of Incorporation in California and maintain an address and an agent for service of process in California.  Though they mean the same thing, ICANN has – since 1998 – used the term “organized” within its Articles.  The term “organized” is the more appropriate term to use for organizations of ICANN’s type, and is even the recommended term provided by the California Secretary of State in model forms for Nonprofit Public Benefit organizations like ICANN (See form ARTS-PB-501(c)(3): "It is organized under the Nonprofit Public Benefit Corporation Law”.  Available at Bpd.cdn.sos.ca.gov/corp/pdf/articles/arts-pb.pdf).  For those unfamiliar, the California Secretary of State is responsible for the filings and maintaining business records for California organizations.  Adherence to the model usage of the language is recommended, and there does not seem to be a compelling justification to change from the historical and accepted usage.  Further, there was nothing in the CCWG’s WS1 report that would dictate this change.

Inserting a statement in the Articles of Incorporation that ICANN is headquartered in California is not supported by the WS1 report.  There was substantial conversation within the CCWG during its deliberations that ICANN’s principal place of business should not be identified as a fundamental Bylaw, and only as a standard Bylaw.  Therefore, not only is this an item that is not dictated by the WS1 report, but taking on this suggestion would appear to be contrary to the WS1 report.
<http://bpd.cdn.sos.ca.gov/corp/pdf/articles/arts-pb.pdf><http://bpd.cdn.sos.ca.gov/corp/pdf/articles/arts-pb.pdf><http://bpd.cdn.sos.ca.gov/corp/pdf/articles/arts-pb.pdf>

“old” Article 5 – Disqualified Persons

There was a request to consider if the prohibition that used to be at Article 5 be reinstated into the Bylaws: In no event shall the Corporation be controlled directly or indirectly by one or more "disqualified persons" (as defined in § 4946 of the Code) other than foundation managers and other than one or more organizations described in paragraph (1) or (2) of § 509 (a) of the Code.

There was a justification provided to the CCWG from Adler, noting that Adler recommended the removal of this section on the following basis:

"There is no legal requirement under California corporate law or related to ICANN’s tax-exempt status that ICANN’s Articles include this prohibition, although it may be a matter of ICANN internal policy. However, we recommend deleting this prohibition now, since it is unclear why control by only disqualified persons versus a subset of 501(c)(3) nonprofits is addressed. Moreover, we are not aware that ICANN has any disqualified persons under IRC Section 4946 other than its foundation managers (directors, officers, and senior executive staff). (If this subsection is retained, the reference to the IRC section defining “disqualified persons” should be corrected. IRC Section 4946 applies to private foundations; the applicable definition for a public charity like ICANN is Section 4958.)"


Response:  ICANN does not have an objection in principle to the reinstatement of this provision subject to ICANN confirming what the appropriate code references would be and whether any further edits would be necessary to bring this section in line with the code section that is now applicable to ICANN as a public charity. ICANN did not originate this edit.  If the CCWG believes that it is important for this provision to be reinstated, please document that in a public comment.



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