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<p class="MsoNormal"><span style="color:#1F497D"><o:p>&nbsp;</o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p>&nbsp;</o:p></span></p>
<p class="MsoNormal"><o:p>&nbsp;</o:p></p>
<p class="MsoNormal">Hi Sam,&nbsp; I wanted to make sure I wasn’t missing anything so I shared your email and my reaction on the above topic with Mike Clark who is, as you know, a tax lawyer who specializes in non-profits.&nbsp; Here is what he had to say:<o:p></o:p></p>
<p class="MsoNormal"><o:p>&nbsp;</o:p></p>
<p class="MsoNormal"><span style="color:#1F497D">“I am not sure why the ACs/SOs are any more or less likely to select someone who is not “independent” because they or an entity they are deemed to control have engaged in transactions with ICANN than someone
 selected by the NomCom.&nbsp; Only 3 of the current 16 ICANN directors listed on the most recent form 990 were shown as lacking independence—presumably one was the CEO, and the others were Bruce Tonkin (who is the chief strategy officer of an ICANN accredited registrar)
 and Chris Disspain, (who is the CEO of AUDA, the policy authority and industry self-regulatory body for Australia domain names).&nbsp;
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p>&nbsp;</o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D">There is no requirement that to be an exempt organization described in section 501(c)(3) there be any, or any particular number, of independent directors.&nbsp; To be sure, governing body independence may help assure
 that the organization is not organized for the private benefit of a non-charitable class, but loss of exemption comes from actually operating for a nonexempt private purpose, not from simply having a certain number of directors who are not “independent” as
 defined in the rules for form 990.&nbsp; The concept of “independent” directors was invented by the IRS when they redesigned form 990 in 2008.&nbsp; The instructions themselves (Part VI, page 18 of the 2014 instructions), say that “federal tax law generally does not
 mandate particular management structures, operational policies, or administrative practices.”<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p>&nbsp;</o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D">In addition, as a practical matter, in answering the questions about the number of independent directors on form 990 (Part VI, lines 1a and 1b), the organization looks to the board in place at the end of the
 taxable year.&nbsp; Although it is possible that board removal and the relatively limited time of service of the interim board could occur right at that time, it isn’t likely.”<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p>&nbsp;</o:p></span></p>
<p class="MsoNormal">Please let me know if you would like to discuss further.&nbsp; <o:p>
</o:p></p>
<p class="MsoNormal"><o:p>&nbsp;</o:p></p>
<p class="MsoNormal">Kind regards, Holly<o:p></o:p></p>
<p class="MsoNormal"><o:p>&nbsp;</o:p></p>
<p class="MsoNormal"><o:p>&nbsp;</o:p></p>
<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><b><span style="font-size:10.0pt;font-family:&quot;Arial&quot;,&quot;sans-serif&quot;">HOLLY</span></b><span style="font-size:10.0pt;font-family:&quot;Arial&quot;,&quot;sans-serif&quot;">&nbsp;<b>J.</b>
<b>GREGORY</b></span><span style="font-size:12.0pt;font-family:&quot;Times New Roman&quot;,&quot;serif&quot;"><br>
</span><span style="font-size:9.0pt;font-family:&quot;Arial&quot;,&quot;sans-serif&quot;">Partner</span><span style="font-size:12.0pt;font-family:&quot;Times New Roman&quot;,&quot;serif&quot;"><o:p></o:p></span></p>
<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><span style="font-size:9.0pt;font-family:&quot;Arial&quot;,&quot;sans-serif&quot;">Sidley Austin LLP<br>
787 Seventh Avenue<br>
New York,&nbsp;NY 10019<br>
&#43;1.212.839.5853</span><span style="font-size:12.0pt;font-family:&quot;Times New Roman&quot;,&quot;serif&quot;"><br>
</span><span style="font-size:9.0pt;font-family:&quot;Arial&quot;,&quot;sans-serif&quot;"><a href="mailto:holly.gregory@sidley.com" title="Click to send email to Gregory, Holly">holly.gregory@sidley.com</a></span><span style="font-size:12.0pt;font-family:&quot;Times New Roman&quot;,&quot;serif&quot;"><br>
<a href="http://www.sidley.com/" title="www.sidley.com"><span style="font-size:9.0pt;font-family:&quot;Arial&quot;,&quot;sans-serif&quot;">www.sidley.com</span></a><o:p></o:p></span></p>
<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><a href="http://www.sidley.com/"><span style="font-size:10.0pt;font-family:&quot;Arial&quot;,&quot;sans-serif&quot;;text-decoration:none"><img border="0" width="35" height="35" id="_x0000_i1025" src="http://www.sidley.com/files/upload/signatures/SA-autosig.png" alt="http://www.sidley.com/files/upload/signatures/SA-autosig.png"></span></a><span style="font-size:10.0pt;font-family:&quot;Arial&quot;,&quot;sans-serif&quot;">&nbsp;<b>SIDLEY
 AUSTIN LLP</b></span><span style="font-size:10.0pt;font-family:&quot;Times New Roman&quot;,&quot;serif&quot;"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt">&nbsp;</span><o:p></o:p></p>
<p class="MsoNormal"><o:p>&nbsp;</o:p></p>
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