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<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif"">Dear Alan:<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif""><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif"">You asked the following question:<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif""><o:p> </o:p></span></p>
<p class="MsoNormal">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).<span style="font-size:10.0pt;font-family:"Arial","sans-serif""><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif""><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:black">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. <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:black"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif"">The relevant statutory requirements are in Sections 6610 et seq<span style="color:black">.</span> of the
<span style="color:black">Nonprofit Public Benefit Corporation Law, which is part of the
</span>California Corporations Code. As mentioned in footnote 1 of the memorandum, Section 6610(b) provides that<span style="color:black">,</span> in a corporation without members<span style="color:black"> such as ICANN is today</span>, a corporation may elect
by approval of the board to wind up and dissolve.<span style="color:black"> 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.</span>
No higher voting requirement is <span style="color:black">impos</span>ed<span style="color:black"> by the law or by ICANN’s current governing documents</span>. It is this vote that is the key board action necessary to start the process of dissolving the corporation.
<span style="color:black"><o:p></o:p></span></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:black"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif"">The next step,
<span style="color:black">describ</span>ed in Section 6611, is the requirement to file with the California Secretary of State a certificate evidencing this election to dissolve. Th<span style="color:black">is</span> certificate
<span style="color:black">may</span> be signed by two officers (it could instead be signed by a majority of the directors then in office, but this is not required<span style="color:black">; two officers is sufficient by law</span>). <span style="color:black">
We assume that even the mere filing of a Certificate of Election to Dissolve would be extremely disruptive to ICANN.<o:p></o:p></span></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:black"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif"">Section 6613 makes it clear that after these<span style="color:black"> initial</span> steps, the dissolution process commences.<span style="color:black"> 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.</span>
<span style="color:black">(Before any assets are distributed, the election to dissolve can be revoked, as provided in Section 6612.)
</span>When the corporation<span style="color:black">’s affairs</span> ha<span style="color:black">ve</span> been completely wound up<span style="color:black">,
</span>the<span style="color:black"> final</span> step occur<span style="color:black">s:
</span>fil<span style="color:black">ing</span> a Certificate of Dissolution with the Secretary of State to
<span style="color:black">end</span> the corporation<span style="color:black">’s existence by dissolution</span>.<span style="color:black">
</span> As Section 6615 provides, this <span style="color:black">Certificate</span> must be signed by a majority of the directors then in office.<span style="color:black"> This is the requirement you refer to in your question.</span> It is true that<span style="color:black">,</span>
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
<span style="color:black">who</span> earlier authorized the dissolution. <span style="color:black">
However, </span>since the Certificate of Dissolution <span style="color:black">is not filed
</span>until the very end of the dissolution process, <span style="color:black">its signature requirement does not prevent
</span>the dissolution process <span style="color:black">from being initiated by the Board under the scenario discussed above</span>.<span style="color:black"><o:p></o:p></span></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:black"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:black">We hope this clarifies the legal requirements for dissolving a non-member nonprofit public benefit corporation.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:black"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:black">Rosemary<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial","sans-serif";color:black"><o:p> </o:p></span></p>
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<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Book Antiqua","serif";color:black">Rosemary E. Fei</span><span style="color:black"><br>
</span><span style="font-size:10.0pt;font-family:"Book Antiqua","serif";color:black">Adler & Colvin</span><span style="color:black"><br>
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</span><span style="font-size:10.0pt;font-family:"Book Antiqua","serif";color:black">San Francisco, CA 94104</span><span style="color:black"><br>
</span><span style="font-size:10.0pt;font-family:"Book Antiqua","serif";color:black">415/421-7555 (phone)</span><span style="color:black"><br>
</span><span style="font-size:10.0pt;font-family:"Book Antiqua","serif";color:black">415/421-0712 (fax)</span><span style="color:black"><br>
</span><span style="font-size:10.0pt;font-family:"Book Antiqua","serif";color:black">rfei@adlercolvin.com</span><span style="font-size:11.0pt;font-family:"Book Antiqua","serif";color:black">
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</span><span style="font-size:10.0pt;font-family:"Book Antiqua","serif";color:black">www.adlercolvin.com</span><span style="font-size:11.0pt;font-family:"Book Antiqua","serif";color:black">
</span><span style="color:black"><o:p></o:p></span></p>
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<p class="MsoNormal" style="mso-margin-top-alt:auto;mso-margin-bottom-alt:auto"><span style="font-size:10.0pt;font-family:"Book Antiqua","serif";color:black">_____________________________</span><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:black"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Book Antiqua","serif";color:black">Adler & Colvin is a San Francisco Green Business certified by the City and County of San Francisco. Please consider the environment before you print this email.<o:p></o:p></span></p>
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<p class="MsoNormal"><b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif"">From:</span></b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif""> Holly Gregory
<br>
<b>Sent:</b> Sunday, October 04, 2015 4:59 PM<br>
<b>To:</b> Alan Greenberg; leonfelipe@sanchez.mx; thomas@rickert.net; mathieu.weill@afnic.fr; accountability-cross-community@icann.org<br>
<b>Cc:</b> Sidley ICANN CCWG; ACCT-Staff; ICANN-Adler; Rosemary E. Fei<br>
<b>Subject:</b> RE: [CCWG-ACCT] Documents for Posting for CCWG-ACCT<o:p></o:p></span></p>
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<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">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<br>
<br>
<br>
<br>
Sent with Good (<a href="http://www.good.com">www.good.com</a>)<strong><o:p></o:p></strong></p>
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<p class="MsoNormal"><b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif";color:black"> </span></b><o:p></o:p></p>
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<p class="MsoNormal" style="margin-bottom:12.0pt"><b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif"">From:</span></b><span style="font-size:10.0pt;font-family:"Tahoma","sans-serif""> Alan Greenberg<br>
<b>Sent:</b> Sunday, October 04, 2015 04:47:39 PM<br>
<b>To:</b> Gregory, Holly; <a href="mailto:leonfelipe@sanchez.mx">leonfelipe@sanchez.mx</a>;
<a href="mailto:thomas@rickert.net">thomas@rickert.net</a>; <a href="mailto:mathieu.weill@afnic.fr">
mathieu.weill@afnic.fr</a>; <a href="mailto:accountability-cross-community@icann.org">
accountability-cross-community@icann.org</a><br>
<b>Cc:</b> Sidley ICANN CCWG; ACCT-Staff; <a href="mailto:ICANN@adlercolvin.com">
ICANN@adlercolvin.com</a><br>
<b>Subject:</b> Re: [CCWG-ACCT] Documents for Posting for CCWG-ACCT</span><o:p></o:p></p>
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<p class="MsoNormal">Holly, <br>
<br>
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).<br>
<br>
Alan<br>
<br>
At 02/10/2015 03:38 PM, Gregory, Holly wrote:<br>
<br>
<br>
<o:p></o:p></p>
<p class="MsoNormal">Thomas, Mathieu and Leon and CCWG,, <br>
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. <br>
Kind regards, Holly and Rosemary<br>
<br>
<br>
<b>HOLLY</b> <b>GREGORY</b><br>
Partner<br>
<br>
<b>Sidley Austin LLP<br>
</b>+1 212 839 5853<br>
<a href="mailto:holly.gregory@sidley.com">holly.gregory@sidley.com</a><br>
<br>
<br>
<br>
<br>
<br>
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