<html><head><meta http-equiv="Content-Type" content="text/html charset=windows-1252"></head><body style="word-wrap: break-word; -webkit-nbsp-mode: space; -webkit-line-break: after-white-space;">Jonathan, et al,<div><br></div><div>Why is the CWG spending time on the rather arcane detail of whether the PTI should be a limited liability company (LLC) or a corporation? This seems to me to be the kind of detail that is routinely handled by the technicians, i.e. people who are attorneys by training, but whose role is to be technical specialists in setting up business. Further, for the purposes we’re talking about, there isn’t even much of a difference, and even further, it’s relatively easy to transform an LLC into a corporation, so even if the PTI were to start as a LLC, transforming it to a corporation would be doable.<div><br></div><div>It seems to me the relevant factors for this group are the scope of the PTI’s responsibilities, the scope of the board’s responsibilities, and how board members are appointed. Deciding on the form of legal entity really is just a detail, and this seems like a fairly awkward venue for sorting out these details.</div><div><br></div><div>Steve</div><div><br></div><div><br><div><div>On Jun 9, 2015, at 11:21 AM, Jonathan Robinson <<a href="mailto:jrobinson@afilias.info">jrobinson@afilias.info</a>> wrote:</div><br class="Apple-interchange-newline"><blockquote type="cite"><div lang="EN-GB" link="blue" vlink="purple" style="font-family: Cambria; font-size: 18px; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: auto; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: auto; word-spacing: 0px; -webkit-text-stroke-width: 0px;"><div class="WordSection1" style="page: WordSection1;"><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style="color: rgb(31, 73, 125);">All,<o:p></o:p></span></div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style="color: rgb(31, 73, 125);"> </span></div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style="color: rgb(31, 73, 125);">Please see below for an update in response to our questions to ICANN.<o:p></o:p></span></div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style="color: rgb(31, 73, 125);"><br>Jonathan & Lise<o:p></o:p></span></div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style="color: rgb(31, 73, 125);"> </span></div><div><div style="border-style: solid none none; border-top-color: rgb(181, 196, 223); border-top-width: 1pt; padding: 3pt 0cm 0cm;"><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><b><span lang="EN-US" style="font-size: 10pt; font-family: Tahoma, sans-serif;">From:</span></b><span lang="EN-US" style="font-size: 10pt; font-family: Tahoma, sans-serif;"><span class="Apple-converted-space"> </span>Theresa Swinehart [<a href="mailto:theresa.swinehart@icann.org" style="color: purple; text-decoration: underline;">mailto:theresa.swinehart@icann.org</a>]<span class="Apple-converted-space"> </span><br><b>Sent:</b><span class="Apple-converted-space"> </span>09 June 2015 16:17<br><b>To:</b><span class="Apple-converted-space"> </span>Jonathan Robinson; Lise Fuhr<br><b>Cc:</b><span class="Apple-converted-space"> </span>Grace Abuhamad; Samantha Eisner; Xavier J. Calvez<br><b>Subject:</b><span class="Apple-converted-space"> </span>Re: A supplementary financial / legal question from the CWG<o:p></o:p></span></div></div></div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><o:p> </o:p></div><div><div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style="">Dear Jonathan and Lise, <o:p></o:p></span></div></div><div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style=""><br><br><o:p></o:p></span></div></div><div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style="">Thank you for your communication and question, and my apologies for the delay in responding. We appreciate that the CWG is not seeking to change ICANN's tax exempt status and thus implementation of the recommendations should be handled with care and consideration, keeping this in mind. We recognize and respect the outcomes achieved by the CWG and CWG's proposal and, once approved through the process, look forward to implementing the recommendations to develop the PTI while preserving the tax exempt status of ICANN. <o:p></o:p></span></div></div><div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style=""><br><br><o:p></o:p></span></div></div><div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style="">Kind regards, <o:p></o:p></span></div></div><div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style=""><br><br><o:p></o:p></span></div></div><div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style="">Theresa<o:p></o:p></span></div></div></div><div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style=""> </span></div></div><div style="border-style: solid none none; border-top-color: rgb(181, 196, 223); border-top-width: 1pt; padding: 3pt 0cm 0cm;"><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><b><span style="">From:<span class="Apple-converted-space"> </span></span></b><span style="">Jonathan Robinson <<a href="mailto:jrobinson@afilias.info" style="color: purple; text-decoration: underline;">jrobinson@afilias.info</a>><br><b>Organization:<span class="Apple-converted-space"> </span></b>Afilias<br><b>Reply-To:<span class="Apple-converted-space"> </span></b>Jonathan Robinson <<a href="mailto:jrobinson@afilias.info" style="color: purple; text-decoration: underline;">jrobinson@afilias.info</a>><br><b>Date:<span class="Apple-converted-space"> </span></b>Tuesday, May 19, 2015 6:23 PM<br><b>To:<span class="Apple-converted-space"> </span></b>Xavier Calvez <<a href="mailto:xavier.calvez@icann.org" style="color: purple; text-decoration: underline;">xavier.calvez@icann.org</a>>, Samantha Eisner <<a href="mailto:Samantha.Eisner@icann.org" style="color: purple; text-decoration: underline;">Samantha.Eisner@icann.org</a>><br><b>Cc:<span class="Apple-converted-space"> </span></b>Theresa Swinehart <<a href="mailto:theresa.swinehart@icann.org" style="color: purple; text-decoration: underline;">theresa.swinehart@icann.org</a>>, Grace Abuhamad <<a href="mailto:grace.abuhamad@icann.org" style="color: purple; text-decoration: underline;">grace.abuhamad@icann.org</a>>, Lise Fuhr <<a href="mailto:lise.fuhr@difo.dk" style="color: purple; text-decoration: underline;">lise.fuhr@difo.dk</a>><br><b>Subject:<span class="Apple-converted-space"> </span></b>A supplementary financial / legal question from the CWG<o:p></o:p></span></div></div><div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style="font-size: 12pt;"> </span></div></div><div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style="">Dear Xavier / Dear Sam,<o:p></o:p></span></div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style=""> <o:p></o:p></span></div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style="">An additional question arising from the work of the CWG on IANA Stewardship Transition has arisen.<o:p></o:p></span></div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style=""> <o:p></o:p></span></div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style="">The CWG currently envisages that the post transition entity (PTI) will be a legally separate entity in the form of a Public Benefit Corporation.<o:p></o:p></span></div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style="">However, we have not ruled out the use of a Delaware LLC with many of the characteristics of a California public benefit corporation replicated.<o:p></o:p></span></div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style=""> <o:p></o:p></span></div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style="">The issue you which Sidley have been concerned about the CWG dealing with and using your input to do so relates to the tax exempt status of the entity.<o:p></o:p></span></div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style="">We are advised that an LLC (subsidiary of ICANN) would simply benefit from ICANNs tax exempt status whereas PTI as a PBC would need to apply for tax exempt status in its own right. The inheritance of the tax exempt status by PTI as an LLC is a potentially valuable benefit.<o:p></o:p></span></div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style=""> <o:p></o:p></span></div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style="">The specific question for you relates to whether or not you can foresee any likelihood of a PTI making a taxable income and, in any event, is the tax exempt (or not) status of the PTI entity an issue of any materiality?<o:p></o:p></span></div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style="">Put another way, is there already or is there any future likelihood of an income being generated within PTI and therefore, is the tax exempt status of the PTI entity an issue?<o:p></o:p></span></div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style=""> <o:p></o:p></span></div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style="">If you are able to assist by providing an ICANN view on these matters that will help the CWG in assessing the options of California PBC versus Delaware LLC for the PTI entity.<o:p></o:p></span></div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style=""> <o:p></o:p></span></div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style="">I trust the above is clear and look forward to any assistance or guidance you can provide.<o:p></o:p></span></div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style=""> <o:p></o:p></span></div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style="">Best wishes,<o:p></o:p></span></div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style=""> <o:p></o:p></span></div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style=""> <o:p></o:p></span></div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style=""> <o:p></o:p></span></div><div style="margin: 0cm 0cm 0.0001pt; font-size: 11pt; font-family: Calibri, sans-serif;"><span style="">Jonathan Robinson<o:p></o:p></span></div></div></div>_______________________________________________<br>CWG-Stewardship mailing list<br><a href="mailto:CWG-Stewardship@icann.org" style="color: purple; text-decoration: underline;">CWG-Stewardship@icann.org</a><br><a href="https://mm.icann.org/mailman/listinfo/cwg-stewardship" style="color: purple; text-decoration: underline;">https://mm.icann.org/mailman/listinfo/cwg-stewardship</a></div></blockquote></div><br></div></div></body></html>