[CCWG-Accountability] Regarding Non-profit and public-benefit legal structure

Wed Jan 7 18:06:42 UTC 2015

I am not rushing into anything, but we have SEEN this...

el

-- 
Sent from Dr Lisse's iPhone 5s

> On Jan 7, 2015, at 19:45, Greg Shatan <gregshatanipc at gmail.com> wrote:
> 
> I would not rush to the conclusion that a membership group is per se prone to capture.  A poorly designed membership group, yes.  The devil is in the details -- who are the members? if they are individuals, who do they represent? how do they act? when can they act, and how quickly? how many of them are there? what are their powers? who is excluded? are there classes of members? is voting weighted?
> 
> Also, I'm not sure if (or why) the community accountability mechanism needs to be "outside" (depending on what that means).  Members in a membership corporation are not really outside, unless I am not getting the sense of the word as used here.
> 
> As for the dispute resolution mechanism, that will depend on the other two factors (among other things).  If the members have the "last word" on something, and the board fails to act, binding arbitration (or litigation) would be a reasonable step (although some escalation mechanisms might be appropriate before getting there).
> 
> Greg Shatan
> 
> Greg Shatan
> 
>> On Wed, Jan 7, 2015 at 10:37 AM, Paul Rosenzweig <paul.rosenzweig at redbranchconsulting.com> wrote:
>> I think that the potential for capture of the outside member group is the reason that the accountability system probably needs to be linked to an independent judicial/arbitral function to resolve disputes.   [Of course that institution, too, could be captured … but at some point we have to end the “who guards the guardians?” question].  And that, in turn emphasizes why it is necessary as part of the transition to define the Board’s/ICANN’s scope of authority.  A judicial/arbitral function can only resolve disputes and cabin capture/abuse if it has an articulated standard against which to measure the dispute.  In the absence of such pre-existing guidance the judiciary/arbiter is simply substituting his/her/its own judgment for the Board and the Community, which is not a good thing.
>> 
>>  
>> 
>> Hence the bottom line:  We need a) an outside accountability mechanism representing the community; b) an independent dispute resolution mechanism; and c) clearly articulated standards against which to measure and resolve any dispute
>> 
>>  
>> 
>> Paul
>> 
>>  
>> 
>> **NOTE:  OUR NEW ADDRESS -- EFFECTIVE 12/15/14 ***
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>> Paul Rosenzweig
>> 
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>> 
>>  
>> 
>> From: Mathieu Weill [mailto:mathieu.weill at afnic.fr] 
>> Sent: Wednesday, January 7, 2015 9:04 AM
>> To: accountability-cross-community at icann.org
>> Subject: Re: [CCWG-Accountability] Regarding Non-profit and public-benefit legal structure
>> 
>>  
>> 
>> Dear Colleagues,
>> 
>> Many thanks for this very valuable discussion. 
>> 
>> While it confirms that our initial orientation towards the ability to, somehow, oversee the Board, is relevant and worth exploring, the latest comments (regarding risk of capture) highlight that we should also anticipate on the accountability of the overseeing mechanism itself. 
>> 
>> If "the community" (through a mechanism yet to be determined) oversees Board and staff, can we ensure all stakeholders, especially those who are less familiar with Icann, that "the community", in turn, is accountable (ie has the relevant independent checks and balances, review and redress mechanisms) ? A significant challenge, but I'm confident our group can address that. 
>> 
>> This aspect might, however, need to be addressed in our definition of WS1, if there is agreement that is a necessary element for the transition to take place. 
>> 
>> Best,
>> Mathieu
>> 
>> 
>> 
>> Le 07/01/2015 09:07, Dr Eberhard W Lisse a écrit :
>> 
>> 
>> I am not interested much in the details, interesting as they are :-)-O, but would like to pick up on  Bruce's last paragraph, because in my view, the "membership supervision" is not going to help much as it is prone to capture, quite the opposite of the accountability we want.
>> 
>>  
>> 
>> greetings, el
>> 
>> 
>> Sent from Dr Lisse's iPad mini
>> 
>> 
>> On Jan 7, 2015, at 02:40, Greg Shatan <gregshatanipc at gmail.com> wrote:
>> 
>> What Bruce has set forth is close to correct.  However, I can't help but do a little legal nit-picking.
>> 
>>  
>> 
>> "Public benefit corporation" is a term used in California (among other places) as a term for non-profit corporations generally.  (In New York State, we use the term "not-for-profit corporation" to mean basically the same thing as a California "public benefit corporation" (and we use the term "public benefit corporation" to mean something quite different -- a quasi-public corporation like the Metropolitan Transport Authority).)  California public benefit corporations are not really "chartered by the state" (though New York ones like the MTA are chartered by the state).  [Wikipedia isn't always a great source....]
>> 
>>  
>> 
>> In California, public benefit corporations may be created with or without members, or may convert from member to non-member and vice versa.  However, a public benefit corporation with members is still a public benefit corporation.  
>> 
>> (California also has "mutual benefit corporations" which are non-profit but never charitable (and are also not tax-exempt).  Mutual benefit corporations are run for the benefit of their members, and not for the benefit of the general public.)
>> 
>>  
>> 
>> The term "member" can also be used to mean people (or organizations) who aren't really members.  For instance, when you become a "member" of a museum, you are not becoming a member of the corporation (i.e., what some in ICANN-land have termed a "statutory member").  These non-statutory "memberships" are more for marketing purposes and have no governance role.  "Statutory members" on the other hand, have a role in governance (which can vary markedly depending on the by-laws of the particular corporation.
>> 
>>  
>> 
>> Hope this helps.
>> 
>>  
>> 
>>  
>> 
>> Best regards,
>> 
>>  
>> 
>> Greg Shatan
>> 
>> (Speaking for myself, and not giving legal advice as I am not a member of the California Bar)
>> 
>>  
>> 
>> On Tue, Jan 6, 2015 at 6:54 PM, Bruce Tonkin <Bruce.Tonkin at melbourneit.com.au> wrote:
>> 
>> Hello Phil,
>> 
>> 
>> >>   I would envisage the Board having to be compliance with all Corporate Governance Codes specific to Companies Law in the country of incorporation, subject to a community consensus override. But what is its corporate status - not for profit or for profit - as different codes would  apply ?
>> 
>> The legal status  of ICANN is as specified in its articles of incorporation:
>> 
>> https://www.icann.org/resources/pages/articles-2012-02-25-en
>> 
>> "This Corporation is a non-profit public benefit corporation and is not organized for the private gain of any person. It is organized under the California Non-profit Public Benefit Corporation Law for charitable and public purposes. The Corporation is organized, and will be operated, exclusively for charitable, educational, and scientific purposes within the meaning of § 501 (c)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), or the corresponding provision of any future United States tax code. Any reference in these Articles to the Code shall include the corresponding provisions of any further United States tax code."
>> 
>> Also from:
>> 
>> http://en.wikipedia.org/wiki/Public-benefit_nonprofit_corporation
>> 
>> "A public-benefit non-profit corporation  is a type of non-profit corporation chartered by a state government, and organized primarily or exclusively for social, educational, recreational or charitable purposes by like-minded citizens.  Public-benefit nonprofit corporations are distinct in the law from mutual-benefit nonprofit corporations in that they are organized for the general public benefit, rather than for the interest of its members."
>> 
>> I believe it was deliberately set up as public benefit rather than a member organization - to avoid the situation where the members become limited to say gTLD registries and registrars and hence it ends up operating primarily for the benefit of the domain name registration industry.
>> 
>> Any move away from a public-benefit corporation to a membership corporation - would need to carefully consider how to ensure that the members are reflective of the broader Internet community and don't become limited to a few members as interest in "ICANN" drops over time.   I.e. a failure scenario of membership organisation is what happens to the membership base over time and how it can be protected from capture.    I have seen some membership based ccTLDs get into problems when their membership becomes dominated by domain name investors for example.
>> 
>> Regards,
>> Bruce Tonkin
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