ICANN Board Withholds Consent for a Change of Control of the Public Interest Registry (PIR)

Fri May 1 00:17:48 EEST 2020

Indeed....uncertainty is always not the best for business.

On Fri, May 1, 2020 at 4:31 AM Joly MacFie <joly at punkcast.com> wrote:

> “ This proposed transaction has posed difficult questions to the ICANN Board
> and the community, and the totality of the circumstances supports a denial
> in this instance. If PIR is able to provide additional information that
> resolves the concerns raised by the Board, PIR remains able to re-submit or
> initiate a new Change of Control Request.”
>
> In other words, back to the drawing board.
>
> Joly
>
> On Thu, Apr 30, 2020 at 11:40 PM Caleb Olumuyiwa Ogundele <
> muyiwacaleb at gmail.com> wrote:
>
>> In case you missed this.
>>
>> ______________________________________________________
>>
>> Today, the ICANN Board made the decision to reject the proposed change
>> of control and entity conversion request that Public Interest Registry
>> (PIR) submitted to ICANN.
>>
>> After completing extensive due diligence, the ICANN Board finds that
>> withholding consent of the transfer of PIR from the Internet Society (
>> ISOC) to Ethos Capital is reasonable, and the right thing to do.
>>
>> ICANN's role is to ensure the stable and secure operation of the
>> Internet's unique identifier systems. We are dedicated to making the right
>> decision, knowing that whatever we decide will be well received by some,
>> and not by others. It is our responsibility to weigh all factors from an
>> ICANN Bylaws and policies perspective, including considering the global
>> public interest. We have done this diligently, ensuring as much
>> transparency as possible and welcoming input from stakeholders throughout.
>>
>> On 13 November 2019, PIR announced
>> <https://thenew.org/the-internet-society-public-interest-registry-a-new-era-of-opportunity/>
>>  that ISOC, its parent organization, had reached an agreement with Ethos
>> Capital, under which Ethos Capital would acquire PIR and all of its assets
>> from ISOC. Under the agreement, PIR would also be converted from a
>> Pennsylvania not-for-profit corporation to a for-profit Pennsylvania
>> limited liability company. ISOC created and agreed to the transaction
>> details that are under review.
>>
>> On 14 November 2019, PIR formally submitted
>> <https://www.icann.org/en/system/files/correspondence/cimbolic-to-icann-14nov19-en.pdf>
>>  to ICANN a "Notice of Indirect Change of Control and Entity Conversion"
>> in advance of closing the proposed transaction between Ethos Capital and
>> ISOC. Since 2003, PIR has operated the .ORG generic top-level domain (
>> gTLD) as a not-for-profit organization, as well as six other gTLDs. Per
>> the gTLD Registry Agreements
>> <https://newgtlds.icann.org/sites/default/files/agreements/agreement-approved-31jul17-en.html#article7.5>
>> , ICANN must either approve or withhold consent of a proposed change of
>> control, the deadline for which is 4 May 2020.
>>
>> ICANN's role has been to evaluate the reasonableness of PIR's request
>> for indirect change of control and entity conversion. In doing so, ICANN evaluated
>> an extensive amount and variety of information related to the proposed
>> transaction, including details of the transaction structure, financing, and
>> other funding sources of Ethos Capital, the parties involved, the role of
>> the Pennsylvania authorities, information related to financial resources
>> and operational and technical capability, how the new for-profit PIR under
>> the control of Ethos Capital would be responsive to the needs of the
>> non-commercial community, what input the .ORG community had provided to PIR
>> or ISOC on the proposed transaction, and how that community input would
>> be reflected in the operations of PIR following its conversion.
>>
>> Throughout this process, the ICANN Board has worked thoughtfully and
>> thoroughly to determine if it is reasonable under PIR's Registry Agreements
>> for ICANN to either approve or withhold consent to the proposed change
>> of control. Before making our determination, the Board, among other things:
>>
>>    - Conducted thorough due diligence
>>    - Received and reviewed hundreds of pages of documentation and
>>    responses provided by PIR, ISOC and Ethos Capital following ICANN issuing
>>    three requests for more information
>>    - Was briefed extensively by ICANN org
>>    - Received and considered more than 30 letters from stakeholders
>>    - Considered input from an ICANN67 public forum, views of the
>>    community and others who weighed in after we received PIR's Public Interest
>>    Commitments
>>    - Considered the opinions expressed in the California Attorney
>>    General's Office letter sent to ICANN on 15 April 2020
>>
>> The Board was presented with a unique and complex situation – impacting
>> one of the largest registries with more than 10.5 million domain names
>> registered. After completing its evaluation, the ICANN Board finds that
>> the public interest is better served in withholding consent as a result of
>> various factors that create unacceptable uncertainty over the future of the
>> third largest gTLD registry. Factors that were considered in determining
>> reasonableness include, but are not limited to:
>>
>>    - A change from the fundamental public interest nature of PIR to an
>>    entity that is bound to serve the interests of its corporate stakeholders,
>>    and which has no meaningful plan to protect or serve the .ORG community.
>>    - ICANN is being asked to agree to contract with a wholly different
>>    form of entity; instead of maintaining its contract with the mission-based,
>>    not-for-profit that has responsibly operated the .ORG registry for nearly
>>    20 years, with the protections for its own community embedded in its
>>    mission and status as a not-for-profit entity.
>>    - The US$360 million debt instrument forces PIR to service that debt
>>    and provide returns to its shareholders, which raises further question
>>    about how the .ORG registrants will be protected or will benefit from this
>>    conversion. This is a fundamental change in financial position from a
>>    not-for-profit entity.
>>    - There are additional uncertainties, such as an untested Stewardship
>>    Council that might not be properly independent, or why PIR needs to change
>>    its corporate form to pursue new business initiatives.
>>    - The transaction as proposed relies on ICANN as a backstop for
>>    enforcement of disputes between the .ORG community and the registry
>>    operator in an untested manner.
>>
>> The entire Board stands by this decision. After thorough due diligence
>> and robust discussion, we concluded that this is the right decision to
>> take. While recognizing the disappointment for some, we call upon all
>> involved to find a healthy way forward, with a keen eye to provide the best
>> possible support to the .ORG community.
>>
>> The Board would like to thank the global community and stakeholders for
>> their engagement.
>>
>> The resolution and rationale document, which expands upon this decision
>> is available, here
>> <https://www.icann.org/resources/board-material/resolutions-2020-04-30-en>
>> .
>>
> --
> --------------------------------------
> Joly MacFie  +2185659365
> --------------------------------------
> -
>

-- 
Dorothy Gordon
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