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Conflicts of Interest
Policy
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[Adopted March 4, 1999,
pursuant to ICANN Bylaws,
Article V, Section 7, and Article VI, Section 3(b)]
1. Purpose
The purpose of the Conflicts of Interest
policy is to ensure that the deliberations and decisions of the
Corporation are made in the interests of the global Internet
community as a whole, and to protect the interests of the Corporation
when it is contemplating entering into a transaction, contract,
or arrangement that might benefit the private interest of an
Interested Director, Officer or Person (as defined below). An
Interested Director, Officer or Person may not use his or her
position with respect to the Corporation, or confidential corporate
information obtained by him or her relating to the Corporation,
in order to achieve a financial benefit for himself or herself
or for a third person, including another nonprofit or charitable
organization. This policy is intended to supplement but not replace
any applicable laws governing conflicts of interest in nonprofit
and charitable corporations.
2. Definitions
2.1 Compensation. "Compensation"
includes direct and indirect remuneration as well as gifts or
favors that are substantial in nature.
2.2 Family. The "family"
of any individual shall include only his or her spouse; his or
her siblings and their spouses; his or her ancestors; and his
or her descendants and their spouses.
2.3 Financial Interest. A person
has a "financial interest" if the person has, directly
or indirectly, through business, investment or family:
(a) An existing or potential ownership
or investment interest in any entity with which the Corporation
has a transaction, contract, or other arrangement, or
(b) A compensation arrangement with the
Corporation or with any entity or individual with which the Corporation
has a transaction, contract, or other arrangement, or
(c) An existing or potential ownership
or investment interest in, or compensation arrangement with,
any entity or individual with which the Corporation is negotiating
a transaction, contract, or other arrangement, or
(d) An existing or potential ownership
or investment interest in, or compensation arrangement with,
any entity whose business or operation has been or will be directly
affected by a decision or action of the Corporation.
2.4 Interested Director. "Interested
Director" shall mean any Director of the Corporation who
has a material financial interest, as defined above, or who serves
as a Director or Officer of any entity with which the Corporation
has a transaction, contract, or other arrangement.
2.5 Interested Officer. "Interested
Officer" shall mean any Officer who has a material financial
interest, as defined above, or who serves as a Director or Officer
of any entity with which the Corporation has a transaction, contract,
or other arrangement. For purposes of this policy, the President
of the Corporation shall be treated as an Officer.
2.6 Interested Person. "Interested
Person" shall mean either:
(a) Any person currently being compensated
by the Corporation for services rendered to it within the previous
12 months, whether as a full- or part-time employee, independent
contractor, or otherwise, or
(b) Any person whose family member, as
defined in Section 2.2, is currently being compensated by the
Corporation for services rendered to it within the previous 12
months, whether as a full- or part-time employee, independent
contractor, or otherwise.
3. Committee on Conflicts of Interest
3.1 To administer and monitor compliance
with this Policy, the Board shall create a Committee of the Board on Conflicts of Interest ("Conflicts Committee"), to consist
of at least two Directors named by the Board.
3.2 The Conflicts Committee
shall require a statement from each Director and Officer not
less frequently than once a year setting forth all business and
other affiliations which relate in any way to the business and
other activities of the Corporation.
4. Duty to Abstain
4.1 No Director shall vote on any matter
in which he or she has a material and direct financial interest
that will be affected by the outcome of the vote.
4.2 In the event of such an abstention,
the abstaining Director shall state the reason for the abstention,
which shall be noted in the minutes of the Board of Directors.
5. Disclosure by Directors and Officers
5.1 When requested by the Conflicts Committee
(not less frequently than once a year), each Director and Officer
shall promptly submit a statement to the Committee setting forth
all business and other affiliations which relate in any way to
the business and other affiliations of the Corporation.
5.2 With respect to any particular matter
then pending before the Corporation, each Director and Officer
shall disclose to the Conflicts Committee any matter that could
reasonably be considered to make the Director or Officer an "Interested
Director" or "Interested Officer," as defined
above.
5.3 With respect to any particular matter
then pending before the Corporation, each Director and Officer
shall disclose to the Conflicts Committee any relationship or
other factor that could reasonably be considered to cause the
Director or Officer to be considered to be an "Interested
Person," as defined above.
5.4 For purposes of this section, Officers
of the Corporation need not disclose compensation and other benefits
paid to the Officer by the Corporation pursuant to Board resolution.
6. Disclosure by Supporting Organization
Members of or participants in Supporting
Organization councils must disclose conflicts of interest or
other financial interests in matters within the scope of the
Supporting Organization in the manner required by the Bylaws
of the Supporting Organization.
7. Procedures in Connection with Proposed
Transactions and Arrangements
7.1 Scope. This section applies to any
proposed transaction, contract, or arrangement in which a Director,
Officer, or Interested Person has a material financial interest.
7.2 Duty to Disclose. In connection with
any actual or possible conflicts of interest, an Interested Director
or Interested Officer must disclose the existence and nature
of his of her material financial interest to the Conflicts Committee
prior to the consideration of the proposed transaction, contract,
or arrangement by the Board or any Committee of the Board.
7.3 Determining Whether a Conflict of Interest
Exists. After disclosure of the financial interest, the disinterested
members of the Conflicts Committee shall determine whether a
conflict of interest exists. Neither the Board nor any Committee
of the Board shall vote upon any proposed transaction, contract,
or arrangement in connection with which an actual or possible
conflict of interest has been disclosed by an Interested Director
until such time as the Conflicts Committee has addressed the
actual or possible conflict of interest. For matters pending
before the full Board of Directors, a referral to the Conflicts
Committee will not be required where the Interested Director
fully discloses to the Board his or her financial interest and
abstains from participation in the Board's consideration of the
proposed transaction, contract, or arrangement.
7.4 Procedures for Addressing a Conflict
of Interest
7.4.1 Where a matter has been referred
to the Conflicts Committee and the Conflicts Committee has concluded
that a conflict of interest exists, the chairman of the Board
or Committee of the Board shall, if appropriate, appoint a disinterested
person or committee to investigate alternatives to the proposed
transaction, contract, or arrangement.
7.4.2 After exercising due diligence, the
Board or Committee shall determine whether the Corporation can
obtain a more advantageous transaction, contract, or arrangement
with reasonable efforts from a person or entity that would not
give rise to a conflict of interest.
7.4.3 If a more advantageous transaction,
contract, or other arrangement is not reasonably attainable under
circumstances that would not give rise to a conflict of interest,
the Board or Committee shall determine by a majority vote of
the disinterested Directors whether the transaction, contract,
or arrangement is in the Corporation's best interest and for
its own benefit and whether it is fair and reasonable to the
Corporation, and shall make its decision as to whether to enter
into the transaction, contract, or arrangement in conformity
with such determination.
8. Violations of the Conflicts of Interest
Policy
8.1 If the Conflicts Committee has reasonable
cause to believe that a Director or Officer has failed to disclose
an actual or possible conflict of interest, it shall inform the
Director or Officer of the basis for such belief and afford the
Director or Officer an opportunity to explain the alleged failure
to disclose.
8.2 If, after hearing the response of the
Director or Officer and making such further investigation as
may be warranted in the circumstances, the Conflicts Committee
determines that the member has in fact failed to disclose an
actual or possible conflict of interest, it shall recommend to
the Board of Directors appropriate disciplinary and corrective
action.
8.3 The violation of this conflicts of
interest policy is a serious matter and may constitute "cause"
for removal or termination of a Director or Officer, or the termination
of any contractual relationship the Corporation may have with
an Interested Person or other party.
9. Records of Proceedings
9.1 The minutes of the Conflicts Committee
shall contain:
(a) The names of Directors and Officers
found to have a material financial interest in connection with
an actual or possible conflict of interest; the nature of the
financial interest; any action taken to determine whether a conflict
of interest was present; and the decision of the Conflicts Committee
as to whether a conflict of interest in fact existed.
(b) The names of the persons who were present
for discussions and votes relating to the actual or potential
conflict of interest; the content of the discussion; and a record
of any votes taken in connection therewith.
9.2 In connection with a conflict of interest,
the minutes of the Board or other Committee of the Board shall
contain the names of the persons who were present for discussions
and votes relating to the transaction or arrangement; the content
of the discussion, including any alternatives to the proposed
transaction or arrangement; and a record of any votes taken in
connection therewith.
10. Compensation Committees
A member of any Committee of the Board
the jurisdiction of which includes compensation matters and who
receives compensation from the Corporation for services is precluded
from voting on matters pertaining to that member's compensation.
11. Annual Statements
Each Director and Officer shall annually
sign a statement which affirms that such person:
(a) Has received a copy of the conflicts
of interest policy;
(b) Has read and understands the policy;
(c) Has agreed to comply with the policy;
and
(d) Understands that the Corporation is
a charitable organization and that in order to maintain its federal
tax exemption it must engage primarily in activities which accomplish
one or more of its tax-exempt purposes.
12. Periodic Reviews
The Conflicts Committee shall periodically
consider whether and how this Conflicts of Interest Policy should
be revised or amended to better meet its objectives. In connection
with any periodic review conducted by the Corporation to ensure
that it operates in a manner consistent with its charitable purposes,
the Conflicts Committee shall report on the matters referred
to it and their resolution.
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Page Updated 26-March-99.
(c) 1999 The Internet Corporation for
Assigned Names and Numbers All rights reserved.
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