IANA ARTICLES OF INCORPORATION

[Jim Dixon <jdd@matthew.uk1.vbc.net>]

This is a first critique of the IANA "Prop[o]sed Articles of 
Incorporation", as found at http://www.iana.org/description.html.

1.  Generally these documents, both the articles of incorporation
    and the bylaws, appear to have been written very carelessly:

a.  Throughout the articles of incorporation, all references to 
    specific section numbers are incorrect; references 
    to article 4 are actually references to article 3, references
    to article 5 are actually to article 4, and so forth.  If this
    is not corrected the articles are in large part meaningless.

b.  Most of the articles of incorporation are repeated word for 
    word in the bylaws.  Article I of the bylaws restates article
    3 of the articles of incorporation, for example, and article
    III section 1 repeats articles 4 and 6.  These provisions do more
    properly belong in the articles of incorporation and should be 
    removed from the bylaws.  Their duplication increases the 
    impression that the articles and bylaws were drafted very
    carelessly.

2.  Article 3, which deals with the purposes of the corporation, 
    appears more or less reasonable, until we reach (vi) 'engaging
    any other lawful act or activity for which a corporation may 
    be organized under the California Nonprofit Public Benefit 
    Corporation Law ("CNPBCL").'  This provision makes it possible
    for the corporation to do almost anything, and should be struck
    and replaced with a provision allowing the purposes of the
    corporation to be widened only after a period of public review and
    only with the consent of the membership.
 
3.  Article 5 makes explicit reference to the ability of the 
    corporation to repeal or modify articles.  In the absence of any
    explicit restriction, this would seem to imply that the directors
    can modify the articles at any time.  Given the quorum requirements
    set out in the bylaws, this means that 1/2 of a quorum of 1/2 of
    the directors can modify the articles.  In other words, 1/4 of the
    board can change the corporation's basic purposes.  Given the 
    signficance of the new corporation, and given the US government
    White Paper's requirements that the new corporation not be easily
    captured by small groups, this is surprisingly careless.  

4.  Article 3 provides that "the Corporation shall ... pursue the 
    charitable and public purposes of lessening the burdens of
    government in providing for the operation of the Internet by
    developing and maintaining the operational stability of the
    Internet infrastructure by (i) ..."  This is an odd formulation.
    I suggest that "lessening the burdens of government in" should 
    be struck out or justified.

5.  Article 4d provides that "No part of the net earnings ... shall
    inure to the benefit of or be distributable to its members, 
    directors, trustees, officers, or other private persons" but 
    (a) the bylaws in Article XI Section 4 permit the corporation
    to make loans with much weaker restrictions and (b) transfers 
    of funds to other non-profit corporations would appear to be
    within the powers of the corporation.  Furthermore it would 
    appear that (Article XI, Section 1) the Board can empower any
    officer to sign contracts obligating the corporation to make
    such contracts.  Once again, this degree of latitude seems 
    wholly inappropriate.  

Generally speaking, as I said above, the articles of incorporation
appear to have been written without any care and not subjected to
any competent review.  

These articles do not reflect the requirement set down by the White 
Paper that the new corporation should be structured so as to prevent
capture by small groups.  Should the Interim Board have nine members, 
three of them can completely rewrite the articles.  They can also bind 
the corporation to transfer large sums of money to other non-profit 
entities, and they can authorize any officer to make loans of any size 
to virtually anyone.  

--
Jim Dixon                                                 Managing Director
VBCnet GB Ltd                http://www.vbc.net        tel +44 117 929 1316
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