Fixing a Maximum Period of Two Terms for an EC ----------------------------------------------- Authors: SHASHI PARKASH JERATH spjerath@tulip.net NONE Except our team members of Tulip Telecom Ltd (collectively) 1. Introduction --------------- The policy seeks to limit the term of an EC member to a maximum of “Two Terms” (four years). All EC members who have completed ‘Four Years” at a stretch or with a gap in between the two terms will NOT BE ELIGIBLE to “CONTEST 2. Summary ----------- Currently there is no limit on the period for which an individual can serve as an EC member. Consequently many EC Members have been in that position for over four years. Democratic Governance is best served with new ideas & opinions brought in by Fresh Members (faces). 3. Situation in other RIRs -------------------------- A) INCANN Section 8 of ICANN by- laws states as follow:- i) Subject to the provisions of the Transition Article of these Bylaws, the regular term of office of Director Seats 1 through 14 shall begin as follows: a. The regular terms of Seats 1 through 3 shall begin at the conclusion of ICANN's annual meeting in 2003 and each ICANN annual meeting every third year after 2003; b. The regular terms of Seats 4 through 6 shall begin at the conclusion of ICANN's annual meeting in 2004 and each ICANN annual meeting every third year after 2004; c. The regular terms of Seats 7 and 8 shall begin at the conclusion of ICANN's annual meeting in 2005 and each ICANN annual meeting every third year after 2005; d. The regular terms of Seats 9 and 12 shall begin on the day six months after the conclusion of ICANN's annual meeting in 2002 and each ICANN annual meeting every third year after 2002; e. The regular terms of Seats 10 and 13 shall begin on the day six months after the conclusion of ICANN's annual meeting in 2003 and each ICANN annual meeting every third year after 2003; and f. The regular terms of Seats 11 and 14 shall begin on the day six months after the conclusion of ICANN's annual meeting in 2004 and each ICANN annual meeting every third year after 2004. ii) Each Director holding any of Seats 1 through 14, including a Director selected to fill a vacancy, shall hold office for a term that lasts until the next term for that Seat commences and until a successor has been selected and qualified or until that Director resigns or is removed in accordance with these Bylaws. iii) At least one month before the commencement of each annual meeting, the Nominating Committee shall give the Secretary of ICANN written notice of its selection of Directors for seats with terms beginning at the conclusion of the annual meeting. iv) No later than five months after the conclusion of each annual meeting, any Supporting Organization entitled to select a Director for a Seat with a term beginning on the day six months after the conclusion of the annual meeting shall give the Secretary of ICANN written notice of its selection. v) Subject to the provisions of the Transition Article of these Bylaws, no Director may serve more than three consecutive terms. For these purposes, a person selected to fill a vacancy in a term shall not be deemed to have served that term. vi) The term as Director of the person holding the office of President shall be for as long as, and only for as long as, such person holds the office of President.” B) AFRINIC: Section 11 of AFRINIC by-laws deal with Board of Directors and sub- section (3) of section 11 reads as follow: 11.3”Each Elected Director shall hold office for a term of approximately three years, which term of office shall expire on the date of the annual General Meeting held on or around the third anniversary of the date of appointment of such Elected Director. Subject to Article 11.7, such Elected Director shall be eligible for re-election on the expiry of his term of office, provided that no Elected Director shall serve more than two consecutive terms.” 4. Details ----------- The Specified term of a Director shall be so that all can get the representation in decision making of Internet policies. Internet enables / connects any part of the world; the fresh thoughts / approach is must for the growth of Internet. It is humbly submitted that Directors are the ones, around whom the organization spins. It is very essential that the terms of Director are fixed so that the domination of few is avoided in the organization. The present Proposal proposes to fix maximum term for which an individual can serve as an EC Member. APNIC comprises 56 countries. Representation in EC has been limited to only a few countries since inception. Fixing a period for being an EC members will broad base representation this augurs well for Democratic Governance. According to Montana Code Annotated 2009, the terms of Directors generally are staggered terms. (1) The articles or bylaws must specify the terms of Directors. Except for designated or appointed Directors, the terms of Directors may not exceed 5 years. In the absence of any term specified in the articles or bylaws, the term of each Director is 1 year. Directors may be elected for successive terms. It is submitted that if the articles of incorporation may also provide for staggering the terms of directors. At each annual shareholders' meeting held thereafter, Directors shall be chosen for a term of two (2) years or three (3) years, as the case may be, to succeed those whose terms expire. It is further pointed out that stakeholders are eminent investors in company and that Directors are runners of the management. If the Directors have fixed tenure it implies that Director would not be acting arbitrarily and would not be bias towards one in many. This belief would pull large number of stakeholders to the APNIC. It is further submitted that a Board of Directors is a body of elected or appointed members who jointly oversee the activities of a Company or Organization. The body sometimes has a different name, such as Board of Trustees, Board of Governors, Board of Managers, or Executive Board. It is often simply referred to as "The Board." A Board's activities are determined by the powers, duties, and responsibilities delegated to it or conferred on it by an authority outside itself. These matters are typically detailed in the organization's bylaws. The bylaws commonly also specify the number of members of the board, how they are to be chosen, what their terms are and when they are to meet. One important role of Board of Directors in large Organization is that the Board tends to have more de facto power. The Board can comprise a voting bloc that is difficult to overcome, because of the practice where institutional shareholders (such as pension funds and banks) grant proxies to the board to vote their shares at general meetings, and because a large number of shareholders are involved. However, there have been moves recently to try to increase shareholder activism among both institutional investors and individuals with small shareholdings. Some of the essential duties of the Board of Directors are: I. Acting bona fide: Directors must act honestly and bona fide ("in good faith"). However, the Directors may still be held to have failed in this duty where they fail to direct their minds to the question of whether a transaction was in the best interests of the company. In the Australian case of Mills v Mills (1938) 60 CLR 150 "[directors are] not required by the law to live in an unreal region of detached altruism and to act in the vague mood of ideal abstraction from obvious facts which must be present to the mind of any honest and intelligent man when he exercises his powers as a director." It is emphasized over here that the Directors can only work with free minds and without any abstraction if there is a rotation system. Rotation system would give New Directors with new thoughts and energy to drive the company through new strategies. II. Use of corporate property, opportunity, or information: Directors must not, without the informed consent of the company, use for their own profit the company's assets, opportunities, or information. In Regal (Hastings) Ltd v Gulliver [1942] All ER 378 the House of Lords, in upholding what was regarded as a wholly unmeritorious claim by the shareholders, held that: "that what the directors did was so related to the affairs of the company that it can properly be said to have been done in the course of their management and in the utilization of their opportunities and special knowledge as directors; and (ii) that what they did resulted in profit to themselves." If the board of director holds their position for longer period of time there is chance of misuse of company's asset because of the indefinite tenure of directors, he can start acting as an owner of company's asset. III. Common law duties of care and skill Traditionally, the level of care and skill which has to be demonstrated by a director has been framed largely with reference to the non-executive director. In Re City Equitable Fire Insurance Co [1925] Ch 407, it was expressed in purely subjective terms, where the court held that: "A director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience." In Dorchester Finance Co v Stebbing [1989] BCLC 498 the court held that the rule in Equitable Fire related only to skill, and not to diligence. With respect to diligence, what was required was: "Such care as an ordinary man might be expected to take on his own behalf." Board of Directors as a whole is expected to work with proper skill and care till the director has fixed tenure he prudently works in order to form good name in the organization but if he has indefinite tenure , he tends to take the work taken for granted. IV. Typical duties of Boards of Directors include • Governing the organization by establishing broad policies and objectives; • Selecting, appointing, supporting and reviewing the performance of the chief executive; • Ensuring the availability of adequate financial resources; • Approving Annual Budgets; • Accounting to the stakeholders for the organization's performance. Thereby having fixed terms for directors is extremely invaluable for the further robust growth of any organization. It is imperative that for any organization to grow in the next double, inclusion of young new blood is absolutely essential. Having indefinite posts for incumbencies of different posts ensures that the interest of the community is disguised within the participating in such a post. Further such existing approach, as is existing in deliberate bringing down the confidence of the community within the ability of APNIC to develop various levels of future leadership. 5. Pros/Cons ------------ Advantages: ADVANTAGAES:  Directors do not become dictators.  No. of Stakeholders in the Company increases.  Efficiency of a Director increases.  Fresh thoughts would evolve in the organization.  There would not be any kind of misuse in the company's asset. Disadvantages: There are no major documented disadvantages of having a fixed tenure of Directors in APNIC 6. Effect on APNIC ------------------ The proposal has no direct impact on NIRs, but impacts members of NIRs in the same way it impacts APNIC members 7. Effect on NIRs ----------------- There will be no immediate affect for APNIC members with existing resource registrations already in the APNIC Whois Database.