2012/02/28 Minutes

Minutes of the Meeting of the CIRA Board of Directors held at the CIRA Offices, 350 Sparks Street, Ottawa on February 28, 2012 at 9:00 a.m. Ottawa time.

Directors attending: Paul Andersen, Kerry Brown, John Demco (ex-officio), Andrew Escobar, Byron Holland (ex-officio), Jim Grey, John King, Rowena Liang, Louise Macdonald, Susan Mehinagic, Bill St.Arnaud (by telephone), Victoria Withers

Regrets: Richard Anderson, Heather Dryden, Barry Shell

Corporate Secretary: Michael Stewart

Guests: David Fowler, Kathy Fisher (Industry Canada), Paul Havey, Jacques Latour

Recording Secretary: Lynn Gravel

1. Approval of Agenda

It was the consensus of the Board of Directors that the agenda distributed with the material for the meeting be adopted as presented.

2. Operational Plan and Budget 2012-2013

The Corporate Plan for FY13 was provided to the Board of Directors as information and tabled at the meeting.

The Chair of the Budget Committee noted that the FY13 budget put forward reflected a culmination of several days of joint cross-departmental planning on corporate priorities, subsequent budget submission and rationalization by staff and four Budget Committee meetings held through November 2011 to January 2012.

It was further noted that the Committee had discussed in detail the Channel and Marketing activities, the level of investment for the Community Investment Program (CIP) and the capital investment associated with the CIP. There was also some discussion on the headcount plan and how it supported the strategic objectives for the next few years. The Committee had unanimously agreed to move the ICANN meeting expense from the Marketing & Communications budget to the CIP activities. The Committee therefore recommended that the Board of Directors accept the budget as presented.

It was therefore resolved that the Board of Directors approve the proposed FY13 Operating Expenditure Budget and Capital Budget as presented.

(Moved: J. King, seconded: V. Withers, unanimously carried)

3. Composition of the Nomination Committee

The Working Group of the Governance Committee provided a brief overview of the work completed. The Working Group held several meetings to review all the applications received and from the short list, lengthy discussions had ensued regarding the various industry experience, not-for-profit or public sector work experience and governance experience. The Working Group was therefore recommending five candidates for appointment to the Nomination Committee, three of them returning from last year.

Be it resolved that the Board of Directors appoint the following people to the Nomination Committee for a term of two (2) years: Colleen Arnold, Tim Denton, Rochelle Grayson, Michael Hrybyk and Stuart MacDonald.

(Moved: S. Mehinagic, seconded: V. Withers, unanimously carried)

4. 2012 Election

4.1 Policy on Nominations and Election

Staff noted that the changes to the 2012 Policy on Nominations and Elections 2012 dealt mostly with date and formatting changes.

A clause was also added prohibiting vote-buying to remove any possible ambiguity. Staff noted this was not driven by any particular issue, but a realisation that the Policy was silent on this point.

Be it resolved that the Board of Directors approve the Policy on Nominations and Elections 2012 as presented.

(Moved: S. Mehinagic, seconded: K. Brown, unanimously carried)

4.2 Appointment of Returning Officer

Staff informed the Board of Directors that the current Returning Officer Eric Lay had regrettably decided to step down this year due to the time constraints of his regular employment He will, however, remain as CIRA’s Assistant Returning Officer.

Be it resolved that the Board of Directors appoint Richard Vickers as the Returning Officer for the 2012 Election and set the 2012 Returning Officer's remuneration at $250 per hour plus any reasonable or certain out of pocket expenses as pre-approved by CIRA.

Be it further resolved that the Board of Directors appoint Eric Lay to assist the 2012 Returning Officer in carrying out his duties and set the remuneration at $165 per hour plus any reasonable or certain out of pocket expenses as pre-approved by CIRA.

(Moved: K. Brown, seconded: J. King, unanimously carried)

5. AGM Venue

Staff reported that for the last two years, CIRA’s AGM had grown into Canadians Connected, an Internet event that combines the AGM and high-profile keynote speakers, bringing together the Internet community not only at the local level but reaching the national and international audiences via webcast.

Recently, the AGM had rotated between Toronto and Vancouver, due to quorum concerns. With the strong participation of the CIF in Ottawa, and the size of Membership in the region, staff believed that the AGM could instead be held in Ottawa-Gatineau this year.

It was therefore resolved that the Board of Directors approve Ottawa-Gatineau as the location for the FY 2013 Canadians Connected: CIRA Symposium and Annual General Meeting (AGM).

(Moved: V. Withers, seconded: J. King, unanimously carried)

6. Report from the Governance Committee

The Chair of the Governance Committee reported that the Committee had met earlier to discuss the Skills, Competencies and Diversity Consideration document for Board Members. It was noted that once the document was finalized by the Committee, the document would be used to develop a survey to collect information from existing Board Members and identify the gaps from Directors whose term will expire. In addition, the document will provide input to the Nomination Committee in their recruitment and selection of candidates for the final slate.

The Chair also reported that the Working Group had been especially busy with the nomination process and the election reform. It was noted that the election reform consisted of changes arising from the new legislation as well as substantive changes to enhance the governance process. The Committee was currently reviewing the timelines with staff and they would also be engaging in a Member outreach to socialize the proposed changes.

P. Andersen turned the chair to J. Grey and withdrew from the meeting.

7. Report from the Audit Committee

The Chair of the Audit Committee reported that the Committee had met on January 20, 2012 to review the progress on the IFRS conversion. The Committee informed the Board of Directors that the IFRS conversion was progressing on target and the conversion plan was completed as well as the preliminary diagnostic report. The Committee also reviewed the accounting policy choices in order to be compliant with the IFRS standards and staff presented a set of mock-up Financial Statements under the IFRS reporting format.

The Chair of the Audit Committee noted that staff and Deloitte had completed the review of the IFRS Standards and had assessed the impact to the Financial Statements between IFRS and the current C/GAAP. As a result of the work completed by staff in the past year, it was noted that a number of standards had been re-assessed and re-assigned to a lower risk level.

The Audit Committee was therefore recommending that the Board of Directors approve the four accounting policy choices as well as the adoption of the IFRS Financial Statements format by Nature, condensed and CIP broken-out. The Board of Directors was reminded that the standards may change throughout the conversion period and staff will be keeping the Committee informed of any changes.

It was therefore resolved that the Audit Committee recommends that the Board of Directors approve the following tentative IFRS accounting policy choices:

IFRS 1:

• Management will not elect the fair value as deemed cost election for tangible or intangible assets.

• Management will elect to designate investments as available for sale and will revisit the issue at a date closer to March 31, 2013 due to the recently issued financial instrument standard (IFRS 9) which eliminates the option of available for sale.

• Management will apply the IFRIC 4 exemption and will not retroactively analyze all transactions.

IAS 38:

• Management will continue to apply the cost model for the ongoing measurement of all intangible assets.

IAS 16:

• Management will continue to apply the cost model for the ongoing measurement property, plant and equipment.

(Moved: R. Liang, seconded: S. Mehinagic, unanimously carried)

P. Andersen rejoined the meeting and resumed the Chair.

Be it further resolved that the Audit Committee recommends that the Board of Directors approve the adoption of IFRS Operating Statement format – By Nature, Condensed and CIP separated out, subject to any improvement in the description of the nature of expenditures and/or amendment in the CIP reporting required by KPMG upon their review of our proposed financial statement presentation:

• Treatment of CIP expenditures as being by “nature”; and/or

• Further note disclosure of the underlying nature of CIP expenditures.

(Moved: R. Liang, seconded: S. Mehinagic, unanimously carried)

8. Financial and Operational Updates

8.1 Report on all Statutory Obligations

This report was provided to the Board of Directors as information and tabled at the meeting.

8.2 Management Report

This report was provided to the Board of Directors as information and tabled at the meeting.

Staff provided an overview of the registration activities and reminded the Board of Directors that the spike in registration numbers in November 2010 was due to a large one time purchase and was not representative of the normal trend. Staff continues to track the registrations with other ccTLDs and the results show that .CA is doing relatively well. It was agreed that, going forward, staff would provide other gTLD market share and additional details on how the .CA is moving within the Channel community.

K. Fisher withdrew from meeting.

There was also discussion regarding the report on priorities to June 30, 2012 and the information provided for each priority. It was agreed that staff would report on the activities since the last Board of Directors' meeting and present the update in context to the strategic objectives. There was also mention of the Registrant and Registrar surveys which are underway and staff will be presenting the results as soon as they are available.

9. Update on IDN Consultation

Staff presented an overview of the first phase of the Internationalized Domain Names (IDN) consultation and noted that two issues dominated the comments regarding the original proposed policy: 1) the potential for significant costs associated with the need to register defensive accented domain name variants; and 2) the introduction of IDNs will increase the potential of fraud, abuse, phishing, user confusion and cybersquatting. Based on the feedback received from the consultation, staff was proposing the concept of bundling, whereby a Registrant of a particular domain name has the sole right to register all of the variants of that domain name.

It was noted that the second phase of the consultation recently closed on February 24, 2012 and over 80 comments were received. Staff is currently conducting a Registrar outreach to solicit their specific input as well. The completion of the technical design is expected to be completed by June 30, 2012 with a proposed launch date of January 2013.

K. Fisher rejoined the meeting.

10. Review of Q3 2012 Financial Results

The financial statements were provided to the Board of Directors as information and tabled at the meeting.

Staff gave a brief overview of the financial results for the period ending December 31, 2011. It was noted that the year-end forecast as provided to the Budget Committee was still anticipating a favourable variance of approximately $400K. Staff noted that overall Q3YTD actual capital expenditures were at the full-year CAPEX budget and that it was anticipated that combined hardware and software CAPEX was expected to be $200K to $300K more than originally budgeted and that the current variance pertaining to the leaseholds and furniture previously reported upon in Q1 would remain at year-end.

11. Update on Committees

11.1 Report from the Technical Oversight Committee

The Chair of the Technical Oversight Committee reported that the Committee had met earlier in the week and staff had provided an update on the status on IPv6, DNSSEC and the Middleware project. Staff also reported on the network redesign noting that the network was being redesigned mostly from a security point of view to support security zones. There was also discussion on the recent DDos attack on a Registrar and how it could affect CIRA. Staff confirmed that CIRA as well as other ccTLD root operators had developed a mitigation plan to address this issue should it materialize.

11.2 Update on the Policy Advisory Committee

The Chair of the Board reminded the Board of Directors that the Co-Chair had stepped down recently and so far had not been replaced. As well, member B. Graham had. It was therefore proposed that J. Demco be appointed Co-Chair until the Committee was sorted out.

It was therefore resolved that J. Demco be appointed as Co-Chair of the Policy Advisory Committee and with the assistance of R. Liang, move forward with the Committee.

(Moved: K. Brown, seconded: L. Macdonald, unanimously carried)

There was some discussion on the nature of the Committee and if any issues should be raised to the Committee. Staff and Board members suggested that the Committee could perhaps examine the current policy work around the IDN, time permitting.

12. Other Business

There was no other business to discuss.

13. Next Meeting

The next meeting of the Board will be held on May 31, 2012.

D. Fowler, L. Gravel, P. Havey, J. Latour and M. Stewart withdrew from the meeting.

14. CEO Update

The CEO and Board of Directors held an in camera session.

Following the CEO Update, B. Holland withdrew from the meeting.

15. In-Camera Session

The Board of Directors held an in camera session.

Following the in camera session, L. Gravel rejoined the meeting.

16. Adjournment

There being no further business, the meeting was concluded at 2:40 p.m.