2011/06/14 Minutes

Minutes of the Meeting of the CIRA Board of Directors held at Hotel Arts in Calgary, Alberta, on June 14, 2011 at 12:00 p.m. Central time

Directors attending: Paul Andersen, Richard Anderson, Kerry Brown, John Demco (ex-officio), Heather Dryden (ex-officio), Byron Holland (ex-officio), Jim Grey, John King, Rowena Liang, Louise Macdonald, Lynne Mackan-Roy, Ross Rader (by telephone), Barry Shell , Tom Williams, Victoria Withers

Corporate Secretary: Michael Stewart

Guest: Paul Havey (by telephone)

Recording Secretary: Lynn Gravel

1. Approval of Agenda

The Chair proposed that the agenda be amended to include: 1) an action required under item 3.2 (Report from the Technical Oversight Committee); 2) item 4.3 (Update on Visit from Assistant Deputy Minister, Industry Canada ) be added; and 3) item 2.3 (Q4 2011 Financial Results) be moved under 3.3 Report from Audit Committee as item 3.3.1.

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

2. Financial and Operational Update

2.1 Report on all Statutory Obligations

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

2.2 Management Report

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

It was noted that when comparing the Canadian market share, the .CA had gained more registrations than .COM, which is quite significant. B. Holland confirmed that we were seeing the results of several months of marketing and raised awareness of the .CA but cautioned that we are at the early stage of our experience with auto-renewals, so their impact is not yet clear.

As for the membership strategy, B. Holland noted that the goal was to increase membership by building the .CA brand and member communications. Some of the key activities proposed for this year are well underway and others such as the revamped website, the first member letter and most recently the .CA member event last night have been completed.

3. Update on Committees

3.1 Report from the Governance Committee

The Chair of the Governance Committee reported that the Committee had met earlier to review the outstanding work from several projects identified in the 2011-2012 work plan. Some of the projects included: 1) developing an integrated annual calendar of activities for all Committees, the Board of Directors and staff ; 2) a review of the Committee structures for next year, especially the value in maintaining both the Audit and Budget Committees; 3) a review of the Board Effectiveness assessment process from last year; 4) Board skills gap and leadership review - a workshop is being planned for October 2012 and a peer assessment in Q4 to provide feedback to the Nomination Committee; and 5) ongoing discussion on the Nomination and Election process, especially the impact of the new Canada Not-for-profit Corporations Act on the organization. As well, members of the Governance Committee put forward a set of questions for further discussion and it was noted that any significant changes would be formulated to allow for approval by the 2012 AGM.

The Chair of the Governance Committee informed the Board of Directors that a short survey questionnaire on meeting effectiveness would be distributed at the end of the meeting.

3.2 Report from the Technical Oversight Committee

The Chair of the Committee reported that the Committee had met the previous day and received an update from staff on the new hires and the status on IPv6, DNSSEC and the Middleware project. As part of the yearly agenda, the Committee also reviewed, at a high level, the security policy and the Business Continuity plan. The Committee confirmed that it will be providing a more detailed report on the Disaster Recovery and Business Continuity plans at a later date. A question was raised on the status of IDN and it was noted that staff was performing a policy analysis and expected to roll out the policy consultation later this year. Another question was raised as to whether the Committee was tracking any under spent expenditures and capital expenses. It was noted that the only delays were the resources for Open DNSSEC due to formalizing the agreement and the virtualization software carried to fiscal year 2012.

The Chair of the Committee reported that the Middleware project to port the Registry over to a middleware platform was in progress and although this amount was budgeted in fiscal year 2012, Board approval was required because of the amount.

Whereas CIRA, as part of the Fiscal Year 2012 Corporate Plan, will be porting the JAVA based registry application to a middleware platform and staff has requested solution architecture and development proposals from three consulting firms.

Whereas the selected consultant will collaborate with CIRA to help implement the JEE Application Server architecture until March 31, 2012.

Whereas the Technical Oversight Committee has reviewed and recommends the project plan.

Be it resolved that staff proceed with the middleware proposal as outlined at an estimated cost not to exceed $600,000.

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

3.3 Report from the Audit Committee

The Chair of the Audit Committee reported that in late January staff reviewed and assessed the current status of the finance function, staff, systems, accounting policies, documentation and support to determine CIRA’s readiness for the upcoming Canadian GAAP audit and IFRS transition.

Deloitte was engaged to undertake a review and document the system conversion as well as the internal controls supporting the revenue processes in order to assist CIRA’s preparation for the upcoming audit. In reviewing the accounting policies, two primary areas were identified which may require different treatment as the accounting standards and CIRA’s landscape has evolved over the years - the manner in which CIRA recognizes revenues and the expensing of the development costs associated with our new registry system. KPMG was engaged through this process and agreed with delaying the normal start of their fieldwork until June 6, 2011.

It is anticipated that KPMG will present their key findings and conclusion for the 2011 year-end audit including Financial Statements by July 31, 2011. Accordingly, a special Board meeting by teleconference will be held in August to approve the audited financial statements.

As a result of the above, the Audit Committee is therefore recommending delaying our conversion to IFRS for one year.

Whereas staff after review of the work plan have identified resource and other constraints with the original Board approved timeframe for IFRS implementation and have proposed a new timeline for IFRS within the adoption standard permitted for not-for-profit organizations by the Canadian Institute of Chartered Accountants to the Audit Committee.

Whereas the Audit Committee has considered and recommends the new plan.

Be it resolved that the Board of Directors delay implementation of IFRS for one year. Accordingly CIRA would produce its first full set of audited IFRS financial statements for the fiscal year-ended March 31, 2013

(Moved: L. Mackan-Roy, seconded: J. Grey, unanimously carried)

3.3.1 Q4 2011 Financial Statements

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

The Chair of the Audit Committee noted that the audit was still ongoing and staff continues to work with the Auditors. Once the proposed adjustments are near finalized, the Audit Committee will review the entries and in turn inform the Board of Directors of the particulars.

There was some discussion in regard to the variance between the budget and the actual expenses and revenue. Staff explained that due to the economic downturn in 2009, net new growth was budgeted at 10%. Staff noted an increase in registration activity, for both new domain registration and renewals, in September 2010 and presented a re-forecasted budget to the Board. As for the expenses, some projects such as the virtualization and channel projects were delayed to the next year. It was further noted that the organization had expanded, hiring 17 people in the last year, revamped the Operations team and as a result, a significant increase in the velocity of activities would take place in the near future. It was agreed that should the organization anticipate a forecasted surplus, then staff should be prepared to act quickly on assembling a list of priorities, activities or initiatives that were not incorporated in the this year's operational plan.

There was also concern with the timelines of the quarterly financials and it was agreed to circulate the quarterly financial statements to the Board of Directors as soon as they are available rather than waiting for the next scheduled Board of Directors’ meeting.

P. Havey withdrew from the meeting.

3.4 Report from the Executive Committee

The Chair of the Board reported that the Committee had met to review the agenda for today’s Board of Directors' meeting and to continue discussions on HR matters.

3.5 Report from the Budget Committee

The Budget Committee have not met since the last Board of Director’s meeting.

3.6 Policy Advisory Committee

The Chair of the Policy Advisory Committee reported that one member of the Committee had yet to receive official clearance from his employer to participate. It was therefore decided to proceed with the formative work of the Committee and allow this member to officially join the Committee as soon as his clearance was received. The initial membership consists of John Demco, Ross Rader, Michael Stewart and the Members consist of Alain Chesnais, Tim Denton, Kirk LaPointe and Michael Geist.

In the meantime, the Committee will start developing a detailed agenda and work plan to provide a high-level insight into the proposed work of the Committee for the remainder of its term. The Committee will also solicit input and guidance from the Board concerning specific areas. Given the profile of the Committee, the Committee will be meeting two to three times a year.

4. Other Business

4.1 Director Update on ICANN San Francisco Meeting

Several Directors attended the ICANN San Francisco meeting in March 2011 and reported that overall it gave them a sense of the bigger picture and the governance practices. It was also a good opportunity to exchange information with other ccTLDs and stakeholders. It was recommended that, if possible, Directors should attend at least one ICANN meeting. An invitation was extended to the Board of attend the ICANN Toronto meeting in October 2012.

4.2 Update on Visit from Assistant Deputy Minister, Industry Canada

The Chair reported that a meeting was held at CIRA offices with the Assistant Deputy Minister, Strategic Policy Sector of Industry Canada. It was a brief meeting and constructive, mostly to update and discuss the current issues.

4.3 Briefing on new Canada Not-for-Profit Corporations Act

The Governance Committee reported that the new Act will bring significant changes, including the elimination of ex-officio Directors and the election of Directors at each Annual General Meeting. The Governance Committee will continue to examine the provisions of the Act and possible impact on the corporation as part of its mandate.

5. Next Meeting

The next meeting of the Board will be held in Vancouver on September 19, 2011.

L. Gravel and M. Stewart withdrew from the meeting.

6. CEO Update

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

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

7. In-Camera Session

The Board of Directors held an in camera session.

8. Adjournment

There being no further business, on motion by J. King and seconded by B. Shell, the meeting was concluded at 3:54 p.m.