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Minutes of the Meeting of the CIRA Board of Directors held at the Fairmont Hotel Vancouver in Vancouver, British Columbia, on May 31, 2012 at 8:00 a.m. Pacific time

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

Regrets: Richard Anderson

Corporate Secretary: Michael Stewart

Minutes of the Meeting of the CIRA Board of Directors held at the Fairmont Hotel Vancouver in Vancouver, British Columbia, on May 31, 2012 at 8:00 a.m. Pacific time

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

Regrets: Richard Anderson

Corporate Secretary: Michael Stewart

Guests: David Fowler (by telephone), Paul Havey, Jacques Latour (by telephone)

Recording Secretary: Lynn Gravel

1. Approval of Agenda

The Chair proposed that the agenda be amended to include the item Legal Update following the Approval of Agenda.

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

A Director attended the ICANN Costa Rica meeting in March 2012 and reported that the meeting had been a great opportunity to talk to other ccTLDLs and various stakeholders within the industry. He also had the occasion to chat with other ccTLDs about how they fund various community programs or research. He encouraged all Board members to consider attending at least one ICANN meeting.

The Chair informed the Board of Directors that R. Anderson had submitted his resignation effective today due to other time commitments.

On behalf of the Board and staff, the Chair conveyed CIRA’s thanks and appreciation to

R. Anderson for the countless time he has devoted and his dedication to the organization as a Member of the Board of Directors and Committees over the past 10 years. The Board wishes Rick the best in his future endeavours and looks forward to his involvement in the community going forward.

(Moved: J. Grey, seconded: B. Holland, unanimously carried)

2. Legal Update

Staff updated the Board of Directors on the legal matter with Brandon Gray.

3. IDN Update

An IDN status report was tabled at the meeting and staff proposed the following recommendation to the Board of Directors:

Whereas CIRA wishes to provide the opportunity to Registrants to register domain names correctly in French, one of Canada’s two Official Languages; and

Whereas CIRA has accordingly been planning the implementation of French Internationalized Domain Names (IDNs) at the second level; and

Whereas, as part of such planning, CIRA developed its IDN plan through broad consultation with subject matters experts, its Registrants, certified Registrars, Members and technical experts; and

Whereas CIRA is now ready to being technical design of its IDN implementation;

Therefore, be it resolved that the Board of Directors direct staff to implement French character IDNs, as presented.

(Moved: J. King, seconded: R. Liang, unanimously carried)

D. Fowler and J. Latour joined the meeting.

4. IXP Update

Staff reported that the IXP project was recently introduced to the community and was still in its infancy. Thus far the response had been quite remarkable and the community was eager to participate. Staff reported that there had been a number of inquiries from local Internet communities and that the Manitoba Internet Exchange provided the first opportunity for CIRA to participate in the formation of a new IX. CIRA will be providing them with support to acquire from ARIN IPv4 and IPv6 address blocks, an ICANN L-Single root node and develop the MBIX architecture. Staff noted that further discussions had taken place with Calgary IXP and Windsor IXP community members. The Board of Directors applauded staff for this critical initiative noting that there was a huge demand for this service and CIRA was taking a leadership role.

5. By-Law Reform

The Election Working Group provided the Board of Directors with further background on the proposed governance changes. A review of the nomination and election process was tabled last year, and was a continuation of the work started in 2007. After much analysis by the Election Working Group, the Working Group had proposed to move to a single stream of candidates; greatly increase the transparency of the Nomination Committee; set term limits for Board members; reduce the size of the Board; and streamline the election process.

Staff noted that only limited feedback had been received from the Membership outreach giving the Working Group a small sample size. The majority of the feedback received was focused on the retention of member-nominated candidates. As a result, the Working Group considered whether modifying the proposed changes would address those concerns.

Discussion ensued regarding the proposed changes. Concern was raised by some Board members on two major issues: whether the reduced Board size would allow CIRA to continue to effectively serve its multi-stakeholder model and whether CIRA should move to a single stream of candidates. The consensus of the Board of Directors was that given CIRA’s current structure, that reducing the Board size at this time was not appropriate. It was also the consensus of the Board of Directors that it was indeed in the best interest of CIRA to eventually move to a single stream model, however, given the feedback received and timing concerns not to proceed at this time.

It was therefore the consensus of the Board of Directors to move ahead only with the changes necessary to conform with the new Act and requested that staff revise the By-Law accordingly, for presentation to the Members for approval at this years’ Annual General Meeting.

D. Fowler and J. Latour withdrew from the meeting.

6. Report from Audit Committee

The Chair of the Audit Committee reported that the audit field work was now complete and it is anticipated that KPMG will present their key findings and conclusion for the 2012 year-end audit including the Financial Statements sometime in early July. The Audit Committee also reviewed the Financial Signing Authorities and the Investment Policy with staff. Staff proposed a number of changes to the cheque signing thresholds primarily to improve the processing efficiency. Changes to the Investment Policy were mostly to clarify the wording and to provide additional investment options with limited additional risk and equivalent liquidity.

6.1 Bank Signing Authority

Be it resolved that the Audit Committee recommends that the Board of Directors approve the following changes to the Financial Signing Authorities:

Increasing cheque signing thresholds from < $10K, $100K to <$25K, $150K.

(Moved: R. Liang, seconded: J. King, unanimously carried)

Be it further resolved that the Audit Committee recommends that the Board of Directors approve the following changes to the Commitment Authorization Matrix (“CAM”):

To authorize the Director, Finance & Administration in conjunction with the President & CEO to manage, administer and revise the commitment authorization matrix internally below the level of President & CEO. The Audit Committee will be advised of any changes to the internal commitment authorization matrix.

(Moved: R. Liang, seconded: K. Brown, unanimously carried)

With respect to the intra operating bank account and investment account transfers, it was agreed that the Investment Policy signing threshold would be applicable.

6.2 Investment Policy

Be it resolved that the Audit Committee recommends that the Board of Directors approve the following changes to the Investment Policy:

1. Applicability: The policy wording is revised to clarify that it applies strictly to the CIRA Investment Account

2. Policy: Clarification provide on why CIRA has currently adopted a preservation of capital investment posture;

3. Portfolio Diversification & Rebalancing: Clarification provided that rebalancing may be unrelated to the investment vehicle and more a function of better matching our investment term to our Deferred Revenue, capital and other commitments;

4. Reporting: Requiring the Investment Advisor to notify CIRA of changes in credit ratings and re-ordering reporting based on the frequency;

5. Investment vehicles (providing additional investment options with limited additional risk and equivalent liquidity):

• Given available CDIC insured issues are exhausted within Banks/Bank Guaranteed up to $1M per institution (limited to Canada’s highest quality financial institutions – above AA);

• Corporate bonds – AA or higher (limit to 25% of the entire portfolio)

• In addition, expanded Banks/Bank guaranteed investments facilitate the third objective of having funds available in the event of an emergency.

6. Credit ratings: Requiring all fixed income investments to have two (2) ratings.

7. Investment transaction authorization threshold: Increasing the authorization for the President & CEO and Director, Finance & Administration from $500K to $1M and up to 2 years.

(Moved: R. Liang, seconded: V. Withers, unanimously carried)

The Chair of the Audit Committee also noted that staff will be reviewing the relative pros and cons of a discretionary versus non-discretionary investment approach and will be providing the Audit Committee with a recommendation at a later date.

7. Financial and Operational Updates

7.1 Report on all Statutory Deductions

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

7.2 Management Report

This item was discussed under item 14. CEO Update.

7.3 Review of Q4 2012 Unaudited 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 FY12 unaudited Financial Statements as compared to the budget. It was noted that total revenue had a favourable variance of slightly less than 2% relative to budget (i.e. higher than budgeted) and total expenses had a favourable variance of slightly over 2% relative to budget (i.e. less than budgeted). The only other notable expense variance related to Channel Management was a favourable variance of $420K, which would be $170K after adjusting for the budgeted cost of the price-off promotion.

8. Update on Committees

8.1 Report from the Technical Oversight Committee

The Chair of the Technical Oversight Committee reported that the Committee had met on May 16, 2012 and staff had provided an update on the status on IPv6, DNSSEC, IDN and the Middleware project. Staff also provided an overview of the IXP project and will keep the Committee informed as to the on-going costs of the project.

8.2 Report from the Policy Advisory Committee

The Co-chair of the Committee reminded the Board of Directors that the Committee had been created in February 2011 and part of its mandate was to provide the Board of Directors with non-binding policy advice and identify potential policy issues related to CIRA’s stewardship of the .CA domain. The current membership was comprised of Paul Andersen, Rick Anderson (Committee Co-chair), Alain Chesnais, Maureen Cubberley, John Demco (Committee Co-chair), Timothy Denton, Michael Geist, Bill St. Arnaud, Matt Stein, and Michael Stewart.

The Committee had met via teleconference on April 18, 2012 to discuss possible working group topics and had agreed to form a working group on Internet eXchange Points (IXPs). A face-to-face meeting was tentatively agreed to during the ICANN Toronto meeting in October 2012.

In light of the resignation from R. Andersen, the Committee Co-chair, it was agreed that J. Demco would remain as Committee Chair at this time.

9. Report from the Governance Committee

The Chair of the Governance Committee highlighted the results of the Board Effectiveness Assessment as compared to last year. It was noted that the full Board Assessment would be provided to the Governance Committee and individual Director feedback sessions between the Chair and each Director were currently underway. A synthesized report on Directors whose terms are expiring and have elected to stand for re-election will be delivered to the Nomination Committee. The Board Chair report will be provided to all Directors and the Committees and Chairs of these Committees will be assessed and reviewed later this fall to allow for a complete review of the year’s activities.

The Governance Committee will be busy reviewing the mandate, structure, and composition of the various committees and the content of the New Director Orientation session.

(D. Fowler and J. Latour rejoined the meeting.)

10. Accumulated Surplus Policy Discussion

Staff presented a conceptual framework and an illustrative financial pro forma pertaining to a Continued Growth Scenario to identify those elements that CIRA should reasonably accumulate funds to cover, including: Deferred Revenue, future capital requirements (to sustain and/or grow the operation), a prudent level of emergency funds, multi-year Community Investment Program CIP) initiatives and strategic investments or special projects consistent with CIRA’s mandate and not for profit status.

In the ensuing discussion, it was acknowledged the fairly conservative posture taken in assessing the reasonable level of funds to accumulate was very much in alignment with the mandate granted to CIRA to operate the .ca Registry public resource on behalf of Canadians.

As the next step, staff will draft an Accumulated Surplus Policy for the review of the Audit Committee incorporating the anticipated results of the strategic planning review.

11. Surplus Investment/Distribution Structures

Staff reported that prior reviews on how best to allocate CIP funds had been carried out in 2006 and 2009. In both cases, the recommendation was to use an advisory committee to assist in the allocation of any CIP funds. Staff also investigated a variety of structures used in other ccTLDs. It was noted, however, that each structure was driven by the local laws, tax issues, and issues specific to them, and was thus of limited assistance.

Staff further noted that given the funds available, a separate entity (such as a foundation) did not appear suitable at this time because of the attendant cost and complexity. An entirely separate entity and organization would have to be set up and maintained as well as staff, facilities, charitable status maintenance, etc. Staff therefore recommended that CIRA continues to manage the CIP funds as it does today and if sufficient funds warrant it, that an advisory committee be created to assist with the disbursement of additional CIP funds.

It was agreed that staff and the Board of Directors would defer the discussion until the strategic planning review. In the meantime, staff will proceed with further analysis of different structures.

12. Other Business

There was no other business to discuss.

13. Next Meeting

The next meeting of the Board will be held in Ottawa on September 17, 2012.

14. CEO Update

14.1 Management Report

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

Staff noted that registration activities had softened over the past few months but staff was not overly concerned given that the decline in the growth rate was not significant.

14.2 Strategic Planning Process

B. Holland provided the Board of Directors with an overview of the 2014-2016 Strategic Planning process. It was noted that the overall goals were to define the strategic planning horizon and future state for CIRA in the next three years. It was further noted that the strategic planning process would include an increase in Board and stakeholder participation as well as a three-year roadmap with objectives and milestones. The first workshop was scheduled for June 2012 and staff will be presenting a draft of the 3 year road map at the Board of Directors’ meeting in October.

L. Gravel, P. Havey, B. Holland and M. Stewart withdrew from the meeting.

15. In-Camera Session

The Board of Directors held an in camera session.

During the in camera session, the Board of Directors agreed that the Board seat vacated by Richard Anderson would be filled at the next Election of Directors.

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

16. Adjournment

There being no further business, the meeting was concluded at 2:00 p.m.