2015/06/16 Minutes

Minutes of the Meeting of the CIRA Board of Directors held at CIRA Offices, 979 Bank Street, Ottawa on June 16, 2015 at 9:00 a.m.

Directors attending: Kerry Brown, Andrew Escobar, Michael Geist, Bill Gibson, Rowena Liang, Louise Macdonald, Carole Mackaay,
Kevin McArthur, Susan Mehinagic, Bill Sandiford, Rob Villeneuve, Faye West

Advisors: John Demco, Byron Holland, Adam Scott

Guests: Steven Barry, Albert Chang, Dave Chiswell, David Fowler, Paul Havey, Rick Koeller

Minutes of the Meeting of the CIRA Board of Directors held at CIRA Offices, 979 Bank Street, Ottawa on June 16, 2015 at 9:00 a.m.

Advisors: John Demco, Byron Holland, Adam Scott

Guests: Steven Barry, Albert Chang, Dave Chiswell, David Fowler, Paul Havey, Rick Koeller

Recording Secretary: Lynn Gravel

1. Approval of Agenda

It was resolved that the agenda for the meeting be adopted as presented.

(Moved: B. Sandiford, seconded: K. McArthur)

2. Approval of the Draft Minutes of the April 21, 2015 Board of Directors’ Meeting

It was resolved that the minutes of the April 21, 2015 Board of Directors’ meeting be approved as presented.

(Moved: F. West, seconded: K. Brown, unanimously carried)

3. Chair’s remarks

The Chair thanked the Board and management for their participation in the strategic planning session the previous day.

4. Financial and Operational Updates

4.1 Report on Statutory Obligations

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

4.2 Management Report

This report was provided as information and tabled at the meeting.

Highlights noted registrations for the period ending April 30, 2015. Domains under management for the period were lower as compared to the previous year while the renewal rate remained unchanged. There was a discussion regarding the relative level of domains under management represented by individuals holding greater than 1,000 domains.

4.3 Preliminary Unaudited Q4-FY15 Financial Results

The preliminary unaudited financial statements for the year FY15 were presented to the meeting.

Highlights of the presentation noted that revenues had exceeded the forecast budget by $663K. This was attributed to domain renewals exceeding expectations at year end. However, core operations expenditures were over budget by $1M due the non-budgeted termination fees for the previous premises, Q4 severance costs and consulting expenditures pertaining to the cultural initiatives, strategic plan and pre-construction activities. The Community Investment Program expenditures were $173K over budget with a greater Fund disbursement than originally planned. Product Development expenditures were $470K lower than budgeted with savings in salaries and benefits, savings in consulting expenditures given greater development work undertaken with internal resources, less travel and lower computer operations costs with the timing of international node deployment. On an overall basis, the actual operating deficit is $205K lower than the year-to-date budgeted deficit. This was impacted by the increase in FY15 investment income through largely realized gains and unrealized gains on the transition of the portfolio to a discretionary investment management approach.

It was also reported that the project fit-up came in on time and that the estimated total project cost was within the overall budget of $2.8M, inclusive of the contingency amount.

Staff provided an update on the FY15 Restricted Investments portfolio and the status of the transition. As of March 31, 2015 approximately $18.9M (i.e. 88%) of the existing investment portfolio was moved to a new Investment Manager PH&N. The remainder of non-redeemable fixed income investment of approximately $2.7M will be moved as they mature over the next 4 years and the custodian account will be closed in FY16.

It was noted that the change in the investment management approach may produce more volatility in the investment income as the fair value of the investments fluctuate based upon prevailing market conditions. As well, PH&N has approved changes to its Bond Fund effective June 1, 2015 to increase the exposure to BBB investment grade bonds given the universe of increased opportunity and risk/reward reflected in the grade of investments.

5. Update on Committees

5.1 Report from the Market Strategy Committee

The Chair of the Committee reported that the Committee had met the previous week. Staff had provided an update on the various projects. Staff also introduced the new project idea SecureZone Password Manager. An initial pilot project is being conducted with selected participants to seek their input as to the value of the technology. A decision on the product launch will be made once the pilot project is completed at the end of August.

5.2 Report from the Compensation and Review Committee

The report from the Compensation and Review Committee was provided to the Board as information and tabled at the meeting.

5.3 Report from the Governance Committee

The Chair of the Governance Committee reported that the Committee had met the previous day. It had reviewed and recommended approval of the Board and Committee Effectiveness survey that the Directors will be asked to complete this year. It is largely unchanged from last year. The meeting had also discussed the list of corporate policies reviewed each year. Highlights noted agreement on the need to simplify the provisions of the Directors Code of Conduct and Policy on Conflict of Interest. It was understood that this policy as well a revised policy on Financial Associations separate from the Code of Conduct policy would be examined in the fall.

R. Koeller joined the meeting.

5.4 Report from the Finance, Audit, Investment and Risk Management (FAIR) Committee

The Chair of the FAIR Committee reported that at its last meeting, the Committee had reviewed the FY15 unaudited financial statements and that the audit field work had been completed. The Committee also reviewed the investment management report and transition cost from Phillips, Hager &North, the Investment Manager. A report on the high and strategic level risk inventory was also presented.

Staff reviewed some of the high level risks with the Board of Directors noting the risk exposure values and changes for each. It was noted that risk management had identified 15 new risks and closed 28 during FY15.

R. Koeller withdrew from the meeting.

5.5 Report from the Community Investment Committee

Staff provided an update on the Community Investment Program. It was noted that 7 projects from Round One were now complete and the remaining 22 projects would be completed in FY16. Staff noted a number of ongoing communication activities including media and social networks which resulted in press release opportunities and national and local coverage.

A. Chang joined the meeting.

6. Registrar Canadian Presence Requirements

It was reported that a review of CIRA’s policy to require a Canadian Presence Requirement (CPR) for Registrars wishing to operate in Canada had been conducted to determine which aspects of the policy discouraged multi-national Registrars from being part of the CIRA Channel.

The obstacle cited by multi national registrars was the requirement to have employees situated in Canada. The need to incorporate an entity in Canada was not unduly limiting.

The interpretation of the existing policy confirmed that the under the existing policy, a multi-national Registrar can be in compliance with the policy by incorporating in Canada and appointing a Canadian based administrative contact to deal with day to day affairs. It is not necessary for the Registrar to have employees in Canada.

It was therefore recommended that no updates or changes be made to the current policy. The Board of Directors was fully supportive of staff’s recommendation.

7. By-law No. 1 – Corporate Secretary

CIRA’s By-law No.1 at present requires the Corporate Secretary to hold the position of General Counsel of the Corporation or be a member of the Board of Directors. The Governance Committee has considered the limitations associated with CIRA’s current bylaw in this regard and has unanimously recommended that the By-law be amended to eliminate the requirement that the Corporate Secretary be either the General Counsel or a Director of the Board of Directors. It is understood that notwithstanding the proposed amendment, the position will remain a Board appointment and continue to report to the Board Chair.

On the recommendation of the Governance Committee and on motion made and duly seconded

It was therefore resolved that:

Section 8.01 of CIRA’s Amended and Restated By-law No. 1 be amended to delete the following sentence: “The Secretary must be a Director, unless the Corporation’s General Counsel acts as Secretary pursuant to subsection 9.04.”;

Section 9.04 of CIRA’s Amended and Restated By-law No. 1 be amended to delete the following sentences: “Unless otherwise determined by the Board, the Corporation’s General Counsel shall act as Secretary of the Corporation. If the Corporation’s General Counsel does not act as Secretary, the Secretary shall be appointed from among the Directors.”; and