Why we need to make this change

Effective governance, how we are organised and controlled, is crucial to our success. We believe the domain name industry should continue to be self-regulated. Self-regulation has served members and stakeholders well up to now and we believe it will do so in the future too. To restore Government confidence in our ability to self-regulate, we need to update our Board structure and the role and responsibilities of the Board.

What this change will mean

The Garratt Report recommended that we make specific changes in order to balance the Board and to make Nominet less susceptible to capture by a section of the membership with special interests.

Currently the Board includes the chairman, chief executive and four non-executive directors. We propose that the Board should be made up of:

3 appointed independent non-executive directors
4 elected non-executive directors and
up to 3 executives with an initial position that we would have the CEO and one other.

The independent non-executives will be appointed using a transparent nominations committee process.

The non-executive directors elected by members are invariably registrars themselves or are closely affiliated with one or more registrars, and this means that they usually have inherent conflicts of interest in serving on Nominet’s Board and participating in decisions. The Companies Act 2006 prohibits a director of a company from being in a situation where they may have a conflict of interest and this has the technical effect of placing all such directors (and the Board itself) in breach. Companies invariably have the power to authorise such conflicts, and such a change is essential to protect the position of Board members from the registrar community. Under the new articles the Board would, where appropriate, have the ability to authorise conflict situations – it would not do so where, for example, the conflict of interest was substantial and/or financial.

Professor Garratt also made the following recommendations that do not require constitutional change and we intend to adopt them all in full:

• Create a clear job description for each director
• Create annual evaluation and development plans for the Board itself, each committee and each director
• Ensure that the nomination, selection, induction, competence building, evaluation, renewal and de-selection processes are reviewed regularly
• To publish in the Annual Report the reasons for, and cost of, the legal fees concerning independent legal advice for directors concerning their directorial roles
• To review and publish the remit and membership criteria of the audit, remuneration and nomination committees.