Following recent conversations on our member's mailing list, NomSteer, and wider feedback from our members and other stakeholders, we are now in a position to update you all on recent developments at Nominet.

Context

In response to a letter from the Department for Business Enterprise and Regulatory Reform (BERR) in October this year, we announced our intention to hold an independent corporate governance review, to be benchmarked against established best practice governance standards. As many of you know, this was prompted by concerns from this board and other stakeholders about how Nominet ensures that it has the right balance of skills and experience on its board, free from conflicts of interest and united in its commitment to act in the best interests of the company and its stakeholders.

Following this announcement, a number of events have taken place that underline the urgent need for such a review, including the resignation of non-executive Director Angus Hanton and the upholding of three conflict of interest complaints against another non-executive director, Jim Davies. We have regretfully taken steps to commence legal proceedings against Jim Davies to require him to comply with his statutory duties and remove and avoid conflicts of interest [see full statement here].

We are extremely disappointed that Jim Davies has conducted many of these discussions publicly and has felt compelled to outline often-confidential board information, including sensitive HR issues. With regard to accusations made against Nominet and the Nominet board, these are denied.

We would like to reassure members the above action has not been taken lightly, but the board has both a legal duty to comply with the requirements of the Companies Act 2006, and to take action when we believe these have been breached and we will be rigorous in doing so.

Following the developments outlined above, Mr Davies and Mr Hanton have called for the removal of the CEO and Chairman. One other member has called for an EGM. We have carefully considered such calls for action but, following expressions of support from current directors, former directors, international colleagues and many of our members, have decided not to call an EGM or to offer any resignations.

Our view is that three member calls do not justify such an extraordinary move and any action of this type is not in the best interests of Nominet and our stakeholders at this stage. Instead, we are committed to the completion of a rigorous, independent review of Nominet’s governance, including board structure, before any fundamental decisions are made. We believe that this is in the best interests of our stakeholders and is a considered, thoughtful response to the concerns that we all share.

Next Steps

1. Governance Review
We will be in a position to announce the independent governance review team during the week of 24th November. This team will have no connection to Nominet or any Nominet board member. Once the independent review appointment has been announced, we will confirm the full scope of the review. This will be done within two weeks of the appointment announcement.

The review will be completed by March 2009 and a full report, including recommendations, will be shared with our members and BERR. At this time, we will also be able to discuss next steps on the recommendations made in the report.

We do not want to pre-empt the findings of this report, as such we will not be in a position to discuss the detail of the governance review until the report has been completed. Of course, any timing updates or engagement requests will be communicated to all stakeholders as soon as is possible.

2. Appointment of Independent Director following non-executive director resignation
Following Angus Hanton’s resignation, we now need to co-opt a replacement director. As such, we have requested Veredus, a specialist recruitment consultancy, to draw up a shortlist of potential non-executive director replacements to temporarily co-opt onto the board. Our goal, as per best practice governance standards, is to appoint an independent director that will work with all Nominet stakeholders. As per our constitution, this director will stand down or stand for re-election at the AGM in 2009 (some time between May and July), which would be subject to member vote.

3. Action against Jim Davies
The ongoing discussions with Jim Davies are of course subject to confidentiality. However, any developments that we are able to discuss, we will do so with all stakeholders as soon as is practicable.

Our Priority

Whilst this is a difficult time for many of our staff, colleagues and members, our goal is to ensure that what is fundamentally a disagreement about Nominet’s future does not overshadow or undermine the excellent work that is taking place in support of our members, customers and the wider Internet community. We believe that whilst such disagreements happen, they should be dealt with in a professional, structured manner, with the benefit of independent guidance and input. We remain committed to ensuring that Nominet is governed according to best practice principles and we will not shy away from this task, despite the challenges.

Our priority remains: to ensure the continued smooth running of .uk and deliver a secure and robust service to our members, registrars and customers.