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Nominet warns of government takeover as Namecheap backs fire-the-directors campaign

Kevin Murphy, March 15, 2021, 15:52:42 (UTC), Domain Policy

Nominet has raised the specter of a government takeover of the .uk registry, should members vote to oust five of its top directors at an Emergency General Meeting a week from now.

The warning came as part of the company’s anti-EGM publicity, and at a time when the campaign for a Yes vote has passed 25% of eligible votes, with Namecheap becoming the biggest name yet to support the ouster.

In a blog post, the company refers readers back to the Digital Economy Act of 2010, which in part gives the UK government the ability to unilaterally take over .uk, should Nominet seriously mess up:

It means that the government can step in, if Nominet is ever considered unstable or not capable of governing itself.

Removing five directors, including two of the four independents, and pressuring the remaining directors to install candidates outside normal procedures, as the EGM petitioners seek to do, would be a huge step backwards in terms of good governance. We have been warned that instability will be of serious concern to government. We know it would create a scenario which would make intervention more likely.

That part of the Act was brought in because at the time Nominet was perceived to be at risk of capture by domain investors. It has since reformed its constitution to make this less likely.

The current situation could be seen as a replay of the situation 11 years ago, with many of those most unhappy with Nominet’s recent strategy among the domainer community.

The campaign, PublicBenefit.uk, wants to fire five directors including the chair and CEO and replace them with two new appointments who have promised to lower .uk domain prices and direct more profit to public benefit causes.

As of today, the campaign has 429 member signatories, representing 25.1% of voting rights. This is probably enough to pass its resolutions, which call for a simple majority of members attending the EGM.

Namecheap has become the largest registrar so far to sign up. It’s the seventh-largest .uk registrar, with 201,355 domains under management. GoDaddy, 1&1 Ionos, Tucows, and the others in the top 10 are so-far undecided. Google has said it will abstain.

It’s debatable whether the Digital Economy Act applies here. The Act deems that a registry has failed under two quite narrow circumstances:

(a)the registry, or any of its registrars or end-users, engages in prescribed practices that are unfair or involve the misuse of internet domain names, or

(b)the arrangements made by the registry for dealing with complaints in connection with internet domain names do not comply with prescribed requirements.

Do either of those apply to PublicBenefit.uk’s demands? It looks like a stretch.

The EGM will take place March 22, next Monday, and right now it’s not looking great for Nominet’s top brass.

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Comments (3)

  1. Susannah Clark says:

    The line of argument is plain: Mark is alleging that if 5 directors are removed, the Government may intervene, take away Nominet’s independence, and remove the membership-based system of governance.

    What you might call a hypothetical ‘Plan G’.

    For a start, I think it is a reflection of Mark’s expectation that he is likely to lose the vote next Monday, that he is shifting the playing field to threaten ‘Do that, and the Government will intervene, and you’ll be left with zero participation in Nominet.’

    ‘The government can step in,” Mark explains, “if Nominet is ever considered unstable or not capable of governing itself.”

    My question would be: “Why does a change of leadership make Nominet unstable or incapable of governing itself?”

    Governments of whole countries change, without making those countries ‘incapable of governing themselves’. Are Russell and Mark, in person, so irreplaceable?

    Mark goes on to suggest that the EGM petition is pressurising any remaining Board Directors “to install candidates outside normal procedures.” He is referring to the call in Resolution 2 (which he has refused to hold, alleging we wanted to ‘elect’ the replacements – incorrect) for the Board to appoint Sir Michael Lyons and Axel Pawlik (note ‘appointing’ not electing).

    To be plain, the membership is entitled to take a view on who should be Chairman. As there will be NO Chair if Resolution1 passes, it is reasonable and responsible to draft in a man (Sir Michael) of great experience and acute understanding of Nominet (having carried out the review of Nominet in 2015, and as a former Chair of the BBC), as an interim or caretaker Chairman. It would just be a responsible interim measure.

    No-one is saying that “normal procedures” would not then take place to confirm or repeal that interim measure. Everything would proceed in a normal orderly manner. There is no instability involved in all of this. And Mark Wood could himself set to work, co-operating in an orderly transfer of leadership to Sir Michael. Leadership changes. That happens in all companies.

    I don’t think the Government need to see that as “instability”. It’s simply transition of leadership.

    The EGM is not a “wrecking ball” as Mark claims. To suggest that is to be fairly derogatory towards 429 of the most engaged Nominet member companies, including the top 75% of UK members/companies in Nominet, and as you day in your article, major companies like Namecheap and Gandi.
    Members simply want new leadership, as is their right and function, in law.

    March 22nd begins that process.

  2. Susannah Clark says:

    If I may also add:

    Mark’s markedly NOT saying the Government “will” step in. I doubt he can. What justification could a government use, to suggest that leadership change (which happens in countless companies) = instability? It doesn’t. It’s just a change of leadership. It happens all the time. It happens to governments, for goodness sake.

    It’s also worth noting that the man who has led the call for an EGM – Simon Blackler of Krystal – is not a domainer, but the owner of one of the UK’s top hosting companies. We’re talking about serious people who run serious companies and businesses, who have joined this call for a change in extraordinary numbers – 432 as I write.

    If anything, the government should be disturbed that a Board and Executive have so alienated such huge numbers of members that they are now seeking better leadership.

    It could be well argued that, subject to the remnant directors complying with what the members indicate they want at the EGM, Sir Michael is an almost ideal candidate to step in as an interim Chairman, and that orderly process will then lead in due course to orderly selection of further directors, orderly decisions, and a company back on an even keel where trust and confidence have been restored.

    There is nothing disorderly about this process. Change of leadership happens. Due process is being followed by serious and committed members of Nominet, not to destroy, but to keep Nominet true to its founding principles, which are plainly in the interests of the UK and its namespace.

  3. Phil Buckingham says:

    Susannah,

    As an elected NED on the Nominet Board, I /we look forward to discussing these very valid points you raise on Monday.

    I’m sure the Board will be in contact with Kevin too next week.
    Thanks,

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