2018-02-12 New gTLD Subsequent Procedures PDP Work Track 4

Notes/ Action Items

1. SOI Updates: No updates.

2.  Continued discussion of financial evaluation models

Slide 6:

-- Discussed 4 financial evaluation models:

1) No financial evaluation

2) No business model or financial fitness evaluation, only financial wherewithall.

3) Some level of self or 3rd-party certification, still without business model evaluation.

4) Comprehensive evaluation of business model and finances.

Slide 7:

-- Let's start from scratch, using what we got from WT members so far:

-- Little support for models 1 and 4.

-- Model 2 with some simplifications and some additions looked more capable of achieving consensus.

-- The output isn't consensus-grade yet, let's test it.

Slide 8:

-- 5 criteria (see details on the slide)

Slide 9:

-- Implementation mock-up of the evaluation questions (see details on the slide)

Slide 10: Financial Evaluation in Initial Report

-- Include both "middle-earth" and "straw-cookie monster" models mentioning agreement (or lack thereof) level, and in the case of "middel-earth", mention to possible simplifications.

-- Include, if provided, mock-up questions for each model.  Since Financial Evaluation is getting a full re-write, providng questions simplify and clarifty implementation, although not required and not immutable.

Discussion:

-- COI piece -- given this mock up the COI element that could be taken as a payment by ICANN could be deferred to the signing of the payment and delegation (rather than at application submission).  Or it could be spread across the regular payments made to ICANN.  (Note that WT2 has spent a lot of time on this.)

-- Like the proposed financials and taking an overall view of how many applications submitted.  Still have to consider what would happen if they would win 50% or 90% and what percent could go to private option.  Otherwise pooling is great.

-- Two types of review: finanical review and an audit.  The downfall is that the applicant might say that they don't expect a launch for two years.  The process that a company has to do it in line with this process -- working with an auditor to understand what the business is going to do, the volume, to showing that they have given enough thought.

-- Side note: Need to be sure that the applicant can demonstrate their ability to contract companies for bandwidth, hardware, etc.   Too hard to have everything contracted in advance.

From the chat:

Maxim Alzoba(FAITID): audited financial statement of a new company gives almost no info beyond officers and address and starting balance

Maxim Alzoba(FAITID): it was violation of FATF recommendations to governments

Maxim Alzoba(FAITID):  Financial Action Task Force (FATF)

Martin Sutton: Could the COI amount you referred to be part of a payment once agreement is signed? I know this is not directly related to this wt..

Maxim Alzoba(FAITID): I am not saying starting audit is not required, that is a measure to prevent purely (from financial of judicial points of view)bad companies from participation

Phil Buckingham: 70% 80%  of CQ s issued were related to Q50 re the LOC / COI  not Q46  on lack  of / submission of financial statements

Maxim Alzoba(FAITID): +1 Martin, it would simplify COI obtaining from banks

Jon Nevett: Good point Martin -- making applicants pay a COI doesn't make much sense at all

Phil Buckingham: yes agreed .  

Maxim Alzoba(FAITID): COI is required only for 6 years, and payment is one way thing

Maxim Alzoba(FAITID): to support new Registries with EBERO (paid via COI if smth goes wrong)

Christa Taylor: An audit/review will evaluate the business model as it would have implications on the financial viability of the corporation

Trang Nguyen: Perhaps stating the obvious, but there’s a tie between COI and the RSP discussion. I believe one of the approaches under discussion there is to have the RSP take-over in cases of financial failure. If that is adopted, there would be no need for a COI.