Nominet Misled Members About Subscription Fees and Voting Rights
Nominet is undertaking a consultation on its corporate documents, its memorandum and articles. The company is presenting this as bringing things up to date and as general housekeeping.
But in fact, the proposed changes seek to remedy the currently broken voting rights and subscription fee parts of the company’s constitution. Iain Mitchell KC produced opinions that identified what he believed to be fatal flaws in the current rules.
In Section 6 of its consultation document, the company asserts that:
“Nominet has always had a flat membership fee for all Members”
That is how it is now and what the board wants to try to lock in in their proposed changes. But Nominet’s claim is false.
Voting rights and subscriptions are currently required to be connected, under Article 19. As Iain Mitchell put it in his opinion:
I note also that article 19 clearly intended to make weighted voting interdependent with unequal subscriptions (putting it crudely: a member might pay more to get more voting power). It is difficult to see how these two issues can be disentangled, and a bye-law which gives weighted voting without addressing subscription levels is arguably ultra vires on that account.
A webarchive copy of Nominet’s website from 1996 bears this out, showing voting and subscriptions linked in bands, with the highest subscription rate of £5,000.
Andy Green doubled down on denying this had ever been the case when addressing this on the recent members call about the consultation. Green said:
“the articles on the web site from 1996 set out the possibility of tiered charging structure. In practice it was never implemented.”
When asked for the basis of his bold assertion, it became clear that he was relying on a lack of evidence, rather than any actual evidence. Given the resources available to the Nominet executive, that’s surprising.
Even more surprising, given that various members have quickly shown Green’s claim to be untrue. One document that has been unearthed is from one of the early Nominet pioneers, Clive Feather, who wrote on USENET in 1996:
“…Members of Nominet have a subscription level; this can be 1, 2, 4, 6, 8, or 10. If your subscription level is N, you pay (currently) N*500 pounds per annum, and get N votes.
The founders of Nominet had the view that the influence you have should depend on how much you have used the system. Therefore the limits on a member’s subscription level depended on registrations to March 1996. Demon Internet made a lot of subscriptions, and so was given a maximum level of 10. Demon Internet chose to go to level 10 and pay 5000 pounds for 10 votes. We could have, instead, chosen to go to level 6, pay 3000 pounds, and get only 6 votes. We didn’t…”
Tiered subscriptions were clearly intended by those who established Nominet and that is reflected in the Articles. Those Articles have not been followed since 1997. Nominet is breaking the law by doing so. It also has no power to charge subscriptions at present, as Iain Mitchell confirmed in the conclusion to his second opinion last year:
“there has been no basis within the terms of the articles for subscriptions to be set and collected from and after 31st August, 1997. It follows, therefore, that the subscriptions which were collected ought not to have been paid.”
It’s also worrying that the defensiveness of old is returning at Nominet. As an example, during the members call, Weighted Voting’s Jim Davies had this exchange with Andy Green:
“The articles link subscription fees to voting rights… When the company originally started business subscription fees and voting rights were linked. You paid more if you had more votes.” said Davies
“We don’t think that’s true.”
“It is true. We have provided you with a document from Nominet’s own website, archived, that shows that was the case.”
Andy Green had to apologise at last year’s AGM for the false claim that Nominet had answered all of the questions raised in our KC’s Opinions last year.
Now he has doubled down on a false claim that tiered subscriptions had never existed at Nominet.
Are Green and his board deliberately misleading the membership? Or are they themselves being misled by the Nominet executives? Or is it just bad governance? Whatever it is, none of these options is appealing.
There is already a claim filed in the small claims track of the County Courts, challenging the validity of the subscriptions charged by Nominet.
We call on Nominet to suspend the consultation immediately, so that the lawfulness of their subscriptions and weighted voting is decided. It is irresponsible of the board to try to plough on while those questions are in dispute.