HKIRC’s response to recent viewpoints addressing the implementation of new governance structure

Hong Kong Internet Registration Corporation Ltd (HKIRC) is writing in response to recent viewpoints addressing the implementation of HKIRC’s new governance structure. As a non-profit making organization administering public resource, we would like to reiterate the spirit of fairness, justice, openness and neutrality in the matter:

1. Board restructure at the right time to contribute to Internet development
In view of the fast changing Internet landscape, and the government’s observance to strive for effective management of public resources, an independent consultanty was commissioned to look at how the existing framework can be improved and make impartial recommendations accordingly. The existing Board structure was laid down according to the Memorandum and Articles of Association (M&A) of HKIRC in 2002. Since then there had been a number of significant changes in the Internet world and the existing institutional framework and governance structure may no longer by optimal. A research was conducted by the consultanty over 12 countries, analyzing the advantages of the different framework of domain administration, understanding latest development and trends of Internet development. A new model of governance structure was recommended afterwards. The government has to play a role since the ‘.hk’ domain is a public resource. According to the consultancy report, the government of each country has increasingly important role to play as the use of Internet becomes more popular. It is therefore understandable that the government has more involvement on matters related to ‘.hk’. In the long run, HKIRC will continue to review the governance structure to ensure the public interest is upheld.

2. New HKIRC Board structure to ensure effective operations
The new Board will consist of eight directors, four appointed by the government of HKSAR and four elected by members. A new Consultative and Advisory Panel (CAP) will be established, consisting of a government representative and 13 advisors. They will be collecting views from all stakeholders and advise the Board on issues such as domain name development, infrastructure, price setting and marketing strategies. The CAP will advise the Board. The Board has the discretion on whether to take advice from the CAP. This two-level governance structure is widely adopted by major registries (i.e. ‘.de’ of Germany) and some-not-for profit organisations. The new Board members and the governance mechanism are evident of the government’s support of the ‘.hk’ administration, enhancing the effective management of ‘.hk’ and upholding public interest.

3. Enhanced communication with members to ensure high transparency of the new governance structure
HKIRC has communicated with members through various channels such as member consultation, online communications to enhance members’ understanding on the company restructure and the new Board. For example, on Aug 7, HKIRC sent an email to members to introduce the new governance structure and encourage members to vote. Hyperlinks with access to related consultancy report and paper were included so that interested parties could understand the issue in details. Also, a Q&A session was held on Aug 8 to allow onsite exchanges between members and directors. PowerPoint on related governance subject and information on AGMs and EGMs were posted to the non-member area of HKIRC website for instant browsing.

4. Cautious implementation and defined cut-off day to ensure EGM credibility
According to Companies Ordinance, the AGM of HKIRC will be held by no later than end of September each year. In order to meet the target of putting the new governance structure in place within 2009, the EGM has to be held before the AGM. Also, a notice period of 21 days will be needed to inform members in advance for either the AGM or the EGM. Similar to AGM, there are procedures which have to be followed. Aiming to ensure validity of each vote, professional auditor is hired to check the eligibilities of member entries. Furthermore, to avoid confusion and misunderstanding in accepting new member applications, a cut-off date had been set to avoid unnecessary ambiguity. Because of this, longer time may be needed to implement the above procedures, which is highly understandable.

5. Continued innovation and practical attitude in the implementation of Registry/Registrar (R/R) model
With a view to meet market demands, HKIRC has been innovative all along – the launch of ‘idv.hk’ in 2003, second level ‘.hk’ domain in 2004, trial run and launch of Chinese Domain Name in 2006 and 2007. During the period, the number of ‘.hk’ domain name registrations has increased by 2.7 times. HKIRC is expecting to implement the R/R model in 2009 as a response to market needs. The change will further open up the market and give more choices to users, ultimately benefiting the Hong Kong community. As a non-profit making organization, HKIRC has to take into considerations various critical issues such as Internet security, information leakage, and continuity of services to customer when a registrar goes out of business. These issues are by no means trivial. Careful planning and consideration are required before implementation.

6. Well-attended Board meetings with committed and enthusiastic directors
According to the records of HKIRC, the attendance rate of Directors in Board and Committees is as high as 82%. All the current/ex-Directors are highly experienced, enthusiastic and their guidance had contributed a lot to the development of .hk.