[arin-ppml] ARIN-prop-173 Revisions to M&A Transfer Requirements (Updated Version)

[ARIN]

ARIN-prop-173 Revisions to M&A Transfer Requirements

The proposal originator revised the proposal.

Regards,

Communications and Member Services
American Registry for Internet Numbers (ARIN)


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ARIN-prop-173 Revisions to M&A Transfer Requirements

Proposal Originator - Marc Lindsey

Date - 5 July 2012

Policy type - Modification to existing policy

Policy term - Permanent

Policy Statement

Delete sections 8.1. and 8.2 in their entirety and replace them with the 
following:

8.1 Principles

ARIN will not change its registration databases to record the transfer 
of number resources between organizations unless such transfer complies 
with this Section 8. ARIN is tasked with making prudent, fair and 
expeditious decisions when evaluating registration transfer requests.

It should be understood that number resources directly assigned or 
allocated by ARIN are not 'sold' under ARIN administration. Rather, such 
number resources are assigned by ARIN to an organization for its 
exclusive use, provided the terms of the applicable Registration 
Services Agreement between ARIN and the organization governing use of 
such number resources continue to be met by such organization.  Number 
resources administered and assigned by ARIN are done so according to 
ARIN's published policies.
ARIN directly assigns and allocated number resources, based on justified 
need, to organizations, not to individuals representing those organizations.

The transfer policies in this Section 8 create certain exceptions and 
exclusions for legacy numbers ("grandfather policies").  The grandfather 
policies are intended to satisfy key policy objectives while promoting 
greater participation in the ARIN community by organizations holding 
legacy numbers.  The grandfather policies allow organizations holding 
legacy numbers to retain some of the historic benefits attached to their 
legacy numbers.

The benefits of the grandfather policies are not available for legacy 
numbers if:

(a) they are voluntarily and permanently released by the original 
registrant or its successor (or assign) to an RIR for re-issue to other 
organizations; where such releases are supported by reliable evidence 
retained by ARIN or the applicable RIR of the organization's informed 
and voluntary consent or agreement to permanently release the numbers; or
(b) the original registrant or its successor (or assign) of such number 
enters into an LRSA or RSA expressly referencing the legacy numbers as 
governed by the terms and conditions of an LRSA or RSA.

8.2. Mergers and Acquisitions

When the transfer of any number resource is requested by the current 
registrant or its successor or assign (the "new entity"), ARIN will 
transfer the registration of such number resources to the new entity 
upon receipt of evidence that the new entity has lawfully acquired the 
number resources from the current registrant as the result of a merger, 
acquisition, reorganization or name change.  ARIN will maintain an 
up-to-date list of acceptable types of documentation.  Transfers under 
this Section 8.2 shall not be contingent upon the new entity's 
justification of need for the transferred numbers.

8.2.1  If the transfer request pertains to non-legacy numbers or legacy 
numbers governed by an LRSA or RSA at the time such transfer request is 
first submitted to ARIN, the new entity shall be required to execute, in 
its own name, an RSA covering the transferred numbers, and pay the 
applicable registration fees.

8.2.2 If the transfer request pertains to legacy numbers that are not, 
as of the date that the request is first submitted to ARIN, governed 
expressly by an existing RSA or LRSA, the transfer shall not be 
contingent upon the new entity entering into or complying with an RSA, 
LRSA or any other form of written agreement with ARIN.

For each transfer of legacy numbers under this Section 8.2.2, ARIN shall 
assess, and the new entity shall pay, a one-time change charge as set 
forth in the fee schedule unless the new entity elects, in its 
discretion, to enter into an LRSA covering the transferred legacy 
numbers and pays the applicable registration fees.

Add the following new definition to Section 2:

A "legacy number" means any number resource that meets the following two 
conditions:

(1) the number resource was issued to an entity (other than a Regional 
Internet Registry) or individual (either, the "original legacy holder") 
prior to ARIN's inception on Dec 22, 1997 by or through an organization 
authorized by the United States to issue such number resources; and

(2) the original legacy holder (or its legal successor or assign) of 
such number resource has not voluntarily and permanently released the 
number to a Regional Internet Registry for subsequent allocation and 
assignment in accordance with such RIR's number resource policies and 
membership (or service) agreements.

Rationale

The current version of 8.2 actually discourages legacy holders from (a) 
updating the WHOIS database, and (b) paying fees to assist with records 
management associated with the WHOIS database.  Some entities that 
currently control resources do not attempt to update the WHOIS records 
because the current transfer process puts at risk their ability to 
retain and use their numbers.

Under the current process, a legacy holder or its lawful successor must 
first prove that it is the lawful successor (which is necessary and 
appropriate).  But it then must also justify its need to continue using 
the numbers it obtained prior to ARIN's existence.  Once the successor 
entity passes the needs hurdle, it is required by ARIN to execute an RSA 
(not an LRSA) as if the numbers were newly allocated from ARIN's  free 
pool.   The RSA (and LRSA) substantially alters the rights conveyed to 
the successor and subjects its numbers to audit and possible revocation 
under then-current policy.  There is, therefore, very little incentive 
for an M&A successor entity to update the ARIN registry database records.

For non-legacy registrants, the process should also be less burdensome 
and uncertain.  Ensuring the continuity of a company's IP addressing 
scheme as part of an M&A transaction should be within the control of the 
entities directly involved.  ARIN's discretionary approval of transfers 
in this context introduces an undesirable and unnecessary contingency.

Entities concerned about whether their M&A related registration database 
record update request will be rejected by ARIN simply do not attempt to 
fully update the records.
Minimizing the barriers for both legacy and non-legacy holders to update 
the WHOIS database when changes are required to accurately reflect 
normal corporate reorganization activities will help increase the 
accuracy of the WHOIS database, which benefits the community as a whole.

Timetable for implementation - Immediate