[arin-ppml] Recommended Draft Policy ARIN-2016-9: Streamline Merger & Acquisition Transfers

[ARIN]

On 16 March 2017, the ARIN Advisory Council (AC) advanced the following 
Draft Policy to Recommended Draft Policy status:

ARIN-2016-9: Streamline Merger & Acquisition Transfers

The text of the Recommended Draft Policy is below, and may also be found at:

https://www.arin.net/policy/proposals/2016_9.html

You are encouraged to discuss all Recommended Draft Policies on PPML
prior to their presentation at the next ARIN Public Policy Consultation
(PPC). PPML and PPC discussions are invaluable to the AC when
determining community consensus.

The PDP can be found at:
https://www.arin.net/policy/pdp.html

Draft Policies and Proposals under discussion can be found at:
https://www.arin.net/policy/proposals/index.html

Regards,

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



Recommended Draft Policy ARIN-2016-9: Streamline Merger & Acquisition 
Transfers

Date: 21 March 2017

AC assessment of conformance with the Principles of Internet Number
Resource Policy:

The proposal is technically sound and enables fair and impartial number 
policy by ensuring that new organizations involved in mergers and 
acquisitions may conduct such activities with a reduced procedural 
burden from ARIN. The staff and legal review noted three issues, all of 
which have been addressed. There is support for the proposal on PPML and 
concerns that have been raised by the community regarding the proposal 
on PPML or elsewhere have also been addressed.

Problem Statement:

In some 8.2 transfer situations, the current policy has the unwanted 
side effect of encouraging organizations not to update registration 
data, thus leaving the number resource in the name of a now defunct entity.

It is not uncommon for an entity which has bought another entity (with 
existing number resources) to leave Organizational data (Whois) in the 
name of the acquired company. The requirements in Section 8.2 put a 
justification burden on the acquiring organization, which was a 
legitimate protection while free pool assignments were available. It is 
worth revisiting Section 8.2 and looking for opportunities to simplify 
the policy in the interest of improving the registry data.

Consider the following:

1. In the case where both organizations (acquirer, acquired) have 
justified their existing number resources from an issuer (e.g. SRI-NIC, 
GSI, ARIN) under the policies that were in force at the time of 
issuance, the number resources have already been justified once.

2. ARIN does not customarily require organizations holding address space 
to document utilization except when they are asking ARIN to issue more 
space.

3. Section 8.2 M&A is not asking ARIN to issue more space or provide 
authorization to acquire space in an 8.3 transfer. It is simply updating 
ARIN's database to reflect the current reality, that control of a 
company has changed.

Language that speaks of required return or transfer of space is of 
questionable enforceability in the context of the current RSA (section 
6, "ARIN has no right to revoke any Included Number Resources under this 
Agreement due to lack of utilization by Holder").

Clauses that serve to scare organizations away from updating their 
information are counter to the goal of maintaining good data in Whois.
Policy should allow ARIN staff to concentrate finite resources on 
ascertaining  chain of custody so as to minimize the chance of 
fraudulent transfers rather than auditing space already issued.

Policy statement:

Delete the bullet point in NRPM 8.2 that reads:

For mergers and acquisition transfers, the recipient entity must provide 
evidence that they have acquired assets that use the resources to be 
transferred from the current registrant. ARIN will maintain an 
up-to-date list of acceptable types of documentation.

Add this statement to list of conditions for clarity:

"The Internet number resources being transferred as part of an 8.2 
transfer will not be subject to an additional needs-based assessment 
during the process of the 8.2 transfer."

Add this conditional to the bottom of 8.2 for linguistic clarity:

"AND one or more of the following:

The recipient must provide evidence that they have acquired the assets 
that use the resources to be transferred from the current registrant.

OR

The recipient must show that they have acquired the entire entity which 
is the current registrant."

Remove the following paragraph from Section 8.2 of the NRPM:

ARIN will proceed with processing transfer requests even if the number 
resources of the combined organizations exceed what can be justified 
under current ARIN transfer policy as defined in section 8.5. In that 
event, ARIN will work with the resource holder(s) to transfer the extra 
number resources to other organization(s) or accept a voluntary return 
of the extra number resources to ARIN.

These four changes will leave Section 8.2 looking like this:

8.2. Mergers and Acquisitions

ARIN will consider requests for the transfer of number resources in the 
case of mergers, acquisitions, and reorganizations under the following 
conditions:

The current registrant must not be involved in any dispute as to the 
status of the resources to be transferred.

The new entity must sign an RSA covering all resources to be transferred.

The resources to be transferred will be subject to ARIN policies.

The minimum transfer size is the smaller of the original allocation size 
or the applicable minimum allocation size in current policy.

The Internet number resources being transferred as part of an 8.2 
transfer will not be subject to an additional needs-based assessment 
during the process of the 8.2 transfer.

AND one or more of the following:

The recipient must provide evidence that they have acquired the assets 
that use the resources to be transferred from the current registrant.

OR

The recipient must show that they have acquired the entire entity which 
is the current registrant.

Comments:

Timetable for implementation: Immediate