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

[ARIN]

On 15 December 2016, the ARIN Advisory Council (AC) advanced the 
following Proposal to Draft Policy status:

ARIN-prop-234: Streamline Merger & Acquisition Transfers

This Draft Policy has been numbered and titled:

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

Draft Policy text is below and can be found at:
https://www.arin.net/policy/proposals/2016_9.html

You are encouraged to discuss all Draft Policies on PPML. The AC will 
evaluate the discussion in order to assess the conformance of this draft 
policy with ARIN's Principles of Internet Number Resource Policy as 
stated in the Policy Development Process (PDP). Specifically, these 
principles are:

     > Enabling Fair and Impartial Number Resource Administration
     > Technically Sound
     > Supported by the Community

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,

Sean Hopkins
Policy Analyst
American Registry for Internet Numbers (ARIN)

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ARIN-2016-9: Streamline Merger & Acquisition Transfers

Problem Statement:

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. 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. In short, 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 being 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 good data in whois.

Policy should allow ARIN staff to concentrate finite resources on 
ascertaining corporate chain of custody so as to minimize the chance of 
fraudulent transfers rather than auditing space already issued.

This proposal suggests two changes: a paragraph change to better reflect 
current practice, harmonize nomenclature with 8.3 ("new entity" vs 
"recipient") and remove an operationally-focused sentence, and a 
paragraph removal as it is the author's opinion that this paragraph has 
outlived its usefulness.

Policy statement:

Replace the following paragraph:

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.

with this conditional, moving it to the bottom of 8.2 for linguistic 
clarity:

AND one or more of the following:

The recipient must provide independently verifiable 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 corporate 
entity which is the current registrant.

Remove the following paragraph from Section 8.2 of the NRPM:

In the event that number resources of the combined organizations are no 
longer justified under ARIN policy at the time ARIN becomes aware of the 
transaction, through a transfer request or otherwise, ARIN will work 
with the resource holder(s) to return or transfer resources as needed to 
restore compliance via the processes outlined in current ARIN policy.

These two 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.

AND one or more of the following:

The recipient must provide independently verifiable 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 corporate 
entity which is the current registrant.

Timetable for implementation: Immediate