[arin-ppml] 2016-9 Streamline Merger & Acquisition Transfers - Text modifications

[John Springer]

Greetings PPML,

After discussions between the author, shepherds and the AC, the text of
ARIN Draft Policy 2016-9, Streamline Merger & Acquisition Transfers has
been modified for clarity.

Please reply with thoughts and feedback. They will be very welcome.
Thank you in advance.

New text:

Problem Statement:
In the case of a merger or acquisition, current policy encourages not
updating 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 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.
Policy statement:
Delete the bullet point 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 conditional 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:
ARIN will proceed with processing transfer requests even if the number
resources of the combined organizations exceed what can be justified under
current ARIN policy. 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 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

Old text:

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

regards

John Springer
ARIN AC member and shepherd of 2016-9
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