[At-Large] ICANN Board Nomination
karl at cavebear.com
Tue Sep 14 23:41:42 UTC 2010
On 09/14/2010 03:21 PM, Bret Fausett wrote:
>> Board payment is a difficult issue.
> Another factor to consider is that, under California law, volunteer
> Board members of non-profit corporations are generally immune to
> personal liability....
It's been a couple of years since I last looked, but the California law
was somewhat tricky because of a Federal immunity statute that may have
preempted the California immunity statue in some circumstances.
When I was on the board I found some situations where neither immunity
statutes nor insurance would have offered any protection. (I warned the
board; but as usual I got the Cassandra treatment.)
In particular there was a situation in which ICANN was paying a lot of
$$ to a contractor that had no legal right to collect those $$ (and I'm
talking about $$ numbers with lots of zeros.)
What made it "interesting" was that the recipient of those $$ was a
person who was not only a founder and corporate officer of ICANN but
also a person with significant direct control over corporate acts.
That raised a thing that our US internal revenue service (our national
"tax man") calls "intermediate sanctions" -
The penalties under intermediate sanctions land on the recipient of the
$$, on the corporation, *and* on the officer and directors of the
corporation. And those penalties are designed to be draconian.
But what makes it most interesting is that those penalties are defined
as a tax -
Now, I am not at all sure that the California statutes can immunize a
director against the payment of a Federal *tax*. And I do wonder
whether typical D&0 insurance will insure against the payment of a *tax*.
In other words whether volunteer or not, whether covered by D&O
insurance or not, there may be significant personal risks to serving as
a director on the board of a non-profit corporation.
These are some of the reasons why I always suggest to a potential
director that they go to their own legal counsel for advice on these issues.
More information about the At-Large