Role & responsibilities of ENS Foundation Director

I’ve been asked to summarise the role and responsibilities of directors of the ENS Foundation, so people can evaluate how to move forward on proposals to replace Brantly’s position at the Foundation.

The ENS Foundation is a Cayman Islands foundation that exists to serve as a legal entity representing the DAO. More detail on why it exists and what it’s for can be found in the governance docs 18.

The Foundation currently has three directors; Myself, Kevin Gaspar, and Brantly Millegan. Directors are responsible for the day-to-day running of the Foundation. In practice, this is very little, at least so far; the Foundation has to make annual filings with the Cayman Islands, which are handled by its lawyers and accountants. It has assorted business expenses; as the Foundation does not have a bank account these are currently paid for by True Names Limited (the nonprofit I direct that funds and organises most ENS development), and requested for reimbursement by the DAO after the fact.

In principle the Foundation’s responsibilities could extend beyond this in time. If the DAO decided it needed, say, a subscription to Google Workplace to give DAO members email addresses etc, the DAO could instruct the Foundation directors to organise and instate this. Likewise, if the DAO wanted to acquire real estate, they would instruct the Directors to carry this out. Foundation directors are free to delegate any of these responsibilities, but it’s their job to make sure it gets done.

The DAO has the exclusive right to appoint and dismiss directors. Directors can also resign - but they can’t be appointed or removed by other directors.

As with all companies, the Foundation provides legal protection to its directors and those acting on its behalf in good faith - the Foundation itself would generally be the target of any legal action in relation to ENS or the directors. I am not a lawyer, but I understand that there are (limited) circumstances under which someone could seek to hold the directors individually responsible for the Foundation’s or the DAO’s actions. The Foundation indemnifies its directors against legal risks arising from their duties as directors, but ultimately the value of this comes down to the ability for the Foundation to fund this - which would come down to the DAO’s willingness to do so. I am also investigating obtaining Directors and Officers Insurance for the Foundation to further protect directors from personal liability. Personally I view this risk as small, but difficult to quantify.

Presently there is no fixed compensation for the role of Director. I’d suggest that the DAO should set some reasonable level of compensation in any proposal that’s put forward to replace or appoint a new director.

The Foundation is only required to have one Director under Cayman Islands law. However, I do not think it’s advisable to have only a single director. Three directors provide for redundancy in the event that one cannot serve, and make tiebreaking on votes easier.

Finally, due to an oddity in NZ tax law, if I am the only director there is the possibility that the NZ tax department would deem the ENS Foundation to be a wholly owned foreign company, and hold me personally liable for the entirety of the income of the ENS protocol. This is not a situation I am keen to explore, and if such was likely, I’d be forced to resign my directorship. This could lead to a situation where the Foundation has no directors; I am not sure what would happen in such a case, and I think it’s also best avoided.

My recommendation here would be to decide on a reasonable level of remuneration for directors, hold a process to accept nominations for the post of director, and hold a DAO-wide Snapshot vote to appoint one.