23 October 2013

Structure New AMS-IX US Entity Chosen

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Selected structure to protect AMS-IX BV and AMS-IX Association from US legislation

Following our statement earlier this month on the plan to set up a separate entity in the United States (US), we can now announce that a structure for this entity has been chosen by the AMS-IX BV in cooperation with Jones Day (global law firm), the AMS-IX (Amsterdam Internet Exchange) Board and several representatives of the members of the AMS-IX Association.

The new entity is meant to enable deployment of Internet exchanges in the US, which will not be physically connected to the AMS-IX exchange platform in Amsterdam, but are stand alone IXs, as is customary with the AMS-IX exchanges outside of the Netherlands. The entity (from here 'US Inc') will be a Delaware incorporated company, very similar to a Dutch BV. The US Inc. will be a wholly-owned subsidiary of AMS-IX BV, whereby the two companies act independently from each other. AMS-IX BV will act solely as a shareholder. No employees or executives working in the Netherlands will be placed in the US Inc. or vice versa. Furthermore, the AMS-IX BV will have several operating agreements with the US Inc. that define the operational framework within which the entity can act, as well as license the applicable intellectual property.

Such a structure seeks to ensure that the US Inc. will not have possession, custody or control over AMS-IX BV’s data or equipment. Moreover, as US legislation, such as the USA Patriot Act, does not apply to foreign companies where there is no US jurisdiction, the USA Patriot Act should not apply to the AMS-IX BV or AMS-IX Association.

To guard, however, against potential future changes in US law (leading, for instance, to extraterritorial effect of the USA Patriot Act) an independent Dutch orphan foundation can be formed at any time. This means that the US Inc. can be moved outside the Dutch AMS-IX structure, and the corporate link between the US Inc. and AMS-IX BV would be severed. AMS-IX’s reason for not selecting this structure in the first place is that an independent orphan foundation does not allow for the intended economy of scale of the organisation, but if needed this Dutch orphan foundation will be invoked and created in one week to protect the Dutch infrastructure and assets.

In an interactive information session this afternoon, the AMS-IX Company, Board and the member representatives group informed the other members of the AMS-IX Association on the pros and cons of the possible structures of the US entity, and the reasons for having selected this particular one. During the session, the members were given the opportunity to ask questions and give feedback.