A common issue that comes up in financings, M&A, and IPO diligence is where an individual employee of a company, rather than the company itself, is the record-owner of the company’s domain name. This often occurs where a founder may have purchased a domain on his or her own account before actually forming the company, or where a CTO or other officer may have applied to the registrar in his or her own name. This can, as might be expected, cause issues down the road:
- Departing Employees: If a founder or employee who registered the domain leaves, this can create maintenance, registration, and continuity problems. And if they leave on bad terms, it can be difficult to obtain their cooperation to transfer it back.
- Sale or Transfer: In an M&A transaction or asset sale, having the domain registered in your company’s name makes the process smoother. You’ll have full rights to transfer the domain to a buyer or another entity.
- Maintenance Fees: If a domain is registered in a single employee’s name, you may be counting on one person to be notified of and pay all required registration and maintenance fees, potentially risking losing the domain if this one link in the chain fails.
Even prior to undergoing a financing or other M&A event, companies should check to ensure all of their domains are registered in the correct entity’s name (e.g. not an employee’s or former corporate name) and conduct any cleanup necessary.