Legal entity for DAO

research

Legal disclaimer

This presentation is for informational purposes only and is based on research conducted by the presenters. The information contained herein should not be construed as legal, financial, or professional advice. We are not licensed professionals or legal experts.

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The content of this presentation reflects our understanding and interpretation of the subject matter, based on the research conducted, and it may not be exhaustive or up-to-date. Before making any decisions or taking any actions based on the information provided in this presentation, we strongly recommend consulting with appropriate licensed professionals or legal counsel to obtain specific advice tailored to your situation.

The presenters and associated parties disclaim any liability arising from the use of, or reliance upon, the information contained in this presentation.

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AGENDA

• Why having a legal entity?

2. SWOT - analysis

3. Best ways to incorporate DAO

Community concerns

Why a legal entity?

Limited Liability and Legal Protection

Legitimacy & Reputation

Regulatory Clarity

and Tax Optimisation

Ownership of intellectual property and real estate

Having a legal entity that represents the DAO in the "real world" is valuable for a number of reasons:

• It provides limited liability to DAO participants for the actions of the DAO. Without a legal entity, participants may be individually held liable for anything the DAO as a whole does.
• It is capable of complying with taxation requirements - without a legal entity, DAO participants may be held liable for a proportion of the DAO's income, even if they are not able to access these funds.
• It is capable of entering into contracts with other "real world" entities, of holding assets (including IP rights), and so forth.

Why a legal entity?

• Legal Protection
• Clear Legal Framework
• Asset Protection
• Reputation and Legitimacy
• Tax Clarity

Strengths

Weakness

• Centralisation Risks
• Bureaucracy and Costs
• Jurisdictional Limitations

Threats

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S

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W

O

T

Opportunities

• Regulatory Arbitrage
• Increase in Collaborations
• Adoption and Scaling

• Regulatory Changes
• Legal Challenges
• Misalignment with DAO Principles
• Vulnerability to External Pressures

Ways to incorporate DAO

1.Limited Liability Company

LLC (Limited Liability Company): For example, in the U.S., DAOs can structure themselves as an LLC and distribute membership interests. This structure allows for legal protection while maintaining a decentralized decision-making process. Vermont and Wyoming, for instance, have been notably crypto-friendly states and might offer more favorable environments for DAOs.

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2. Foundation

Foundation: Some DAOs might choose to structure themselves as non-profit foundations, especially if their primary purpose is philanthropic or community-driven.

Ways to incorporate DAO

3. Decentralized Jurisdictions

Decentralized Jurisdictions: Some projects are working to create digital or decentralized jurisdictions where DAOs can be incorporated and recognized legally. These are still in early stages but represent an exciting frontier for DAO legal recognition.

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4. Multiple Entities

Multiple Entities: A DAO could set up multiple legal entities in various jurisdictions, depending on the regulatory advantages of each. Each legal entity would be responsible for a specific aspect of the DAO's operations.

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Swiss Foundation

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British Virgin Islands Limited Company

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Cayman Islands Foundation

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Swiss Association

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Liechtenstein Foundation

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Singapore Foundation

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Bahamas Foundation

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Panama Foundation

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Marshall Islands DAO LLC

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Gibraltar Foundation

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No VASP

Regime

Private DAO

Register

KYCisn't

Required

For-profit

Status

Non-profit

Status

No Local DAO

Manager Required

Affordable

Costs

Fast

Setup

Best countries to incorporate DAO

The Panama foundations have become some of the most popular legal wrappers in the incorporation of DAOs. One of the advantages of the Panama foundation as a legal wrapper for DAOs is the fact that it provides a secure vehicle for the confidential asset protection including Intellectual property. The legal mechanisms provided in the country ensure that the assets cannot be seized even by the government of the country. When you have digital assets, you do not have to worry about their protection. The foundation has you covered.

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The Panama foundations

Examples of decentralization governance of the DAO

The ENS Foundation is a Foundation Company Limited By Guarantee, incorporated in the Cayman Islands.

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The ENS Foundation's Articles of Incorporation give significant powers to the ENS DAO. The DAO may vote to:

• Appoint or remove a director, member, or supervisor.
• Prohibit admitting any members in future.
• Instruct the directors to wind up the foundation, and specify what charity or other foundation should receive the foundation's assets.

KYC means “Know Your Customer.” It describes the process of verifying the identity of (new) customers. The KYC process is performed to prevent illegal activities such as money laundering or fraud, in return protecting both company and client.

Why is KYC at The Sandbox?

The Sandbox has implemented KYC into its platform, by the majority request of its SandFam members, for the following reasons:

• To prevent fraudulent activity during contests, events, and sales.
• To prevent the use of multiple accounts during contests, events, and sales.
• To prevent The Sandbox being used to perform illegal activities, such as money laundering.
• To prove that users are a genuine, living person.

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https://daos.paradigm.xyz/

https://www.daobox.io/

More info and answers to the common questions you can find here: