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Decentralised Autonomous Organisation DAO in the Cayman Islands – Foundation

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Decentralised Autonomous Organisation DAO in the Cayman Islands – Foundation

February 24
09:41 2022
Bell Rock Group is becoming the leader in DAO advisory services in the Cayman Islands, setting up foundation companies and providing governance and advisory professionals to a range of disruptive blockchain communities.

The Cayman Islands Foundation Companies Act, 2017, introduced a new form of legal entity known as a “foundation company”, a vehicle that operates like a trust, allowing it to function like a civil-law foundation or common-law trust while retaining the separate legal personality and limited liability of a company. It has proved incredibly popular for decentralized autonomous organizations (or DAOs), most of which utilize blockchain technology.

Why does a DAO require legal personality at all?

Legal structures in many jurisdictions require a person or group to act as the owner of the DAO and DAOs without legal personality run into problems such as:

(a) unable to interact with third parties outside the DAO

(b) unable to enter into contracts, open accounts with digital exchanges or other counterparts

(c) unable to hold assets

(d) unable to protect valuable intellectual property that may be imitated by other projects or DAOs, and

(e) unable to carry out the wishes of the DAO or formally recognize community votes

(f) hire developers or other employees to grow the ecoystem

As a result, Developers can sometimes find themselves carrying out actions on behalf of the DAO and, consequently, be personally exposed to potential liability.

Creating a Foundation Company is the Solution

The solution to the problems above is for the DAO to establish a foundation company. The foundation company has legal personality to enter into contracts and undertake actions with third parties.

It is also managed by directors who carry on the business of the DAO. Unlike a company, the foundation company can be structured without shareholders. It can be ownerless – just like the DAO it represents. The foundation company can be supervised by a supervisor (or even multiple supervisors if desired). A supervisor has no ownership or economic entitlement in the foundation company but simply acts as a steward, ensuring that the directors of the foundation company observe their obligations to the DAO pursuant to the foundation company’s governing documents.

With no shareholders, all of the officers of a foundation company simply have the objectives of the DAO as their priority, similar to trustees and enforcers carrying out the objectives of a trust.

Governance Structure

A foundation company could include almost any form of governance structure so long as the foundation company is managed by at least one director, is supervised by at least one supervisor and has a secretary. Bell Rock Group, as a licensed and regulated firm, can provide the role of directors and supervisor.

A foundation company incorporated in the Cayman Islands is the ideal structure for DAO’s and can be incorporated in as little as 24 hours. As a regulated professional services firm based in the Cayman Islands, Bell Rock has been at the forefront of DAO entity formations, blockchain advisory and crypto investment fund formation and governance. For further information on incorporating your foundation company, DAO development or the appointment of professional services (such as directors or senior level advisors to a new or an existing project then feel free to contact us: [email protected]

Media Contact
Company Name: Bell Rock Group
Contact Person: David Lloyd
Email: Send Email
State: Grand Cayman
Country: Cayman Islands
Website: www.bellrockgroup.com

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