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💡 This document is meant to provide some visibility over the trade-offs of having a legal wrapper for RnDAO or not.
It's a document created by the DAO members and does not constitute legal advise.
It will be used as context for a proposal on whether we should explore incorporating a legal wrapper or not.
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Legal Wrapper:
What would it look like?
- An organization is incorporated in a certain jurisdiction to limit the liability of the DAO members
- The jurisdiction selected might require filing taxes (might be tax-free but still require filing).
- DAO members could further reduce their risk by being anon or incorporating a personal legal vehicle with limited liability at their own expense
Pros
- Limited liability for all members
- The DAO can recieve grants (certain grant-giving organisations require a legal structure)
- Facilitates fundraising: Insitutional investors expect a legal structure
Cons
- Incorporation and tax filling costs
- Might require disclosing the identity of the individuals or some level of KYC (this might put restrictions on USA based members to invest funds)
Open Questions / doubts
- Can we find a legal structure that enables us to issue tokens?
- Can we find a legal structure that's affordable?
No Legal Wrapper:
What would it look like?
- The DAO members have full liability (i.e. their personal assets could be confiscated in the case of a dispute. The enforceability and legal viability of such a process are uncertain)
- DAO members could reduce their risk by being anon or engaging with the DAO through a personal legal vehicle with limited liability (incorporated and managed at their own expense).
Pros
Cons
- Up to the individual to figure out and pay for any personal legal vehicle's incorporating and filing costs
- Up to the individual to become anon or not
Open Questions / doubts
References and Primers
A Primer on DAOs - Harvard
Legal Issues Facing DAOs
Formation of DAOs
Marshall Islands LLC for DAOs in mentioned in the Formation of DAOs section.