LXDAO legal entity discussion

General
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Background

  • We are fundraising for the LXDAO treasury
  • We sign SAFT with investors
  • There are some legal tasks to do for LXDAO to receive funds
  • We also need some legal structure and support for protecting DAO members (Future of Ooki DAO - Ideas - Ooki)
  • We hope to receive funds ASAP

Tasks

  • Draft and prepare SAFT
  • Figure out and build a legal structure for receiving funds. It should be quick, lower costs, and meet the DAO structure
  • Find a proper legal consultant for LXDAO for legal structure, handling legal files and real-world contracts

Budgets

  • Depending on actual plans, it might be from 5k - 15k USD. I can pay upfront and submit the invoice to the DAO governance

References

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Advice from legal consultants, several options

  • Without an entity, DAO members will have unlimited liability risks
  • Register a BVI company to receive funds from VC, about 1500 USD within ten days + DAO Foundation + extra unknown accounting, maybe?
  • Register Marshall Island DAO Entity directly, which is more suitable for a DAO, but longer and more expensive
  • Register an HK off-share company (10K-20K HKD) + 10K HKD account per year
  • Depending on the business, register different companies for different asset management, like governance, etc.

Advice from investors and VCs

  • From VC: In general, need a BVI or foundation entity to receive funds from VCs
  • From VC: some big VCs can help work on it
  • From VC: Hard to find a case for DAO entity, too early and rare
  • From Individual: SAFT agreement on EthSign
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IMO, this will be a required step if we want to grow bigger. Some businesses or grants need an entity for taxation, etc. And the entity should be a bridge between the virtual DAO and reality matters.

The DAO shadow company should be controlled by DAO governance, and granted by the DAO treasury.

Absolutely. We need to build a consensus to have the shadow DAO company. Also, we need tokens from the DAO treasury.

Yes, it is needed. No VCs dedicated to investing DAO ATM. The common way is to register a BVI for most Web3 projects. The difficulty is that we are a DAO rather than a centralized team.

I would like to see it. This is super simple and easy, focusing on creating values. But unfortunately, if we want to grow bigger, we have to handle some shitty reality things like investment, taxation, contracts with non-web3 businesses, KYC, etc.

No one thought that DAO members would have unlimited liability until this case came out https://forum.ooki.com/t/future-of-ooki-dao/456. Although we won’t do something bad, it is a big risk if it happens.