This guide was built to help you understand the benefits of incorporating your DAO and how the process of DAO incorporation works. We help you answer questions like:
Why should I incorporate my DAO? In what geographic jurisdiction should I incorporate my DAO? What legal entity type should I choose?
Get all the information you need to make the best decisions for you DAO by reading this guide.
Start the conversation by reaching out to MIDAO and providing some basic information about your DAO or Web3 project.
Next, MIDAO will help you through KYC and send you template documents such as an operating agreement to complete with their guidance.
MIDAO will submit all of your documentation to the RMI, and will send you your DAO LLC charter after a short waiting period.
– KoinDX
– Pecunia Finance
– Secret Network
If you’re not recognized as a legal entity, all of your contributors are at significant risk. If you get sued, all of your contributors’ assets could be seized. Incorporating is the best way to avoid these risks.
The best way to protect your organization’s contributors is to incorporate it as a DAO LLC. This ensures everyone can keep their assets and their future earnings even if the organization is sued or under a legal crisis.
If your DAO or Web3 project gets sued, whether it is for-profit or not-for-profit, any number of these things could happen:
- Your contributors are liable, meaning their personal assets will be under attack. In other words, everyone will be paying up.
- Your anonymous contributors will have to share their identities.
- You’ll need to create a centralized entity going forward, which is against your ethos of decentralization.
If you don’t have corporate personhood, your DAO can’t technically own any Intellectual Property or hire employees. Put simply, your DAO has no capacity to own assets, enter into agreements, or act as an entity in the corporate realm without incorporating first.
If your DAO or Web3 project needs to open a bank account to manage fiat currencies, it’s impossible unless you establish corporate personhood. And, if you’re signing contracts and interacting with third-party companies outside of the organization, the contracts don’t hold up under the law without corporate personhood.
Without a tax entity, all your members can be held accountable for taxes on any net earnings your DAO generates. If you sell a bunch of NFTs, for example, your members would have to pay taxes on those gains, even if they never received any of the money.
A MIDAO DAO LLC not only protects your members from having any tax reporting or liability, but the entity is also not taxed by the government. Think about all the money this will save you and your members!
This guide was built to help you understand the benefits of incorporating your DAO and how the process of DAO incorporation works. We help you answer questions like:
Why should I incorporate my DAO? In what geographic jurisdiction should I incorporate my DAO? What legal entity type should I choose?
A limited liability corporation (LLC) to protect you and your contributors
Physical address in the Marshall Islands
Automated Anti Money Laundering (AML) and Counter Financing of Terrorism (CFT)
Corporate personhood, which allows your organization to own assets and enter into agreements
Annual document filing on your behalf
White glove service from beginning to end
Recognition of smart contracts
A point person to work with the Marshall Islands government
Help with creating your legal documents, such as your operating agreement
The opportunity to weigh in on legislation
All beneficial owners or members (those with 25%+ governance rights) must have current passports and complete KYC. Our third-party vendor validates their residency and citizenship and checks against sanctions and blacklists.
- Operating Agreement
- Certificate of Formation
- Foreign Investment Business License (FIBL) application
For more RMI specific info, check out our info sheet.
The Marshall Islands provides a legal entity home for DAOs and Web3 projects. Registering as a non-profit LLC establishes corporate personhood without paying taxes to the Marshall Islands. And, the organization can register without a single person taking liability for the entire DAO or Web3 project. Instead of the entire organization signing an operating agreement, just the organization’s founders need to.
MIDAO offers both for-profit and not-for-profit DAO LLCs in the Marshall Islands. Our for-profit DAO option became available in December 2022.
We helped pass a law in the Marshall Islands that allows DAOs or Web3 projects to simply list the smart contract in which their governance processes take place. You won’t have to write out all the technical details or even list your members. Simply provide information on the smart contract and token, and you’re all set.
The Marshall Islands is a best-of-both-worlds spot for all types of DAOs and Web3 projects because it’s a sovereign nation that still receives protection and government services from the U.S. For example, the Marshall Islands uses the U.S. postal service and receives military protection, but it is not subject to the laws of the U.S. As an added bonus, lawyers around the world are comfortable working with the Marshall Islands because of its similarity to the U.S. and its history of traditional incorporation.
No, only members who hold a substantial portion of the tokens (more than 25% each) need to share their information. The remainder of the organization can remain anonymous.
As little as 30 days.
A MIDAO DAO LLC protects your members from having any tax reporting or liability in the Marshall Islands. Non-profit entities are not taxed by the Marshall Islands government. For-profit DAO LLCs are taxed a 3% gross revenue tax, which is a tax on gross revenues that does not include dividends and capital gains.
MIDAO's structure is designed to be flexible and adaptable to the needs of different DAOs and Web3 projects. We think most Web3 projects involve DAOs in some way, even if they don’t use the term “DAO.” Whether your project is a decentralized exchange, a crypto game, or anything else, MIDAO's structure can be customized to suit your unique requirements. We love talking to passionate crypto founders, so please don’t hesitate to reach out!
No, you do not need to be a registered company to use MIDAO's structure. We work with a range of entities, including both registered and unregistered companies. Some companies come to us seeking to add an entity to a preexisting structure, while most companies come to MIDAO seeking their first legal entity.
You are permitted to use our service without any legal assistance. However, we highly recommend seeking the advice of a legal professional regarding your legal entity and other legal needs. We have a partner network of over 300 Web3 lawyers; ask us to connect you with the lawyer that is the best fit for your needs.
Just reach out, we’re always around to answer any questions.
Contact us
Fill in the details below for any questions or to reserve your DAO LLC and we’ll be in touch.
