Workshop 3: DAOs & incorporation (LexDAO - 3/14)

--- tags: Program, Syllabus --- # Workshop 3: DAOs & incorporation (LexDAO - 3/14) - How do DAOs fit IRL within these 'legacy systems' - Different DAO legal structures that exist today - **Used by DAOhaus** - [SimpleCodeDeferenceAgreement](https://github.com/lex-node/SCoDA-Simple-Code-Deference-Agreement-) - **Created by LexDAO** - [What is a Ricardian LLC](https://ricardian.gitbook.io/ricardian-llc/) - "designed to grant compliant ethereum accounts with Delaware limited liability protections, while also avoiding the need for duplicative LLC filings. In other words: 1-click LLCs." - [Risks of a Series vs stand-alone LLC](https://ricardian.gitbook.io/ricardian-llc/what-are-some-risks-of-series-llcs-v.-stand-alone-llcs) - [Fantastic Medium article](https://medium.com/lexdaoism/ricardian-llc-limited-liability-nft-f64a162f751b) - When does a DAO need to 'corp up' - The earlier a DAO can provide legal protections for its members the better - The DAO should be ready to register once the DAO begins to take in capital from outside contributors - - *Does my DAO need to incorporate? (question for MP participants)* - "The biggest reason to create a DAO LLC is for the legal protections an LLC offers. If an organization chooses to create the DAO first, before forming a DAO LLC, there are no legal protections to protect investors and stakeholders from legal liability for that DAO. Of course, pinpointing the liable parties in a large DAO may be difficult, but it still leaves the DAO investors and stakeholders open to legal backlash should something go wrong. - When you’re dealing in financial matters, especially in technology so new as blockchain, failing to form an LLC around the DAO is extremely risky. Without the protection of an LLC, an investor in a DAO may face having their personal assets seized or subject to a lawsuit if the DAO were to be sued. An LLC will insulate any stakeholder from personal risk, and so only the DAO itself will be liable in a legal case. - A DAO has the added complication that the stakeholders may be global, and so only the stakeholders in the country where the case is being heard will be liable. This makes the risks of a DAO without the protection of an LLC even higher. For example, if Americans form a DAO with citizens of other countries, the people from foreign nations will not be held liable if an American sues the DAO, because the damages can be recovered from the American citizens' personal assets through the legal system. It would be up to those citizens to try to recover the damages from the other DAO stakeholders, which would likely prove difficult, if not impossible." - If a DAO forms a DAO LLC, then this cannot happen. The DAO’s assets are the only assets that can be at risk if the DAO is sued. This makes forming a DAO LLC essential for any DAO." - source: https://www.doola.com/blog/what-is-a-dao-llc-your-complete-guide-to-daos#:~:text=The%20legislation%20will%20require%20DAO,%E2%80%9D%2C%20or%20%E2%80%9CLAO%E2%80%9D. - *What sort of liability do the members of my DAO face? (question for MP participants)*