Founder’s DAO Improvement Proposal - Approve Memorandum of Association, Bylaws Foundation Director, Foundation Supervisor, and Fee Reimbursement
Author(s): Founder’s DAO Legal Wrapper Committee; Pixel Vault, Inc.
Type: Structural
Implementer: Founder’s DAO Community Members
Created Date: August 3, 2022
SUMMARY
On July 1, 2022, the Founder’s DAO tokenholders approved a proposal to work with a Cayman Island law firm to “legally wrap” the Founder’s DAO in a Cayman Islands Foundation, which is proposed to be named The Founder’s DAO Foundation (the “Foundation”). This proposal seeks tokenholder approval of the following items:
- Approve the Foundation governing documents
- Approve the Foundation Bylaws
- Approve Campbell Law as Director of the Foundation
- Approve Silverside Management Ltd. as Supervisor and Secretary for the Foundation
- Approve fee reimbursement to Pixel Vault, Inc. to cover accrued legal expenses and other fees, including the director, registered officer and supervisor fees for 2022
- Approve of the contribution of Founder’s DAO assets to the Foundation
In an effort to encourage complete transparency, which is essential to the operation of any decentralized autonomous organization, the documents and invoices referenced herein can be viewed here. Prior to the Founder’s DAO vote, the Founder’s DAO tokenholders are encouraged to review the documents and engage in constructive discussion regarding the terms therein. These documents have been reviewed and commented on by the Founder’s DAO Legal Wrapper working group.
Further, this proposal also includes several references to law firm articles and other external resources to provide the Founder’s DAO members with information regarding Cayman Island foundation companies and the applicable laws.
APPROVAL OF FOUNDATION GOVERNING DOCUMENTS
The Memorandum and Articles of Association (the “M&A”) are the governing documents for The Founder’s DAO Foundation, which is proposed to be a Cayman Islands Foundation Company. The M&A gives certain powers to the tokenholders, including, but not limited to the following:
- Appoint or remove directors, including approving of director remuneration
- Appoint or remove supervisors, including approving of supervisor remuneration
- Ability to review reports, accounts and information about the business affairs of the Foundation through a Tokenholder Vote
- Sit on various committees
- Wind up or dissolve the foundation company
- Amend the M&A
The goal in crafting the M&A was to (1) allow flexibility in the Tokenholders to decide the direction of the Foundation and (2) confirm that any directors or supervisors appointed in accordance with the M&A were subject to both fiduciary and contractual obligations to the Foundation and its tokenholders. As such, we’ve included certain tokenholder voting requirements for remuneration exceeding market rates and other protections layered throughout.
The proposed M&A can be viewed here.
*APPROVAL OF FOUNDATION BYLAWS
The Bylaws are the governing rules of the Foundation and formerly adopt certain voting mechanics that were previously approved by the Founder’s DAO. The Bylaws set forth the certain voting mechanics that have previously been established in the proposal dated March 7, 2022.
The proposed Bylaws can be reviewed here.
APPROVAL OF FOUNDATION POSITIONS
- Director: This proposal seeks to approve Campbell Law (in his personal capacity) as the director of the Foundation. In discussions with Campbell, we’ve confirmed that the director role for this Foundation model is lighter compared to others – this is because our goal with this Foundation was to push most of the duties onto the Tokenholders (outside of any fiduciary duties owed to the Foundation pursuant to Cayman Islands law). Campbell is well versed in Cayman Islands law and has experience working across a number of various Foundation companies in various capacities. More information about Campbell can be found here (link). The expected annual fees with respect to the director position are $25,000, and $12,500 for the remainder of 2022.
- Supervisor: This proposal seeks to approve Silverside Management as the supervisor of the Company. The supervisor role acts as a “steward” to the Foundation and confirms that certain actors (i.e. directors, tokenholders, and other individuals who may be appointed to serve on behalf of the Foundation) are acting in accordance with (i) the terms of the M&A and (ii) in accordance with Cayman Islands Law. Our intention with the Foundation model here was to move as many duties away from the supervisor role (subject to Cayman Island law) and push certain responsibilities and approvals onto the tokenholders , as further set forth in the M&A. Campbell Law, the individual proposed to serve as director, works at Silverside Management. The costs for Silverside Management to act as supervisor from formation until December 31, 2022 is $2,500. More information about Silverside Management can be found here (link). The annual fees are approximately $5,000.
- Registered office and Secretary: Each foundation company must have a Secretary, licensed to provide company management services in the Cayman Islands. The foundation company’s registered office must be at its Secretary’s registered office and the Secretary. Silverside Management can handle the registered office and secretary services, which is purely an administrative task. The costs to incorporate the Foundation and have Silverside Management act as registered office and company secretary until December 31, 2022 are reflected in the invoice, which can be viewed in the link under “Reimbursement of Fees.”
REIMBURSEMENT OF FEES
Pixel Vault, Inc., as partner to the Founder’s DAO, paid certain fees on behalf of the Foundation, including legal fees, the director fees, the supervisor fees and the company secretary fees. The legal fees for incorporation of the Founder’s DAO Foundation, including review of the M&A, the contribution agreement and these proposals was $19,979.25. Additionally, the director, supervisor and registered office fees for 2022 were paid by Pixel Vault on behalf of the DAO. Those fees owed to Silverside totaled $20,600. This proposal seeks to reimburse Pixel Vault a total of $40,579.25, payable in $APE coin, which is the most liquid coin held by the Founder’s DAO. The conversion of $APE to USD shall be equal to the price of $APE upon submission of the transaction to the Founder’s DAO multisig signers for execution.
All invoices referenced herein can be reviewed here.
APPROVAL OF CONTRIBUTION AGREEMENT
As discussed in a previous proposal (link), to create a clean trail of asset ownership, and in connection with the formation of the legal entity, it is proposed that legal title be transferred to the Founder’s DAO Foundation in accordance with a written Contribution Agreement to be approved by the DAO. The draft Contribution Agreement, to be approved by the DAO pursuant to this proposal, can be viewed here (link). Upon approval by the DAO, the Foundation director, Pixel Vault, Inc. and each key signer will execute the Contribution Agreement.
REFERENCES
For additional reading materials and education, below are several materials, including law firm releases, for Founder DAO member review:
- Walkers, The Foundation Companies Law (LINK)
- Walkers, Laying the Foundation Article (LINK)
- JD Supra, The Rise of Cayman Foundations (LINK)
- The Foundation Companies Law, 2017 (LINK)
- The ENS Foundation (LINK)
- O’Melveny & Myers, DAOs: Looking for Limited Liability & Legal Personality (LINK)
DISCLAIMER
The information provided in this proposal does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available in this proposal are for general informational purposes. Should you require further information in connection with your vote on this proposal, please contact a Cayman Island lawyer.