FDIP - Legal Wrapper Kickoff

Founder’s DAO Improvement Proposal - Legal Wrapper

Co-Authors: Saintlysatan, Kingmaker, CryptoScottie, WestCoastWalker, jakewittman

Type: Structural

Implementer: Founder’s DAO Community Members

Created Date: June 24, 2022

SUMMARY

This proposal seeks to permit the above named members of the Founder’s DAO to engage with a law firm to “legally wrap” the Founder’s DAO in a Cayman Islands Foundation. This is the initial proposal that allows the community members named above to represent the DAO’s interests in the items below.

Note: The final Memorandum and Articles of Association (i.e., the legal entities governing contracts) and any service providers (other than Walkers, which is proposed to be approved below) will be approved in a subsequent proposal.

ABSTRACT

After discussion regarding various legal entities that could “legally wrap” the Founders’ DAO, the Co-Authors decided that proposing a Cayman Foundation would be the most optimal in terms of legal flexibility, cost and time. The proposed Founder’s DAO Foundation is a Foundation Company Limited By Guarantee, to be incorporated in the Cayman Islands. Foundation companies are considered nonprofits. The Founder’s DAO Foundation would have no shareholders and cannot pay out dividends to its directors or members. It is proposed that the DAO shall engage Walkers, a leading international law firm, as legal counsel on matters relating to Cayman law. Walkers’ FinTech group has represented many DAOs in the formation of legal entities and has a breadth of experience in the blockchain industry.

More information on Cayman Islands Foundation Companies can be found here [LINK] and here [LINK]. The Foundation Companies Law, 2017, which is the statutory rule creating Foundation Companies, can be found here [LINK].

Why do we need a legal wrapper?

There are many purposes for having a “legal wrapper” around the DAO, including:

  • It provides limited liability to DAO participants for the actions of the DAO
  • It is capable of complying with taxation requirements
  • It is capable of entering into “real world” contracts with other entities

Who is involved in the Foundation?

The Founder’s DAO Foundation is proposed to have one director, which shall be a third-party Cayman service provider to be approved by the DAO in a subsequent proposal.

The Founder’s DAO Foundation is proposed to have one supervisor. The supervisor is an administrative role whose job is to make sure that the directors are doing their jobs in accordance with Cayman Islands law. The supervisor will be approved by the vote of the DAO in a subsequent proposal.

What power will the Founder’s DAO tokenholders have?

The Founder’s DAO Foundation’s Memorandum and Articles of Incorporation (the “Articles”) will give significant powers to the Founder’s DAO Tokenholders (the “Tokenholders”). The Tokenholders may vote to:

  • Appoint or remove a director, member, or supervisor.
  • Prohibit admitting any members in future.
  • Instruct the directors to wind up the foundation, and specify distribution of the assets.

Though it will not be specified directly in the Articles, the Tokenholders may also instruct the director to take action on behalf of the Foundation - such as signing a contract, engaging a company for a service the Tokenholders or Founder’s DAO require, or delegating the directors’ powers to a working group or subcommittee. The subcommittees that have been approved by the already existing governance mechanics will continue to represent the DAO in the matters for which they have been appointed.

The final Articles will be approved by a subsequent vote of the DAO.

CONTRIBUTION OF TITLE TO ASSETS

The Founder’s DAO assets are held in the following Ethereum wallet address: 0x580A96BC816C2324Bdff5eb2a7E159AE7ee63022 (the “PVFD Assets”).

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 in a subsequent proposal. Upon formation of the legal entity and pending final approval by the DAO, the key signers to the Founder’s DAO and the director of the Founder’s DAO Foundation will sign the Contribution Agreement and the contribution will be made effective. Note that although legal title will be passed to the Founder’s DAO Foundation, the tokenholders will still have authority over these assets in accordance with the Articles, which will be approved in a subsequent approval by the DAO.

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