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4. FORMATION REQUIREMENTS

  • In order for a DAO to benefit from legal personality, it must fulfill the following requirements:

    • The DAO must be deployed on a Permissionless Blockchain;

    • The DAO must provide a unique Public Address through which anyone can review the DAOs' activities and monitor its operations;

    • The whole software code of the DAO must be in Open-Source Format in a Public Forum to allow anyone to review it;

    • The software code of the DAO must have undergone Quality Assurance;

    • There must be at least one GUI that will allow a layperson to read the value of the key variables of the DAO's smart contracts and monitor all transactions originating from, or addressed to, any of the DAO's Smart Contracts. The GUI will also specify whether Members are able to redeem their Tokens without restrictions and if not, the GUI will clearly mention the restrictions that are in place;

    • The DAO must have By-Laws that are comprehensible to a layperson. The By-Laws must be publicly accessible via a GUI or a Public Forum. Sensitive information may be redacted from the By-Laws before their publication, if those redactions are necessary to protect the privacy of individual Members or Participants in the DAO;

    • The governance system of the DAO must be technically decentralized, although not necessarily operationally decentralized, as per Article 3(7).

    • Independent of the chosen governance system, there must always be at least one Member of the DAO at any given time;

    • There must be a publicly specified mechanism that allows a layperson to contact the DAO. All Members and Administrators of the DAO must be able to access the contents of this communication mechanism;

    • The DAO must refer to or provide a Dispute Resolution Mechanism that the DAO, Members and Participants will be bound by;

    • The DAO must refer to or provide a Dispute Resolution Mechanism to resolve any disputes with third parties that, by their nature, are capable of being settled by alternative dispute resolution.

  • The DAO will, upon meeting the formation requirements in Article 4(1), have limited liability by default, subject to the provisions of Article 5.

  • Concurrent fulfillment of the requirements in Article 4(1), and an announcement by the DAO that it has fulfilled those requirements is deemed conclusive evidence of the DAO's recognition under this Model Law and does not require certification from, or registration by, an Accreditation Authority.

  • A jurisdiction adopting the Model Law may authorize an Accreditation Authority to monitor whether a DAO continues to meet the requirements for legal personality under the Model Law.

  • A DAO may request confirmation from an Accreditation Authority, if such an authority exists, to determine whether the DAO complies with the requirements for legal personality under the Model Law.