subDAO Legal Entity Formation
Llama Risk resources for DAO sub-orgs in search of suitable legal structures
The content of this post is also published as a spreadsheet at the link below where it will be continuously updated:
Llama Risk subDAO Legal Entity Formation Spreadsheet
Resources:
Introduction
Link: subDAO Legal Entity Formation Spreadsheet
Llama Risk is available to assist DAO community organizations with the formation of appropriate legal entities for the purpose of conducting their DAO-related activities. As part of our effort to help streamline the subDAO incorporation process, we have begun assessing various jurisdictions and considerations relevant to subDAOs.
We have put together a subDAO Legal Incorporation spreadsheet that aspiring organizations may refer to. We will continue updating the spreadsheet with suitable jurisdictions. For each jurisdiction, we assess:
Parties and relations to the entity: Individuals or entities that are involved in the formation and operation of the legal entity.
Formation requirements: The prerequisites that need to be fulfilled for the incorporation of the entity. It includes the minimum number of shareholders, directors, and other specific requirements like submitting an application for registration, notarial deeds, and confirmation of capital payment.
Legal Personality: Recognition as a separate and distinct legal entity from its owners means it has its own rights and obligations separate from those of its owners.
Decision-making, management, and signing authority: Examination of how decisions are made within the entity, who has the authority to make those decisions, and how the management structure is organized.
Liability and duties of members: Shareholders' liability is typically limited to their shareholding. Directors have specific duties and responsibilities towards the entity, and they can be held accountable for breaches of these duties.
Delegation of authority: Method of appointment of directors and other key personnel by the shareholders. Directors have the authority to represent and operate the company, and their decisions are legally binding.
Transferability of shares: Shares can generally be transferred unless there are restrictions imposed by the articles of association.
IP rights: Research focuses on trademarks (any sign that distinguishes goods or services) and copyrights (original works of authorship).
UBO: The natural person(s) who ultimately owns or controls a company. The identity of the UBO, as well as other key stakeholders, may be required to be registered in specific registers.
Tax implications: Tax rates applicable to the entity, including corporate income tax, capital gains tax, and VAT.
VASP regime: Virtual assets service providers are regulated under specific acts and must adhere to certain guidelines.
We welcome DAO members to consult with Llama Risk legal counsel with any needs they have concerning subDAO incoporation. You can contact us at contact@llamarisk.com or contact Llama Risk legal counsel Svetlin Konsulov directly on Telegram: https://t.me/skonsulov.
Link: subDAO Legal Entity Formation Spreadsheet
Jump to Jurisdiction:
Czech Republic
Parties and relations to the entity
At least 1 shareholder is required for incorporation. A minimum of 1 managing director and 1 supervisory board member (if established) is mandatory. A legal entity is eligible to be a managing director; however, a designated natural person representing the entity must be registered in the commercial register. A managing director is prohibited from serving on the supervisory board.
Formation requirements
Submit an application for registration to a local court, accompanied by the notarial deed of the articles of association, the appointment of initial managing directors, and a local bank’s confirmation of stated capital payment. Utilizing the Ministry of Justice’s online articles of association template is permitted. Bank confirmation is waived if the capital is below CZK20,000. The capital minimum is CZK1.
Legal Personality
Separate and distinct legal entity
Decision-making, management, and signing authority
Shareholders must convene at least annually to vote on matters including financial statement approval, dividend payments, loss coverage, and auditor elections. Regular meetings are also necessary for appointing or revoking board and supervisory board members and amending the articles of association. Decisions can be made during physical meetings or through per rollam procedures.
Liability and duties of members
The liability of shareholders is limited to the amount proportional to their shareholding. A director who breaches the duty of due managerial care is required to return any benefit gained from such conduct to the company. Every shareholder has the right to seek compensation or damage on the company’s behalf against a director and to ensure the director fulfills their obligations.
Delegation of authority
The directors are appointed by the shareholders and hold the top managerial position in a corporation. They can be dismissed at any time without reason, unaffected by employment contracts. While they can seek management instructions from shareholders, they must maintain due care in their actions. Directors represent and operate the company, and their authority is legally binding externally, even if internal representational boundaries are breached.
Transferability of shares
Allowed in general unless articles of association impose restrictions
IP rights
(A) Trademark can be any sign, such as personal names, colors, designs, letters, numerals, shapes of goods or their packaging, gestures, and musical trademarks, as long as it can distinguish one's goods or services from those of others. (B) Copyright applies to original works of authorship that are perceptible in any form, including electronically, and extends regardless of the work's duration, intent, or importance. Computer programs are also covered if they represent the author’s unique intellectual creation. There is no requirement or option to register for copyright to be valid. The copyright extends to the entire work, its development stages, parts, titles, and character names, provided they meet the criteria of an original authorship work as defined above.
UBO
The identity of a company’s ultimate beneficial owner, as defined by the Czech AML Act, is required to be registered in the commercial register. An ultimate beneficial owner is a natural person who has significant control over a company, such as owning more than 25% of capital contribution or voting rights. The identities of managing directors and shareholders of a Limited Liability Company are publicly available in the commercial register.
Tax implications
Corporate income tax is 19%. Capital gains are subject to the normal CIT rate. Standard VAT is 21%
VASP regime
Virtual assets service providers are regulated under the Czech AML Act and must obtain a trade license for the provision of services related to virtual assets
Malta
Parties and relations to the entity
The company must have at least one shareholder and one director to meet corporate requirements. Corporate directors are allowed, but there must be at least one director who is a natural person. A company secretary is also mandatory, and one individual cannot hold the roles of secretary, director, and shareholder simultaneously.
Formation requirements
A limited liability company is deemed legally established under the Companies Act upon the execution and subscription of a memorandum of association by at least two individuals, or by one individual in the case of a single-member company. The issuance of a certificate of registration by the Registrar of Companies is also a requisite for the valid formation of the company. The minimum authorised share capital is EUR 1,164.69.
Legal Personality
Separate and distinct legal entity
Decision-making, management, and signing authority
A company registered in Malta operates through two main bodies: the general meeting of shareholders and the board of directors. The Annual General Meeting must be convened every calendar year, and it is distinct from any other meetings that occur during that period. It typically addresses matters such as the declaration of dividends, reviewing annual accounts, and evaluating the reports of directors and auditors. The Extraordinary General Meeting deals with decisions not covered in the AGM. Any issues outside the scope of the annual meeting are deliberated and resolved during an EGM.
Liability and duties of members
The liability of shareholders is limited to the amount proportional to their shareholding. A director has the legal obligation to act with honesty and integrity, prioritizing the company’s best interests. Directors are legally mandated to foster the company’s welfare by overseeing the company’s overall governance, ensuring its appropriate administration and management, and supervising the company’s general affairs
Delegation of authority
The directors manage the general business of a company registered in Malta. Directors are legally authorized to exercise all powers that are not explicitly reserved for shareholders’ resolution during a general meeting. The company’s constitutive documents typically grant directors the flexibility to organize their meetings as they see fit. Board meetings are essential for directors to make significant and effective decisions. The frequency of these meetings is influenced by the board’s practices and the specific needs and circumstances of the company.
Transferability of shares
Allowed in general unless articles of association impose restrictions
IP rights
(A) Trademarks can include various types of signs, must be representable graphically, and distinguish goods/services. Registration through the Controller of Industrial Property or EUTM registration. 10-year registration, renewable indefinitely. Protection extended to well-known marks under WIPO Paris Convention. (B) Copyrights - automatic for literary, musical, artistic works with original character and material form. Excludes ideas, procedures, operations, concepts, content of databases.
UBO
All Maltese companies are required to disclose information concerning the natural persons deemed as Beneficial Owners. Access to the UBO register is not open to the general public. Access is granted only to competent government authorities and to "subject persons" as defined under the Maltese Prevention of Money Laundering and Funding of Terrorism Regulations who are conducting customer due diligence. Additionally, third parties who can demonstrate a 'legitimate interest' are also permitted access to the register.
Tax implications
Corporate income tax is 35%. Tax is chargeable on capital gains realized on the transfer of immovable property (real estate), shares and other securities, business, goodwill, business permits, copyrights, patents, trade names, trademarks, any other intellectual property (IP), interests in a partnership, and beneficial interests in a trust. Standard VAT is 18%
VASP regime
The Virtual Financial Assets Act (VFAA) clearly defines various classes of cryptocurrencies and governs the public offering of virtual financial assets and the services centered around such assets, establishing a legal framework for ICOs and related services. The Innovative Technology Arrangements and Services Act (ITAS) introduces a voluntary regulatory framework for innovative technology arrangements and services, including those involving distributed ledger technologies (DLTs). The Malta Digital Innovation Authority Act establishes the Malta Digital Innovation Authority, tasked with overseeing and regulating activities under the ITAS.
Ireland
Parties and relations to the entity
The company must have at least one shareholder. At least one director is mandatory, and this director must be a resident of the European Economic Area (EEA). If a company is unable to appoint a director who resides within the EEA, it must obtain specific insurance. Corporate directors are prohibited. The company is also required to appoint a secretary, and restrictions are in place to prevent the same individual from serving simultaneously as the secretary, director, or shareholder.
Formation requirements
The company must have a minimum authorized capital or shares of EUR 25,000. For purposes of incorporation, the following documentation must be submitted to the Companies Registration Office- an incorporation fee, the company's constitution, and incorporation form containing company details. Every company must have a registered office and agent in Ireland.
Legal Personality
Separate and distinct legal entity
Decision-making, management, and signing authority
Companies are generally obligated to conduct an Annual General Meeting (AGM) every calendar year. The limited company has the option to waive the necessity of holding a physical AGM. This can be achieved through a process where all shareholders annually sign a unanimous written resolution. Authority for management of the company's affairs is typically delegated collectively to the board of directors in the constitution with certain fundamental decisions relating to the company being reserved for the shareholders (eg, changes to the company's constitution).
Liability and duties of members
The liability of shareholders is limited to the amount proportional to their shareholding. Directors are legally obligated to fulfill their duties to the company, not to parent or other affiliated companies, individual shareholders, or creditors. Consequently, in the event of a breach of duty, only the company has the legal standing to initiate an action against the director.
Delegation of authority
Directors must consent to their appointment and can be appointed by the company's shareholders or, if the company's constitution allows, by the other directors.
Transferability of shares
Allowed in general unless articles of association impose restrictions
IP rights
(A) Trademarks can be registered nationally in Ireland or at a European level, which affords the registered owner protection on a pan-European basis. For unregistered trademarks and logos, it is possible to obtain legal protection under the common law tort of passing off. (B) There is no registration regime in Ireland for copyright works; it is not a pre-condition of the protection afforded to the work under copyright law. Copyright will arise at the time that the original work of authorship is recorded or fixed.
UBO
Identities of the Directors, Secretaries, Shareholders and any "beneficial owners" (being any natural person who ultimately owns or controls, directly or indirectly, 25 percent or more of the company) must be disclosed and are publicly available from filings made at the CRO.
Tax implications
Corporate income tax is 12.5% (for Trading Corp) and 25% (for Non-trading Corp)
Capital gains are subject to a tax rate of 33%. Standard VAT is 23%
VASP regime
VASPs are mandated to register with the Central Bank of Ireland and adhere to the EU’s AML guidelines.
Poland
Parties and relations to the entity
The company must have at least one shareholder. A single-shareholder limited liability company cannot be instituted by another similar entity. The appointment of at least one director or board member is obligatory. In instances where the share capital surpasses PLN 500,000 and the total number of shareholders is above 25, the establishment of a supervisory board becomes a requirement.
Formation requirements
Shareholders are typically required to first sign the articles of association via a notarial deed. Next, they have to remit their financial contributions to the company. The management board is instated, and a supervisory board/ audit committee (if mandated by the articles of association). The official registration of the company in the business register can be completed online. Minimum capital requirement - PLN 5,000.
Legal Personality
Separate and distinct legal entity
Decision-making, management, and signing authority
The company is obligated to conduct at least one shareholders' meeting annually (within six months following the conclusion of the previous fiscal year). The purpose is for shareholders to deliberate and pass resolutions on various matters, including the allocation of profits or absorption of losses, endorsing the actions of the entity's members, and approving the financial accounts for the past fiscal year. Shareholders have the option to attend these meetings via electronic means.
Liability and duties of members
The liability of shareholders is limited to the amount proportional to their shareholding. Directors could be held accountable if they inflict damage through actions or omissions that are either illegal or contradict the company's articles of association. They can be held liable for unlawful dividend distribution. The company is entitled to sue directors for breach of duty and seek various remedies.
Delegation of authority
Directors are tasked with representing and administering the company’s affairs, both in and out of judicial settings. Their authority can only be curtailed by legal statutes, the company’s articles of association, or resolutions passed by shareholders. The articles of association may grant individual shareholders personal rights. These rights can encompass the power to appoint or dismiss members of the management or supervisory boards.
Transferability of shares
Allowed in general unless articles of association impose restrictions
IP rights
(A) Trademark rights are provided in three distinctive regimes: national trademarks (registered by the PPO); international trademarks (registered through WIPO and approved by the PPO); and EU trademarks (registered through EUIPO). A person wishing to seek protection of their designation (sign) does not have to register the trademark through any office. They may benefit from an unregistered trademark right based on unfair competition law on the basis of prior use on the market. (B) Copyright protection begins as soon as the work is established (registration of the right is not necessary).
UBO
The business register includes detailed information about entities and individuals who own more than 10% of the share capital. The register also contains a comprehensive list of the company's management board members along with their residential addresses
Tax implications
Corporate income tax is 19%. Capital gains are subject to the normal CIT rate. Standard VAT is 23%
VASP regime
The primary regulatory framework governing crypto assets is encapsulated in the Polish Anti-Money Laundering (AML) Act. To conduct a crypto asset activity, it is necessary to obtain an entry in the register of virtual currency activities and implement policies, controls, and procedures to mitigate and manage the risks associated with ML and TF.