Liability Concerns#

MIDAO is not a law firm and does not provide legal advice. Please read our full legal disclaimer here.#

What liability protection does a DAO LLC provide?#

• Members of an RMI DAO LLC receive standard limited-liability protection: the same corporate-veil principles that apply to other LLCs. Liabilities arising from activities conducted through the entity belong to the entity, not to its members personally.
• The corporate veil is a strong but not unconditional protection. Courts in some jurisdictions can set it aside in circumstances such as fraud, commingling of personal and company assets, or failure to properly maintain the entity. A lawyer can help you evaluate when the veil will and will not protect you — we are happy to introduce you to lawyers experienced with DAO LLCs.

If a DAO were investigated for wrongdoing, would liability fall on its UBOs or Managing Members?#

• Marshall Islands law places no additional legal liability on a UBO, Manager, or any other Member of a DAO LLC unless the DAO LLC's Operating Agreement explicitly provides for it.
• Your home jurisdiction may take a different view: some countries impose special liability, reporting, or other requirements on citizens or residents who are beneficial owners or controlling members of a foreign company. Consult a lawyer in your own jurisdiction where this may apply.
• This differs from many foundation and non-profit structures (for example, in the United States or the Cayman Islands), which place specific rights, responsibilities, and liabilities on Directors and similar roles.

How should I evaluate the risks of joining a DAO LLC?#

• No jurisdiction — the Marshall Islands included — can tell an individual what risks a particular business dealing carries. The answer depends on your role (founder, member, investor, customer, employee), the activity involved, and the jurisdiction where you reside.
• For a risk analysis of your specific situation, engage a lawyer in your own jurisdiction. We can introduce you to lawyers familiar with DAO LLCs and cross-border Web3 work.

Who should sign MIDAO's service agreement?#

• The rights and responsibilities it grants are set out in the agreement itself and the linked terms of use — please read both before signing.
• Any legal person (a company or an individual) can be the counterparty. When a company is the counterparty, any authorized natural person can sign on its behalf.
• If you would like help assessing the agreement, we are happy to introduce you to a lawyer.