Liability Concerns

The Risks of Joining a DAO LLC vs. Another Entity Type

• Consider asking, "What are the risks of joining a company?" Delaware does not answer that question to individuals joining organizations operating in their jurisdiction (whether as a customer, investor, founder, employee, etc.), and the Marshall Islands also cannot answer it for you.

• If an individual wants to analyze the risks associated with any business dealing, they need to hire a lawyer. The legal and tax risks associated with an activity also depend not only on where the company is situated but also on the jurisdiction from which the person joining is based. An individual may receive a different analysis from a lawyer depending on the jurisdiction where they reside.

If the DAO were Investigated for Wrongdoing, would Legal Liability fall on the UBOs and/or the Managing Member(s)? Or would it be more similar to a foundation or non-profit, where there is no clear liability?

• No additional legal liability is placed by the RMI on a UBO, Manager, or any other Member of a DAO LLC unless the DAO LLC's Operating Agreement explicitly provides for additional liability on some individuals.

• That said, some countries may have laws that require citizens or residents to face special liability or requirements for being beneficial or otherwise controlling owners or members of any foreign company, so local laws or lawyers should be consulted as needed.

• Unlike with the RMI DAO LLC, in the case of many foundations or non-profit corporations, such as in the United States or the Cayman Islands, there actually are special rights, responsibilities, and liabilities placed on Directors or similar positions.

If the DAO is an LLC, Does That Absolve Me From Any Legalities That Pertain to the DAO?

• LLCs (including DAO LLCs) are the industry-leading way to protect individuals, including founders, from unlimited liability using what’s called a corporate veil. Please let us know if you’d like an introduction to a lawyer to help maximize the effectiveness of your corporate veil or help evaluate when it will and will not protect you from liability. Alternatively, you can Google “corporate veil” for a lot of good reading on the topic.

Liability Concerns When Signing MIDAO's Service Agreement. Who Should Sign the Agreement?

• Please read the service agreement and linked terms of use to see what rights & responsibilities are granted by it. Let us know if you would like an intro to a lawyer to further address this question for you.

• Any legal person (company or human) can be the counterparty on our service agreement. If a company is a counterparty, any authorized natural person (human) can sign the agreement on its behalf.