LegalGELegalGE
...

DAO Governance

What is a "Legal Wrapper" for a DAO?

A "Legal Wrapper" is a registered legal entity (like an LLC or Foundation) that wraps around the DAO. It allows the DAO to interact with the traditional legal system: open bank accounts, sign contracts, pay taxes, and sue or be sued, while still maintaining its decentralized governance structure internally.

Can a DAO own real estate in Georgia?

A DAO itself (as code) cannot own property in the Public Registry. However, its "Legal Wrapper" (the Georgian LLC or Non-Profit) can buy and hold real estate on behalf of the DAO. The Operating Agreement ensures that the entity manages this property strictly according to the DAO's voting results.

How are taxes handled for a DAO in Georgia?

It depends on the wrapper. An LLC pays 15% corporate tax on distributed profits. A Non-Profit (NNLE) is tax-exempt on grants and donations but taxed on commercial income. Without a wrapper, DAO members might be individually liable for income tax on their share of the DAO's treasury, which is a complex compliance risk.

Is Georgia a crypto-friendly jurisdiction for DAOs?

Yes, Georgia offers a flexible corporate law environment, low bureaucracy, and a crypto-friendly banking sector (relative to the region). While there is no specific "DAO Law" like in Wyoming, the existing framework allows for creative and effective structuring of decentralized organizations.

Reading Time

3 min

Published

...

Decentralized Autonomous Organizations (DAOs) represent a revolutionary governance model where decisions are made not by central leadership but by the community (token holders) via smart contracts. However, the "Code is Law" principle often clashes with traditional legal reality. To operate in the real world — sign contracts, hire employees, or open bank accounts — a DAO needs a "Legal Wrapper." DAO Governance legal services bridge the gap between blockchain technology and Georgian legislation, protecting organization members from personal liability and creating a framework for legal operation.

What Does DAO Governance Service Cover?

This service combines corporate law with Web3 specifics:

  • Legal Structuring (Legal Wrapping): Selecting the appropriate legal form for the DAO (e.g., LLC, Non-Profit) and registering it.
  • Drafting Bylaws and Governance Documents: Reflecting the DAO's constitution and smart contract logic in real legal documents (Bylaws, Operating Agreement).
  • Liability Limitation: Structuring the entity so that DAO members are not personally liable for the organization's obligations with their assets.
  • Tokenomics Legal Analysis: Determining the status of Governance Tokens (whether they constitute securities).
  • Intellectual Property Protection: Legally protecting the code, brand, and content created by the DAO.
  • Dispute Resolution: Creating mechanisms for resolving disputes between members when smart contracts cannot regulate the issue.

Common Real-World Scenarios

DAO Governance services are needed when:

  • A DAO plans to invest in real assets (real estate, company shares) and needs a legal entity to register these assets.
  • A group of developers wants to launch a project but fears their token will be considered an unregistered security.
  • A DAO needs to issue grants or hire contractors and requires official contracts.
  • Treasury Management takes place, and decision-making procedures need formalization.
  • Conflicts arise between DAO members that cannot be resolved through on-chain voting.

Georgian Legislation and Regulations

Georgia does not have a specific law on DAOs (like Wyoming or the Marshall Islands), so existing corporate law applies. The main acts are the Civil Code of Georgia and the Law on Entrepreneurs. A DAO is often structured as a Limited Liability Company (LLC) or a Non-Entrepreneurial (Non-Commercial) Legal Entity (NNLE), depending on its goals. It is crucial that the charter correctly outlines decision-making mechanisms so that votes cast via smart contracts have legal force. If a DAO is not registered, it may be considered a Partnership (under the Civil Code), which imposes unlimited personal liability on members — avoiding this is a key legal objective.

Service Process

Setting up a legal framework for a DAO with Legal.ge specialists involves:

  1. Goal Identification: Clarifying the purpose of the DAO (investment, charity, protocol management).
  2. Legal Form Selection: Choosing the optimal form (LLC, NNLE, Foundation) within the Georgian jurisdiction.
  3. Document Drafting: Preparing a hybrid charter that recognizes blockchain voting.
  4. Registration: Registering the organization in the Public Registry.
  5. Operational Support: Handling daily legal issues (KYC, contracts, taxes).

Why Legal.ge?

DAOs are a new and complex phenomenon. Traditional lawyers often fail to understand how multi-sig wallets or token voting works. Legal.ge gives you access to Web3-oriented lawyers who can encase your decentralized vision in a safe legal framework, protect your community, and ensure the project's sustainability.

Updated: ...

Specialists for this service

Loading...