Welcome to the DAO Legal Guide focusing on the Marshall Islands DAO LLC, an integral segment of the Pontinova Global Top 100 DAO Legal Report.
Delve into this comprehensive guide to gain insights into the legal set up requirements and the regulatory compliance framework surrounding Marshall Islands DAO LLCs. Explore the other jurisdictions to understand why they excel at fostering DAO initiatives and navigating the intricacies of decentralized governance structures.
Download the Pontinova DAO ReportMarshall Islands DAO LLC
Suits best for Investment DAO
Governance Robustness ⚫
Ease of Setup ⚫⚫⚫⚫⚫
Asset Protection ⚫⚫⚫
Community Involvement ⚫⚫⚫
Legal Requirements
Legal
RMI DAO (Non-Profit) LLCs are incorporated under the Decentralized Autonomous Organization Act, the Limited Liability Company Act and, if applicable, the Non-Profit Entities (Amendment) Act.
Constitution
Certificate of Formation or Limited Liability Company Agreement or Smart Contracts including a statement that the organization is a DAO and delivered to the Registrar of Resident Domestic and Authorized Foreign Corporations for filing, at least one Incorporator who can be either an individual or a company and who do not need to be a resident of the RMI or a member of the DAO, Non-Profit Activity, if the DAO wants to register as a non-profit entity.
Regulatory Board
The Registrar of Resident Domestic and Authorized Foreign Corporations and the Banking Commissioner have the authority to promulgate regulations.
Administration, Management
Registered Agent, Members if member managed or Smart Contract if algorithmically managed.
Reporting, Accounting, Auditing
Accounting and Auditing are not mandatory. Reporting is mandatory on an annual basis between January 1st and March 31st of each year. The Annual Report must contain beneficial ownership information and information relating to leadership, community engagements and financial activities. In addition, DAOs must file a beneficial ownership information Report with the Registrar of Resident Domestic and Authorized Foreign Corporations at the time of formation and at the time of each annual Report. A beneficial owner is an individual who exercises control over the RMI DAO (Non-Profit) LLC through direct or indirect ownership of more than 25% of the LLC's interests or voting rights, through management of the LLC, or other-wise. Any person who engages in unlawful conduct is subject to a civil penalty of USD 500 for each day that the violation continues or is not corrected, and may be fined up to USD 10’000, imprisoned for up to 2 years, or both.
Please note that there is no minimum capital required to set up a RMI DAO (Non-Profit) LLC. The calculation of the incorporation fees should include legal consulting fees. The incorporation duration is about 3 weeks.
Taxation
No corporation tax, capital gains tax, wealth tax, or any other tax is applicable to RMI DAO (Non-Profit) LLCs. For-profit LLCs are taxed with a 3% gross revenue tax excluding dividends and capital gains.
Regulatory Compliance Framework
The RMI adopted the Decentralized Autonomous Organization Act on November 25, 2022, making it the first in the world. Hereunder, the RMI classifies as virtual or digital assets (a) virtual currencies, (b) digital consumer assets, and (c) digital securities. A virtual currency is a digital asset used as a medium of exchange, unit of account or store of value. A digital consumer asset is a digital asset that is used or bought primarily for consumptive, personal or household purposes and includes a blockchain token or any other digital asset that does not qualify as digital security or virtual currency. A digital security is a digital asset that constitutes a security, such as notes, stocks, and bonds and that does not qualify as digital consumer asset or virtual currency.
Securities and Investment Act [A / VA I]
Applicable to any person who directly or indirectly issues a security. They must file a registration with the Registrar of Resident Domestic and Authorized Foreign Corporations and the registered security must be approved by the Cabinet. An exemption may be granted for any security issued by a non-profit entity.
Securities and Investment Act [A / VA S]
Applicable to any person who directly or indirectly sells, exchanges, or transfers a security. They must file a registration with the Registrar of Resident Domestic and Authorized Foreign Corporations and the registered security must be approved by the Cabinet. In addition, a Virtual Asset Service Provider (VASP) operating as a financial service provider must obtain a license issued by the Commissioner of Banking. A license application fee of USD 300 must be paid at the time of application and an annual license fee of USD 1’000 must be paid before the end of September 30 of each financial year. It takes up to two weeks to obtain a license. Any person operating without a license is subject to a fine of up to USD 10’000.
Anti-Money Laundering Regulations [P, A / VA S]
Applicable to all VASPs operating within the RMI and carrying virtual asset transfers that qualify as cross-border transfers and virtual asset transactions that exceed USD 1’000.
Check the other DAO Jurisdictions:
• Switzerland - Foundation
• Switzerland - Association
• Liechtenstein - Foundation
• Lithuania - Private Limited Liability Company
• Cayman Islands - Foundation
• British Virgin Islands - Limited Liability Company
• Abu Dhabi ADGM - Distributed Ledger Technology Foundation
