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Legal framework overview
The State of Wyoming has drafted a special regulation for DAO, under which a DAO can be established in Wyoming as a Limited Liability Company (LLC) with specific characteristics. Management of the DAO LLC is vested in its members (similar to the classical model of LLCs) if it's member-managed or in the smart contract if it's algorithmically managed (similar to the classical DAO model, where decision-making is encoded in the protocol). The DAO LLC established in Wyoming allows a limitation of personal liability, as the DAO LLC members are not personally liable for the LLC's debts or legal liabilities.
Each time a real estate property is tokenized, the following happens:
- 1.A new DAO LLC is created in Wyoming. With the U.S. common law's flexible legal system and less bureaucracy and paperwork, the DAO LLC registration process is very simple, with minimal documentation required. The governance and management of the DAO LLC is mainly structured in its smart contract, articles of organization, and operating agreement.
- 2.This newly created DAO Company raises capital by selling its governance tokens, bAsset tokens, to investors. bAsset tokens represent voting power in the corresponding DAO. Before becoming a member of the DAO LLC, an investor must confirm that he/she is not a citizen/resident of any country (including the USA), state or territory where it is prohibited to purchase, hold or own cryptocurrency or tokens. bAsset tokens are not intended to be marketed or sold in any jurisdiction where they legally may not be marketed or offered for sale.
- 3.Then, as the members decide to approve such a decision, DAO LLC invests in real estate property, legally becomings its owner. Consequently, bAsset tokens holders receive legal ownership of a portion of the property, and they are members of the particular DAO LLC that owns this property.
- 4.Every DAO member can influence the organization's "governance" by submitting proposals to the DAO's general membership meeting. After a DAO member submits a proposal, all the members can vote to determine its fate.
- 5.As the business becomes more and more successful, the price of bAsset tokens is expected to increase. bAsset token holders also receive pro rata income on their investments on the basis of the net proceeds after payment to realtors, legal fees, maintenance and other disbursements.