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Foundation Formation

A foundation company can be used for private, commercial or philanthropic purposes. It has the well-known advantages of being a company and it is subject to long-established legislation. We have set up many foundation companies for blockchain decentralized autonomous organizations (DAOs) plus ongoing support services.

We also provide advisory services to DAO's and act as directors to provide robust and independent governance. 

 

Why have a legal entity?

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Having a legal entity that represents the DAO in the "real world" is valuable for a number of reasons:

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  • It provides limited liability to DAO participants for the actions of the DAO. Without a legal entity, participants may be individually held liable for anything the DAO as a whole does.

  • It is capable of complying with taxation requirements - without a legal entity, DAO participants may be held liable for a proportion of the DAO's income, even if they are not able to access these funds.

  • It is capable of entering into contracts with other "real world" entities, of holding assets (including IP rights), and so forth.

Bell Rock Group – Cayman Fund, Corporate, Governance & Capital Markets Solutions

It has great flexibility with regard to objects, management, supervision and everything else, enabling it to be tailor-made  to the founder’s plan and circumstances. It has clear advantages over the trust, over the usual “not for profit” company, and over the foundation introduced in other offshore centres.

The incorporation process for a Foundation is the same as that for a traditional exempted company under the Companies Act other than as to certain additional requirements (and existing companies can be converted if they satisfy these same requirements) being that the company:

  1. Is limited by shares or by guarantee, with or without a share capital;

  2. Has a memorandum that:

    1. states that the company is a Foundation;

    2. generally or specifically describes its objects (which may, but need not be, beneficial to other persons);

    3. provides for to whom and how the surplus assets of the Foundation will be disposed of on its winding-up;

    4. prohibits dividends or other distributions of profits to its members or proposed members;

  3. has adopted articles; and

  4. has a secretary who is a qualified person (i.e. a person licensed or permitted under the Companies Management Act (Revision) to provide company management services, such as Bell Rock).

Bell Rock would be delighted to assist with the formation and on-going support for your Cayman Foundation, so please contact us to discuss.

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