Creating a decentralized autonomous organization (DAO) can be an effective way to work with like-minded people from all over the world. Although establishing a DAO comes with several advantages, it is also accompanied by legal uncertainties.

In Wyoming, however, the state senate passed the Decentralized Autonomous Organizations Supplement, which recognizes DAOs as legal entities in the state. In other words, this means that DAOs can be incorporated in Wyoming.

If you are looking to establish your own DAO limited liability company (LLC), this guide can help. Read on to discover the important things you need to know to create your own DAO in Wyoming.

Forming Decentralized Autonomous Organization (DAO) LLCs in Wyoming

Now that we know that a DAO can be incorporated in Wyoming, we should go over some of the crucial steps you need to take before you can start your new business.

Filing Articles of Organization to Form Wyoming DAO LLCs

To create a Wyoming DAO LLC, you first need to submit Articles of Organization (Articles) to the Secretary of State. The document must include the following information:

• A statement that indicates that the business is a DAO.
• The registered name of your internet-native business entity, where “DAO LLC” must be included as part of the name. For example, if your business name is Curtains, then the DAO’s name must be “Curtains DAO LLC” (there are other options, which we’ll outline later in this article). 
• The address of the DAO and its registered agent, who must have a physical address in Wyoming. 
• Consent to Appointment by Registered Agent, whereby the Agent consents that he or she is the registered agent of the DAO.
• A Notice of Restrictions on Duties and Transfers, which should state that the smart contracts and the Articles of a DAO may alter or eliminate fiduciary duties. Moreover, these documents may also restrict the withdrawal or resignation from the DAO, transfer of ownership interests, return of capital contributions, and dissolution.
• An identifier of any smart contracts associated with the DAO, which should be available to the public.

 

The Articles should also indicate whether the organization is algorithmically-managed or member-managed. If not indicated, the business is presumed to be the latter. If the DAO is algorithmically-managed, members must be able to update, upgrade, and modify the smart contracts.

The Articles of Organization, along with the smart contracts, are similar to the operating agreement that governs a traditional LLC. It can be amended when there is a change in the name of the DAO. Members can also update the document when there is an erroneous statement in the Articles or if there are changes in the smart contracts.

Like creating a traditional LLC, you can file the Articles online or by mail. Below, we have outlined the steps you need to follow to file your Articles:

Filing by Mail

You need to file the Articles by mail if your DAO’s registered name: 

• Starts with A, followed by a space
• Has A, An, or &, followed by a space
• Includes special characters

 

To file the documents by mail, you need to download and print the DAO Articles of Organization form from the Wyoming Secretary of State website. 

Fill up the form and mail it along with the Articles. However, you need to also include a check or money order for $100 payable to the “Wyoming Secretary of State.”

Filing Online

If your DAO’s registered name does not meet the conditions above, you can file the Articles online. This short process can be faster and more convenient since you can do it from home. 

You need to go to the Wyoming Business Center site and select the “Start Now” button. Then, choose LLC as the business entity type.

Below are some of the data you need to provide when filing your Articles online:

1. Business Name – In this section, you can indicate your business as a DAO under “Additional Designation.”
2. Detail – Specify your organization’s period of duration and delayed effective date.
3. Agent – Indicate whether your registered agent is an individual or a company
4. Addresses – This location can be in Wyoming or another state or country. This section can be an actual office address or any of the following:

 

• a home address
• a friend or a family member’s address
• The address of your registered agent (your registered agent’s address must be in Wyoming)
• a mailbox rental address
• a virtual office address

 

5. Organizers – the name of the individual organizing the DAO LLC 
6. Additional articles – The Articles of Organization

 

After you input the information above, you need to review them to ensure they are accurate. You can, however, always make changes by clicking the “Previous” button.

Read and sign the terms and conditions. Make sure to read the “Penalty for filing false document” section as well.

After confirmation, you can start the payment process. You need to pay $102 and complete the checkout procedure.

After your payment goes through, you will receive a message confirming your registration. We recommend that you download the receipt and the registration documents for your record.

Cost of Forming a Wyoming DAO LLC

The initial filing fee in Wyoming is $100. If you choose to file the Articles of Organization online, you need to pay an extra $2 for a convenience fee.

Additionally, Wyoming law requires businesses to file an annual report, which costs $60 per year.

Other potential factors that can affect your DAO startup costs include payments to your registered agent. It’s important to note that you can’t form a DAO in Wyoming unless you do so through a registered agent.

DAO LLC Naming Convention

You need to follow naming conventions when choosing a name for your new DAO LLC. Your organization must include “DAO LLC” or a combination of indicators for both DAO

and LLC.

“DAO” or “LAO” is a requirement for all DAOs in Wyoming. Businesses must also have the words “Limited Liability Company” or any of its following abbreviations:

• LLC
• LL.C
• LC
• L.C
• Ltd. Liability Company
• Ltd. Liability Co.,
• Limited Liability Co.

 

You can also reserve a name for your DAO by filling up the “Application for Reservation of Name,” which can be found on the Wyoming Secretary of State website.

Other Things to Remember When Forming a DAO LLC in Wyoming

If you already have an LLC, you can choose to convert the business to a DAO. You only need to file an amendment to your Articles of Organization. 

You cannot register an out-of-state DAO in Wyoming. The Wyoming Secretary of State does not issue a certificate of authority for a foreign organization.

If you have more questions regarding the foundation of a DAO in the state, you can consult the state website.

The Legislation and Recognition of Wyoming DAO LLCs

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In April 2021, the Governor of Wyoming signed Senate Bill 38 into law, which granted legal status to decentralized autonomous organizations (DAOs). Essentially, it allows individuals to form DAOs in Wyoming.

 

This section underscores the legality of DAO LLCs in the state. If you’re thinking of establishing your own DAO in Wyoming, here’s what you need to know.

Why the Wyoming LLC Laws Still Matter

While some provisions of the Wyoming Limited Liability Company Act still apply to DAOs, it’s important to note that Senate Bill 38, which is now Decentralized Autonomous Organization Supplement (Supplement), does not repeal or modify any law that otherwise applied to LLCs in Wyoming.  

 

DAOs in Wyoming

An LLC in Wyoming can become a DAO by amending its Articles of Organization (Articles). The modification must include an indication that the company is now a DAO. 

 

The amendment should also make space for a Notice of Restriction on Duties and Transfers (Notice). The Wyoming government has issued a format for the Notice that organizations must follow.

 

The Notice should state that the rights of DAO members differ from the rights of members in other LLCs. Additionally, the document should also mention that the Articles, the operating agreement, and smart contracts may define or remove the fiduciary duties of members.

 

Furthermore, the Notice should stipulate that the aforementioned documents can restrict the following:

 

• The transfer of ownership interests between DAO members
• Withdrawal or resignation of a member of the organization
• Return of capital contributions
• Dissolution of the organization

Formation

Anyone can establish a DAO in Wyoming by submitting Articles of Organization to the Secretary of State. 

 

The individual forming the organization does not need not be a DAO member. Additionally, each DAO must have a registered agent operating in the state. That is to say, the registered agent must have a physical address in Wyoming.

 

The organization may operate for any legal purpose, regardless of whether the organization is formed for profit.

Articles of Organization

The Articles of Organization and smart contracts for a DAO shall govern all of the following:

 

• Relations among the DAO members and between the members and the organization
• Rights, responsibilities, and duties of the members
• Activities of the organization and their operations
• Means and rules for changing the operating agreement
• Members’ voting rights
• Transferability of membership digital assets and interests
• Withdrawal of membership
• Distributions to DAO members before dissolution
• Changes in the Articles of Organization
• Process for updating applicable smart contracts
• Other miscellaneous aspects of the DAO

Operating Agreement and Management

An operating agreement can act as a pillar for the operations of a DAO. It shall include information about members’ responsibilities and obligations. 

 

The operating agreement must specify if the organization is member-managed or algorithmically-managed. If it is the former, the members and token-holders are responsible for managing the organization. If it is the latter, smart contracts should be updateable, upgradable, and modifiable.

Membership

Unless stated in the Articles or the operating agreement, no DAO member shall owe a fiduciary duty to the organization. Instead, members are subject to the implied contractual covenant of fair dealing and good faith.

 

In a member-managed DAO, membership interests are calculated by dividing a person’s contribution by the total amount of digital assets the DAO has at the time of a vote.

 

If members do not need to make a contribution as a prerequisite to becoming a DAO member, then each member shall have one membership interest, which means that they are entitled to one vote.

 

Additionally, members of a DAO have no right to separately inspect or copy organization records. The business also has no obligation to furnish any data about the DAO to the extent the data is available on a public blockchain. In other words, the organization has no obligation to disclose data that is not otherwise available on a public blockchain.

 

Members can only withdraw by following the removal process decided under the Articles or smart contracts.

 

Unless stated otherwise in the smart contracts or the Articles, a withdrawn member must give up all interests in the DAO, including any governance or economic rights.

Dissolution

A DAO will be dissolved if any of the following occurs:

 

• The period specified for the duration of the DAO expires
• If the majority of the voters in a member-managed DAO called for the dissolution of the organization
• The occurrence of incidents specified in the underlying smart contracts or the Articles of Organization
• The DAO has failed to greenlight any proposals or complete any crucial tasks for a year
• The Secretary of State deemed that the DAO no longer has a lawful purpose.

 

After these events, the organization must issue a statement of intent to dissolve. The document should follow a form prescribed by the Secretary of State.

Miscellaneous

Both the Articles of organization and the DAO’s operating agreement are effective as statements of authority. But, when the two documents are in conflict, the Articles preempt any conflicting regulations.

 

Meanwhile, if the Articles and smart contracts have conflicting provisions, the smart contracts prevail.

Register your DAO LLC in Wyoming Today

Creating a DAO today comes with a wide range of benefits, including inclusivity, transparency, and international reach. The Supplement is another advantage for those who want to start their own DAO. With the new Wyoming law, you do not have to worry about legal uncertainties that generally accompany blockchain technology.

 

Filing Articles of Organization can be challenging if you do not know where to start. The process can be tedious and daunting, especially for those with no experience in the matter. 

 

But don’t worry, doola is here to help! Reach out to doola today and get your Wyoming DAO LLC up and running.

Pro-Tip

“Look for a reliable agent that considers your best interest and your business.”

If you’re looking for a registered agent that could assist you in registering your DAO LLC in Wyoming, contact Doola today. Get started with your Wyoming business today.

FAQs on Wyoming DAO LLCs

Can a DAO own real estate? 

DAOs can own real estate if they function as companies that govern assets on a blockchain. For example, RealDAO, LLC manages real property assets with DAOs on the blockchain, tokenized as NFTs.

Can you sue a DAO? 

While DAOs are relatively recent developments, based on their legal recognition in Wyoming and that it can also be seen to be a partnership, as members are sharing profits, it is possible to sue a DAO. However, the caveat is that taking a DAO to court would most probably have to be in Wyoming.

Is a DAO a general partnership? 

No, a DAO is not exclusively a general partnership. It is an internet-native organization that can also take the form of an LLC.