Having forged a reputation as a leading IOFC (International Offshore Financial Centre) The Republic of the Marshall Islands (RMI) – thanks to some new cutting edge legislation – is rapidly becoming one of the world’s leading jurisdictions for the registration/incorporation of Decentralized Autonomous Organizations (DAOs).
Legal Entities
The RMI offers a for-profit and not-for-profit DAO LLC (Limited Liability Company), legal entities based on the traditional Marshall Islands LLC but customized to meet the unique needs of DAOs.
Benefits of Legal Entities
● Limited liability for DAO members
● Corporate personality for owning property, signing contracts, opening bank accounts, etc.
● Tax entity
Benefits of RMI DAO LLC
● No trustees, directors, officers, or managers with extra liability or responsibility
● All documents and records can be kept on the blockchain
● Most members can remain anonymous
● Governance via smart contract is specifically permitted by law
Non-profit DAO LLC
Non-profit DAO LLCs in the RMI have no economic owners and cannot distribute their earnings to their members. Instead of beneficial owners, non-profits have beneficial
members. There are no taxes on non-profits, and there should be no pass-through taxes on any members.
For-profit DAO LLC
For-profit DAO LLCs are subject to a 3% Gross Revenue Tax (GRT), which applies to all earned income and interest but does not apply to capital gains and dividends.
Relationship with the United States
The RMI is a sovereign nation not under US jurisdiction. Many of its laws, such as its corporate laws, are based on the laws of Delaware. RMI courts will even look to case law in
Delaware if no statute or case law exists on a matter in the RMI.
Digital Asset Regulations
Currently, there are no digital asset, token, or protocol-related laws or regulations in the RMI, except for companies that engage in the custody of digital assets on behalf of others. The plan is to introduce innovative, tech-forward legislation and regulation over time that applies to digital assets, tokens, and protocols.
Why the Marshall Islands?
The Republic of the Marshall Islands (RMI) has been a global leader in shipping company jurisdictions for over five decades. Over 40 public companies traded on NASDAQ and the NYSE and companies representing over 20% of the world’s shipping capacity were incorporated in the RMI. Now, the RMI is applying what it has learned in shipping to become the leading global jurisdiction for DAOs.
Compliance
- The RMI is dedicated to following international standards regarding topics such as beneficial ownership.
- DAO members with 25%+ governance rights in DAO LLCs must complete KYC, providing their real name, address, and passport.
- Additionally, on-chain activity will be monitored for Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT).
- The RMI is proud not to be part of any blacklists or tax evasion lists
Annual Reporting
DAO LLCs report annually by sharing their updated company agreement and having beneficial members do KYC. For-profits must report their revenue for tax collection purposes.
Banking for DAOs
RMI DAO LLCs have successfully opened bank accounts with Signature Bank, Western Alliance Bank, and others.
Other RMI Corporate Entities
RMI DAO LLCs are considered domestic companies. There are foreign corporations and foreign LLCs available from the RMI that are not subject to the DAO Act of 2022
and therefore do not get the benefit of that statutes provisions.
RMI Law Firms
OCI maintains a list of RMI lawyers based in the RMI and the United States and can make
introductions on your behalf.
DAO Legal & Governance Advice and Consulting
OCI is not a law firm and does not provide legal advice. MIDAO has partners who can provide legal and other advice. Contact us for more details or introductions.
Common Questions Answered:
What prices/terms can OCI offer in terms of setup of (and annual maintenance of) such Companies?
To set up a Marshall Islands DAO LLC with OCI costs $US6,000.
What docs/info will OCI need with each DAO LLC set up order placed with us?
You need to complete a basic Company Order Form + confirm payment +the Founders of the proposed LLC need to supply KYC (ie proof of Identity and proof of residential address) as per TMI requirements. OCI then creates/delivers the Incorporation documents (including Certificate of Formation & The Company Constitution/Articles of Association & the Operating agreement ) + we supply the templates for your , Operating Agreement ) + we will supply you with a template Foreign Investment Business License (FIBL) application. DAO members with Governance rights of 25% must also supply KYC (everyone else in the DAO may remain anonymous]
What docs/services are included in the set up price?
We provide the Operating Agreement Templates (you may customize), Certificate of Formation, we assist you to manage/meet the Company’s Compliance requirements for the first year FIBL, maintain the required Registers/Statutory Books and we also supply a Marshall Islands Registered Agent + Registered Office service for year one. One year’s legal consulting is also included (ie you can consult with our In House Lawyer at any time for no extra cost). OCI’s annual fee is $US5,500. KYC is run annually in January.
What docs/services are included in the annual fee from 2nd year?
OCI’s annual fee is $US5,500. KYC is run annually in January. We also assist you to manage/meet the Company’s Compliance requirements for the first year FIBL, maintain the required Registers/Statutory Books and we also supply a Marshall Islands Registered Agent + Registered Office service for year one. One year’s legal consulting is also included (ie you can consult with our In House Lawyer at any time for no extra cost).
What are the annual compliance requirements for a MI DAO LLC (eg do we have to have/show economic substance/must accounts or an annual return be filed?)
DAO members with Governance rights of 25% or more must pass compliance annually. Everyone else in the DAO may remain anonymous, no compliance requirements. Please see also the above InfoSheet
What are the tax rates applicable to such Companies in MI if any?
For-Profit DAO’s will be subject to 3% Gross Revenue Tax (GRT) on their earned Revenue. This includes interest payments but does not include capital gains and dividends. MIDAO DAO LLC Not-For-Profit DAOs have no economic owners and cannot distribute their earnings to their members. Instead of Beneficial Owners, Not-For-Profit DAOs have Beneficial Members. There are no taxes on Non-Profits and there should be no pass-through taxes on any members]
Press
● Cointelegraph: https://cointelegraph.com/news/marshall-islands-legally-recognizes-daos-as-domestic-limited-liability-companies
● The Block: https://www.theblock.co/post/197435/marshall-islands-dao-law
● Blockworks: https://blockworks.co/news/the-marshall-islands-wants-money-making-daos-to-call-it-home
● Coindesk: https://www.coindesk.com/video/marshall-islands-looks-to-become-global-hub-for-dao-incorporations/
Relevant Statues
● DAO Act of 2022: https://docsend.com/view/ramkt3e6af428rkv
● Business Corporations Act: https://rmiparliament.org/cms/images/LEGISLATION/PRINCIPAL/1990/1990-0091/BusinessCorporationsAct1990_8.pdf
● Non-Profit Entities Act: https://rmiparliament.org/cms/images/LEGISLATION/PRINCIPAL/2021/2021-0029/Non-ProfitEntitiesAct2020_1.pdf
Would you like to know more? Then please Contact Us:
info@offshorecompaniesinternational.com
DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.
