Since the introduction of the Foundation Companies Act in 2017, foundation companies have become a popular way to provide stable legal wrappers for Decentralised Autonomous Organisations (DAOs). Unlike typically structured organizations with clear shareholder ownership and control, DAOs are managed through community governance. This is where foundation companies offer their unique advantage - they can be legally recognized without any shareholders or directors involved. In other words, ownerless yet compliant entities are tailored perfectly to meet the needs of those running blockchain projects today.
What is a Cayman Foundation?
Cayman's foundations are revolutionary legal entities with the power to function like a trust or foundation while providing limited liability and an intriguing ownerless approach. Beneficiaries can receive potential benefits from these unique structures over time, all under robust control outside of those directors running it.
The supervisor's role is primarily that of an overseer, with the power to take action should directors breach their fiduciary duty. This responsibility and authority are laid out in detail in Cayman Islands law for each moment when passing crucial resolutions becomes necessary.
Key Advantages of a Cayman Islands Foundation
By its very nature, a foundation has no owners and is highly compatible with decentralized organizations (DAO) and DeFi projects which prioritize decentralization. Furthermore, the establishment of a separate legal entity grants it reliable corporate standing, ready to execute contracts as well as open accounts at banks or exchanges. Finally, advanced control mechanisms can be implemented by allocating them to persons external to the directors— allowing founding members an influence in determining the direction taken by their organization.
Cayman foundations are a popular choice for crypto projects and venture capitalists alike due to their clear, advantageous regulatory framework. Plus, with express incorporation possible in as little as 24 hours when KYC processes are completed - setting up your foundation has never been easier. For added convenience, there is also an excellent array of experienced local service providers readily available to provide registered office services along with individuals qualified for the roles of secretary, director, and supervisor positions.
When it comes to confidentiality, the foundation can outline practical details of its operations through private bylaws that are kept separate from any constitutions. Additionally, considering there is no corporate tax or capital gains in Cayman proves another attractive factor for many looking to establish foundations here.
Other Cayman Legal Acts to Adhere
Any project conducted in the Cayman Islands must adhere not only to provisions of the VASP Act but also to an array of other laws and regulations. This can include sanctions legislation or Anti-Money Laundering Regulations, as well as Securities Investment Business Acts, International Tax Co-operation (Economic Substance) Act, and Data Protection Act. Compliance with all relevant legal requirements is paramount for successful operations in this jurisdiction.
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DISCLAIMER: The information provided is not legal, tax, or accounting advice and should not be used as such. It is for discussion purposes only. Seek guidance from your own legal counsel and advisors on any matters. The views presented are those of the author and not any other individual or organization. The information provided is for general educational purposes only and is not investment advice. The author of this material makes no guarantees or warranties about the accuracy or completeness of the information. Any action taken based on the information discussed should be reviewed with a professional. The author is not liable for any loss from acting on the information discussed.
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