IIP-149: Incorporate Index Coop

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Status: Proposed Author: @Matthew_Graham @ElliottWatts @Metfanmike Gov Review: @sixtykeys Created: 11th April 2022 Quorum: 150,178 INDEX (5% of circulating supply)

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Simple Summary

This proposal puts forward an opportunity for the community to engage with a law firm to set up a corporate structure. This corporate structure is designed to solve for a number of issues that DAOs face in general and Index Cooperative faces in particular.

Abstract

Based upon Index Coop’s needs, Fried Frank has recommended a Cayman foundation structure that will likely have a British Virgin Islands (BVI) subsidiary in anticipation of any future Treasury diversifications. This approach has been vetted by a third party legal expert.

There are both upfront and ongoing costs if the community decides to move forward. The estimated Year 1 cost ranges between $107k and $204k, with yearly ongoing costs ranging from $30,500 to $67,500. We expect the corporate structure to take as little as 3-4 weeks to create and for Index Coop to use Fried Frank to do so.

Motivation

As the Index Cooperative grows, we should pivot towards a formal organizational structure that is compliant and easier to work with. Top DeFi projects and protocols have gone down the path of formal incorporation. We argue that Index Cooperative should do the same. Having no corporate structure leaves us collectively more open to risks.

Incorporating Index Cooperative would have multiple benefits:

• Creating limited liability protection for contributors. Our current structure creates unnecessary risks that we should move immediately to mitigate or outright eliminate
• Opening the door to more partnerships and off-chain activity with organizations that will only enter into a contract or engage with an actual legal entity
• Compliance with applicable tax laws

We have explored various incorporation options with the law firm Fried Frank to arrive at a recommended structure that serves Index Cooperative’s specific organizational needs and business model.

Prior to moving this IIP to vote, we intend to facilitate an open discussion with the broader community on this forum thread.

Specification

Creating the proposed structure has both an upfront and ongoing cost. If the community decides to move forward, the estimated Year 1 cost ranges between $107k and $204k with an ongoing cost ranging from $30,500 to $67,500. A full breakdown of these anticipated costs can be found here.

Do note that some of the estimated costs may not be required (and are earmarked as such) or may be satisfied in ways that do not incur the listed cost, so the overall costs may be lower. That said, it’s best to analyze the merits of this proposal assuming the high-end of the range.

Creating the corporate structure is anticipated to take around 3-4 weeks to set up. This will benefit all at the Index Coop through mitigating potential but unknown risks, protecting its members from personal liability. It also allows the Index Coop to become a compliant entity that is safer and easier for third parties to work and engage with.

Voting

FOR:

DO create a corporate structure. And engage with Fried Frank.

AGAINST:

DO NOT create a corporate structure.

Copyright

Copyright and related rights waived via CC0.