Proposal #19 Governance - Incorporate Creepz DAO as a Legal Entity in Singapore

Most jurisdictions do not recognise a DAO as a legal entity in its own right. This means that a DAO cannot own any property or enter into any contracts, including to procure any goods or services, or to hire any employees. This severely limits what the DAO can do in the real world.

Further, without a formal entity creating a tax shield, the individual persons behind the DAO would be liable to pay tax on any income received by them – thus greatly reducing opportunities for tax planning.

These disadvantages can be solved by incorporating a company to manage the DAO.

Singapore has emerged as a leading hub for blockchain and decentralised technology enterprises. The city-state's regulatory clarity, political stability, and business-friendly environment present a good case for a DAO to establish a formal legal presence there. The company start-up and running costs are significantly less than those in, for example, alternative Caribbean jurisdictions.

The proposal is to incorporate Creepz DAO as a private limited company in Singapore ("Creepz DAO Legal Entity"). This will involve reserving a unique company name (e.g. Creepz DAO Pte Ltd or similar), preparing the necessary documents, and registering with the Accounting and Corporate Regulatory Authority (ACRA). Upon successful incorporation, Creepz DAO Legal Entity will be recognised as a separate legal entity, capable of entering into contracts, owning assets, and being responsible for its liabilities.

To facilitate this process, we will need a local nominee director, nominee shareholder (who acts on behalf of Creepz DAO token holders as a trustee of sort) and local registered office address. We will identify and appoint a local lawyer for the incorporation effort and a local corporate secretary to satisfy the other requirements. These will be supplemented by the appointment of current Signatory @hansoro and current Advisor @ethereal_shogun, both IRL practising lawyers, as directors of the new company (“Creepz DAO Directors”). For the avoidance of doubt, any vacancy of the Creepz DAO Directors will be filled by a replacement from and chosen by the Admin team of Signatories and Advisors.

The role of the Creepz DAO Directors is to implement the instructions of the Creepz DAO Admin team (who themselves are instructed by Creepz DAO token holders via the Proposal vote process). The Creepz DAO Directors will oversee and instruct the local lawyers, corporate secretary, accountants and other third party service providers accordingly.

The incorporation process will also require a company constitution that aligns with Creepz DAO's governance structure and objectives. This constitution and associated documents will serve as a foundational legal document outlining the rights and responsibilities of the nominee shareholder, directors, Creepz DAO token holders and the Creepz DAO Legal Entity itself. We will identify and appointment a local lawyer to prepare these documents.

This Proposal aligns with previous legal advice sought from external law firm McDermott Will & Emery Singapore LLP back in April 2022 as regards the suitability of Singapore as a destination for Creepz DAO to incorporate a legal wrapper.

At the time of writing we believe the one-off costs of incorporation should be no more than USD 12,000, with ongoing annual running costs of USD 8,000. If this proposal is passed then the Admin team shall be entitled to allocate Creepz DAO's funds to the incorporation and running of the Creepz DAO Legal Entity without the need of a further proposal. This shall include a right to sell Creepz DAO's assets if necessary. If it looks like these costs will be exceeded, or any other issues are flagged as part of the incorporation process, the Creepz DAO Directors will update the Creepz DAO Admin team accordingly.

The Creepz DAO Directors will be transparent in respect of all fees. They will ensure we receive written invoices for all payment requests received and keep the Admin team updated of all expenditure. Accounting and bookkeeping will be outsourced to a local service provider. Finally copies of all accounts produced for the Creepz DAO Legal Entity will be posted in the Creepz DAO Discord server.

The Creepz DAO Directors will upon approval of this proposal take up the responsibility to incorporate Creepz DAO Legal Entity in Singapore, and thereafter actively manage the Creepz DAO Legal Entity, based on the following budget:

• up to USD 12,000 - one off setup fee (including incorporation filing, DAO centric constitution, drafting of directors and/or shareholders agreement, other incidental documents);

• up to USD 8,000 - annual running cost (including corporate filing/accounting/bookkeeping/audit/nominee/banking/insurance costs (company insurance and director insurance). This includes a fee of USD 2,200 per annum to the local nominee director and a nominal fee of USD 1,000 per annum to each of the Creepz DAO Directors for their role as a named director of the Creepz DAO Legal Entity.

Cons:

• The process of incorporation and ongoing compliance will incur costs (one-off and ongoing), including government fees, professional service fees for legal and secretarial support, and potential insurance and taxes.

• No members of the current Creepz DAO Admin team are qualified to practise or advise upon Singaporean law.

• The need for a local director and registered address by its nature limits Creepz DAO's decentralized nature.

• There may be complexities in aligning Creepz DAO's decentralized governance with the corporate requirements of a Singapore private limited company.

• DAOs, and their legal status, are still a relatively new legal concept. Whilst there is no one 'obvious' jurisdiction to pick, in theory a more attractive jurisdiction could emerge post incorporation. However there is nothing to preclude us from moving to, or additionally incorporating in, such jurisdiction if circumstances were to change (for example if Creepz DAO were to receive a significant increase in its income).

Pros:

• A legal entity in Singapore can provide Creepz DAO with limited liability protection, reducing the risk to individual members' personal assets. This is of particular importance to our Gnosis wallet signatories.

• Incorporation can enhance Creepz DAO's credibility and legitimacy in the eyes of potential partners.

• By having an identifiable legal entity, we can enter into contracts and take advantage of opportunities that we are currently precluded from (for example, taking part in VC funding rounds in accordance with local regulations).

• Singapore's favorable tax regime, including no capital gains tax, low corporate tax (17%) could be financially advantageous for Creepz DAO.

Votes should be casted as a 'Approve' to approve or 'Disapprove' to reject this proposal. It requires a quorum of at least 25% votes and an absolute majority support of at least 75% 'Approve' votes to pass this proposal to change Creepz DAO's governance mechanism.