The Future of Company Law: Decentralized Autonomous Organization (DAO)

TABLE OF CONTENTS FOREWORD ............................................................................................................... V 2 nd PREFACE ............................................................................................................ VII 1 st PREFACE .............................................................................................................. IX TABLE OF CONTENTS ........................................................................................... XI ABBREVIATIONS ................................................................................................ XVII ABSTRACT .......................................................................................................... XXIII ZUSAMMENFASSUNG ...................................................................................... XXIII SCOPE .......................................................................................................................... 1 CHAPTER I: INTRODUCTION to BLOCKCHAIN I. BASICS of BLOCKCHAIN .................................................................................... 9 1. History and Definition .......................................................................................... 9 2. Technology ......................................................................................................... 13 3. Advantages and Disadvantages ........................................................................... 15 4. Related Terms ..................................................................................................... 17 4.1. Distributed Ledger Technology .................................................................. 17 4.2. Oracle ......................................................................................................... 19 4.3. Crypto-asset ................................................................................................ 20 4.4. Ethereum .................................................................................................... 23 4.5. Smart Contract ............................................................................................ 24 4.6. Decentralized Autonomous Organization ................................................... 27 4.7. Initial Coin Offering ................................................................................... 28 II. LEGAL DEVELOPMENTS .................................................................................. 29 1. Civil Law Jurisdictions ....................................................................................... 30 1.1. Germany ....................................................................................................... 30 1.2. Türkiye ....................................................................................................... 32 1.3. Switzerland ................................................................................................. 33 2. European Union .................................................................................................. 35 3. Common Law Jurisdictions ................................................................................ 39 3.1. United Kingdom ......................................................................................... 39 3.2. United States............................................................................................... 40 4. Notable Examples around the World .................................................................. 42 III. FUNDAMENTAL NOTIONS related to DAO and THEIR LEGAL NATURE... 44 1. Introduction ......................................................................................................... 44 2. Crypto-asset ........................................................................................................ 45 2.1. Introduction ................................................................................................ 45 2.2. Definition, Related Terms and Differences ................................................ 45 2.3. Legal Analyses ........................................................................................... 47 2.3.1. Introduction ........................................................................................... 47 2.3.2. Civil Law Jurisdictions ......................................................................... 48 2.3.2.1. German Law .................................................................................. 48 2.3.2.1.1. Classification as Property ....................................................... 49 2.3.2.1.2. Classification as Money .......................................................... 53 2.3.2.1.3. Classification as Financial Mediums ...................................... 55 2.3.2.1.4. Classification as Intellectual Property Rights ......................... 59 2.3.2.2. Turkish Law ................................................................................... 60 2.3.3. European Union Law ............................................................................ 63 2.3.4. Common Law Jurisdictions .................................................................. 66 2.3.4.1. United Kingdom ............................................................................ 66 2.3.4.2. United States .................................................................................. 68 2.3.5. Interim Result ....................................................................................... 70 3. Smart Contract .................................................................................................... 73 3.1. Definition, Legal Analyses and Regulatory Aspects ................................. 74 3.2. Legal Capacity ........................................................................................... 80 3.3. Offer and Acceptance ................................................................................. 83 3.4. Language and Format ................................................................................. 88 3.5. Execution and Termination ........................................................................ 91 IV. INTERIM CONCLUSION .................................................................................... 95 CHAPTER II: THE EXISTING LEGAL WRAPPERS Application of the Existing Legal Wrappers to DAO I. BASICS of DAO ................................................................................................. 109 1. Introduction ....................................................................................................... 109 2. Definition throughout Historical Trajectory ..................................................... 110 3. Features of DAO ............................................................................................... 114 4. Taxonomies and Market Practice ...................................................................... 116 II. CURRENT LEGAL DEVELOPMENTS ............................................................ 119 1. Civil Law Jurisdictions ..................................................................................... 119 2. Common Law Jurisdictions .............................................................................. 120 3. Notable Examples around the World ................................................................ 122 III. GENERAL LEGAL REVIEWS on DAO ........................................................... 123 1. Introduction ....................................................................................................... 123 2. Legal Nature ..................................................................................................... 125 3. Liability ............................................................................................................. 129 4. Bodies and Their Relations ............................................................................... 132 IV. APPLICATION of THE EXISTING LEGAL WRAPPERS to DAO ................. 134 1. Introduction ....................................................................................................... 134 2. Partnership ........................................................................................................ 135 2.1. Introduction .............................................................................................. 135 2.2. Civil Law Jurisdictions ............................................................................ 136 2.2.1. Ordinary Partnership (Adi Ortaklık / Gesellschaft bürgerlichen Rechts) ................................................................................................ 136 2.2.1.1. Legal Nature and Liability ........................................................... 137 2.2.1.2. Establishment ............................................................................... 144 2.2.1.3. Mandatory Bodies ........................................................................ 151 2.2.1.4. Relationships................................................................................ 153 2.2.1.5. Dissolution of Partner Status and Partnership .............................. 159 2.2.2. Other Forms ....................................................................................... 165 2.2.3. Interim Result .................................................................................... 165 2.3. Common Law Jurisdictions ......................................................................... 167 2.3.1. Introduction ........................................................................................ 167 2.3.2. General Partnership ............................................................................ 168 2.3.3. Limited Partnership and Sister Forms ................................................ 171 2.3.3.1. Limited Partnership..................................................................... 171 2.3.3.2. Limited Liability Partnership ...................................................... 174 2.3.4. Unincorporated (Non-Profit) Association .......................................... 175 2.3.5. Interim Result .................................................................................... 177 3. Corporation ....................................................................................................... 177 3.1. Introduction .............................................................................................. 178 3.2. Civil Law Jurisdictions ............................................................................. 179 3.2.1. Introduction ......................................................................................... 179 3.2.2. Joint Stock Company (Anonim Ortaklık / Aktiengesellschaft) ........... 179 3.2.2.1. Legal Nature and Liability ........................................................... 181 3.2.2.2. Establishment ............................................................................... 183 3.2.2.2.1. Basics of Establishment Process and Articles of Association ........................................................................... 183 3.2.2.2.2. Capital................................................................................... 185 3.2.2.3. Mandatory Bodies ........................................................................ 189 3.2.2.3.1. Introduction .......................................................................... 189 3.2.2.3.2. Management Board ............................................................... 189 3.2.2.3.3. General Assembly ................................................................. 191 3.2.2.3.4. Supervisory Board ................................................................ 194 3.2.2.4. Share and Shareholders ................................................................ 195 3.2.2.4.1. Introduction .......................................................................... 196 3.2.2.4.2. Rights and Obligations ......................................................... 198 3.2.2.4.3. Voting Rights ........................................................................ 200 3.2.2.4.4. Shareholder Decision-Making .............................................. 202 3.2.2.5. Audit ............................................................................................ 204 3.2.2.6. Dissolution and Termination........................................................ 205 3.2.2.7. Interim Result .............................................................................. 206 3.2.3. Limited Company (Limited Şirket / Gesellschaft mit beschränkter Haftung) .............................................................................................. 207 3.2.3.1. Legal Nature and Liability ........................................................... 208 3.2.3.2. Establishment ............................................................................... 209 3.2.3.2.1. Basics of Establishment Process and Articles of Association ........................................................................... 210 3.2.3.2.2. Capital................................................................................... 211 3.2.3.3. Bodies .......................................................................................... 212 3.2.3.3.1. Introduction .......................................................................... 212 3.2.3.3.2. Directors ............................................................................... 212 3.2.3.3.3. Shareholders Meeting ........................................................... 213 3.2.3.4. Share and Shareholders ................................................................ 215 3.2.3.4.1. Rights and Obligations ......................................................... 215 3.2.3.4.2. Share Transfer....................................................................... 217 3.2.3.5. Audit ............................................................................................ 218 3.2.3.6. Dissolution and Termination........................................................ 219 3.2.3.7. Interim Result .............................................................................. 220 3.3. Common Law Jurisdictions ...................................................................... 221 3.3.1. Introduction ........................................................................................ 221 3.3.2. Public Limited Company / Corporation ............................................. 222 3.3.3. Private Limited Company / Limited Liability Company ................... 223 V. NEW LEGAL WRAPPERS TAILORED for DAO ............................................ 225 1. Introduction ....................................................................................................... 225 2. Vermont ............................................................................................................ 226 3. Wyoming – Tennessee – Marshall Islands ........................................................ 227 4. Utah................................................................................................................... 232 5. Delaware ........................................................................................................... 236 6. Model Law ........................................................................................................ 237 VI. INTERIM CONCLUSION .................................................................................. 239 CHAPTER III: THE NEW CODE A New Form Recommendation for DAO I. INTRODUCTION ............................................................................................... 269 II. THE NEW CODE ................................................................................................ 272 III. INTERIM CONCLUSION .................................................................................. 321 CONCLUSION ......................................................................................................... 331 BIBLIOGRAPHY ..................................................................................................... 359 CURRICULUM VITAE ........................................................................................... 377