2021 21LSO-0263

STATE OF WYOMING

SENATE FILE NO. SF0038

Decentralized autonomous organizations.

Sponsored by: Select Committee on Blockchain, Financial

A BILL

for

1 AN ACT relating to corporations; providing for the

2 formation and management of decentralized autonomous

3 organizations; providing definitions; and providing for an

4 effective date.

6 Be It Enacted by the Legislature of the State of Wyoming:

8 Section 1. W.S. 17-31-101 through 17-31-115 are

9 created to read:

10

11 CHAPTER 31

12 DECENTRALIZED AUTONOMOUS ORGANIZATION SUPPLEMENT

13

14 ARTICLE 1

15 PROVISIONS

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2 17-31-101. Short title.

4 This chapter shall be known and may be cited as the

5 "Wyoming Decentralized Autonomous Organization Supplement."

7 17-31-102. Definitions.

9 (a) As used in this chapter:

10

11 (i) "Blockchain" means as defined in W.S.

12 34-29-106(g)(i);

13

14 (ii) "Decentralized autonomous organization"

15 means a limited liability company organized under this

16 chapter;

17

18 (iii) "Digital asset" means as defined in W.S.

19 34-29-101(a)(i);

20

21 (iv) "Limited liability autonomous organization"

22 or "LAO" means a decentralized autonomous organization;

23

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1 (v) "Majority of the members," means the

2 approval of more than fifty percent (50%) of participating

3 membership interests in a vote for which a quorum of

4 members is participating. A person dissociated as a member

5 as set forth in W.S. 17-29-602 shall not be included for

6 the purposes of calculating the majority of the members;

8 (vi) "Membership interest" means a member's

9 ownership share in a member managed decentralized

10 autonomous organization, which may be defined in the

11 entity's articles of organization, smart contract or

12 operating agreement;

13

14 (vii) "Open blockchain" means a blockchain as

15 defined in W.S. 34-29-106(g)(i) that is publicly accessible

16 and its ledger of transactions is transparent;

17

18 (viii) "Quorum" means a minimum requirement on

19 the sum of membership interests participating in a vote for

20 that vote to be valid;

21

22 (ix) "Smart contract" means an automated

23 transaction, as defined in W.S. 40‑21‑102(a)(ii), or any

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1 substantially similar analogue, which is comprised of code,

2 script or programming language that executes the terms of

3 an agreement and which may include taking custody of and

4 transferring an asset, administrating membership interest

5 votes with respect to a decentralized autonomous

6 organization or issuing executable instructions for these

7 actions, based on the occurrence or nonoccurrence of

8 specified conditions.

10 17-31-103. Application of Wyoming Limited Liability

11 Company Act.

12

13 (a) The Wyoming Limited Liability Company Act applies

14 to decentralized autonomous organizations to the extent not

15 inconsistent with the provisions of this chapter and the

16 powers provided to the secretary of state by W.S.

17 17-29-1102 shall apply to this chapter.

18

19 (b) This chapter does not repeal or modify any

20 statute or rule of law that applies to a limited liability

21 company that is organized under the Wyoming Limited

22 Liability Company Act that does not elect to become a

23 decentralized autonomous organization.

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2 17-31-104. Definition and election of decentralized

3 autonomous organization status.

5 (a) A decentralized autonomous organization is a

6 limited liability company whose articles of organization

7 contain a statement that the company is a decentralized

8 autonomous organization as described in subsection (c) of

9 this section.

10

11 (b) A limited liability company formed under the

12 Wyoming Limited Liability Company Act, W.S. 17-29-101

13 through 17-29-1102, may convert to a decentralized

14 autonomous organization by amending its articles of

15 organization to include the statement required by

16 subsections (a) and (c) of this section and W.S. 17-31-106.

17

18 (c) A statement in substantially the following form

19 shall appear conspicuously in the articles of organization

20 or operating agreement, if applicable, in a decentralized

21 autonomous organization:

22

23 NOTICE OF RESTRICTIONS ON DUTIES AND TRANSFERS

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2 The rights of members in a decentralized autonomous

3 organization may differ materially from the rights of

4 members in other limited liability companies. The Wyoming

5 Decentralized Autonomous Organization Supplement,

6 underlying smart contracts, articles of organization and

7 operating agreement, if applicable, of a decentralized

8 autonomous organization may define, reduce or eliminate

9 fiduciary duties and may restrict transfer of ownership

10 interests, withdrawal or resignation from the decentralized

11 autonomous organization, return of capital contributions

12 and dissolution of the decentralized autonomous

13 organization.

14

15 (d) The registered name for a decentralized

16 autonomous organization shall include wording or

17 abbreviation to denote its status as a decentralized

18 autonomous organization, specifically "DAO", "LAO", or "DAO

19 LLC."

20

21 (e) A statement in the articles of organization may

22 define the decentralized autonomous organization as either

23 a member managed decentralized autonomous organization or

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1 an algorithmically managed decentralized autonomous

2 organization. If the type of decentralized autonomous

3 organization is not otherwise provided for, the limited

4 liability company will be presumed to be a member managed

5 decentralized autonomous organization.

7 17-31-105. Formation.

9 (a) Any person may form a decentralized autonomous

10 organization which shall have one (1) or more members by

11 signing and delivering one (1) original and one (1) exact

12 or conformed copy of the articles of organization to the

13 secretary of state for filing. The person forming the

14 decentralized autonomous organization need not be a member

15 of the organization.

16

17 (b) Each decentralized autonomous organization shall

18 have and continuously maintain in this state a registered

19 agent as provided in W.S. 17-28-101 through 17-28-111.

20

21 (c) A decentralized autonomous organization may form

22 and operate for any lawful purpose, regardless of whether

23 for profit.

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2 (d) An algorithmically managed decentralized

3 autonomous organization may only form under this chapter if

4 the underlying smart contracts are able to be updated,

5 modified or otherwise upgraded.

7 17-31-106. Articles of organization.

9 (a) The articles of organization of a decentralized

10 autonomous organization shall include a statement that the

11 organization is a decentralized autonomous organization,

12 pursuant to W.S. 17-31-104, and shall set forth the matters

13 required by W.S. 17-29-201.

14

15 (b) In addition to the requirements of subsection (a)

16 of this section the articles of organization shall include

17 a publicly available identifier of any smart contract

18 directly used to manage, facilitate or operate the

19 decentralized autonomous organization.

20

21 (c) Except as otherwise provided in this chapter, the

22 articles of organization and smart contracts for every

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1 decentralized autonomous organization shall govern all of

2 the following:

4 (i) Relations among the members and between the

5 members and the decentralized autonomous organization;

7 (ii) Rights and duties under this chapter of a

8 person in their capacity as a member;

10 (iii) Activities of the decentralized autonomous

11 organization and the conduct of those activities;

12

13 (iv) Means and conditions for amending the

14 operating agreement;

15

16 (v) Rights and voting rights of members;

17

18 (vi) Transferability of membership interests;

19

20 (vii) Withdrawal of membership;

21

22 (viii) Distributions to members prior to

23 dissolution;

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2 (ix) Amendment of the articles of organization;

4 (x) Procedures for amending, updating, editing

5 or changing applicable smart contracts;

7 (xi) All other aspects of the decentralized

8 autonomous organization.

10 17-31-107. Amendment or restatement of articles of

11 organization.

12

13 (a) Articles of organization shall be amended when:

14

15 (i) There is a change in the name of the

16 decentralized autonomous organization;

17

18 (ii) There is a false or erroneous statement in

19 the articles of organization; or

20

21 (iii) The decentralized autonomous

22 organization's smart contracts have been updated or

23 changed.

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2 17-31-108. Operating agreement.

4 To the extent the articles of organization or smart

5 contract do not otherwise provide for a matter described in

6 W.S. 17-31-106, the operation of a decentralized autonomous

7 organization may be supplemented by an operating agreement.

9 17-31-109. Management.

10

11 Management of a decentralized autonomous organization shall

12 be vested in its members, if member managed, or the smart

13 contract, if algorithmically managed, unless otherwise

14 provided in the articles of organization or operating

15 agreement.

16

17 17-31-110. Standards of conduct for members.

18

19 Unless otherwise provided for in the articles of

20 organization or operating agreement, no member of a

21 decentralized autonomous organization shall have any

22 fiduciary duty to the organization or any member except

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1 that the members shall be subject to the implied

2 contractual covenant of good faith and fair dealing.

4 17-31-111. Membership interests for member managed

5 decentralized autonomous organizations; voting.

7 (a) For purposes of W.S. 17-31-113 and 17-31-114 and

8 unless otherwise provided for in the articles of

9 organization, smart contract or operating agreement:

10

11 (i) Membership interests in a member managed

12 decentralized autonomous organization shall be calculated

13 by dividing a member's contribution of digital assets to

14 the organization divided by the total amount of digital

15 assets contributed to the organization at the time of a

16 vote;

17

18 (ii) If members do not contribute digital assets

19 to an organization as a prerequisite to becoming a member,

20 each member shall possess one (1) membership interest and

21 be entitled to one (1) vote;

22

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1 (iii) A quorum shall require not less than a

2 majority of membership interests entitled to vote.

4 17-31-112. Right of members, managers and dissociated

5 members to information.

7 Members shall have no right under W.S. 17-29-410 to

8 separately inspect or copy records of a decentralized

9 autonomous organization and the organization shall have no

10 obligation to furnish any information concerning the

11 organization’s activities, financial condition or other

12 circumstances to the extent the information is available on

13 an open blockchain.

14

15 17-31-113. Withdrawal of members.

16

17 (a) A member may only withdraw from a decentralized

18 autonomous organization in accordance with the terms set

19 forth in the articles of organizations, the smart contracts

20 or, if applicable, the operating agreement. If no terms and

21 conditions for withdrawal of a member are set forth for a

22 member managed decentralized autonomous organization, a

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1 member may withdraw only via a vote by a majority of the

2 members.

4 (b) A member of a decentralized autonomous

5 organization may not have the organization dissolved for a

6 failure to return the members' contribution to capital.

8 (c) Unless the organization's articles of

9 organization, smart contracts or operating agreement

10 provide otherwise, a withdrawn member forfeits all

11 membership interests in the decentralized autonomous

12 organization, including any governance or economic rights.

13

14 17-31-114. Dissolution.

15

16 (a) A decentralized autonomous organization organized

17 under this chapter shall be dissolved upon the occurrence

18 of any of the following events:

19

20 (i) The period fixed for the duration of the

21 organization expires;

22

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1 (ii) By vote of the majority of members of a

2 member managed decentralized autonomous organization;

4 (iii) At the time or upon the occurrence of

5 events specified in the underlying smart contracts or as

6 specified in the articles of organization or operating

7 agreement;

9 (iv) The decentralized autonomous organization

10 has failed to approve any proposals or take any actions for

11 a period of one (1) year;

12

13 (v) By order of the secretary of state if the

14 decentralized autonomous organization is deemed to no

15 longer perform a lawful purpose.

16

17 (b) As soon as possible following the occurrence of

18 any of the events specified in subsection (a) of this

19 section causing the dissolution of a decentralized

20 autonomous organization, the organization shall execute a

21 statement of intent to dissolve in the form prescribed by

22 the secretary of state.

23

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1 17-31-115. Miscellaneous.

3 The articles of organization and the operating agreement of

4 a decentralized autonomous organization are effective as

5 statements of authority. Where the underlying articles of

6 organization and operating agreement are in conflict, the

7 articles of organization shall preempt any conflicting

8 provisions. Where the underlying articles of organization

9 and smart contract are in conflict, the smart contract

10 shall preempt any conflicting provisions of the articles of

11 organization, except as it relates to W.S. 17-31-104 and

12 17-31-106(a) and (b).

13

14 Section 2. This act is effective July 1, 2021.

15

16 (END)

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