The Senate Select Committee Report into Australia as a Technology and Financial Centre's Final Report recommended the implantation of a Decentralised Autonomous Organisation (DAO) company structure to foster and develop decentralised companies. But what are DAOs and what does this mean if adopted?
DAOs are a way for organisations to co-ordinate towards common goals by relying on blockchain powered smart contracts. In lieu of a central organisation, DAOs have a range of members who work without a traditional corporate structure (but if the recommendation is accepted a new structure might soon exist).
The Select Committee recommends:
that the Australian Government establish a new Decentralised Autonomous Organisation structure
The recommendation was in response to a range of submissions outlining that DAOs are among the top two most commonly used decentralised systems being used, but have no legal recognition or regulatory guidance. Both the COALA DAO model law and the Wyoming DAO Model were mentioned in submissions as potential starting points and references for the government to consider.
As it stands, DAOs are not recognised at Australian law as anything, meaning they are not separate legal entities with their own legal personality or limited liability which results in a range of potential problems. If a DAO is really a partnership unlimited liability could attach to each member of the DAO which may stifle growth or detract from a DAO's appeal.
The legal uncertainty and responsibility of members could be remedied with some of the submissions arguing that amending the Corporations Act could provide clarity and recognition to the cross-over between digital assets and DAOs.
In any case, the ongoing popularity of DAOs mean that a legislative approach will need to carefully encompass what is being done now, and what will be able to be done in the future if it is to be useful and meet the goals set out in the Senate Report.