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8 LONG TITLE
9 General Description:
10 This bill makes changes to the Decentralized Autonomous Organization Act.
11 Highlighted Provisions:
12 This bill:
13 ▸ clarifies that the Division of Corporations and Commercial Code files a
14 decentralized autonomous organization's certificate of organization and does not
15 issue a certificate of organization;
16 ▸ makes modifications to the permitted names of a decentralized autonomous
17 organization to align with permitted names for other entities formed in the state; and
18 ▸ makes technical and conforming changes.
19 Money Appropriated in this Bill:
20 None
21 Other Special Clauses:
22 None
23 Utah Code Sections Affected:
24 AMENDS:
25 48-5-103, as enacted by Laws of Utah 2023, Chapter 85
26 48-5-105, as enacted by Laws of Utah 2023, Chapter 85
27 48-5-201, as enacted by Laws of Utah 2023, Chapter 85
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29 Be it enacted by the Legislature of the state of Utah:
30 Section 1. Section 48-5-103 is amended to read:
31 48-5-103. Powers of the division.
32 (1) (a) The division may make, amend, or rescind a rule, form, or order when necessary
33 to carry out this chapter.
34 (b) The division shall make rules in accordance with Title 63G, Chapter 3, Utah
35 Administrative Rulemaking Act.
36 (2) The division may by rule:
37 (a) provide the form and content of a registration requirement required under this
38 chapter;
39 (b) provide the method of determining whether formation requirements described in
40 Section 48-5-201 have been met and when to [
41 (c) identify industry standards for determining whether the decentralized autonomous
42 organization has undergone security review for quality assurance.
43 Section 2. Section 48-5-105 is amended to read:
44 48-5-105. Permitted names.
45 (1) (a) The name of a limited liability decentralized autonomous organization shall
46 contain the words limited liability decentralized autonomous organization or limited
47 decentralized autonomous organization or the abbreviation L.L.D., LLD, L.D., or LD.
48 (b) Limited may be abbreviated as Ltd., and decentralized autonomous organization
49 may be abbreviated as DAO.
50 (2) Except as authorized by Subsection (3), the name of a decentralized autonomous
51 organization shall be distinguishable as defined in Subsection (4) upon the records of the
52 division from:
53 (a) the actual name, reserved name, or fictitious or assumed name of any entity
54 registered with the division; or
55 (b) any tradename, trademark, or service mark registered with the division.
56 (3) (a) A decentralized autonomous organization may apply to the division for approval
57 to reserve a name that is not distinguishable upon the division's records from one or more of
58 the names described in Subsection (2).
59 (b) The division shall approve the name for which the decentralized autonomous
60 organization applies under Subsection (3)(a) if:
61 (i) the other person with a name that is not distinguishable from the name under which
62 the applicant desires to file:
63 (A) consents to the filing in writing; and
64 (B) files a form approved by the division to change the person's name to a name that is
65 distinguishable from the name of the applicant; or
66 (ii) the applicant delivers to the division a certified copy of the final judgment of a
67 court of competent jurisdiction establishing the applicant's right to use the name in this state.
68 (4) A name is distinguishable from other names, trademarks, and service marks
69 registered with the division if the name contains one or more different words, letters, or
70 numerals from other names upon the division's records.
71 (5) The following differences are not distinguishing:
72 (a) the term:
73 (i) decentralized autonomous organization;
74 (ii) DAO;
75 (iii) limited liability decentralized autonomous organization;
76 (iv) L.L.D. or L.L.DAO; or
77 (v) L.D. or L.DAO;
78 (b) an abbreviation of a word listed in Subsection (5)(a);
79 (c) the presence or absence of the words or symbols of the words "the," "and," "a," or
80 "plus";
81 (d) differences in punctuation and special characters;
82 (e) differences in capitalization; or
83 (f) differences in singular and plural forms of words.
84 (6) The division may not approve for filing a name that implies that a decentralized
85 autonomous organization is an agency of this state or any of the state's political subdivisions, if
86 the decentralized autonomous organization is not actually such a legally established agency or
87 subdivision.
88 (7) The authorization to reserve or register a decentralized autonomous organization
89 name as granted by the division does not:
90 (a) abrogate or limit the law governing unfair competition or unfair trade practices;
91 (b) derogate from the common law, the principles of equity, or the statutes of this state
92 or of the United States with respect to the right to acquire and protect names and trademarks; or
93 (c) create an exclusive right in geographic or generic terms contained within a name.
94 (8) The name of a decentralized autonomous organization may not contain:
95 (a) the term:
96 (i) association;
97 (ii) corporation;
98 (iii) incorporated;
99 (iv) partnership;
100 (v) limited liability company;
101 (vi) limited partnership; or
102 (vii) L.P.;
103 (b) any word or abbreviation that is of like import to the terms listed in Subsection
104 (8)(a);
105 (c) without the written consent of the United States Olympic Committee, the words:
106 (i) Olympic;
107 (ii) Olympiad; or
108 (iii) Citius Altius Fortius; or
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115 (9) A person, other than a decentralized autonomous organization formed under this
116 chapter or another decentralized autonomous organization that is authorized to transact
117 business in this state, may not use in the person's name in this state the term:
118 (a) limited liability decentralized autonomous organization;
119 (b) limited decentralized autonomous organization;
120 (c) L.L.DAO or L.L.D; or
121 (d) L.DAO or L.D.
122 Section 3. Section 48-5-201 is amended to read:
123 48-5-201. Formation requirements.
124 (1) (a) One or more persons may act as organizers to form a decentralized autonomous
125 organization by delivering to the division for filing a certificate of organization.
126 (b) At least one of the organizers of a decentralized autonomous organization shall be
127 an individual.
128 (2) (a) A certificate of organization shall provide:
129 (i) the name of the decentralized autonomous organization, which shall comply with
130 Section [
131 (ii) the name of an organizer that is an individual;
132 (iii) the street and mailing address of the organizer described in Subsection (2)(a)(ii);
133 (iv) the name and address of the legal representative; and
134 (v) the information required by Subsection 16-17-203(1).
135 (b) An organizer may request that the information provided in Subsections (2)(a)(ii)
136 and (iii) is redacted by the division before any public disclosure of the filing.
137 (3) A decentralized autonomous organization shall submit evidence to the division in a
138 form required by the division that the decentralized autonomous organization has complied
139 with the following requirements:
140 (a) the decentralized autonomous organization is deployed on a permissionless
141 blockchain;
142 (b) the decentralized autonomous organization has a unique public address through
143 which an individual can review and monitor the decentralized autonomous organization's
144 transactions;
145 (c) the software code of the decentralized autonomous organization is available in a
146 public forum for any person to review;
147 (d) the software code of the decentralized autonomous organization has undergone
148 quality assurance;
149 (e) the decentralized autonomous organization has a graphical user interface that:
150 (i) allows a person to read the value of the key variables of the decentralized
151 autonomous organization's smart contracts;
152 (ii) allows a person to monitor all transactions originating from, or addressed to, the
153 decentralized autonomous organization's smart contracts;
154 (iii) specifies the restrictions on a member's ability to redeem tokens;
155 (iv) makes available the decentralized autonomous organization's by-laws; and
156 (v) displays the mechanism to contact the administrator of the decentralized
157 autonomous organization;
158 (f) the governance system of the decentralized autonomous organization is
159 decentralized;
160 (g) the decentralized autonomous organization has at least one member;
161 (h) (i) there is a publicly specified communication mechanism that allows a person to
162 contact the registered agent of the decentralized autonomous organization and provide legally
163 recognized service; and
164 (ii) a member or administrator of the decentralized autonomous organization is able to
165 access the contents of this communication mechanism; and
166 (i) the decentralized autonomous organization describes or provides a dispute
167 resolution mechanism that is:
168 (i) binding on the decentralized autonomous organization, the members, and
169 participants of the decentralized autonomous organization; and
170 (ii) able to resolve disputes with third parties capable of settlement by alternative
171 dispute resolution.
172 (4) Notwithstanding the requirements of Subsection (3)(e)(iv), a decentralized
173 autonomous organization may redact sensitive information from the by-laws before making the
174 by-laws available, if those redactions are necessary to protect the privacy of individual
175 members or participants in the decentralized autonomous organization.
176 (5) A decentralized autonomous organization is formed when the decentralized
177 autonomous organization's certificate of organization becomes effective and the decentralized
178 autonomous organization submits the evidence required in Subsection (3).
179 (6) Upon formation, the decentralized autonomous organization shall have limited
180 liability, subject to the provisions of Section 48-5-202.
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184 Section 4. Effective date.
185 This bill takes effect on May 1, 2024.