Abstract
Decentralised Autonomous Organisations (DAOs) are this really interesting new type of organisation that runs on blockchain technology using smart contracts instead of having traditional managers and boards. They’re becoming pretty popular globally, but India hasn’t really figured out what to do with them legally yet. This paper looks at whether DAOs can actually work within our Companies Act, 2013. After analyzing the Act’s requirements and how DAOs actually function, I’ve found that there are some serious mismatches. DAOs just don’t fit into the way our company law is structured right now – things like needing directors, having a registered office, and all the compliance requirements just don’t work with how decentralized these organizations are. My conclusion is that we need proper legal reforms if we want DAOs to have any real chance in India.
Keywords:Decentralised Autonomous Organisations, Blockchain Governance, Companies Act 2013, Corporate Personality, Smart Contracts, Indian Corporate Law
INTRODUCTION
Blockchain technology has really changed how we think about organizing businesses and economic activities. One of the most interesting innovations to come out of this is the Decentralised Autonomous Organisation – or DAO for short. Basically, a DAO is an organization that’s governed by code (smart contracts) that runs on a blockchain, which means you don’t need the usual hierarchy of managers and executives making all the decisions.1
DAOs are being used for all kinds of things around the world – managing investments, running DeFi protocols, making collective decisions about digital assets, and more. Some places like Wyoming in the US have actually passed laws recognizing DAOs as legitimate business entities.2 But India? We’re still being pretty careful about anything blockchain-related, and we don’t have clear laws for cryptocurrencies or decentralized systems yet.
This creates an important question that I want to explore: can DAOs actually operate under our Companies Act, 2013?
I’m going to look at whether the Act’s provisions can accommodate these decentralized entities, and if not (which seems likely), what kind of legal changes we might need to make it work.