What is a Smart Company?

A smart company is a company whose shares or membership units are tracked on a blockchain. Founders can begin as a smart company during the entity formation process. Alternatively, we can help an existing company become a smart company.

Companies may utilize blockchain without becoming a smart company. See our other service pages for those items.

Why be a smart company?

Smart contracts built on distributed ledger technology adds immutable trust and transparency (selected data can still be private).

Blockchain’s asymmetric encryption virtually eliminates fraud. It reduces complexity and friction costs across the board. Blockchains are a more secure and efficient means of corporate governance, cap table management, and fund-raising.

Being a smart company benefits all shareholders and investors. This route may seem more complicated up front, but the effort is worth it.  We believe a company utilizing blockchain will typically incur less yearly legal litigation, accounting, auditing, and banking fees. The value of the added trust and security are nearly priceless.

If you are starting a new company, the process is somewhat like forming a regular entity. Our attorney will advise you on what entity is best for your endeavor (C Corporation, LLC, DAO LLC, etc.). Then, we ensure the corporate documents are prepared and filed to reflect the tokenized shares and governance process. Once authenticated and permissioned into the system, shareholders will be able to log into the blockchain system directly to access and transfer shares.

DAO LLC

A DAO or decentralized autonomous organization is a type of limited liability company (LLC) created in Wyoming April 2021. The DAO LLC is a smart company, it is managed by a smart contract on the blockchain.

Wyoming rivals Delaware in choice of forum for entity formation. Wyoming has the lowest taxes in the U.S. The administrative costs are low. The state also has strict privacy protections. An LLC’s managers/owners are not even required to be listed on the articles of organization. There is no income tax for corporations, and annual filings can be done online.

Many companies have traditionally chosen Delaware for their legal system. Namely, their court of Chancery – a court that settles all corporate legal disputes with a judge instead of a jury. In December of 2021, Wyoming also instituted a court a Chancery.  (See e.g. https://www.wyoleg.gov/Legislation/2019/SF0104)

How much does this cost?

An attorney can help you determine which state and entity is best before moving forward.

The first 30 minute consultation to discuss your best course of action is $225.

A free 15-30 minute introductory call may be taken on a case-by-case basis. Email gary@allomerlaw.com to introduce yourself and request a call.

Until client is ready to proceed with a flat fee agreement for the Smart Company creation-subsequent time will require the client sign a retainer agreement and deposit 2-4 billable attorney hours.

Flat fees for smart companies range from $7,500 – $15,000.