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On 11 April 2023, the Registration Authority (“RA”) of Abu Dhabi Global Market (the “ADGM”) published Consultation Paper No. 3 of 2023 titled “Proposal for a Legislative Framework for Distributed Ledger Technology Foundations” (the “Consultation Paper”). With this Consultation Paper, the RA aims to address the growing interest from market players to use ADGM foundations for the purpose of facilitating distributed ledger technology (“DLT”) projects and issuance of non-regulated utility tokens (“DLT Foundations”), and provide a comprehensive explanation on the Distributed Ledger Technology Foundations Regulations 2023 (the “DLT Foundations Regulations”) proposed to that effect. It should be noted that the RA welcomed comments on the Consultation until 12 May 2023 and that the DLT Foundations Regulations are yet to be enacted in their final form.


The recent years have witnessed the emergence of decentralised autonomous organisations (“DAOs”), a type of governance structure deeply rooted in the principle of decentralisation. DAOs’ operations are run on smart contracts and their governance is managed through voting rights attached to native tokens, which are issued by the DAOs themselves. As such, DLT projects are often designed by founders with DAOs at the core of their underlying architecture.

Some founders elect to operate via unincorporated DAOs, whereby the organisation is solely based on the codes contained in the smart contracts, without any off-chain materialisation interms of ownership or governance. This option, even if seemingly aligned on the values of decentralisation, may however often pose regulatory, legal and operational challenges for the DLT projects.

Conscious of this problem, many founders have leaned towards the incorporation of a legal entity to act  as the legal wrapper of their DAOs. In this way, such DAOs would be able to capture the benefits of legal personality, while also enjoying the ability to operate off-chain (e.g. enter into agreements, hold assets, carry out treasury functions, etc.).

In that latter scenario, foundations and similar legal forms have gained popularity among founders of DLT projects in view of their unique legal features. Taking into account their intrinsic suitability for DLT projects, the foundations regime currently in place in the ADGM, namely the Foundation Regulations 2017 (the “Foundations Regulations”), however presents characteristics and requirements which may not cater to their needs. In this regard, the RA intends to put forward the DLT Foundations Regulations as a new standalone framework, specifically tailored to the governance and operational requirements of DAOs.


The below provides an overview of the key proposals introduced by the Consultation Paper:


Legal Personality

DLT Foundations have legal personality.


DLT Foundations may conduct any activity that is:

  1. not unlawful nor contrary to public policies; and
  2. as applicable, in line with purposes which may be limited or specified in the DLT Foundation’s charter (the “Charter”).

Company Service Providers

DLT Foundations must engage a company service provider licensed in the ADGM, unless recognised as an “exempt foundation” by the RA – according to criteria similar to the ones contained in the Foundations Regulations.

Minimum Initial Asset Value

DLT Foundations must have a minimum initial asset value of USD 25,000, which should be paid up within six months following incorporation.


The Charter shall include beneficiaries.

Distribution of Profits

The Charter shall include distribution of assets and applicable mechanisms.



DLT Foundations must appoint a council:

  1. which may comprise the founders and token holders as members;
  2. with exclusive responsibility for a number of reserved matters; and
  3. with powers, limited to specific circumstances, to reject the requests of voting tokenholders.


The Charter must include the relevant governance mechanisms with respect to tokenholders.


The Charter may provide, under certain circumstances, for the removal of the founders from the council (and loss of any other powers in relation to the DLT Foundations) and the appointment of an independent guardian to oversee the council.


The Charter must include a description of the intended use of any tokens, as well as any buyback dynamics by the DLT Foundations in relation therewith.


Accounts and Audit

DLT Foundations must prepare and file annual audited financial statements with the RA for publication.

Annual Return Form

DLT Foundations must file an annual return with the RA confirming the nature of any tokens, the ultimate beneficial owners, as well as any other information as may be required by the RA.


The Charter, its audited financial statements and information on the founders, council members and guardian (as applicable) are required for publication.

Other Disclosures

The Charter must include information on:

  1. tokenomics of the DAO;
  2. vesting schedules;
  3. smart contracts;
  4. security audits;
  5. treasury; and
  6. singe-chain or multi-chain structure.


The beneficiary owners of the DLT Foundations include the founders, council members, guardian, beneficiaries and persons in “control”, being understood as any persons owning more than 25% of voting rights in the DLT foundation.


AML and Sanctions

DLT Foundations must comply with the applicable AML and sanctions regimes.

Data Protection and Cyber Security

DLT Foundations must comply with the applicable data  protection and data security regimes.


Under specific circumstances, the RA may issue a temporary prohibition order on any marketing conducted by the DLT Foundations.



Any beneficiaries (including tokenholders, as applicable) have a right to receive assets pro rata to, as applicable, the percentage of assets they are entitled to, or the number of tokens they hold.

Liquidation and Voluntary Strike Off

DLT Foundations may be voluntarily struck off – according to criteria similar to the ones contained in the ADGM Companies Regulations 2020.


Upon Incorporation

The fees for the initial application include:

  1. name reservation: USD 200;
  2. registration application: USD 500;
  3. commercial license: USD 8,000; and
  4. data protection: USD 300.

Yearly Renewal

The fees for the yearly renewal include:

  1. commercial license: USD 8,000; and
  2. USD 300.
Romain Rolland
Romain Rolland
Head Of Office
Logaina M Omer
Logaina M Omer