Entrepreneurship in India and China’s developing economies

Case study of the economies of India and China

Entrepreneurship development affects multiple domains, although we frequently consider it as a single dynamic. Entrepreneurship can impact numerous industries and non-profits in a developing economy.

Entrepreneurship involves mobilizing human, financial, and mechanical resources to generate ideas. So, it serves more than economic progress and prowess. Entrepreneurship has social, cultural, and political effects beyond economic power. All these factors resound even truer when the case of a developing economy is considered, India and China, for instance.

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Economic growth of India and China

The two countries have shown remarkable growth in terms of economy and entrepreneurship within a few decades. Both feature in the list of the top ten largest economies of the world; both have managed to lift themselves out of the shackles of poverty and grief; both have represented themselves as growing powers, be it in terms of human or financial capital. This is why looking at their examples becomes essential.

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Case Study – Entrepreneurship and India

India, as a developing country, is grappled with multiple vices, and most of them are on the economic and social front. One of the biggest and most pertinent issues the country faces today is the problem of large-scale unemployment, which subsequently leads to multiple failures in terms of education and training, infrastructure and development, and social and moral growth.

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Fostering Entrepreneurship in India

Entrepreneurs, as business leaders, not only promote ideas and bring change but are also successful harbingers of the economic growth of India and entrepreneurship development. In India’s case, entrepreneurs have successfully promoted capital formation and employment generation. The employment provided has been instantaneous and large-scale, and it seems true to say that fostering entrepreneurship in a country such as India can prove helpful on these fronts.

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Obstacles to India’s entrepreneurship growth

Due to overpopulation and a lack of resources, India’s regional entrepreneurship development initiatives are hampered by slums and squatters. The country suffers from regional differences, including the world’s largest slum and one of the top ten richest men in the same county. To begin with, entrepreneurship has been effective in closing this gap gradually. Cottage industries and skill development have been used to strengthen the economy. Several underdeveloped locations can benefit from entrepreneurs’ innovations. The same applies to economic power concentration, as seen above. Successful entrepreneurs have reduced such gaps.

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Statics of India’s economic growth

For anyone who has been observing keenly India’s economic progress, it is difficult to deny that the country has shown a powerful growth in GDP over the past few years, with about 6.6% annual growth in 2017. In fact, the country is presently the fastest-growing democracy in the world. The country owes this growth to its entrepreneurs, who constantly look out for opportunities. With their ideas and measures directed towards resource mobilization, skill and entrepreneurship development, and redeveloping the market, they have had a huge role to play in pulling up the Gross Domestic Product of the country, as well as showing a positive impact on the per capita income of the nation’s population.

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India’s GDP rank

India’s GDP rank is currently 7^th(nominal, 2018), whereas it is 3^rd on the PPP list. The Ease of Doing Business Rank for the country has risen to 77, from the times a few decades back when talking about such a list for India was meaningless. No wonder, the country has made it to the world’s top ten largest economies.

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Future Prospects for India’s Economy

The entrepreneurs’ expansion in foreign trade and commerce has had a positive impact on the country’s economy and relations with other nations. In barely two decades, India’s entrepreneurship has led to overall development, greater global links, and faster economic progress. Alongside this, it has spread learning and awareness across the nation. The country as a whole has benefited, as have society, small communities, underprivileged groups, and genders.

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Case Study – China’s Entrepreneurial Spirit

China, as a nation, has shown remarkable growth in terms of entrepreneurial prowess. This entrepreneurship development has given China a competitive edge over the rest of the world. National trends from about half a year back have shown how the strength of non-state-owned enterprises has grown tremendously, thanks to China’s strongly growing entrepreneurial spirit.

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The Rise of Entrepreneurship in China

China, known widely over the world for its effectual economic strategies, has had a prime motto of “mass entrepreneurship and innovation” for years now. This agenda led to the upsurge and development of multiple businesses and entrepreneurship development, ranging from very diverse and varied domains. Howsoever much the disparity between the organizations, the underlying framework remained the same, which was what they called entrepreneurial spirit. In nature and substance, the spirit was optimistic in nature.

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The rise of China’s economy

The state of affairs was viewed in a different light by the rest of the world, and the economic growth of China was attributed more to monopolistic advantages than to industrial smartness. Little by little, the private sector of China was overtaken by a wide array of entrepreneurs, bringing about a large-scale reform. China, in the late 80s and early 90s, had set the stage for entrepreneurship to take the lead role. In fact, the country is presently considered the largest producer of low-cost in the world.

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Entrepreneurial Familism in China

A national reform approach focused on start-ups and private companies to combat corruption, poor public health, and extreme poverty, which are common in developing economies. This highlighted two key elements of Chinese business and entrepreneurship development: familism and relational capital.

Familism was derived by seeing the country or organization as a family and putting it in charge of determining its worth and importance. GuanXi, or relational capital, is also rooted in a key Chinese social concept. Chinese entrepreneurs value human interactions and networks since the broader the network, the easier the development. It was deemed critical that the ‘human’ element be present and worrisome, whether in their wants or as a resource.

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China’s GDP rank

The result is clear and loud. China is doing well in its GDP growth, with an annual change of 6.9%. Ranking second, only after America, it represents power in the list of the top ten largest economies of the world. It has set a world record for lifting more people above the poverty line than any other. There is a lot of room for improvement because the per capita income still lies below the world average. With China, however, it doesn’t seem to be a distant dream.

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Design thinking for Business Innovation

Business and Technology Updates

Design thinking and business innovation

The usual terms and expressions we associate with design are uniqueness, wow factor, and successful solutions. Surprisingly, all three fit in very well to establish and run a business. There is no doubt then design thinking is a highly crucial aspect of business innovation.

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Why go for design thinking for business innovation?

It is evident from examples taken from all around the world that businesses powered by design perform much better than the rest. When the principles and guidelines of design thinking are applied to a business strategy, productivity, as well as the success rate of the innovation or technology, shows an impressive surge. The reasons are many and well-structured. Firstly, a design-led business has the potential for constant redesigning and ready redevelopment. In short, such businesses shall not fail easily because they always have alternative design options to resort to, and therefore that many times success rates.

Secondly, design thinking for business innovation guarantees two very important parameters for a successful business – constant innovation and improved efficiency. The design process, be it in any field, always aims at creating a goal to attain a preferable solution and involves devising a course of action to attain the same. A successful business strategy is no different.

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What is Design Thinking?

Design thinking is not, however, synonymous with design, for it focuses more on the process and the framework rather than the solution itself. Context is what is of utmost importance to design thinking, and it involves five chief components – framing, ideating, refinement, delivering, and innovation. The structure provided by design thinking is of paramount importance, and it acts like a thinking cycle. The individual or the team adapts itself to the needs of building a context, framing opportunities, experimenting and exploring ideas, and evaluating the pros and cons, the constraints, and the workability.

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Steps of Design Thinking for Business Innovation

Design thinking is not one-sided, nor is it linear. Design thinking can be called an iterative approach, especially when discussing business innovation because it requires constant checks and amendments. In such a situation, it becomes necessary to highlight certain steps that must be followed for the process. Broadly, the steps can be categorized into three major divisions – motivation, ideation, and execution. However, a further detailed categorization proves more useful.

Discovering a problem

The first step towards any business innovation is, without a doubt, discovering a problem, a potential target that the business shall cater to, or the section of end-users it will serve. Without this crucial step of discovery and realization, any business innovation would be aimless, and design thinking would do no good at all.

Understanding the situation

Now that one has a somewhat thorough understanding of what, who, and why they wish to cater their business towards, design thinking takes the lead role. The first step in the design thinking approach begins with understanding the situation. As mentioned before, design thinking is not the same as conventional commercial thinking in that the course of action is more important than the problem itself. This requires a clear understanding of the situation at hand, for only then can any innovation creep out.

Observation and analysis

Once the basic study is done, one must start looking out for more. Be it patterns or statistics, insights or data, the one innovating for a business must keep himself well-informed about the market and the customer. Design thinking involves a proper study before getting down into the process hands-on.

Framing opportunities

Framing one’s POV is a very important step in design thinking. This, however, needs the accompaniment of two equally important aspects – assumptions, questions, and scope definitions.

Incubating

The process doesn’t stop at framing only; reframing, incubating, and meditating on one’s thoughts and analysis, all these are crucial parts of design thinking. After all, the greater the number of permutations-combinations realized and mentally worked upon, the lesser the burden of responsibility on the business enthusiast.

Ideating

The work must then proceed forward from study and analysis to ideating and problem-solving. The design thinking process for business innovation takes an interesting turn when one begins to dwell on their ideas with constant experimentation and explorations. Teamwork comes into an intriguing play here, for the corrections and alterations to a single idea by multiple minds can truly render it successful and worthier.

Prototyping

One very important aspect of design thinking for a business is prototyping. When the time is right, that is after one has spent enough time putting on the thinking cap, evaluating and re-evaluating their ideas, and analyzing options, it is highly recommended that they shape their ideas into reality. This can be effectively done with the creation of a prototype, which gives one dual opportunity – being able to test how a particular idea will work out in real life, as well as not risk one’s business too much, for it is just a sample to test on. The prime motive would be the validation of the innovation before launching it into the mainstream.

Final testing and launch

A successful prototype can be translated into a successful business innovation in no time at all. This is the time for final approval and launch, and one can expect to determine the true value of one’s innovation in terms of feedback by end-users, popularity among the masses, and acceptance of the innovation.

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The difference it creates

When someone is fascinated with business innovation, they usually spend hours alone thinking about it. The solution and action are more crucial to a design-oriented attitude. Hence, business innovation occurs when an individual creates a creative solution for a common problem instead of a common answer for an uncommon problem.

The innovation must be human-centered. This indicates that the solution should be created around customers’ emotions, wants, and reactions without compromising technically or economics. Design-based thinking for business is the only way to do this. Analytical design methods like SWOT or SCBA (Strengths, Weaknesses, Opportunities, Threats) are effective (Social Cost Benefit Analysis).

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Starting a new business venture: from ideas to launch

Leadership

There are more than one billion firms in the world, and therein lies the difficulty. If a person desires to establish a firm, he is certain to face over a thousand rivals in the same market. Creating a new business idea or venture is no piece of cake, right from the first step onward.

The journey from idea to product launch is extensive and requires brainstorming. Starting a new business idea isn’t as hard as it seems, but it takes tenacity, talent, and the correct advice to succeed. The endeavor becomes straightforward and feasible if one creates a list of things needed to start a business and breaks it down into a few steps. It is a basic requirement of starting a new business venture.

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Forming the Big Business Idea

The most important aspect of a company’s endeavor at the start is the idea itself. A successful company concept can emerge suddenly or after a long period of inspiration and thought. The idea must have the potential of being launched as a full-fledged commercial endeavor and must be original, ambitious, and innovative. If you already have a business idea in mind, and you already consider it sound enough to be able to hit the market successfully, a big share of the necessary brainstorming is already done.

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Market research

After you have identified the business idea, it is time that reality takes over imagination. Any business idea is no more than basic scratch, until and unless it is validated. This is possible only with great ground research of the market where you wish to launch your business at. The key lies in seeking answers to a few important questions for starting a business:

Is your idea unique, or has it already been started by someone before you?

If the idea hasn’t been followed or created as of yet, what are the reasons behind it?

Is the idea enough for a successful business?

Who would the prime rivals for the idea be?

What makes them successful in the business?

Can the idea be refined and improved a little?

Would customers benefit or get attracted to the idea?

How would the product/service handle competition?

What are the areas that would need improvement?

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Constant monitoring

A successful business venture comes only when it has been monitored well for honest and helpful feedback. The company’s idea needs to be spread enough for people to attempt and test it in order to realize whether it is workable or not. People frequently attempt to understand situations from others’ perspectives. This guarantees that any anomalies that may have been overlooked are brought to light.

These inputs are also collected from as many audiences as feasible. A variety of consumer inputs from different backgrounds lets you estimate the product’s acceptability and find and fix additional flaws. Prototyping and testing are the main tools for the same.

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The Legal Aspects

When starting a business, many legal issues must be addressed. Apart from engaging with the business idea and leaning into product testing and quality assertions, one must also keep all legal standards, this is one of the basic requirements of starting a new,

Copyright and business structure must be addressed. Review partnership and insurance obligations, for instance. Choosing a name and getting identifying codes and licenses to register a corporation is vital. Starting a firm legally involves bank accounts, trademarks, and patents. A small mistake could bring big issues.

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The Strategy

A business plan or strategy is crucial to turning an idea into a product. Business plans include the entire company’s history. An elaborate strategy can aid when executed, thus it must include the smallest details and instructions.

The contents of a business plan must, however, be very well-structured and organized for the most fruitful of results. At the same time, since it would be an official document, there is a protocol for its composition. Broadly speaking, a business plan document must include the following –

Introduction or Title, Executive Summary, Description, Strategies and Market Data, Competitive Analysis, Design and Development Strategy, Operation Plan, Management Strategy, Finance Considerations.

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Funds and Finances

For starting any business, some resource or capital, however big or small, is required. The source for the same can be chosen from a multitude of sources. You could either choose to fund it yourself in case it’s a small venture or if you have the means. The funds could come from close relatives and friends or from financial organizations in the name of a business grant. These days the internet can be used for crowdfunding purposes. If one is venturing out on a start-up, institutes also offer incubators and accelerators, which are designed to provide a platform for these start-ups. In case the scale of the firm is large, one might even call in investors for the purpose of raising the needed capital.

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Product Development

After all the steps have been taken, it is time to focus on product development. The study and research, along with the parameters of the innovation, amalgamated with the constraints of finances are all necessary prerequisites for product development. Three major categories of resources – technical, financial, and human – are of paramount importance in this regard. One must possess the necessary technicalities for the development of the product or service, without compromising on funds. Human resource is the most important after all for two reasons – firstly, the innovation for a product or service cannot come from a machine, and secondly, the skills to develop, modify or improve it further requires human intervention as well.

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The Right Team and Right Location

Finally, the most important aspect of a business establishment is its team. An individual may possess the skills and talents for producing a mind-boggling business idea; to convert this idea into a full-fledged business he requires a team. A team that is skilled in diverse domains and departments. The right location is when you have a physical setup of your business. The right location would be one that is accessible by customers or clients, as necessary, provides you with the required area needed, is situated close to other places of requirements, say secondary support services, and so on.

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Launching the Product

You can finally launch the product or service, as your business commands. A new chapter begins from here on, but your venture from idea to launch is hence complete.

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The legal frameworks for DAOs in Delaware

Business and Technology Updates

DAO Legal Frameworks

The legally secure structure of DAO should be created for consumer protection and for unknown liability risk, as many consumers participate in the DAO. This has further encouraged the creation of a DAO legal framework. Mainly, there are four different options for setting up the DAO legal structure, including Wyoming DAO LLC and Delaware LLC in the United States of America, Cayman Island, and Switzerland.

In the real world, DAOs are represented as ‘legal wrappers’ for the external legal relationship and governance. These DAO legal wrappers are similar to a legal company having a legal structure in the form of b-corps, c-corps, LLCs, and DAO LAO. To resolve the DAO legal entity issues, the governance tokens are offshored to foreign jurisdictions, including the Cayman Islands, Switzerland, Singapore, Panama, and others.

Further wrapping the DAO into a legal framework formed in such a jurisdiction.

Additionally, it should be highlighted that a DAO Legal Wrapper must contain a section of the DAO to guarantee that it offers legal protection to its members and status legally binding to the decentralized governance system.

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Formation of DAO as Delaware, LLC

Delaware LLC is an organizational form of business that is used for a variety of business purposes, including operating enterprises, holding companies, unique purpose entities, and specific transaction vehicles.

With the emergence of distributed ledgers and the growth of blockchain technology in commercial and corporate transactions, it has become an organizational form for distributed autonomous organizations as well. DAO could accrue the benefits of forming or establishing a legal entity in the jurisdiction of Delaware and LLC. The US state of Delaware has established a legal DAO as LAO(Legal DAO). This DAO legal structure allows members to invest in the decentralized platform in exchange for utility tokens. This legal structure is referred to as a DAO ‘legal wrapper’, created by structuring DAO as an LLC to provide clarity on the applicable law, provide tax benefits, and limit the liability of the participants of such a system. Incorporating DAO in Delaware state provides much flexibility and a faster, cheaper process of incorporation. Moreover, it provides flexibility in choosing whether to make smart contracts public or private and to have on-chain operations freely and to make decisions that better align with the projects. Due to this, more and more projects have started to incorporate under Delaware LLC. Further, MetaCartel Ventures DAO LLC and The LAO have opted for legal status under the Delaware LLC Act.

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Formation of DAO as Wyoming, LLC

Wyoming Governor Mark Gordon signed Bill 38 in April 2021, which allowed Wyoming to recognize decentralized autonomous organizations (DAO) as legal entities, LLC (Limited Liability Companies). This came as an amendment to the already existing Wyoming Limited Liability Act. The new amendment in the law defines a DAO as an LLC, wherein the article of incorporation includes the statement that the company is a DAO. Subsequently, in July, DAOs to be formed as limited liability companies, i.e., DAO LLCs, became a law in the state of Wyoming in the US. This law also has been recognized in Europe and Germany due to the Treaty of Friendship, Commerce, and Navigation between the Federal Republic of Germany and the United States of America on October 29, 1954.

As per the law, the decision-making in a DAO depends on the approval of more than fifty percent of the participating members in a vote participated by a quorum of 4 members. Further, the membership interest is determined as the member’s ownership share in the member-led DAO, which may be defined in the DAO’s smart contract or operating agreements.

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Explaining The Decentralized Autonomous Organization (DAO)

Business and Technology Updates

Introduction

A decentralized autonomous organization (DAO) is an emerging form of legal structure. With no central governing body, every member of a DAO typically shares a common goal and strives to act in the best interests of the entity. DAOs, which have gained popularity among cryptocurrency and blockchain technology enthusiasts, make decisions with a bottom-up management approach.

Therefore, there are various legal frameworks in different jurisdictions all over the world for the smooth operation of the DAO through, DAO members, voting system, proposal, and decision-making.

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What is the purpose of a DAO?

DAO stands for Decentralized Autonomous Organization, which operates transparently and autonomously, meaning independent of any human intervention. These organizations have their rules and structure written in codes known as smart contracts and do not have a hierarchical system, meaning no single commanding body behind decision-making. Decisions are made via a voting system on proposals during a specified period by those who have invested in these organizations or through algorithms depending on the type of DAO. These organizations are collectively owned and managed by their members only. DAO ownership is attained by selling tokens to the investors provided by the platform in exchange for virtual currency used on the blockchain on which the DAO code has been deployed. This provides voting rights to the token holders to accept or reject a smart contract-based business proposal. However, the legal status of DAOs is still uncertain. Despite the growth of the decentralized autonomous organization, the legal status has become a hurdle in its technological advancement and exposes risk to its members.

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Formation of DAO

The organization was launched on April 30, 2016, after the Ethereum protocol engineer, Christoph Jentzsch, released the open source for an Ethereum-based investment organization. It was first meant to operate as a venture capital fund for crypto and decentralized spaces. DAO, called earlier ‘The DAO,” was a decentralized platform that relied on crowdfunding through token selling. Those who bought these tokens became token investors and decision-makers. The idea behind DAO is to form an automated, decentralized platform wherein decision makers are the members of that platform, and decisions are taken collectively without the interference of a centralized governing authority.

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The general structure of DAO

There are two stages for DAO; one is the Pre-DAO stage, and the other is the Post-DAO stage. DAO, initially in its pre-DAO stage, is a centralized project that is managed by its founders. Further, smart contracts are launched, tokens are issued, the members of the DAO are selected, the governance system is formed, and the DAO then enters the Post-DAO stage that fully decentralizes the ownership and the management.

The structure of the DAO includes a DAO governance system, a DAO constitution, DAO membership, a DAO voting rights system, and a decision-making process.

DAO members

The selection of members of the Decentralized Autonomous Organization is decided by the founders. They usually rely on a single criterion wherein a minimum limit of tokens is decided that a token holder possesses to become a member of DAO. However, there are other criteria to decide upon, such as the members of DAO, wherein those participants are welcomed who are contributors and play an important role in its work, such as validators, oracles, or creators, for example.

Voting Rights

Once the members of the Decentralized Autonomous Organization are decided, the founders then structure the voting right mechanism that allows participants in the decentralized governance system of a Web3 decentralized project. The founders issue Liquidity Provider tokens to all the members of DAO as proof of the number of the project’s tokens staked by a DAO member. However, in other cases, founders may issue a separate type of governance token. These tokens must be non-transferable and non-tradable; otherwise, they will be considered securities.

Proposal making

Once the members and their voting rights are decided, subsequently, the founders determine which of the Decentralized Autonomous Organization members will have the right to create proposals and how many members must support it to put it to a vote of the entire DAO.

Decision making

The members of the DAO then participate in the decision-making by deploying their voting rights. These decisions include the issuance of additional tokens, burning of tokens, increasing liquidity pools, disposing of the treasury, and the like.

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In summary

Decentralized Autonomous Organizations are internet-native organizations that are owned and managed collectively by their members. They have built-in treasuries that can only be accessed with the permission of their members. Decisions are made through proposals that the group votes on over a set period.

DAOs are a highly effective and extremely safe way to collaborate with like-minded people all over the world. DAOs, as internet-native organizations, have the potential to completely transform corporate governance. As the concept matures, more organizations may choose to use a DAO model to help govern their activities.

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The legal frameworks for DAOs from around the world

Business and Technology Updates

DAO in Switzerland

In comparison to the other European jurisdictions and the Wyoming LLC model, Switzerland provides a much more flexible and easy-to-foundation model with moderation taxation, making it the most used jurisdiction for DAO. There are three commonly used DAO legal structures in Singapore, namely, the Swiss Foundation Law, the Swiss Association, Decentralized Autonomous Association (DAA), and the Private International Act (PILA).

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The Swiss Foundation Law

For long-term decentralization projects, the Swiss Foundation is the ideal legal entity. This Swiss foundation setup requires registration in a public registry, an irrevocable foundation deed, and supervision by a federal authority. However, for decentralized projects wherein activities evolve and mature with time, this legal entity is not very appealing.

Swiss Association

The Swiss Association provides more flexibility than the Swiss foundation. Further, it is a separate legal entity wherein having a resident board member is not required. Its members can be individuals or legal entities having limited liability. The geographically dispersed blockchain projects having a common goal or charitable purposes use the Swiss Association as DAO legal framework. Furthermore, the Swiss Association offers tax exemption. Tax exemption is also granted to commercial enterprises having an association as DAO legal framework, provided that the business is a subsidiary having charitable objectives. For NPOs and NGOs, they have been the entity of choice. Some of these are incorporated as associations, like the World Wildlife Fund, FIFA, and the like.

The governing body of the association is the general assembly that appoints the board of directors, decides on the admission of members, and resolves all matters concerning the association’s articles of association. A recent use case for the Swiss Association is Libra.

A Decentralized Autonomous Association (DAA)

DAA helps to achieve a DAO with limited liability. The general assembly is the governing body of the association that appoints the board of directors, decides on the admission and expulsion of members, and resolves all matters concerning other corporate bodies in the articles of association.

Private International Act (PILA)

This is a newly developed legal entity that provides a DAO, a legal structure recognized under Swiss law. It allows DAO to exist as an internet native and also to be recognized under the Swiss legal order. Based on the theory of equivalence, the code of DAO is considered a governing law, and digital space is an online jurisdiction. This is a new type of DAO legal structure wherein a DAO is not created as per the law of a state and is recognized in Switzerland as a foreign company with rights and obligations.

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DAO in the Cayman Islands

Cayman Island is one of the jurisdictions that has been chosen by a lot of Cryptocurrency projects to create a DAO legal wrapper. The Cayman Islands Foundation Companies Act, of 2017 introduced a new form of legal entity known as a “foundation company”. This foundation company acts as an ideal DAO legal structure that functions as a civil law foundation, providing incorporated trust and retaining a separate legal personality and limited liability of a company. Furthermore, a “foundation company” can be structured without centralized shareholders, wherein all the decisions are made by the members of the DAO community.

Foundation company as a legal wrapper

Each DAO maintains a register of its members, which must be synchronized with the register of foundation beneficiaries. In the case of a Cayman Islands foundation, the register is maintained privately, which provides flexibility and scalability for the DAO itself. Further, the Virtual Asset Service Provider Act (VASP Act), which regulates the transfer, exchange, custody, and issuance of virtual assets to the public in exchange for some considerations, has changed how decentralized projects in Cayman Island can operate. Furthermore, the foundation company also grants rewards from its treasury. This is only possible with DAOs having a Cayman Island foundation company as the DAO legal framework. MakerDAO is one example that has used foundations in Cayman Island and Switzerland.

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Conclusion

Different legal structures have been created for DAO to give it a legal personality and to eliminate liability risk. Some of these are Delaware LLC, Wyoming LLC, Foundation Company in Cayman Island, and Swiss foundation. Wyoming LLC is the most flexible DAO structure. However, it requires a lot of paperwork and information. On the contrary, Delaware’s setup is quick and cheap with moderate taxation, but it requires every member to be updated, and each member of DAO needs to be a member of an LLC.

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The Business Companies Act of the BVI

Business and Technology Updates

BVI financial record-keeping system

According to the Business Companies Act, a corporation is required to keep financial records and underlying papers that can demonstrate the firm’s transactions. These documents may include but are not limited to, agreements, invoices, bank statements, and other documents of a similar nature. These records have to be stored away for at least five years if they are to be considered valid. Any location is acceptable for the storage of the documents; however, if the records are not held at the registered office, the company is required to inform the Registered Agent of the address where the records are being kept.

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Annual Government/Renewal Fees of the BVI

The number of shares that have been issued is used to calculate the number of annual license fees or franchise fees that must be paid. For a business that has a maximum share of 50,000, the annual fees that must be paid beginning in the second year and continuing on into subsequent years will be $450 each. The fees might reach a maximum of $1,200 if the registered capital of the firm is greater than 50,000 shares. A Registered Agent is obligated to make an annual payment to the Registrar in the amount that is specified.

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BVI data privacy law

The introduction of the Data Protection Act, of 2021 (often known as the DPA) in the British Virgin Islands (BVI) safeguards personal data that is handled by public and private organizations. The data protection regimes are comparable to the principles that are applicable in the United Kingdom and the European Union under the General Data Protection Regulation (GDPR). The major purpose of the DPA is to ensure the security of data and to encourage transparency and accountability in the processing of personal data. The DPA is applicable to all existing limited partnerships and incorporations in the BVI (collectively referred to as “Private Body”). A person who processes data in the form of commercial transactions, either directly or on behalf of a private business, is likewise subject to this regulation. This includes data processed on behalf of the body formed in the British Virgin Islands (BVI) or elsewhere outside of the British Virgin Islands (BVI).

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BVI taxation law

Due to the fact that the vast majority of taxes are not required to be paid in BVI, the tax system in this jurisdiction is far easier to navigate than the definitive form of taxation used in other jurisdictions. The British Virgin Islands (BVI) do not have a tax on corporations, capital gains, value-added, sales, gifts, or inheritances. A payroll BVI tax on employees working within the territory, stamp duty (which only applies to the transfer of land and the transfer of shares in companies that own land), import duty, land tax, and a number of other minor ancillary taxes and permit fees are some of the other taxes that are imposed in the jurisdiction. The absence of taxes has made the British Virgin Islands (BVI) a well-known tax haven for overseas investors.

Regarding offshore jurisdiction, for tax purposes, the company must comply with international obligations or global standards. Lately, there have been agreements between BVI and other countries like UK and US in order to implement regulations to improve international tax compliance. The Tax Authority Act, BVI Limited Partnership Act 2018 has established International Tax Authority that supervises BVI’s compliance with international obligations in cross-border transactions. Apart from the above, BVI has imposed EU Union withholding tax on interest payments in the jurisdiction of persons residing within the European Union.

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Conclusion

British Virgin Island (BVI) is one of the ideal places to initiate business with its flexible organizational structure, significant tax benefit, and hassle-free company establishment. Apart from that, a person can operate and carry out their business anywhere in the world with minimal financial reporting. However, there are some challenges with regard to a work permit, trade license, and audit requirements. Even if there is no legal need for a legal audit, companies might require an audited statement to prove the company’s lawful establishment in BVI. Apart from that, the Labor Code passed in 2010 requires a work permit which can take more than two months. Additionally, a trade license required to perform business in BVI may take around six weeks for approval, wherein a corporation must register with the Social Security Office and the Inland Revenue Department before starting operations.

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Incorporation of BVI Companies

Business and Technology Updates

BVI company registration

The BVI Business Companies Act also referred to simply as “the Act,” is the statute that is used to incorporate businesses in the British Virgin Islands, both offshore and locally. The Registrar of Corporate Affairs must receive a copy of the company’s Memorandum and Articles of Association from the company’s registered agent. “An application for the incorporation of a company may only be filed by the proposed registered agent, and the Registrar shall not accept an application for the incorporation of a company filed by any other person,” it states in the document. “An application for the incorporation of a company may not be filed by any other person.”

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BVI company incorporation

Incorporation of the company is effective from the date the Memorandum and Article of Association are filed with the Registrar. If the incorporation conditions comply with the Act, the Registrar issues a certificate of incorporation and allows a unique number to the company. There is no requirement under the Act to issue shares at the time of incorporation, and neither the company is required to have a director at the time of incorporation. However, the appointment of a director is mandatory under the Act. The Registered Agent is required to appoint the company’s first director, and such a director has the authority to issue shares to the shareholders.

“Subject to this Act and to the memorandum and articles, shares in a company may be issued, and options to acquire shares in a company granted, at such times, to such persons, for such consideration and on such terms as the directors may determine.”

In addition, there is no such criterion for approved share capital, which means that there is no requirement for a minimum amount of share capital. In accordance with the Act, a share may be issued either with or without a par value attached to it. When a corporation issues a share that has a par value, the consideration for such a share might come in any form; nonetheless, it should be at least equal to the par value of the share.

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The regulatory framework of BVI

BVI’s legal system for business establishment stems from Delaware General Corporation Law, and as such, the Act follows principles and concepts similar to English Law. A company under the Act may incorporate as a company limited by shares; a company limited by guarantee that is not authorized to issue shares; a company limited by guarantee that is authorized to issue shares; an unlimited company that is not authorized to issue shares or an unlimited company that is authorized to issue shares. In addition, the Act allows “restricted purpose company” for incorporation in BVI, subject to some additional disclosure (a statement that the company is a limited purpose company and its purpose) that has to be made in the Memorandum of Association. Additionally, the BVI Business Companies (Amendment) Act, 2018 has extended the classes of companies that may be Segregated Portfolio Companies (SPC).

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BVI Limited Partnership Act 2018

The Limited Partnership Act of 2018 is complied with by any limited partnership business that is recognized in the British Virgin Islands. In accordance with the provisions of the Limited Partnership Act of the BVI, a limited partnership can start out either with or without a separate legal identity from its participants, depending on the preferences of the founding general partner. A general partnership is also recognized in the British Virgin Islands, and its operation is governed by the Partnership Act of 1996. In this configuration, a partnership does not have a distinct legal personality from its constituent members, and all partners have complete culpability for the debts incurred by the partnership.

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BVI economic substance act

A corporation is required to comply with the BVI Economic Substance Act and perennially submit or report relevant information pertaining to the operation of the business. For the purposes of taxation, the entity must disclose a degree of economic substance within the British Virgin Islands if it conducts activity that falls within the definition of “Relevant Activities.” If the corporation has its tax residence outside of the British Virgin Islands (BVI) or any of the “Listed Jurisdictions,” then the duty to demonstrate that it possesses substance will not apply to the company.

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The NFT Economy in Metaverse Gaming

Business and Technology Updates

Non-Fungible Token and metaverse

The entire feature of owning a character and increasing its value implements a concept on which the metaverse land and property is heavily based. The concept of Play-to-earn as imply enables users to earn and own items in the form of non-fungible tokens (NFTs). NFTs are another concept that has contributed to revolutionizing the gaming industry. The players’ characters are called Avatars which are unique for every player, aka NFT. The feature of uniqueness is ensured by blockchain, wherein their ownership is intact with the user. The avatars that the players own have a dynamic value that can be traded and sold in exchange for cryptocurrency and further swapped into real money. Apart from NFTs and characters, Players can also own other types of assets, such as land property and tools, which can be bought and traded in the NFT marketplace.

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The metaverse gaming community

The metaverse gaming community plays a significant role in the development of metaverse games, which is also true of the gaming industry as a whole. In the metaverse gaming landscape, taking a community-oriented approach has resulted in the creation of enormous economic value. The creation of a forum in which multiple players can carry on conversations is an essential step in the process of growing a community on a gaming platform. According to the information disclosed in the patent, the multiplayer virtual reality game known as US6767287B1 is programmed in a manner that allows it to support multiple user communities. Evidently, the purpose of the invention is to connect multiple servers in order to bring together users from all over the world.

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Inside the Metaverse community

When players have the ability to govern, develop the game, and communicate with other users, a community has a greater chance of forming in a metaverse gaming setting. The prior art disclosure known as WO2022114456A2 describes a metaverse game system that is oriented on user interaction. This system gives users the ability to experience game content in an environment where virtuality and reality are combined. On the other hand, the value proposition of the project ought to be alluring enough for consumers to register for the gaming arena in the metaverse. In this regard, a number of different metaverse projects have created their games in order to generate economic value for the participants. Users can construct and establish original concepts by utilizing features of the platform such as the right to vote, the ability to produce NFTs, the sale of their assets, and the opportunity to meet other participants. In this regard, the prior art document US7780532B2 grants users the ability to construct a gaming environment and obtain ownership of such a gaming environment, including the ability to sell such ownership or a fraction of ownership in a certain gaming environment. This also leads to the ‘create to earn’ model, which is a concept in which game designers run the game studios and directly participate in the development of the game.

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Conclusion

The game business was one of the very first sectors to begin incorporating metaverse into its products, making it one of the pioneers in this space. They intend to provide a gaming experience that is very near to reality.

Even though the metaverse sector has been moving forward at a fast pace in terms of innovation, it is still a ways off from recolonizing the gaming industry. There have been many advancements achieved on the subject of security and decentralization, but there is still a need for innovation in the experience that Metaverse claims to deliver to its users. There is a significant amount of room for growth in the game industry thanks to the introduction of a metaverse, and a great number of organizations are continuously focusing their efforts in this direction. However much time it takes, when it is finally developed and properly integrated with all of the applicable technologies, the metaverse will transform the technology sector.

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Global Blockchain Lawyers (www.GlobalBlockchainLawyers.com) is a digital platform to discuss legal issues, the latest technology and legal developments, and applicable laws in the dynamic field of Digital Currency, Blockchain, Bitcoin, Cryptocurrency and raising capital through the sale of tokens or coins (ICO or Initial Coin Offerings).

The blockchain ecosystem in India is evolving at a rapid pace and a proactive legal approach is required by blockchain lawyers in India to understand the complex nature of applicable laws and regulations.