Howdy everyone Sandow podcast number 56.
This episode is a special one.
This is one I've been working on for two or three months now.
I've been teasing it out a little bit.
It really began back in episode 31, 32 when I did the sandbox ecosystem and the birth
of the Tao.
Originally I was supposed to do this episode back then.
But these episodes turned out to be so big that I had to split them all apart.
And before I knew it, the delegates had arrived and you know, 20, 20 episodes later, here
we are 56.
I'm done with the foundation company episode and here it is.
So I'm so excited.
I'm so excited to go through this one because to me this is like the, this is where I wanted
to take this, which is what is a foundation company?
What are we doing here?
And I think we arrived at the answer now that we're here and we determined, I think it's
going to answer a lot of questions.
I think a lot of people, if you're a nerd like me, when it comes to looking into how
DALs are done, I think you're going to find this to answer a lot of questions.
So what's the scope of the talk today?
Today is about sharing my analysis on some facts that I've learned.
All of these facts are public.
You can Google search all of this.
This is not an accusation.
It's not a smear campaign.
It's about transparency.
It's about, I've said many times, I want to help bring the DAL out of the shadows.
I want to help bring the DAL from obscurity into common generality where we all know what's
going on.
We all, we understand the relationships.
This, this is how we get there.
So this episode may be a little long and that's okay.
You'll see that it could be a lot longer.
I have cut it down a lot.
Before I do that, disclaimer, I do not represent the sandbox game or the sandbox foundation.
I'm not your financial or legal advisor and nothing I say is to be taken as financial
or legal advice.
When I say the word SIP, I mean sandbox improvement proposal.
When I say the word DAL, I mean decentralized autonomous organization.
And when I say SanFam, I'm talking about the sandbox community and those who participate
in the people, product and purpose of the sandbox ecosystem.
Not sure how many people notice, maybe not many at all, but I, I did.
I have some shorts that came about here.
So take a look.
They're about a minute a piece.
So like what is the purpose of sandbox?
So what is the purpose of the sandbox?
Again from the sandbox white paper, which was launched in 2020.
So what I did was in anticipation of Sandow, SIP 18, which check out podcast number 55
on the debrief on that.
I had leaned forward to create these little short snippets to start the process.
I had already paid for them.
So here they are, but they're short little snippets of the ecosystem and what it's all
about.
But that ecosystem looks a little bit like this and the people sector, there's everyone
from gamers to the sandbox team for the product.
It's the game client at the Dow and for the purpose, it's what's mentioned in the white
paper and expand upon by the sandbox leadership.
All that comes together, mixes together to, to create the ecosystem.
And it goes round and round every day.
All those things.
This episode is squarely focused on the Dow, what it is and how it's out functions.
I'm your host Lancer.
I'm president of the Medi-Worlds group.
We have published two experiences, lore droppers and lava defense, a alpha season four and
a game makers fund 2023.
Today's episode, what is a foundation company in the Caymans Island?
I, here's everything that you're going to see.
It comes from these sources, five main sources.
The first one is a reading of the Cayman's Cayman Island's laws.
That's the companies act foundations, company law, companies management act, the directors
registration and licensing law, securities investment, business law, virtual asset service
providers act and citation of acts parliament, citation of acts of parliament law.
So that's, that's one portion.
Second portion is looking up all the different online tools that the Cayman Islands has.
And we'll, we'll show a little bit more of that later on here.
Loads.
There you go.
So different tools, business portals, statistics, administrative platforms, that sort of thing.
And then SEMA regulations.
SEMA is a, it's a monetary authority.
They had a bunch of regulations to read as well.
And then I read a lot of expert opinions, all sorts of different law firms, most of
them on the Cayman Islands, Conyers, Loweb Smith.
Even I read an article from the United States government accountability office who did a
study on the Cayman Islands, Stuart Humphreys, Cartan group, Maples group, Adele Christen,
Morant law firm and Walker's global.
Each of them had some different type of blog or article opining, talking and discussing
and analyzing a foundation company.
And I read as much as I could.
And then last but not least, just regular old Google searches to fill in the blanks.
So that's what took like two or three months is reading through all of this stuff in order
to figure out what is a foundation company.
Here's the agenda for today.
It's in three parts.
Three parts.
However, parts two and three end up being so big, but part one, sorry, end up being
so big that it doesn't make sense to do parts two and three.
Otherwise this thing's gonna be four hours long.
So what we're going to do is part one only.
And I'm pretty sure I'm committed to part two.
We're all done, but I don't really have like the funding for SIP 18 did not go through.
So I'm looking at kind of changing and the way Sandow podcast goes.
But I'm the very least right now we're doing part one, which is going to be a recap of
Sandow 34, the birth of Sandbox Tao.
The research that I just went over all my research findings, looking at their website,
the Caymans, the Companies Act, the Foundation Companies Law, the Companies Management Act,
and then the others that I mentioned, and then an application of that law.
What does it actually mean toward the regulations you have to apply?
How do you actually create a company, a foundation company?
What sort of terminology does each one use?
The TLDR, of course, and then all the remaining questions I had.
Part two would be a building of that analysis, although that might be part three now of applying
all that to the foundations, memos, articles, and constitution.
Read SIPs one and two.
If you're interested in that, you can see them linked there in snapshot.
And then part three, which might end up being part two, is all of the case law.
So people suing Tao's and foundation companies and that sort of stuff that's applicable to
us, different legal opinions on what's still to be decided.
So that legal gray area that you hear about Cyril and Kunta talk about and digging in
the sand podcast.
Different Q&As.
I might be able to get a couple lawyers on here to answer some remaining Q&As.
We'll see.
That'll depend on basically funding.
If they'd like to just come on and answer or have to pay them a legal rate per hour,
we'll see.
So a comparison of entities that are like foundations, like dunas, or there might be
a third one.
So those part two and threes are going to be done in a future episode.
We're only worried about part one.
So part one, a recap.
Then we're going to go into research.
Then we're going to apply that all of what we learned into how does it matter, why does
it matter, and how is it applicable to us.
So let's get right into first up is the recap.
We talking about, we'll be going over the DOW timeline, the relationship map, and the
Cayman Islands.
So episode 34, this is where we were back then.
So episode 34 was back in October 2021, about four or five months ago, and we went over
the location of where the DOW was, whether or not there was a conspiracy afoot.
I still don't think there is.
The relationship that I could piece together of who was where doing what.
And then there was an answer to the Apecoin DOW on who was running the foundation for
them.
And a lot of time and effort went into that.
So much time and effort went into just revealing that.
But the big remaining question was, even if we know where everyone is, we know how the
players work and how they all work together.
What is actually a foundation company?
So our timeline here, we'll start first with the timeline.
Back in 2012, the sandbox started as a 2D mobile game.
This is back in episode 34 that we were doing this.
Hi everybody.
I'm Arthur Madrid.
I'm the API founder of Pixel.
We began doing a mobile game called the sandbox in 2012.
And then some years later in 2018, the sandbox transformed itself into a 3D metaverse blockchain
game.
So what's next for us?
We have been working on a sandbox 3D version.
Then in September 2020, the sandbox launches its white paper.
And in that white paper, it talks all about a DAO, like in the first paragraph, you can
see here.
Sandholders will be able to participate in governance of the platform via a decentralized
autonomous organization.
So it's back in 2020.
And then in early 2022, the DAO plan starts.
May 2023, DAO planning definitely starts, kicks in the high gear.
And then by November 2023, the sandbox foundation is created as a legal entity.
And again, you can read SIPs 1 and 2.
In the bottom where the links are, there is the constitution and the memo and the articles.
And you'll see it looks a lot like this.
So Memorandum of Association.
And here it is, the sandbox foundation and all this.
And then in May 2024, the DAO has announced the Amedium article, it looked a little bit
like this.
And then SIPs 1, 2, and 3 right off the bat were there to be voted on.
And in episode 34, a big part of it was this relationship map, the revealing of what I
thought was going on based on my research here.
So we went from a lot of unknown entities to what I thought was happening and who was
connected to who.
And it went a little bit like this.
Beautiful.
This is what took me days of no sleep and researching and googling and all sorts of
things, trying to piece stuff together, reading corporate documents, delving into the weeds.
This is what took me so long to figure out.
And yeah, so we started with this.
All we knew was the sandbox company, the Sandbox DAO Foundation.
There was a special council.
Yatsu was a part of the special council.
Advisory board.
You may or may not have known Yatsu was chairman of Animoca.
I certainly didn't know that really until not even like a few months ago when I really
started researching the DAO.
I really didn't know Animoca's place in the sandbox company.
I had no idea.
I knew the name Animoca, but I didn't really know what they were or who they were.
Until I started researching interviews.
I like mini-SandFan people.
I was worried about the ecosystem.
I was just worried about Game Maker and playing the game and the rewards.
And I was just worried about that stuff.
I wasn't worried about who owned what and who did what.
Not until the business end of the sandbox came full-fledged into the ecosystem in the
form of the DAO.
So there you have it.
That was episode 34.
If you want to see how that relationship unfolds, go back to episode 34.
I go over all of it there.
And then the latter part of that was the Grand Cayman Islands.
And learning and understanding how closely everyone worked together.
Some people might think it's a conspiracy, but at the end of the day, it's a small island.
It's got a small town feel.
The business district is really right there.
It's like a few blocks worth.
It's not that big to begin with.
So it's kind of understandable that people are so close together.
Do you remember how I mentioned how I kept throwing up a number every time I said the
word Cayman?
All right, I ended up getting up to one, two, three, four, five, six.
Six mentions of Caymans.
Carton Group, Caymans.
Maple Groups, Caymans.
Traverse Albarga Law Firm is in the Caymans.
ICSL is in the Caymans.
IPA is in the Caymans.
8.0 also in the Caymans.
But the more important thing is that Sandbox Dow Foundation is in the Caymans.
Six references to the Grand Cayman Islands.
And as I started researching and that started popping up, I was trying to figure out why
was that?
Why is the Caymans popping up so much?
So part two of my talks or my investigations, my analysis was why is the Caymans so involved
in the Dow?
So we ended up going through a whole rigmarole on that and discussing the Grand Cayman Islands
and how they were all next to each other.
They're very, very close.
Three minute drives, eight minute drives, that sort of thing.
But there was one big question left, the big elephant in the room is why are we here?
Why are we talking about all that?
And as I was, I started investigating further.
As I started delving into the laws, the regulations, I started discovering something I didn't expect.
So episode 34, it was just Google searching who everybody was looking through Dun & Bradstreet,
looking through Google searches, LinkedIn profiles, all sorts of things that were public
and able to be found and company about me pages to piece together who was connected to
what.
What I wasn't, I didn't know at the time was why were they all connected together?
And it wasn't until I started reading our own documents that I started linking things
together that led me to the acts and regulations of the Cayman Islands and their legislative
body that all of the laws that they put into place.
And as I started reading through those things, I discovered that while it is true, they all
are next to each other.
That's not the question you should be asking.
It's why are they all close together?
And why are they all on the same island?
And that's because there are positions that they are able to fill.
In many cases, only them can fill it, not just the companies, but the people who are
in the companies that are certified to because there are laws and regulations that require
they be certified to have those positions.
And the best people to do that, the licensed people, are the people who live on the island,
and the Grand Cayman Islands as specified by the laws of that country.
So that's what was surprising to me, is that it wasn't because people just chose them because
they're best friends.
It's because there are laws and regulations that prescribe very strict, very, very strict
rules and regulations to be in management services, to be a director, to be a secretary,
to be even a little bit legal counsel, but management services.
And they are fulfilling those rules after having fulfilled all the requirements and
the acts and regulations.
And that is the subject of today, is to share with you the research I did that revealed
what it is that foundation company is and based on and required to do.
So for the research, we have it into...
The first part here is three things.
We're going to look at the government website.
We're going to look at statistics and we're going to look at the overview.
And then after that, we'll be getting into the laws and regulations.
So part one of research.
When we're talking about the Cayman Islands law, we're really focused on...
If you go to the website, you'll see this pops up.
You'll see here, nice looking website, Cayman Islands.
Cayman Islands general registry.
There's a home button, there's registers, all sorts of menus that you can look at.
There's a lot here that you can search through, different buttons, all sorts of stuff.
So when you go to their website though, there's some things I want you to key in on if you're
really trying to figure out and look at foundation companies.
Up at the top, you've got the menu.
So there's registers, online tools, and resources.
And down below, when you hover over that, you'll see there.
These are the things that'll pop up.
So what we're worried about for the purposes of our foundation company are these.
So when you go to their website, you hover over registers and then you're looking for
a company's register.
When you go to resources, you're looking for acts and regulations and statistics overview.
So those things contain a lot of what we're after here.
Okay.
And so for the purposes of today, to keep things nice, orally, we're going to put that
over here on the left hand side so that you can always see where I am in this huge amount
of data that you could be searching for.
That way you can follow along with me if you'd like.
Okay, so the first thing is we're going to go to the statistics.
And again, go to resources and then click statistics overview and you'll be right where
I am.
Statistics are always a good thing to look at first because it tells you magnitude.
Magnitude is scope.
How big is it that we're dealing with?
And if you look at their statistics, you can kind of get an idea for what is their impact?
How deep is this going to go?
So here's some statistics that stood out to me.
In 2021, 1000 active companies as of quarter three, 2024, they came in Grand Cayman Islands
as 121,000 active companies.
In 2023 alone, 10,000 of those companies became newly registered.
In September alone, 800 companies were terminated.
Now that doesn't just mean like they did something bad.
It could also mean that they were dissolved and that the owners no longer wanted to run
them anymore.
900 companies registered.
So in that month alone, Grand Cayman Islands added about 100 companies just in that month.
All right, so that's good.
It tells you that there are over 100,000 companies that look at these laws and that 10,000 new
companies every day are added.
So when you hear maybe a sentence about how the Grand Cayman Islands, they believe that
they are a bastion of robust and flexible and common sense business law.
They're a haven for productive business.
121,000 other companies agree with that.
Roxy says, I wish I had one there.
Yeah, me and me both.
But if you keep watching this, Roxy, you'll see that it's actually not that hard to do.
It's really very affordable in some cases.
The toughest part is the legal fees.
But if you read everything yourself, you can do most of this yourself.
The flexibility is pretty...
I can see why it's so...
What's the word?
Alluring to have your company here.
There's a lot of interesting stuff, a lot of flexibilities.
But anyways, there's some statistics.
So it kind of gives you a...
Walking into it, are we talking like five companies?
No, we're talking 121,000 companies.
And with 10,000 new companies every year, that's pretty interesting.
All right, so what's the next part?
So now what we want to do is we want to start looking at the type of companies because we
are a foundation company after all.
So what does that mean?
Well, if you go over here under registers, hover over companies register, and then click
types of companies, you will be presented with a page that looks like this.
So I just follow the same thing.
What we're looking for is these.
Visual overview, this is what caught my eye, as did liability of shareholder.
And then foundation company, there's a learn more button.
So let's learn more.
All right, so the visual overview.
If you click that first button right here, that visual overview, it'll give you a PDF
with a picture on it.
This PDF shows you companies, ordinary, exempt, foreign, limited liability.
So it's a nice little reference chart.
So where are we?
Well, the way you figure out where we are is you read the memos of association and the
articles of association from sips one and two.
And what does it say under the memo association?
On page five, it says, form a foundation company limited by guarantee without any share capital
and registered as an exempted company.
So when you apply those key terms to the little picture graph they have, where do we end up?
This is where we end up.
Our company, we're exempt.
We're not foreign, we're not limited liability, we're not ordinary.
We're a foundation company.
And if you read the little one three right there says the foundation companies, what's
applicable to us is the Companies Act 2021 provision and the foundation companies law
2017 provision.
And so there we are.
There's our next breadcrumb in the trail of what is a foundation company.
We now need to reference Companies Act and the foundation companies law.
So this is the sort of thing that I do, I was doing, trying to figure out what is a
foundation company.
All right, the next thing.
So I said there were three buttons, three little places you go to.
So now let's look at the next visual overview, a liability of shareholder and member.
So another little picture graph is what it brings you when you do that.
And it shows liability shareholders, members, limited and unlimited.
So again, where do we look to figure out which one are we?
Look at the memo of association to form a foundation company, limited by guarantee without
any share capital.
Apply that to the little chart.
And there we are.
We are limited by guarantee without share capital.
There's the sandbox down right there.
So we're already starting to triangulate where a foundation company sits within the Cayman
Islands law.
And those are some key words that we can start to to reference when we read their regulations.
Last but not least, let's actually look at what they have to say about a foundation company
on their on the tutorial page.
That one down here at the bottom.
And when you click their their foundation page, it'll it'll show you show you this.
So you click, you click types of companies, exempted company.
And here you go.
This is a looks like a wiki page almost.
And I'll read through this one first.
I cut down a little bit to make it summary.
But where the proposed activities of a company are to be carried out mainly outside of the
Cayman Islands offshore, the registrants can apply for registration as an exempted company.
There's a lot of special features.
We're all going to go over that when we read their rules.
And what happens when you register?
There's different types of exempted companies.
So some key phrases and all that stuff.
Here they are, where proposed activity when and when you start reading this, what you're
really looking for are key terms.
Most of them are like nouns and verbs, things that you must do like, like you you must register,
or you must register with this, this place.
Register would be verbs, something you must do.
And SEMA is a noun, someone that you need to know about.
So what does it mean to register with SEMA?
That's the sort of stuff that you're really starting to piece together as you read through
their rules.
There's these nouns and verbs that start to really, really show you things you need to
be paying attention to like proposed activities carried out outside of the Cayman Islands
offshore.
Register of members, annual general meeting, alter its memo and articles of association
without restriction.
May issue shares, may express its capital.
The annual return to the registrar requires declaration.
And what else?
No changes have been, you must declare that no changes have been made.
You must declare that provisions have been observed of the company's law.
You must declare the company's operations have been outside the Cayman Islands.
You don't have to use the word limited or an abbreviation limited.
And you must be, must be registered under section 30.
All of these are key words that you can start to control F and start to look for in these,
in these regulations that we're about to read.
That is how you start to unwind all this.
All right.
So then that's an exempted company.
Now when you click foundation company, it brings you to another wiki page.
Looks a little bit like this.
This one's much more applicable to us because it tells us what is the foundation company
part of a sandbox foundation.
And here's some key words.
It's a separate legal entity.
There's something about a founder in it.
There are wide parameters given to it.
The foundation's company law and the company's act is important.
There must be a memo and articles of association.
Foundation companies law again is not standalone statute, which means it's added to it is in
addition to the company's law.
Things that will apply.
Company may be converted.
Foundation may created such companies must be limited by shares or by guarantee can be
established with or without share capital foundations are prohibited from paying dividends.
So similar to a similar to nonprofits, nonprofit organizations have no shareholders and pay
no dividends.
So it's kind of sounding sort of familiar there.
Other distributions.
The secretary qualified person license and permitted companies management act or companies
management law, the company management services, things that you must provide disposal winding
up licensed firms can provide such services as and lists of services.
These key phrases start to paint a picture.
What do we mean when we say the word foundations?
A foundation company and through all that as you start reading through those things
you start to piece together what's called a regulation stack.
A regulation stack is the, the arrangement and configuration of law or regulations that
you are required to either know comply with or adhere to.
And it's called a stack because the way these regulations play with each other is important
to know.
Sometimes there is a really important foundational law that all the other laws reference.
That would be the bottom of the stack.
And then there's a, there's a company or a law that is in addition to that would be on
top of the other foundational law.
But then there is a, a, a side regulation that doesn't, that's not in addition to, but is adjacent to it.
It's a reference.
So that will be off to the side.
Then there are independent regulations that, that aren't subject to or associated with
in any way, but still have a part to play.
And what is it that you do?
That's called a regulation stack.
So when you, when you start reading through these things that we were looking through
through the website, you start to see what the regulation stack looks like.
All right.
So we know that the Companies Act is the foundational one.
It's the biggest, baddest thing on the block.
And then in the, the page that we read earlier, it said the Foundations Company Law is in
addition to the Companies Act.
So it's a supplemental law.
When you, when you have laws, almost every modern, every modern country has, well, I
went ahead of myself there.
So you've got the Companies Act, which is the foundation.
You've got the Foundations Company Law, which is in addition to, but then they also referenced
the Company Management Act, which wasn't in addition to either one.
It was, it was adjacent to there, but not subject to the both of them.
You always, always have your commercial partners, which is your law firms that you hire to help
advise you of the laws you need to be complying to.
They're not government.
They are privately held commercial entities.
Not to be confused with law.
They help you interpret the law.
They render legal opinions on what you can expect if you do this or that and what the
law says about that.
Sometimes they're right.
Sometimes they're wrong.
Most of the time you pay them to be right though.
And then last but not least, case law.
Case law is something that is always a moving target.
It's when you take someone to court over the law and it's dispute resolution through the
court system that's called case law.
So when, when, when Kunta and Cyril are talking about the legal gray area, we're mostly talking
about the case law has been undecided.
As in not a lot of foundation companies have been taken to court.
Some have.
I think there's five or six instances now.
And we'll go over that in another part where foundation companies have, or DALs have been
sued.
To generate case law.
And then all the other little stuff, all the other little adjacent laws that have a part
to play, but are not subject to the CAAPE Companies Act, Foundation Companies Law and
the case law.
This is a regulation stack that is put together and furnished by the country of the Grand
Cayman Islands.
And if you want to be a foundation company, if the sandbox wants to be a foundation company,
it must abide by these laws to the satisfaction of the Grand Cayman Islands government and
ensure that it complies so that we can, we can have that, that legal protection that
a foundation company is afforded.
But you have all of these regulations that are supporting a foundation company.
Okay.
So that right there is, is the first part I wanted to go over for our research.
We went over the website, we went over the magnitude of the statistics, 121,000 companies.
We went over an overview of where does the sandbox DAL sit when it comes to liability
and where does it sit when it comes to the type of company that it is.
You know, it's an exempted foundation company and it is a limited company by guarantee without
share capital.
So already you're starting to hear these buzzwords, these buzzwords, and you're going to see a
lot of it in the regulation.
So this next part we're now going to go over in the research are all the laws and regulations
that are applicable to us, the sort of thing that we're paying directors and law firms
and management services for.
This is where the rubber meets the road on what does it mean to be a foundation company?
All right.
So the first thing where we are now, we're under resources, acts and regulations, particularly
acts and regulations, scroll down to where it says companies.
And then you're looking for the two key phrases we already heard.
Companies Act 2023 and the foundation companies law point to 17.
So the companies act is about 224 pages had to read through originally set in 2003, originally
published in 2003 revised 2023, the foundation companies law originally published in 2017
revised 2023.
Foundation companies law is 31 pages versus company act is 224 pages.
So it got way easier after I got to foundation companies law, but getting through those 200
pages, that was a little bit of a bear.
The good news is, is we're not going all over all 200 pages.
Now what we're doing is we're going to go over the summary that the key points that
I figured out, it's still 200 pages worth.
So there's going to be a number of slides, but it's not terrible.
When I ended up with the summary version, it was, I'm we're talking maybe a handful
of pages at this point.
So I was able to really, really pull it down to the most bare essential stuff that I think
you all should know about.
So the company's act has 20 Oh shoot, I don't remember what that Roman number is.
23, maybe 12345678.
123456789101112131415161718192021.
There are 21 parts to the company's act.
That's 224 pages.
21 parts.
These are the parts that are relevant to us.
One's here in blue.
Only 1234567 parts I found were really relevant to what we're doing here as a foundation company.
And you'll see already, you can see some of those keywords.
Constitution, incorporation, membrane of association, distribution of capital, liability, companies
associations, exempted companies, applicability of law of companies formed or registered,
beneficial owner registers.
These keywords we already read in the past 10 minutes when we looked at their website.
So you could already tell that there's going to be something in there for us to know about.
That's how you pick this apart.
You just start looking for keywords, patterns, and then then you can start reading what they
say about those keywords and patterns, it will start to paint a picture for you.
You can do it.
The only reason I can do it in the way that I'm doing is because as a contract negotiator
and program manager, I've had a lot of background in this sort of thing.
So I could read through it and there are there are still a lot of terms I don't know and
I'm not a lawyer.
But I've written a lot of contracts.
I've done a lot of contract stuff.
So a lot of these terms, a lot of these terms weren't new to me, although I had to learn
a lot just by reading through all of this.
So we're going to go through these parts and it's going to look a little bit like this.
So I have the Companies Act here, which you all can follow along if you go to, like I
told you here, Acts Regulations, click Companies Act.
And when you get there, here are the page numbers and the PDF.
So if you go to PDF page 17 or 22, you can find these things here.
What I did is I went, I did two things, three things.
I did three things.
So I green highlighted important terms or words that were important to pay attention
to.
So they're like most of their verbs and nouns.
And then I have blue text here for the meat of the takeaway.
What from this sentence do you need to know in order to understand what is they're trying
to say?
And then here anything here and blue highlighter is my own personal thought as I was reading
it.
Okay, so there are here the definitions, you're going to see a ton of a ton of green.
There's a little bit less green as we go along because the definitions is full of keywords.
But section two is the definitions and interpretation.
The definitions is where I go first whenever I read a regulation.
When they say a word, what do they mean?
The most important words are usually there in the definitions so that they can be sure
that you know it's well defined.
All right, so right off the bat, we're already getting hit with tons of stuff.
Okay, so authority.
Whenever they say the word authority, they mean Cayman Islands Monetary Authority, otherwise
known as SEMA.
Exempted company means a company registered as exempted under section 164.
So we already know we need to read section 164, whatever it is.
Just like down here, we already know we need to read section three, whatever it is.
So an exempted company means a company registered as exempted under section 164.
We already knew that an exempted company was a company registered as exempted because on
their website, they gave us a nice little picture.
And our articles of association told us under exempted company is where foundation lives.
So we already knew that part.
But now we're just adding to our knowledge base.
All right, next thing is an officer.
When they say the word officer, they mean in relation to a company, it includes a manager
or a secretary.
So those are already two positions that we're going to need to learn about.
What does a manager do and what does the secretary do?
A regulated business means a business which is required to be licensed.
That's already a buzzword.
What does it mean to be licensed?
So file that one away because that is one of the key things as to why we are what we
are at the sandbox, why things are the way they are.
So a regulated business means a business which is required to be licensed under one or more
of the regulatory laws and it says the C regulation laws definition.
Okay, so we're just going to skip down here to regulatory laws means any one or more of
the following acts.
And there was a bunch of them.
There was like 14, the three that stuck out to me.
It's a company management act because it already mentioned it in the the about me page on the
website, the security investment business law gets mentioned quite a bit later on.
And the director's registration and licensing act, which also gets mentioned quite a bit
later on.
Okay, so when they say the word registrar, they mean the registrar of companies appointed
under section three.
And we need to familiarize ourselves with section three.
All right.
Next up.
So that was part one.
All right, so I said there were seven parts, right?
We already just cleared part one.
Yay.
Part two.
Full of buzzwords here in part two.
Oh my.
So full of buzzwords, the Constitution, Corporation of Companies, Associations, Memo's of Association,
full of buzzwords already.
So in section five, it mentions and again, section two was definition of interpretations.
And I didn't find anything in sections three or four that I really needed to know.
So section five is what I skipped to right here on the slide.
So section five is the mode of forming a company.
All right.
It says those who subscribe, that's a very, very particular term, the verb.
So that term will keep on showing up in the regulation.
So it's very important to know later on what do they mean when they say subscribe?
It's not in the definitions, so already my mind is going, what does subscribe mean?
So those who subscribe their name to a memo of association can form an incorporated company
with or without limited liability.
Okay.
So it's kind of a normal statement.
The only thing that really perks up our ears there is what does it mean to subscribe and
what is a memo of association?
We already know what an incorporated company is.
We know what limited liability is from the website.
All right.
Moving on to section seven, the memo of association.
I should have highlighted that one.
There we go.
So the memo of association.
Okay.
The memo of association shall contain the name of the proposed company and where the
registrar office is.
Okay, cool.
So what we learned right there is that in the memo of association, whatever that's supposed
to be, it's going to contain the name of the company and where the registered office is.
Which let's take a look real fast just to show you all.
So we have a memo.
We're looking for the memo of association.
So if we go to sandbox.dow website, all right, and we go to sip number one, we know that's
where the memo is going to be.
All right.
So here it is.
Sip number one.
All right.
So when it loads, okay, so we're going down the bottom and let's go to the memo of association.
Looks like we need to go to sip number one for that.
Oh, sip number two.
So in sip number two, there's the memo of association.
Okay, so let's click the memo of association.
So we're referring to this right here.
So the law says that the memo of association shall contain shall means must you'd have
no choice shall contain the name of the proposed company and where the registered office is.
It may also specify objects, what the proposed company is to be.
Objects is another specific word.
Objects sounds like purpose, but we'll see.
Let's look at the memorandum of association, the sandbox foundation.
Okay, there's a registered office right there on the front page.
And let's see if we can eyeball something called objects.
So the name of the foundation company is a sandbox foundation and it is registered here.
So already we met the law on that part on that part and here, hey, paragraph three,
the objects for which the foundation company is established.
There are the objects.
So we're going to go over all this in detail and parts two or three, whichever one ends
up being looking at these documents.
But first, all we're worried about is how does this apply to the law?
What does the law say that stuff must look like?
And there it is.
So that's how you can start to triangulate and associate things together.
Section eight, company limited by shares.
So the section eight of the Companies Act says, the capital registered in the company's
creation may be divided into shares.
Okay, so that's not bad.
What does it mean to be divided in shares?
Well, first of all, let's keep in mind that the very first sentence says, a foundation
company limited by guarantee without any share capital, but shares in a company are so well
known that I had to know what that was all about.
And so what they're referring to when they say capital is capital can be money or assets
or equipment.
So it could be money that they invest in the company.
It can be a building.
It could be if if cryptocurrency is considered assets in some countries, cryptocurrency.
But one thing I didn't know is what are shares.
And when I learned what I when I searched shares, shares are units of ownership.
So if you have one share, normally have one unit of ownership.
And shares and stocks are used interchangeably, although they're technically different.
So look at Investopedia.
Do you want to get a little bit more into what that all means?
But I realized when I was reading this, I needed to remind myself what shares mean.
So there we go.
Capital is money, assets or equipment and shares are units of ownership.
All right.
So that would be pages 17 through 22, and sections one through eight.
So let's keep going.
Section nine of part two, company limited by guarantee may have the liability of its
members limited to what they contribute to the company known as a company limited by
guarantee.
That's what we are.
So when we read the the Constitution and the articles and the memos for the foundation
company that are in six, one and two, when we read that for parts two and three of the
podcast episode later on down the road, we're going to be expecting to see how it spell
out what it is that each member contributed to the company to limit their liability, meaning
what they gave.
So maybe someone gave $50,000.
That $50,000 is the limited guarantee that the member is on the hook for should the company
go belly up or should it have to pay its debts, all stuff that the companies act and explains
later on in later sections.
All right, section 10, the memo of association may be altered.
Interesting.
So we know that they have to have a memo of association.
Now we're about to read how much can they alter it?
A company may by special resolution alter its memo of association without restriction.
So almost entirely, they have almost entire flexibility to alter their memo of association,
which is very good to know.
So as they develop these core documents that they're required to by the law, they're allowed
to change these documents to fit the business model.
So you're starting to see a lot of flexibility for a company that is limited by guarantee
and has a memo of association.
Section 12, signature and effect of memo shall be signed by a subscriber.
There's that word again, is binding on the company and members.
That's an interesting statement.
What that says is that when the subscriber, wherever that subscriber is, signs the memo
of association into into effect, it is binding on the company and its members.
So we're going to be interested later on to know at what point do the members become members
by the members right away.
Does a subscriber or someone appoint these members?
What's going on?
Who is the subscriber?
All right, section 20, articles, when I say articles, I mean articles of association,
prescribing regulations for companies.
A company limited by guarantee shall be registered with both a memo and articles signed by subscribers
that prescribes regs for the company.
Okay, so what we just learned here is that not only does a company limited by guarantee,
which is what Fountainvaite Sandbox Foundation is, must have a memo of association, it must
also have an article of association, and both of those things must be signed by the subscriber,
whoever that person is because we still don't know.
So when I read the memo as an article of association for the Sandbox, I'm looking, I'm going to
need to know who that subscriber is because apparently they are very important to this
process.
Let's take a sneak peek at who that is.
Let's take a look at subscriber.
All right, two hits already.
What's the first hit?
We, the subscriber of this memo, wish the Fountainvaite Sandbox Foundation company cool.
That's in line with the regulation and address and description of subscriber is this.
It's that corporation and it's this person.
Oops, you can't see what I see.
Hold on a second.
There we go.
So it is address and description of subscriber at this address for this company and this
person.
All right.
So it tells me this person is a subscriber because of their authorized signatory for
this company.
So this company is a subscriber, authorized signatory is this person, and the subscriber
is the one that kicks all this off.
So let's do another sneak peek.
Where are the members?
Members, talk about members, liability members is limited, foundation company.
Okay, so it doesn't spell out who those members are.
So we don't know.
But we do know who the subscriber is.
And apparently that is the person who starts the company.
Okay.
And they prescribe the regs for the company, meaning they make up the rules.
So that subscriber is hugely important to a foundation company, to a company, not just
a foundation company, because right now we're still in the Companies Act, which is all companies.
All right, so every company apparently must have a memo and articles of association signed
by a subscriber who prescribes the regs for the company.
Okay, starting, starting to come together.
So section 21 regulations required in case of unlimited company or company limited by
guarantee.
So that company limited by guarantee is us.
So I'm interested in this section.
What does it say?
The articles, so that's articles of association, must state the number of members being registered
with the company.
Okay, so this just tells me that while the memo told us not much about the members, remember
over here, the articles should.
Okay, so let's go back to our SIP number one, click on articles of association.
All right, and let's just very quickly look where the members 13 references to a member
and it starts talking about the founder.
Okay, so the founder has the power to do these things.
Here's the members, the initial subscriber to the memo of association shall be the first
member of the foundation company.
Well, there you go.
And then they may admit members and they may admit as a member any person who has applied
for membership in writing.
Okay, so it doesn't say there are any more members and the law says over here, the law
says they must state the number of members.
So what I read right here is that there is one member and what was that member?
The person who signed the member animal association, which is this company authorized by this person.
So there you go.
That told you exactly what you need to know to know how did our how did our foundation
company form.
All righty, next section, section 23, printing, stamping and signature of articles.
There I go again, not highlighting everything.
So that keyword right there, articles shall be signed by each subscriber of the memorandum
of association.
So what that tells me is that when I see those those signatures that I can be sure that that
is the full list of subscribers of which there is one, the one company.
So there are no other subscribers.
That also tells me that there can be more than one subscriber.
So because the the memo of association had one subscriber and the articles of association
association told us that that subscriber is the first member, we know there's one member
and one subscriber at the time this was created back in November 2023.
You see, you see how this is coming together.
It all starts to paint a picture and a pretty easy picture.
Once we get to the end, then it's like, oh, okay.
All right, I get it.
I get why everyone lives next door to each other on a small island in a business district
of a company that's well known for its robust business ecosystem with over 121,000 companies
Yeah, all right.
I'm starting to get it now.
Okay, so section 24, our alteration of articles by special resolution.
We talked about special resolutions or we saw that word earlier where in section 10,
the memo of association may be altered by special resolution.
Okay, so the alteration of articles by special resolution can happen when a company may by
special resolution alter or add to its articles.
So just repeat itself really just said that you can alter your articles and your memos
by special resolution.
Okay, that we define special resolution already we didn't see it defined.
So special resolution could mean anything that something we'll probably have to look
at in one of our documents.
There it is right there special resolution means a resolution passed at a general meeting
of the foundation company by not less than two thirds majority of votes cast or by resolution
writing on article 9.7.
Boom, done.
And all I had to do was look at the foundation, the sandbox foundation articles association.
How about that, which can change itself and its own rules by a special resolution, the
two thirds majority.
Cool.
This to me is fun.
This is exciting.
I am an I'm nerd now.
Because it's education, it really paints a picture, it shows you what is that you need
to do to comply with the law and why you see things go the way they go.
Why does everything need to go through legal?
We'll find out later, because there are pretty stiff penalties for getting it wrong, jail
time and pretty hefty fines, all sorts of stuff.
All right, pages 30 through 35 of the Companies Act, section 25 talks about the adoption and
effect of the articles of association.
If there are other if there are articles, they shall be signed by each subscriber.
Okay, that was pretty much the only thing I could find there that talks about well,
okay, you adopt an article association when it's signed by the subscriber.
All right, fine.
Good to know.
Let's keep going.
Section 26 registration, the registrar.
I remember in the in the definition, the registrar means a registrar of companies appointed under
section three.
All right, we didn't find anything interesting in section three.
So the back where we were, where we here is section 26, the registrar shall make the register
available for inspection by any person on payment of a fee specified in part one a of
schedule five.
We'll go into that later.
But but spoiler alert, if you go to 200 page 209, and you look at that part a schedule
five, it's a $50 fee.
So you pay a $50 fee and you get to see that the register of people who are registered
to a company.
And I showed that on episode was it was birth of the Dow episode is what it was.
And that was episode number 34.
So in episode 34, I show the what it looks like inside that portal.
That was that tool, the business platform tool I mentioned earlier, you can search people.
And if you pay a fee, you can see what the companies are, what the names are.
So that that complies with the law.
The registrar shall make that register available for inspection by anyone who pays that $50
fee.
And all you need to do is just make an account.
Just create an account.
Email address, password, name, pay the fee, you get the you get that register.
So shall pay a fee.
Also when filing a memo of association per part one of schedule five.
Again, if you look at page 209, you'll see that the subscribers for the foundation paid
$600 to file the memo of association with the registrar.
So that's how you comply with the law.
Pay the fee, fill out the form, give it to the right person.
Boom.
Alright, consequences of incorporation under section 27 says upon filing the memo association,
the registrar shall issue a certificate and from the date of incorporation, the subscribers
of the memo association shall be a company body authorized to act.
So what does that say?
When when the company receives their approval, their their certificate, I didn't even say
that when they receive their approval from the registrar, the registrar will give them
a certificate saying, yeah, you're a company now.
And then the date of incorporation in your memo association is this official day that
your company starts.
So let's look at the memo of association and when does it start for us?
Looks like you'll see that.
Hold on.
Just a second.
Can you read that date?
Right there.
November 20th, 2023.
That is when that is when the fifty dollar.
It's like a fifty dollar stamp was paid.
Filing number on 20 November 2023.
Is there any other date here that said when it was going to be incorporated?
I didn't see any other date.
Let's look at the very bottom.
The last page is normally where you find that.
It will do it'll say something like incorporated.
There it is.
There's your incorporation date.
Twenty twenty three.
Three, the law, read the law and then you can start to piece together what it is you're
actually reading when you go read these documents.
It's really not that scary once you get through the whole what does this term mean?
What does that term mean?
How do these terms all go together?
It's very doable.
Okay, that's section twenty seven.
Section twenty eight.
Lack of capacity or power.
Ultra V. Res.
I didn't know what that word was, so I just looked it up on Google.
Ultra V. Res.
Vires.
How do you say this?
Ultra Vires.
Ultra Vires is the act is acting or done beyond one's legal power or authority.
Okay.
So doing something you're not authorized to do.
So that's what this section is referring to.
No act of a company shall be invalid because it didn't have the capacity or power to perform
the act.
That's a fascinating statement.
That really stuck out to me.
What that means to me is that even though a company had ultra Vires, no power or authority
to do it, it doesn't automatically make the companies act invalid.
So if the foundation company did something it wasn't supposed to, that doesn't just mean
that it gets nullified.
But that sentence didn't stop there.
In section twenty eight, it says, but the lack of capacity or power may be asserted
in proceedings by a member or director against the company.
So it can be used as an argument, maybe in a court of law or maybe in a dispute like
mediation or arbitration or even just a resolution that's done in a business meeting.
They may assert that the company, what it did had ultra Vires, Vires, Vires.
Let's hear that word again.
Ultra Vires.
A lot of legal stuff going on over here.
So but that doesn't mean that just because it's not automatically invalid that they that
the company can just do whatever it can be challenged.
And what's implied here, but not ultra, but not said directly is that it could be challenged
successfully as long as they go through a process of all sorts of things.
All right.
So section thirty restrictions on registration of certain names.
All right, so this part was interesting and unsurprised.
It was surprisingly connected to us.
No company shall be registered by a name which contains the word gaming.
I just thought that was interesting.
So we can't say Sandbox Gaming Foundation has to be sandbox foundation.
Who knew?
The more you know, section thirty two company within power to issue bearer shares, not to
hold lands in the islands.
All right.
Here's where we start getting into capital.
Equity capital with respect to a company includes shares, stock and script.
No script was but Lynn later on a sentence says entitles the owner to receive profits
or to share and distribution of assets on a winding up.
So some of those keywords are important to us.
So equity capital because it's plastered on top of our foundation company, right?
There's no share capital at all.
All right.
But if we did have some, it would entitle the owner to receive profits.
But what's one big asterisk that we learned when we read the company's foundation description?
All right, let's go back and look at it for a second.
Very, very important part where I brought up the nonprofit.
Where was it?
Right here.
A foundation company is prohibited from paying dividends or other distributions of profits
or assets.
So we already know that this this page section in the Companies Act referring to how a company
with equity capital allows the owner to receive profits.
We know that's not going to be applicable to us, but it's still interesting to know
just in case.
All right.
And here's a question that was burning as I was reading this, right?
Does the share capital apply here?
Share capital was a different word than equity capital.
I couldn't quite figure out if there was a link there.
Does share capital mean the same thing as equity capital?
I don't know.
So does this mean that the sandbox foundation gave up the right to entitle the owner to
a variable right of participation in the profits of the company?
I think the overriding principle here is that the foundation and company can't distribute
profits, but it still was a question that that popped up as I was reading.
It might just be automatically.
Yeah, we can't do that.
Law says so.
Okay.
So that was page 30 through 35, which was section 25 through 32.
Okay.
Now we're out of part two.
Again, there were seven parts that we need to work through.
We're already in part three now.
Part three says distribution of capital and liability of members of companies and association.
And after this, we only have like five more slides to go through.
And then we go through the next regulation stuff and it only gets shorter after that.
So this was the biggest one.
Once we get through this part, then smooth sailing after this.
So section 36 says power of a company to pay commissions.
Part that interests me, interested me here was a company always has the power to pay
a commission to a person subscribing or agreeing to subscribe.
Now, why is that important to know?
Because it helps paint a picture for how much.
How can you pay someone?
And where did we see that?
Where did we see that in one of our SIPs?
What is this one?
SIP number two, the Sandbox Foundation.
So if we search a dollar sign, right, legal fees and related fees, $50,000.
Director services, $30,000 annually.
So the director, we didn't see any word of the director being a subscriber.
Okay.
We don't know that yet.
We don't know for sure who it is, but those related fees, I bet you we paid the subscriber
a fee somewhere between one to $50,000.
Most of that might've even been legal fees.
I'm not sure.
But there you go.
Registered office fees is part of that.
And the registered office is the subscriber.
So we paid a subscriber, a company to subscribe for us, the Sandbox Foundation into existence.
And we paid them a fee for that.
And as part of the law allows, we can do that.
Companies Act authorizes a commission for companies to pay their subscribers.
At the time, I didn't know what that meant.
But now looking back on it, it's what I just said.
Yeah.
The part that I still need to figure out though is, does this mean that the subscriber reference
is no longer a part of the foundation company?
I don't know.
I have to ask.
Hey, that's what I need to ask here.
Is the subscriber still a part of the Sandbox Foundation company?
Right.
So that's probably really what I want to know here.
Okay.
Section 38.
The definition of a member.
Here we go.
We've been wondering what is a member.
The subscribers of the memo of association agreed to become a members of a company and
shall be entered on the register.
Oh, okay.
So the subscribers become the members.
That's I mean, that's that's clear.
It's simple, but fascinating.
So the subscribers that we pay are now the members of the company that they formed.
All right.
So nothing to be learned about.
You're just learning about the law.
What does it say?
The register of members on section 40 says every company shall keep a register of the
names and addresses of its members, the date when they became a member, the date when they
cease to become a member.
Now, remember back in the previous section, all you need to do is pay $50 to see to inspect
that register and the registrar shall make it available to you.
So we see now that not only shall the registrar make the register available to you, but the
company is required to keep an updated register.
And there's certain there's certain dates like 30 days after such and such happens,
you must update the register a month after or two months after whatever you must update.
So it has rules for how that that must go down.
All right.
And then we get into voting rights.
What does voting rights mean?
It means the conference on shareholders.
One second.
The conference on shareholders, including the right to appoint or remove directors.
All right.
So we're getting into how do directors come to be?
Well, it looks like directors come to be through the voting of shareholders.
This is a new term.
Who are shareholders?
We don't know yet.
We think they might be members.
Because at this point in time, I haven't seen their name.
But let's do a little cheat and see if shareholder pops up in one of our our documents.
It does not.
So already you can tell this term needs to be clarified.
So if the shareholders, by the way, which we don't have any share capital, right.
So who are the shareholders here?
Don't know yet.
But if I had to wager, it's probably the members.
I'm sure.
So it goes on to say in section 40, in the case of an entity not having a share capital,
here we go.
I have to answer the question on members of vote at general meetings of the entity.
And there's your answer.
So when you don't have a shareholder, which is what the Sandbox Foundation is without
share capital, the entity that can vote in place of the shareholders are the members.
And who are the members at this point in time?
The subscriber.
The subscriber who signed that document is now the member who can then vote in a meeting
to appoint or remove the directors.
You see how this is going.
It's cool, huh?
All right.
If a company doesn't have general meetings, the rights are conferred upon shareholders
or members.
OK, so this takes it a step further.
If there are no general meetings, then even though there aren't going to be any general
meetings to appoint or remove directors, the right to appoint or remove directors are now
given to the shareholders of the meeting or the members.
I think what that means is that there are no meetings required.
I'm not sure.
But one of the questions I had was, do subscribers become members upon initiating a foundation
company?
Oh, that was an early one I had.
Yes, yes, that that part we already answered.
Whoops.
And who are shareholders when a company doesn't have share capital?
We answer that one right here.
It's going to be.
It's going to be the members.
So these are questions that I had.
I wrote down as I was reading, not realizing later on that I answered the questions.
So we're going to put.
Yes.
Right.
So the answer is yes.
Who are they?
When you don't have share capital, the members.
Cool.
So that's section.
That's part three.
We're still in part three when we go to section 44.
That's the inspection of the register.
Register of members can be kept at a registered office or anywhere else it does business.
Point to that.
An exempted company is not required to allow people to inspect the register.
Now this is important.
The important distinction from what I said earlier, how the registrar keeps.
Where is it?
The registrar.
The registrar shall make the register available for inspection on a fee.
So what is the difference here?
I think what this is saying is that while the registrar is required to furnish this
to you upon paying the fee, the company is not.
Okay, so an exempted company is not required to allow people to inspect its own register,
but you can still go to the registrar to pull that for a fee.
And I think the reason why this is, although I'm not sure, is because this is for free.
You can go to a company, I didn't see any fee associated with going to an exempted company.
Say, hey, let me see your registered books.
I don't know for sure though.
So that's why I asked, why is this?
Why is this a thing?
Section 49, liability of present and past members of the company.
If a company is wound up, which took me a while to figure out, the word wound up appears
so many times, it appears in both the articles in the memo.
And I couldn't figure out when the word wound up.
It means liquidated, meaning closed.
So if a company is closed down, what they call wound up, then every member is required
to contribute to the assets of the company to satisfy the debts of liabilities.
Hence the limited by guarantee.
Those members guarantee an amount that they are contributing to the company.
And if the company gets liquidated, closed down, or whatever, can't pay its debts, then
those guarantees kick in and that satisfies the debts and liabilities.
That's the way I read it.
Here's the part that really, really caught me off guard.
All right, past members were active up to one year prior, contribute to the debt, contribute
if the debt was occurred while they were a member.
Really?
So if you remember and within a year of you leaving, a debt was incurred, I'm sorry, hold
on.
If you were a member and a debt was incurred while you were a member, it doesn't say there
was limitation at any time you remember that debt was occurred, up to one year later, you
may be called upon to satisfy those debts.
That's fascinating.
That's an interesting clawback right there.
All right, and the next it goes on to say for companies limited by guarantee, which
is us, no member is required to pay more than what the memo of association cited as guaranteed.
Good to know.
Let's take a look for that real quick.
Guarantee.
Okay.
So, and what does this part say?
It talks about foundation company shall have perhaps we didn't establish some important
to what we're doing.
Wish the form of foundation company limited by guarantee.
An amount equal to the amount of the guaranteed amount made by each member in accordance with
paragraph nine.
Let's look at paragraph nine.
Each person who is a member undertakes to contribute to the assets of the foundation
company, the event being wound out in about one year afterwards.
They're just repeating the law at that point.
For payment of the debts and liabilities of the foundation company contracted to blah,
blah, blah, blah, blah, blah, such amounts as may be required not exceeding the sum of
$1.
Okay.
So, interesting interpretation.
I guess there's nothing wrong with saying that the guaranteed amount is $1.
Okay.
If that, if that's what meets the law, then they're within their rights to do so.
All right.
Section 57 meetings.
A meeting may start with only one member or director present.
So we know that subscriber became a member.
It seemed like that was the only member, but the only subscriber, which became the only
member, which then may appoint directors or officers and no, no two person thing is needed.
All right.
Section 57 meetings going to say memos and articles of association may dictate how all
this goes.
And they do.
If you, if you read those two documents, it will tell you how that goes.
We'll do that again.
We'll go through those memos and articles in parts two and three of the podcast episode
somewhere not today.
Section 58 general meetings.
A general meeting other than an exempted company.
So not us shall be held at least once a year.
And that struck me as well.
It appears as though exempted companies aren't required to have meetings at all.
As I should add a big old question mark to that.
What does that mean?
I guess you can, it means a plain reading, but what does that translate into?
There are no meetings at all, which kind of, kind of makes sense when it said earlier,
right in our, in our previous slide where if a company doesn't have a general meeting,
then the rights, so the voting rights are conferred upon the members who was the initial
subscriber.
So this initial subscriber who becomes a member who is allowed to not have a meeting because
their executive company has the voting rights to appoint directors without any meeting.
Okay.
So you're starting to learn how this goes.
Section 60 definition of special resolution.
A resolution is a special resolution when it has passed by minimum of two thirds of
eligible members.
We already read that in the memo, but this is where it's coming from.
The law says a special resolution is it has to be passed by minimum of two thirds of eligible
members.
So if you're only one member, then you voting for it meets the two thirds.
If you're two members, it doesn't meet two thirds because it's 50%.
One one half.
If you're three members, you need two of the three, two thirds.
So you see how this goes.
That first person has a lot of power to decide who, but as you increase, you need more and
more people.
All right.
Section 61 provisions where no regs regulations as to meetings unless otherwise specified,
every member shall have one vote and be given five days notice of a meeting.
Okay.
So what we learned is if you do have a meeting, you have to get the members five days.
So maybe someone doesn't want to wait five days, right?
Like the subscriber who just became a member who has the voting rights and they're not
required to have meetings so that they want to meet, they want to get themselves noticed
for five days for a meeting.
So they just go ahead and elect someone in right then and there because they're allowed
to per law.
That's one way to do it.
I have no idea how it actually went for the sandbox foundation, but according to law,
that's possible.
All right.
So let's take just 50 through 59 of the company's act.
All right.
We're halfway pages 111 through 114.
We're now in part seven.
Okay.
So we went from part three to part seven.
There wasn't anything that I needed to really talk about in part five and six.
So part seven is the coup de grace for us, exempted companies.
So pay close attention because this is going to lay a month to that reg stack.
It's going to lay a solid foundation.
But what happens after this?
What happens to us?
Exempted companies section 163.
So what I noticed is that it starts with section one and the definitions and it goes all the
way down to sections 200 something at 266.
And it doesn't matter what part you're in.
It just keeps on being sequential.
So that was really cool.
I like that.
That was very easy to figure out.
So if I'm in part seven, I don't have to start over with section one.
It's just section whatever it was carried over from from section six.
Awesome.
I love that.
Anyway, section 163.
What companies may apply to be registered as exempted companies?
This is fascinating.
How do we become an exempted company?
Any company carrying out objects outside the islands to which section 174 refers.
We haven't hit that yet, but you can already see it's right there.
We're not far away from it.
All right, section 165 declaration by proposed company.
Subscriber must declare section 163.
And what does section 163 say that we just went over?
That the company is going to carry out its objects outside the islands.
So that subscriber must declare it.
And did we declare it?
Let's go the word outside.
Not there.
What about here?
Outside.
Not there.
So where do we declare that?
Maybe let's look to the word objects.
And let's go to the first one.
No, it's not there.
No, not there.
No, it's not there.
We're in the wrong place.
No.
We're in the memo now.
No.
There it is.
The memo of association paragraph four subsection O Oscar to do anything else within the Cayman
Island law and regulation which promotes or may help to promote the objects which the
company is established.
Actually that wasn't what I thought it was.
Huh.
Now they use the word islands.
So maybe there.
Okay.
It was it was in paragraph five of the memo.
The foundation company may not carry on a business for which a license is required under the
laws of the Cayman Islands unless duly licensed.
That was another that was another rabbit trail that went down.
And that's why the reg stack is so wide because there's more regs that we have to go through.
Luckily they're not that big.
But there are other things that we have to go through.
So what this tells us is that the descripts driver must declare that the company will
not function inside the island except where licensed or waived or whatever.
All right.
Section 168 re declare sections 165 and 174 every January.
Also must re declare that there has been no change to the memo or articles or the memo
or association.
But the memo.
Oops.
I think that's supposed to say the memo of.
So no change to the memo of association.
So that subscriber must declare every year or the very least a member unclear which one
must declare that they're not carrying business on in the island and whatever section 174
is about to say.
We're almost there.
Section 169 pay an annual fee.
The fee must be paid every January.
Her part for a schedule five and that schedule five is on page two hundred twelve of the
Companies Act and that fee is seven hundred bucks.
Okay.
Fair.
All right.
What's up next?
Section 174.
In a great critical fame and some of the earlier sections mentioned section 174 here we are.
What is section 174 say?
Shall not carry on trade or business in the islands except to further the business of
the exempted company outside the island.
What does that mean?
We'll go over here in a second.
Exempted companies are allowed to contract with Cayman Island service providers.
What is that word service providers that we were looking at earlier?
What does that mean to carry on business outside of the islands?
So I looked up what a service provider mean.
Just you can look at it in the company's law.
It means licensed secretaries, legal counsel, directors.
Does this sound familiar?
Those are the people that are part of the foundation company for the sandbox.
Right?
These people that we thought were right next door to each other, perhaps a conspiracy was
afoot.
Turns out no.
The law says they must be properly licensed and authorized to fulfill those functions.
And they all live in their license in the Cayman Islands.
So there you go.
That's why you're seeing what you're seeing here.
And I would not have known that had I not read the regs act, by the way.
I thought maybe maybe there's something going on there.
Maybe someone knows someone and they're they all work together.
Business requires trust.
If you've ever been in business, you know that.
So there must be a trust factor there.
But actually, it seems like there's more to it than that.
What it seems like is that there are certain requirements and regulations.
We haven't gotten there yet, but we're going to get to the licensing requirements that
these positions must have and that the people that we selected that that are our Dow admin
team selected, whoever it was, our subscriber selected was properly licensed in accordance
with the company's act and regulations that we just finished reading.
Not finished, but that part that we just read.
How about that?
Oh, are.
So there you go.
Exempted companies cannot, shall not carry on trader business except, except to hire
service providers to help them do their job.
So legal counsel to help advise them of legal for the Cayman Islands law.
And secretaries to file paperwork.
Directors, subscribers, members, the sorts of things that this law has already spelled
out for us.
How about that?
It's looking less and less like a conspiracy.
Every section we read seems like there are good reasons for why people were selected
to do what they do and that those people don't work for free.
They're there.
I wouldn't expect them to.
They do a service.
All right, section 176, the penalty for carry on business contrary to this part.
Whoa.
Here's why it matters.
An exempted company who carries on business contrary to the rules, meaning exempted company
that that carries on trader business inside the license where they're not allowed to,
may be dissolved and every director or officer find.
It seemed like the fine changed from like a thousand dollars a day.
Some of them depend on like sometimes the director was fine, like a hundred thousand
dollars.
It's a, it's a lot.
It adds up a lot.
So and we already know that the director was compensated compensated what right?
50, $30,000 annually.
Yeah.
So 30 days of noncompliance, the director has already eaten up their $30,000 annual
salary.
Right?
So they have an incentive to be compliant all 12 months of the year.
I didn't even put that together until right just then.
So let's, let's, let's put that one in here.
So the sandbox Dow sandbox foundation director is paid 30 K only takes 30 days to.
To exhaust directors salary.
So they have every incentive to do the job correctly.
That's why things take so long because the penalty is pretty steep.
That foundation company could could go away in a hurry.
Alright next part.
So now we're in part 10.
Alright application of law to companies formed or registered in the islands section 170 section
196 says application to existing companies companies act shall apply to companies limited
by guarantee.
Okay.
Got it.
Part whatever that is.
Beneficial owners registers.
It's part X V I I A.
So let's take a look at that.
Google should know that says.
What is.
Heart.
In numbers.
Oh man it's telling me to look at a chart.
Hold on.
Let me show you what I'm looking at.
So we're looking at this chart.
Let's copy paste.
Copy paste this.
Alright so what what section is this.
Oh it doesn't show me.
Alright so we know it's more than 10 right.
So where's where's the V where's the V.
No here's the V that's 18 and it's 1111 a this one doesn't have an A on it just says
X V 1 1 or I 17 so I don't know what the A means but let's just say 17.
Okay we might need that later so let's keep that open.
Alright.
Part 17 beneficial owner registers section 244 is interpretation.
Oh finally we get to these service providers.
What time corporate services provider means an individual or legal entity under company
management act.
There's our next breadcrumb trail.
It's like the third time we've seen the word company management companies management act.
What is it.
What does it say.
We're going to have to find out.
So companies corporate services provider means an individual or legal entity under a company's
management act or is licensed to provide registered offices services.
Okay.
What does an approved person mean.
It means a person that is regulated registered or holds a license in the islands.
So we could probably guess right that that that licensor is SEMA the Cayman Islands Monetary
Authority it already mentioned licensed by SEMA.
This is probably what they mean.
The approved person so who are they.
We don't know quite yet but we know that there are approved people.
There are corporate services providers.
They're under this management act and the approved people are licensed probably by SEMA
are relevant interest means a person holding shares voting rights with a right to a point
with directors.
Section 247 through 257 was a big list.
The big old big old list and it would basically spelled out all the company and member duties
that they had to abide by and I just put out the first parts of each of each of those sections.
So there was a duty to identify beneficial owners.
There's a duty to identify relevant legal entities.
You need to give notice to registrable persons due to supply information to SEMA and all
their regulatory agencies duty to establish and maintain beneficial ownership registers.
That's for to go to the registrar due to keep register up to date.
So once you put a register in into action you have to keep going with it.
Cool.
Section 265 to 266 talks about right to issue restrictions and notices and this effect.
Here's where we start putting those words that we defined earlier in action.
Corporate services provider may send a restrictions notice to a person with a relevant interest.
What in the world does that mean?
It means that the person, the legal or individual entity under the CMA who's licensed to provide
office services may send a restrictions notice, whatever that is, to a relevant person who
holds share voting rights or the right to appoint or remove directors.
So who is that?
That would be the subscriber who became the member.
They held the voting rights to to appoint or remove directors.
So apparently a corporate services provider who is a licensed person or entity may send
a restrictions notice, which we don't know what that is yet, to a relevant person who
started the company, foundation company, ours.
All right.
Restrictions notice will halt any transfer agreement rights or payments or shares issuance.
Wow, that's a lot of power.
That restriction notice apparently can stop all the business activities of a company.
And apparently the person who is licensed corporate service provider can do that.
I don't know who these people are yet, but they're pretty important person in this process.
So what I what I thought was I need more clarity on that.
That's a lot of power.
And under any.
What else is there to that?
This is a lot.
OK, so then we move on to oh gosh, let's go back to our room and numeral X, V, I, I, I.
Take a look.
There it is.
Part 18.
Miscellaneous.
So section or schedule one a required particulars require particulars to be included in the
memo of association.
There's a bunch of stuff you to put in the memo, a lot of which we already went over,
which is what is the name of the company?
Where is it registered?
All this stuff.
All right.
So it was a big long list.
Schedule five is where we got all the fees and I already spoiled them earlier.
You had to pay $50 to see a company's registry to pay $600 to file stuff and that sort of
thing.
The dates for registering an exempted company and filing the memo of association are located
there.
That's on pages two oh one through two nine.
The company's act.
And last but not least, the end notes.
Wasn't its own section.
I just said in notes and whatever in there was that the company's act used to be called
the company's law from about 1964 to 2020.
Now that part threw me for a loop because in the earlier discussions of companies act,
it identified it as the company's act of 2003, not 1964.
So I have no idea what that's supposed to mean.
Apparently the company's act has been was the company's law and it started in 1964.
It then became the company's act.
So it was renamed in 2021.
Gee whiz information that becomes a little bit important later on.
And when we go over the whole terminology table, you'll see why it doesn't get very
confusing when one act calls it company's act.
Another act calls it company's law.
Then you start talking about company's management act and company's management law and foundation
company act and foundation company law.
What in the world are all these terms supposed to mean?
Well apparently law used to be called the act used to be called the law.
So it's now known as the company's act used to be called the company's law.
Same thing.
And also it started in 1964, I guess.
So that was interesting.
All right.
So guess what?
We're done through the company's act.
We went through it.
That was only one part.
That was that was one law, but it was the biggest one.
It took us the longest to get through.
The rest of them will go much, much easier.
And we will we will go through all of what we originally went through.
So when I said that reg stack was really important to understand, to make sure that you are complying
with the law and that the government is happy with you so that you can continue to do business.
Well, the biggest part of that, the company's act, we now understand there are some pretty
key points.
There's a subscriber who completes the paperwork.
That subscriber becomes the member.
That member can then vote in the director.
The director can then do meetings or not do meetings, apparently.
And as long as the subscriber or I guess the the registered office or the company secretary,
we're not sure yet.
We have to read more law to figure that out, has to declare every year that they are still
an exempted company.
They have not conducted business inside the law.
And that not that the memo and the articles have not changed that were originally incorporated
the company.
Some pretty fascinating information there.
It's a pretty interesting TLDR.
So that is that.
That's part one.
Now we're going to go into.
Yep.
So there's Companies Act of 2003, but apparently 1964.
Now we're going to get into the foundations company law.
So in our TLDR or the company's act, it was a pretty interesting, not wholly complete
for us and the foundation, but it definitely laid a groundwork for what was required of
the officers and the members of any company.
There were a number of exemptions in there.
And because we are an exempted company, as we explained, as we saw earlier, very beginning
when we traced rooted ourselves.
This one here, where we trace rooted ourselves under exempted foundation company.
There are a number of statements in there that were that specifically spelled out the
exemption part.
So in our reg stack, we have our company's act, which we just went through.
Now we need to read the addition to that company's act, which identified itself as the foundation
company's law or the FCL.
All right.
So that's what we're going to do next.
We're back in on the website.
We're going to resources, acts and regulations.
Click that down, go down below and you'll see foundation companies.
Okay.
It's 31 pages.
So a massive difference from 224 pages of the company's act.
That's good news.
So no matter how this goes down, we're only going through 30 pages.
Cool.
We deal with that.
And because it's an addition, you can expect to see a lot of terms or will you?
Because you'll see the terms vary.
They're similar, but they vary.
And that's why I had to end up doing a terminology table.
Show you what that looks like real fast.
We're only going to see it for like a few seconds because we'll get to it.
There's a terminology table I had to do because the way they differed so much from each other
like this.
All right.
So we'll get to that.
We'll get to the TLDR.
But geez.
Okay.
So we're going to foundation company.
There are only six parts this time with some schedules.
Schedules just mean like addendums and attachments.
That's where I think all of them are relevant to us.
So, so we have to go through all six parts and all 30 pages because we are foundation
company and this is the regulation for foundation company.
All right.
Let's look straight off the bat at the preamble.
So the preamble is in part zero.
I didn't really identify itself as a part.
So I guess in the end you kind of have seven parts, whatever.
So the preamble, pretty important thing I saw a law to allow certain companies to be
registered as foundation companies for their constitution, operation, management, and winding
up.
There's that liquidation term again.
And to provide for incidental and connected matters.
Inacted in 2017 revised in 2023.
Is this another thing we're going to find out?
What's 1964?
No, short answer is no.
It really was an act in 2017.
So but that's still funny to find out.
All right.
Part one definitions.
So section two is where our definitions are a term used in this law, but not defined in
definitions has the same meaning that it has in the company's law.
Now this is where I told you about the whole companies act company's law thing.
So before 2020 and 2017, the company's act was called company's law company foundation
company's law was first enacted in 2017 before 2020.
So it is now saying the word company's law.
Okay.
So now we know when they say the word company's law, they really mean companies act.
So the CA.
Okay.
Put that put that one in your brain.
So what this is saying is that a term used in this law that isn't in the company's act
has the same meaning as if it were in the company's act.
No, no, wait, wait, hold on back up.
I just stumbled all over myself.
A term used in the foundation company's law, but it's not defined here in the definitions
that same term that is using defined in the company's act is the same thing used here
in the foundation company's law.
All right.
So here's the perfect example.
Constitution if the con the word constitution is defined in the company's act, but not found
to find in the foundation company's law, then that law has the same meaning in both the
foundation company's law and the company's act.
All right.
So the word winding up.
Same thing.
If we don't find a definition for it in the foundation company's law, but we do find a
foundation definition for it in the company's act.
That meaning is also transmuted or absorbed in the foundation company's law by default.
Okay.
Good to know.
That's good to know.
All right.
So what did I say here in the company's act paid 219 legislative history.
Oh, oh, that's where I said.
Right.
In the legislative history, it changed from the company's laws, the company's act in 2021.
Okay.
Whatever that part.
All right.
What do articles mean?
Articles mean the articles of association.
Well, what do beneficiary mean?
That's a new term.
We've not run across that before.
Beneficiary means a person who will may benefit from the foundation company carrying out its
objects.
Okay.
So those are key words we already know.
Foundation company is exempted and objects means its purpose.
What is it that we're trying to do?
Bylaws that's a new term means it's bylaws under section 12.
Pet peeve of mine has always been don't use the term or the definition, but they gave
us kind of a hint here.
Go to section 12.
It will further define bylaws.
Okay fine.
But yeah, bylaws means bylaws.
Go to section 12 for more information and we will go to section 12.
All right.
Constitution, kind of a new word.
Saw it once before, it wasn't defined.
Means the memo and articles of a foundation company, but not is bylaws.
Okay.
Interesting stuff there.
So a constitution is a memo of association and articles association of a foundation company.
So two founding documents called the constitution.
We have both of these, right?
We have the, we have the articles and we have the memo.
Both of those things equal the constitution.
Now here's the confusing part.
I don't know how this happened or why yet, but if you look at sip number two, excuse
me, sip number one, you'll see the word constitution.
Okay.
Nothing, nothing to be alarmed about yet.
So here it is constitution under sip number one.
If you click the constitution, guess what it says in the title?
Oh, you can't see that.
Hold on.
Let me find it.
There.
What does that say?
The constitution as of May 28th, 2024.
That's when the Dow launched is also called the bylaws.
But we know that the law says it cannot be the bylaws.
So I think that's just a, it's an oversight.
I think I don't think we need Roman numerals anymore.
I think it's just an oversight that someone didn't notice.
I couldn't find a reason for this in the Dow foundation.
So I don't know.
I don't know how to explain it, but there's definitely the TSBs foundation labels its
constitution as bylaws, but per the foundation company's law, it can't be the bylaws.
It is instead the memo and articles of association.
You're just going to have to live with that.
And maybe one day I'll ask part of the questions probably later on.
All right.
What does a foundation company defined as?
It means declared under section five.
So we need to read section five to be stuff.
And we're going to go in section five to read it.
All right.
What is an interested person?
A new term, I think only we've seen that term before means any of its members or supervisors,
someone entitled to be a member or supervisor or someone declared under its constitution
to be an interested person.
So who does it automatically give you?
Right?
Who is automatically a member?
The subscriber.
So automatically the subscriber is an interested person and whatever that's supposed to do
for them later on.
They do talk about interested people later on and what rights they have.
Supervisor, that's a new term.
Don't know what a supervisor is yet, but apparently it's important to a foundation company's law.
Cause there's, I guess, an interested person.
Memoranda means memo of association.
Good reminder.
Qualified person.
Now that is a fascinating term because earlier we talked about how qualified people, right
in the preamble.
Nope, not there.
Where was it?
It was here.
Nope.
Where the companies act again.
We ran into that term earlier and what did it say?
Qualified qualified.
Oh, there you go.
Qualified person licensed or permitted.
And that was in the website description.
Okay.
So now we're back in the foundation company law where it's going to spell it out for us.
A qualified person means a person who is licensed or permitted by the company's management law.
Okay.
There's that, that we are terminology phrasing thing again.
They mean the company's management act.
Okay.
CMA by the company's management law, otherwise known as the company company's management
act to provide company management services.
That sounds a lot like when we heard earlier, uh, corporate services.
Okay.
This is that terminology thing that we're going to get to later on, which body of law
uses what?
So company management services is a new term different than company corporate services
use in the company's act.
They mean something similar, not exactly the same, but they're both licensed.
Okay.
So in the CMA pace 25 of the end notes, a CMA used to be called the CML.
So the camp to the company's management act was called the company's management law until
2021 when they changed their name.
Okay.
So good to know.
You didn't know that and we'll, we'll put it back here to a company's management law.
All right.
So a qualified person, the person who's licensed or permitted by the CMA to provide company
management services on the islands.
So where it said earlier that a, a, a zip to company may not conduct create trade or business
on the islands, except when they do business with a qualified person to do the company's
business like a lawyer or a director.
So now they've, they have identified that a lawyer or a director, or they're about to
identify a director and a secretary is, has to be a qualified person and that you can
contract those people within the company and you're not in violation of the company's act.
All right.
So we're starting to kind of piece together the train.
A supervisor means a person other than a member who is under the foundation company's constitution
has an unconditional right to attend and vote at general meetings, whether or not the person
has supervisory powers or duties.
Wow.
Okay.
So we have a new person that we have to now figure out called a supervisor who is not
a member, but it seems to be an interested party, an interested person who also is entitled
to vote and attend meetings, but meetings don't have to be held or the for companies
act what we read earlier, right?
And accepted company doesn't have to have general meetings once a year.
Okay.
Fascinating.
I don't know how that's going to play out.
So yeah, we need to figure out who the supervisor is.
Let's take a quick look.
See the word supervisor 31 mentions in our articles of association.
All right.
So here's the supervisors.
We'll read that another part, another episode.
Let's see if supervisors is in our, our memo association.
It doesn't looks like there's one mention of supervisor.
I don't see the word anywhere.
But to look for it in our future episode where the supervisor is, but I don't see the word
here somewhere should have highlighted it.
We're going to keep going.
What is the end of the definitions?
Section two of the foundation's company law.
All right.
Section three application of laws.
The company's act applies to a foundation company with changes described in section
one.
All right.
So section one, I expect to be all pretty big, but we'll see.
It's only 30 pages, so it can be super huge.
But what this is saying is that there are changes to the company's act, which is that
bottom piece of the, of the reg stack here.
All right.
So it's saying this foundation's company law is modifying parts of the company's act.
And because we know all the company's act applies to the foundation company's law and
it's only an addition.
So that means that whatever changes here is meant to change what is here in the company's
act.
So it's, it's authorizing itself to adjust what that base foundation is.
Okay.
All right.
Where are we in section three?
Right down here at the bottom.
Okay.
Let's keep on going.
Now we're in part two, which starts with section four becoming a foundation company.
Cool.
Now we're getting into it.
So when we have our people, our founder, our, or not founder, excuse me, our subscriber,
what do they have to do to become a foundation company?
So a foundation company must be limited by share or guarantee with or without share capital.
So we know which one we are, we're limited by guarantee and we're without share capital.
Cool.
Checkbox.
Company must have a memo of association.
Cool.
Checkbox.
We have that.
Company must also have an article of association.
Cool.
Checkbox.
We have that.
A foundation company must have a secretary who is a qualified person.
Boom.
There's a connection.
So what was a qualified person?
A person who is licensed or permitted by the company's management law, also known as the
company's management act to provide company management services in the islands.
All right.
And here you have foundation company must have a secretary who is a qualified person.
So what is this saying?
That's saying that the secretary position in a foundation company must be a licensed
person.
They must be qualified to do the job.
But that qualified person, that secretary must be licensed under a different legislative
act.
So we haven't read that one yet, but it's not that big.
So we're going to get to that one next.
So that act seems pretty important because I bet you we're going to find license requirements.
So fees, continuing education, different professional requirements to become a licensed person.
I bet you that's what we're going to see there.
So that's a pretty important thing right there.
You cannot conduct business with a secretary who is unqualified, who is not licensed.
Good to know.
All right.
Section five, declaration of a foundation company.
This is pretty cool, G was saying the certificate of incorporation, declaring it to be a foundation
company is evidence that it is.
Remember earlier in the company's act when once you complete, once you complete the requirements,
you get a certificate from the registrar.
Where's that?
Here it is.
Section 27 of the company's act upon filing the memo of association, the registrar shall
issue a certificate.
All right.
So now we know once we get that certificate in the foundation's company law, it says it
is evidence that you are a foundation company when you get a certificate.
Cool.
All right.
Part three starts with, part three says the constitutions of foundation companies.
Foundation means memos of association and articles of association are two founding documents.
Section six, model form of a constitution.
That model form may adopt any or all of the template constitution and schedule two.
Remember how there are, there are six parts, but at the very bottom there's schedules.
Okay.
So we know one of those schedules provides a template or the constitution and the constitution
is the memo and the articles.
Cool.
So that's going to be pretty important, but here's the interesting thing.
You may adopt it.
So it means you may not adopt it and it's a template and you are not required to do
it that specific way.
All right.
So we know the constitution equals the memo plus articles and the sandbox foundation.
Just spoiler alert, when you compare the two, the foundation definitely adopted most of
the template.
So when we get to schedule two, you'll see, I'll probably even put it side by side where
you can see how, where the template and schedule two says this sentence, our TSB foundation
document says this sentence also.
There's some differences, but for the vast majority of it, it's very similar.
All right.
Section seven, duties, powers and rights.
The constitution has broad power to shape the foundation company, how it sees fit.
Okay.
All right.
So we're already starting to see why a foundation company, why, why I'm reading in those, those
articles.
When I said the very beginning, I read a lot of articles from different law firms and stuff.
It was my earlier slide, right here.
So all these law firms, so many of them talked about the foundation company and how flexible
it was, how it could, it's like a trust 2.0, the best of a nonprofit, the best of a corporation
for profit, the best of a nonprofit.
A lot of these, these expert opinions had many different viewpoints and many different
interpretations, but what most of them agreed on was that foundation company is a very flexible
tool and, and most of them mentioned a favorite tool of a Dow.
Now it's going to take a little bit more time for us to figure out why exactly that is and
how we can think through this connecting to a Dow.
But what's super clear already is that all of these broad powers that the foundation
company has, that's the wrong one.
And we need to be here.
All these broad powers that they now have means that that one subscriber who becomes
that one member who then can elect the board, the director.
Now we know that they can pretty much do whatever they want.
You know, as long as it's not illegal.
All right, next up.
So section seven was duties, powers and rights.
The constitution has broad power to shape the foundation company how it sees fit.
The constitution is only enforceable against the foundation company, meaning it's not
enforceable against anything else.
Interested persons are entitled to receive reports, accounts, business affairs of the
foundation company.
Now we start to see what an interested person actually gets to do.
Cool.
Next up, so pages nine through 11 beneficiaries have no powers or rights and is not an interested
person.
All right, so now if you are a beneficiary, which was defined as a person who will or
may benefit from the foundation company carrying out its objects, you have no power or rights
and you are not an interested person.
An interested person is entitled to receiving reports, accounts and business affairs of
the foundation company.
Good to know.
Very good to know.
So the foundation company has a duty to carry out the objects set out in its memo if and
only if the memo declares and designates persons within standing to enforce the duty against
the foundation company.
I don't understand that one at all.
Sounds like they're saying the company has a choice in carrying out its objects.
I need help understanding that.
Why would that even be in there?
So the foundation company doesn't have a duty to carry out its objects if the memo declares
and designates, if the memo doesn't declare and designate the person with standing to
enforce the duty.
I'm not sure.
I'm going to need help.
Section eight, members and supervisors.
Okay, finally, we might get to see what a supervisor is here.
Foundation, didn't we already?
Never mind, we did.
Supervisor means a person other than a member who under the company's constitution has an
unconditional right to attend and vote.
So this one is the constitution may grant the right for a person to be a member or supervisor.
Foundation company may cease to have members, but must have at least one supervisor.
Well, there you go.
That tells you just how important supervisors are.
And those supervisors are there who are required to be there and have voting rights in a meeting.
A member or supervisor may be a director.
Cool.
A big question I had was, can a secretary also be a director?
Wasn't able to figure that one out by reading it.
And part four.
All right, so now we're in part four, operations and management of foundation companies.
We're pretty close already being done.
Section 12 are the bylaws.
Bylaws must be followed, but are beneath constitution, which is the memo in the articles.
Okay, so that means that the bylaws are subordinate to the constitution.
Bylaws are not part of a constitution and people who deal with a foundation company
are not required to consider its bylaws.
I guess that means they are required to consider the constitution.
Not exactly sure how that plays out in business dealings, but at the very least, if you'd
conduct business with a foundation company, you are not required to look at its bylaws.
Okay.
That was pages nine through 11.
Pages 11 through 17 starts with section 13, register offices.
And a foundation company's registered office shall be at the secretary's business address
as a qualified person.
Now we understand the importance of the secretary.
So that registered person, that subscriber is the secretary and that secretary is qualified,
which means they must be licensed by the company's management act.
Cool.
So here we go.
Section 16, secretary.
A foundation company shall have a qualified person as a secretary.
We already knew that.
Said the same thing.
Just reiterated it.
Section 17, compliance with laws.
Foundation company must give info for secretary to comply with AML, which is anti-money, anti-monetary
laundering.
Wait a minute.
Hold on.
I think I just messed that up.
Anti-money laundering.
Right.
So SC must give info for the secretary to comply with anti-money laundering, terrorism
law or crime law.
Foundation company must not accept assets unless the secretary states no objection.
Okay.
That is a, that's a pretty powerful authority.
So the foundation company cannot accept things that it's given unless the secretary says
that nothing's wrong with that.
Okay.
Now we get into part five.
All right.
So we just left part four.
The court plays an important role in resolving FC financial, foundation company disputes,
appointing, removing members and conducting investigations.
That's the grand court's function.
Cool.
Part six, miscellaneous.
Schedule one.
Schedule one is the, the company's act, a list of companies act things that are applicable
to the financial, to the foundation companies.
There are a lot of sections that are not applicable to, to foundation companies here.
And so none of these came up in any of my research that I really need to talk about.
The reference to a member also references an interested person.
So fascinating thing there is if you are a member, you are also an interested person.
Cool.
So it's, it's an interesting connection.
Whereas before we had interested person means any of its members or supervisors, someone
who is entitled to be a member or supervisor in the schedule.
It reiterates that the member also references an interested person.
So there's another link there.
I am still kind of unsure what that connection is supposed to mean, except that an interested
person is entitled to reports.
Like is there some, is there more there?
Is that also why they, they go so far as to say that, that we're modifying the company's
act for the foundation company's law?
I don't know.
I need to, I need to ask a lawyer or something.
And there are many, many other sections that are modified.
They're all seem very minor.
All right.
So now let's go into schedule two, the model constitution.
This provides a template of the memo and articles, which is what the constitution is, two things
for what a foundation company could look like.
Remember they said may the template it's not required.
It's not mandatory.
It is optional and not mandatory.
All right.
So under the memo association, it established the template, establishes the location of
a foundation company, defines the objects, which is the things it wants to do and how
many members it has.
All right.
It also creates that document is a thing that creates the foundation company, that memo.
Okay, so here's the memo for us.
It says memo of association.
It says where we are, who we are, what we're trying to do.
And at the bottom it's signed and then it gets stamped here somewhere, stamp, stamp,
stamp at the top right.
And it gets stamped into existence.
Okay.
So that whole thing looked pretty standard to me.
There was nothing that read very surprising from what we had already researched about this.
And what I found is that when I put the two side by side, the foundations memo association
was very similar to the template.
The only big thing is that section four here, paragraph four, where it talks about foundation
company shall have and be capable of exercising all functions and all these objects.
It has a long list of objects that are not included in the template.
So, so clearly the objects are, there's more to our foundation company, but what we're
trying to do in the Dow, then what the template provided for guys.
That was a big difference.
Now we go to the articles of association, the articles defines.
That's where I see the founder is defined.
And that's interesting because this is the first time I've seen the word founder defined
anywhere.
It's not in the foundation's company law of parks one through seven.
It's not in the company's act.
The founder doesn't even exist until you get to the template, which is not required.
So I don't know what the, I don't know what to make of that.
I'm not sure what that's supposed to mean.
Clearly it means it's not required, but as you'll see in our foundation, the founder
has a lot, a lot of power and responsibility.
And when I was reading these expert opinions from different law firms in the Cayman islands,
they too talk about the founder like they're an important part of the foundation company.
So why is the founder only mentioned in the template and defined there?
I don't, I don't know.
I don't know.
I can't, I couldn't figure it out.
So anyways, it defines a founder in the articles association, which is the template, which
is not, which is not required and set schedule to the foundation's company law.
Okay.
It gives this template gives overall guidance and direction of the foundation company, including
role descriptions for the founder member, director, supervisor, beneficiary, secretary
and proxies.
And once you know it, our article does the same thing.
Our articles talks about the supervisors.
It talks about the beneficiaries, the secretary talks about general meetings and the proxies.
So it does, it does the same thing.
It also gives guidance on the registers, the accounts, the auditors, all the winding up,
which is that liquidation term indemnity, which is when you hold people harmless for
doing things bylaws alterations and how meetings are really conducted.
It basically structures how a foundation foundation company will operate.
All right.
So again, when I put them side by side, the Dow, the Sandbach Dow's articles of association
matched very closely to the template and the foundation's company law.
They just expanded more on the directors and officers role.
So you, on the one hand, you have a constitution.
It creates the company, the foundation company.
On the other hand, you have the articles.
Okay.
I'm sorry.
You have the constitution, which equals the memo association and the article of association.
Okay.
The memo association creates the foundation company talks about where things are, where
they live, all that article association talks about the roles and how the company will be
conducted.
What meetings would look like.
Okay.
So both of them together equals the constitution.
No, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no points.
If you know what that reference is from.
All right.
That concludes the foundation's company law, the second stack in the reg stack.
All right.
We're already done much sooner than we were with the company's act.
Next up, the CMA.
It was mentioned a lot.
It talks about licensing stuff to the CMA of 1999 companies management act is where we're
going next.
This time, instead of going to the Cayman Island register, you instead have to go to
what's called SEMA, the Cayman Island monetary authority.
All right.
It's got another website.
Look at that.
It's got another website.
Looks a little bit like this and it has regulations and stuff.
And yeah, it's an entity within the Cayman Island that is the authority for issuing stuff.
Okay.
So you would go to publication.
Nope.
You go to regulatory framework, acts and regulations up here at the top.
Okay.
So like I just showed you under regulation, regulatory framework, you will ask some regulations
and they're boom, companies management act 2024 revision.
But what you'll see here is there are a lot of companies act.
Okay.
We're going to get into something, a term, a legal thing later on, but just worry about
the one that says companies management act 2024 revision.
Okay.
This revision 2024 is 28 pages.
Okay.
So another, another short one.
All right.
Here we go.
There are 24 parts this time.
However, only one, two, three, four, five, six, seven, eight, nine parts are relevant
to us.
Okay.
So companies management act on page five, section two, authority means SEMA.
We already knew that, right?
It was in the, the, the company's act.
The authority meant the Cayman Island monetary authority.
Okay.
So a managed company means a company to which the services included in the definition of
section three are provided by a licensee.
So we already know based on what we've learned earlier that the licensee, which is a secretary,
also the director, which we will find out pretty soon.
The licensee has to do things in accordance with section three.
Cool.
We're very interested in section three now.
License means a license granted by the authority.
So we're connecting dots by crazy over here.
Right?
So the, the licensee is given by the authority.
The authority is SEMA or a licensee is a secretary and we'll find out soon.
Also a director.
And those people are qualified persons to give company management services to a foundation
company, which is only allowed to do business on the islands with company management services.
So see how that's working.
That my friends is why we see this.
That's why it's not just that they're there.
I don't know.
They went to high school together.
They all used to work together.
It's not just that.
It's that the law states they have to be licensed and they have to go through all these things
and that they have to be qualified people.
And that qualification, that license comes from the central, the, a, a Canyon islands
monetary authority.
I'm about to figure out in a few minutes here what it required, what you have to do to become
a licensee.
Okay.
That's the last part we haven't quite figured out yet.
All right.
Next up on the interpretation, which is basically the definitions of section two of the company's
management act, senior officer, a new term we haven't seen.
We saw the word officer, but not senior.
So it's a new combination means a managing director, president, chief executive officer
or other officer with authority to bind the licensee of which that person is an officer.
All right, cool.
New term.
Management basically means the head honchos of the company.
Now we move on to section three, definition of business of company management.
All right.
So that term we've seen before, we know that the foundation company's law says company
management services.
All right.
Means the provision of the following corporate services.
Now where we've seen that term before, that was the company's act saying corporate services
provider.
So now you're starting to see kind of like a merging of terminology in the third body
that is separate from both the foundation company's law and the company's act.
Okay.
So that reg stack that we're up to right now.
So this one right here is where we are.
It's defining terms found in both of these two.
Okay.
That's good news.
That means you're finally seeing like a convergence.
That's awesome.
I love seeing that.
All right, where are we?
We're here.
All right.
Section three, definition of business of company management means the provision of following
of the following corporate services for profit or reward in or from within the islands.
And it gives a big long list of stuff, but it basically boils down to you can act and
do things you can provide.
You can file, you can establish, you can maintain all the stuff that you would think that you
would do in a company like filing meeting minutes or providing secretary services or
establishing documents and accepting assets without objection, maintaining the company
and declaring stuff.
All of these things that we've already went over that you have to do has to be done by
someone who is licensed, who is a qualified person licensed by SEMA.
They came in islands monetary authority.
We're very close to closing the loop here.
Very close, almost through.
So moving on to pages eight through 10, that brings us to section four, which is a definition
of group of companies.
A company is treated as a subsidiary of another company when it controls the composition of
the subsidiary's board of directors or controls more than half of the votes or is a subsidiary
of a subsidiary or can appoint or remove directors of that company.
All right, so this was this one jumped out at me because it kind of gave you this.
You're not going to be like a subsidiary and then somehow get around being called a company.
Like you have to get to disclose your beneficiaries and part of that disclosure, not just the
beneficiaries, but part of that, that calculus is if you are controlled by another company,
then then you are considered a group of companies.
And it kind of like ropes you in to where this you can't just loophole yourself around
some of these licensing requirements.
So that's pretty cool.
That's good to see.
And good terminology there you can use in many different ways.
So section five, we're going to move on to application of the authority.
Corporate services licensed to perform section three may be granted by the authority.
Okay, we're going to do that.
Stiff penalties for not being licensed.
Again, more fines and more jail time if you conduct corporate services management stuff
and you're not licensed.
Stiff penalties.
So we already know the director and the officers could be hit with stiff penalties.
Now we know the secretary can be hit with stiff penalties in jail time.
All right, so going on section five, authority may grant either a corporate services license
or a company management license.
Interesting.
So those are those terms that we were playing with earlier.
So what this seemed to me is that the services license seems to be most of section three.
We just went over that long list of stuff that we expect to do in a company.
And the management license seems to be like an additional services thing.
Kind of like a catchall for what's not in section three.
The company, the management license is like, whatever is not in section three, we can give
you this extra license, which does all these non specified things.
That's as best as I could figure that one out.
A license grants when the authority is satisfied that the applicant has, and here's the requirements
for being licensed, sufficient expertise to carry on the business of company management.
Wow, that's broad.
That pretty much gives, well, there's more, I'll keep going, and can be carried on by
a person who is fit and proper to be directors or managers or officers.
It pretty much says the SEMA has a discretion to choose whether or not they want to license
someone.
It's not like you have to be a lawyer for five years, or you have to have a business
degree, or you have to have X number of dollars in your bank account.
This is just saying SEMA is going to look at your application and decide whether or
not you have sufficient expertise.
They're also going to decide if you're a person who's fit and proper.
And if you're not, it doesn't seem like you can do anything about it and your license
will be denied.
Application, your license application.
Here are the factors that are considered honesty, integrity, reputation, competence, capability,
financial soundness.
So there are things that you can do.
Obviously, this things that I've learned is there are certifications you can do here
to help demonstrate these things.
Like if your financial soundness, there's different finance courses you can have.
So if you have a degree in finance, you probably can demonstrate you have financial soundness.
If you've been an accountant for X number of years at a company, you can probably demonstrate
financial soundness.
Reputation, maybe there's a reputation score website somewhere, or a news article by a
CNN or some reputable place that you think that the people who review this license will
think highly of speaking well of you.
As it's like this whole thing you can do to demonstrate each of these integrity would
just be like, hey, I've never I've never been convicted of a law or have a violating a law.
And that's demonstrating my integrity, my honesty, all these different things.
Very broad, though, very, very broad.
Alright, let's keep going page 11 through 25.
Section seven is display of license.
The license shall be prominently displayed on the premises of the company.
Cool, a lot of a lot of regulatory licensing type things they have that require the same
thing.
And in my career field, I've had to do the same thing I've had to display my license
in a public place so that it can be viewed.
Someone does transact with me.
Alright, so section 13 audits and accounts.
License holders are audited annually.
Within six months of financial year end, Ford audited accounts and certificate of compliance.
Alright, so now we're starting to see the weight that goes behind being licensed.
It's not just filing application given the fee.
You are also required to be audited annually every single year.
And within six months of a financial year end, which doesn't have to be December, by
the way, your company can declare that a financial year end is September, February or whatever.
But within six months of that financial year end of your company, you are to forward whatever
audited accounts they're referring to and that certificate of compliance.
I don't know yet what that is, but it probably sounds exactly what it is.
That compliance is that you complied with the intent of the law to keep your license.
Section 17.
This was fascinating.
Licensees to ensure.
So a licensee is required to ensure against losses arising from claims of civil liability.
They didn't give it a dollar figure for what you're supposed to be licensed to insure it
against.
I don't know if it's $5 or $5 million or what, but I'm not entirely sure if this applies
to the foundation secretary or not.
That's probably something I need to ask a lawyer if I can get them on for part two or
three.
Section 18.
Additional powers of the authority.
So authority, which is SEMA, may revoke a license if it believes a licensee is unable
to meet obligations or is not fit and proper.
If revoked, it will disclose that revocation in the news, which is basically the local
Cayman news or whatever.
And then section in the end notes.
So we're at the end already.
Companies management law was first put out in 1999 again with the whole CMA 2023 revised
2024.
Apparently it came out in 1999, I guess.
I whatever.
And then was changed to Companies Management Act in 2021.
Good to know.
So that way when you see company's management law and the act or elsewhere, you know it's
referring to both companies management act and the company's management law.
They're interchangeable.
It just kind of reduces the confusion.
So what did we learn from the SCL?
We learned that that the authority, which is SEMA, grants licenses to qualify people
who determines to be fit and proper and has sufficient expertise to carry on the business
of company management.
And when it licenses these people, they must be audited annually.
And they face stiff fines and jail time if they act and practice without a license.
And that these people are also directors and secretaries.
And those are the two terms we could find within the CMA that are licensed.
Your director is licensed and your secretary is licensed.
Two very important positions in a foundation company as we find out.
So they have it.
Where's your third law?
Right there.
Boom.
Now the good news is we only have, we only have, we have four more sections to go through,
but we're going to be going through this pretty quickly.
So we're pretty much already done.
But we have this last part to go.
So the DRLL, which again is the directors registration and licensing law.
Again that sounds pretty important to look through.
So something about that tells us that our director should be licensed.
The securities investment business law, we'll go through that and why that's listed here.
Virtual Asset Service Provider Act.
That is where cryptocurrency law is for the Cayman Islands.
And the citation of acts of parliament law.
Very, very short, it's one slide.
Get through now why those acts are important to us here.
You'll find, all right, here's the first thing I want to note earlier.
In SEMA, when you go to the acts and regulations and you go to their website, you'll see a
bunch of what looks like the same name.
Okay.
So here you see directors registration and licensing, the DRLL Act 2015 Act 2023 Act
2019.
So what is this really saying to you?
What this is saying is that this is why it was important to know when the law came into
effect.
So we know the law came into effect in 1999.
We don't see anything here that says 1999.
We do have our see 2015 or 2014.
Excuse me.
So we can be assured here that for DRLL, which came out in 2014, REV is 2023.
REV means the latest version revision.
It's 40 pages.
If you look at all of these four things.
Now the reason why you can't just look at one is because of what's called conformed.
When we went to look at this important point for anyone who just wants to read law in your
spare time.
So here, here's a in the company's management act.
The only reason why we only had to go to this one right here, this 2024 revision was because
in the 2020, 24 revision here, when you click this, it included all of the adjustments and
revisions from prior years.
So this 2024 revision included the amendments, 2023, 1997, 2018, all of these others that
you see here.
2024 revision included all of those prior year revisions.
And that's called a conformed copy.
Conformed meaning absorbed, all absorbed.
However, when you go to this DRLL, the one we're about to go to, the director's registration
and licensing law, what I quickly found out is that this 2023 is not conformed.
It's not conformed at all.
What that means is that that 2014, that original law here, you have to read it.
And then you have to read the 2015 amendment to see what it changed from the 2014.
And then you had to read the 2019 amendment to read what it changed from the 2015.
And then you have to read the 2023 amendment to know what it changed from the 2019.
All right, so there's no conformed copy that I could find anywhere that absorbed all of
those amendments into one.
And that's important to know, because if you only read the 2014 law, you will be outdated.
There is laws in here that are somewhat important, but you have to read them to figure out if
they are important.
And that's why it's called a conformed copy.
Just a bit of a gee whiz I wanted to share with everyone.
This is what I did as a contract negotiator and a contract writer is I managed conformed
copies.
After I wrote the contract and negotiated it, and I signed it and all of that, whenever
I made changes to that contract, an amendment, what we call a modification, whenever we made
a modification to the original contract, if I didn't produce a conformed copy, then that
meant that everyone had to read the original contract and all the modifications done to
that contract thereafter to make sure that they saw the full totality of the changes.
If I did create a conformed copy, which normally took extra time, but it automatically like
ran a script to combine everything into one.
So if in the original contract, the original dollar figure was $1 and then modification
four, increase that dollar by another dollar.
So it increased the total contract value by $2.
A conformed copy would show $2 as the total contract value, whereas a not conformed copy
would not.
You'd have to read both the original contract and mod four to know that the contract value
is $2.
Hope that makes sense.
That's important for you to know because up until this point, everything has been a conformed
copy for what we've read.
But this DRLL takes a different approach for whatever reason, it didn't do a conformed
copy.
All right, cool.
So I will put in the slides what the amendment changed.
And then we're all happy.
Everyone's fine.
So of these six parts, only four parts are really applicable to us.
So here we go.
Yeah, it's only one slide, right?
I think so.
Nope, it's more than one slide.
Okay.
So what I did was I have the original law and then have what the amendments did.
That way you can kind of keep that in mind as we go through this.
So the 2014 law defines terms, establishes registration, licensing, consequences, authority,
insurance requirements.
The first amendment, which was in 2015, made minor alterations to the wording schedule
in section seven.
That kind of is important to us a little bit.
The 2019 amendment did some minor alteration to the definition of the word covered entity
in section two.
That's the definitions.
And then 2023, that amendment modified some added the word partnership to definitions
in section two and add consequences to partnerships in section 28.
That's not really important to us because we're not a partnership that I'm aware of.
But you still need to know what all the amendment said because again, it's not a conformed copy.
So DRLL, let's take a look.
So where are we?
We are in SEMA, the website.
I'm under acts and regulations.
Click DRLL 2014 rev 2023, 32 pages and all.
So the cover page talks a little bit about how it establishes registration rules for
directors and licensing of professional directors, corporate directors and registered directors.
So right off the bat, we already have brand new terms.
So it talks about how this is going to establish registration rules and licensing for directors.
It splits directors off into three components, professional, corporate, registered.
Okay, cool.
Got it.
So there's three types of directors now.
In section two interpretation, which is pretty much another word for definitions, it talks
about what those three directors are.
So corporate director means a body of corporate, a corporate entity appointed as a director
for a covered entity.
Covered entity is a brand new word.
It's defined in a little bit.
But a corporate director here basically means a company.
It is a company that has been designated as a director that of another company.
So that's where you get into that like that groups of companies definitions that we were
talking about earlier, where it's a subsidiary, you can't escape the fact that it's a city
area.
It's not going to be a loophole.
The law is not going to allow you to do that.
So corporate director, I guess in theory here, you would have a corporate director, which
is an entity.
So a company that's designated as director of itself.
I don't know why you do that.
But I guess that's something that it might maybe guard against.
Not sure.
You'd have to have experience in this to kind of know what this is really after.
Then you have a professional director.
It means a person who is a director for 20 or more covered entities.
Well, a registered director means a person registered under this law.
So it looks like someone who is a director for under 20 entities.
So 19, one to 19.
And then a covered entity means a company to which paragraphs one and two of schedule
four of the securities investment business law apply or mutual fund.
So we're not a mutual fund.
What we might be though is a securities investment business law.
And if you have if you've been paying attention to anything about cryptocurrency regulations,
regular authorities, that should not be a surprise to you.
But we're in the Cayman Islands.
They have their own laws.
So let's see what their laws say about this.
That's what matters here.
So you have the foundation company, Sandbox Foundation, which has a cover, which has a
qualified person who must be licensed.
One of those people must be the director.
And the director now has their own licensing law, which says that if they are a director
of a covered entity, they must they must also they must also pay attention to the securities
investment business law.
All right.
So that's why we have SIBL on the reg stack is because now we're getting drawn into that
regulation through this reg stack.
This thing is complicated.
This is why you pay lawyers thousands of dollars for them to sit through all this and tell
you what the answer is to your question.
When you say, hey, I want to I want to fire my director.
Am I allowed to do that?
First, they're going to ask, OK, what position do you hold?
Are you an interested person?
Are you just a beneficiary with no rights?
Are you a supervisor who may always vote and may might not you're not allowed to get shut
out that you're paying the lawyer to read through these hundreds of pages and have the
expertise and the experience to know what to do in that situation, what to tell you.
So there you go.
We will get into that in the next slide.
But for right now, we know that the covered entity means a company to which paragraphs
one and two of schedule four of the securities investment business law applies.
So if you are a a director, a licensed director of this covered entity, which is cited in
this law, you must be licensed through the director's registration and licensing law.
All right, so we will figure out here pretty soon.
We think that applies.
I'm not sure that does.
So sections four through 22, it just starts talking about the differences between the
registered directors, professional directors and corporate directors.
So you cannot be a director unless properly licensed by SEMA.
There we go.
There it states it explicitly.
It doesn't exactly state it explicitly in the the Companies Management Act.
It just says the word director in the same sentence as license.
So you kind of have to in my mind, it's it's there.
But it's not explicit.
Here it is very explicit.
You will be licensed if you're a director.
And applicants must have sufficient capacity to carry out duties and fit proper person.
Same thing as the Companies Management Act.
Professional and corporate directors must must be insured against liability.
Again, it doesn't exactly specify what that insurance looks like.
But you must be insured to cover liabilities, I guess, when the if the foundation company
gets sued.
But not registered directors.
So if you are a director of less than 20 companies, then you are not required to be insured.
So I'm not really sure exactly how that plays out because the Companies Management Act requires
that licensees be insured.
I don't know if that's a loophole or contradiction or what.
That's actually a good point.
Let's put that down here.
So CMA says licensees must be insured.
Is this a contradiction?
Yep.
Good question.
Good question for another podcast episode.
All right.
Let's continue on.
So under under the DRR, the director's registration and licensing regulations, schedules one to
five.
It just goes through application details.
Like what you have to fill out.
You have to fill out personal information.
You have to pay a fee, all that stuff.
So at the end of all this, I'm not sure if the director's registration and licensing
law applies because of the definition of the term covered entity.
So now we have to go to SIBL, the Securities Investment Business Law, to figure out what
a covered entity is defined as to figure out if a director is required to be licensed under
this law.
Okay, let's do that.
So we're going now to the Securities Investment Business Law.
It is also under CMA under the acts and regulations.
Let's get into that.
56 pages, by the way.
That was a little bit longer.
So section three definitions, securities mean assets, rights or interests specified in schedule
one.
Okay, so we got to go to schedule one to figure that one out.
Securities Investment Business has the meaning assigned to it in section four.
All right.
Let's go to section four.
Section four is the meaning of securities investment business means if a person is engaged
in the course of business in any of the activities set out in schedule two of that person is
a company incorporated under the Companies Act.
All right, so let's read that back.
Or the word securities investment business, what was that word?
Why is that word important?
I don't know why right now I can't remember.
So it means if a person is engaged in the course of business in any of the activities
set out.
Oh, oh, right, right.
So if the rule is you have to be licensed as a director under this law, if you are a
covered, if you are director of a covered entity, and a covered entity refers to this
other law which says you are a covered entity if you are engaged in this business that is
listed under another part of this law.
Now we got to go to that other part to figure out what all that is.
Okay.
So let's go to schedule one, which is where the securities definition meaning assets,
rights or interests specified in schedule one.
Okay, so now we're going to figure out what that is defined as.
The only one that seemed relatively important to us at all was sub paragraph A of schedule
one which said shares and stocks of any kind in the share capital of a company.
Now the good news is, if you remember what we talked about earlier, we do not have share
capital.
All right, it said it very clearly.
And I'm pretty sure now we understand why without any share capital, right, we couldn't
figure out why they use the word share capital versus equity capital in the company's act.
I think that's why they use that term share capital because now it is not considered a
security when otherwise it would have been.
The business would not have been considered a security per the Cayman Island law.
I don't know that for sure, but that's just the way I read this.
All right, so there this here's the second part, schedule two securities investment business,
all of the regulated activities that makes it a securities business.
The following activities are activities carried out in the course of a securities investment
business for the purpose of this law.
And then it just says a bunch of broad things like dealing the securities, arranging deals
and securities, managing securities, advising of securities, managing EU connected funds,
marketing EU connected funds, acting as a depository on an EU connected fund.
So the word security is all up in this thing.
And we just define security as the only one that could be applicable to us that I could
see shares and stocks of any kind in the share capital of a company, which we don't have.
So that leads me to assume that it's not applicable, but I'm not a lawyer and I don't know how
the case law on this, which is that that Greg stack at the very top of the pyramid, that
the what is that trap trap piece traps trapezoid think that I don't think it applies, but I'm
not sure.
So I have to ask a lawyer on a different part of different episode for Sandow.
All right.
The last one that was of interest of any kind was section four schedule for persons required
to be registered under subparagraph five four.
And it's one a company within a group of companies.
There's that word again.
That's saying the subsidiary thing carrying on securities investment business exclusively
for one or more companies than the same group.
All right.
That was that was kind of a word salad.
But we understand the terms right.
Security investment business, which should be should be highlighted.
All right.
What does security investment business mean?
Securities What does the word securities mean?
Share in stock of any kind of any share capital, which the sound foundation does not have.
At least it says it doesn't on its own.
It's constitution, which is the articles in the memo.
Okay, so we can safely assume that's not us.
I don't mean that safely, but doesn't look like it's us.
But then subparagraph two, a person carrying on securities investment business exclusively
for a sophisticated person, a high net worth person or a company that is A or B. All right.
So here's the reason why I'm not sure if it applies.
While the plain reading makes it seem like we're not it's not applicable to us because
we don't have share capital and the rest didn't even make sense for us.
It's it's circular.
This thing is circular.
And there's enough ambiguity in my mind here that I'm not sure if it really applies.
It says outright that a director must be licensed, just like a CMA does the Companies Management
Act.
But there's clearly something more here.
And when you read the rest of these, there's a higher level of scrutiny that a director
has to go through if this applies.
That's why I think that without share capital is what it is.
So that they don't have to be so that the securities investment business law isn't applicable.
But I don't know.
I'm not an expert in this field.
I don't know.
So that's where I that's where I'm going to end on it.
I'm not sure that it applies.
I don't think it does.
I'm not I'm not 100% sure.
Let's go to the next one.
This one popped up in a couple different places.
Just one sentence is two sentences.
So I looked it up, the virtual asset service providers were still within CMA's website,
were still in acts and regulations.
Okay, so the VASP law 44 pages.
This one was immediately this one immediately caught my attention.
The interpretation of the virtual asset service providers act.
Virtual asset means a digital representation of value that can be digitally traded or transferred
and can be used for payment or investment purposes doesn't include digital rep of fiat
currencies.
Okay, so this basically means cryptocurrencies.
That's what this means.
So virtual asset service is interpreted as means the issuance of virtual assets or the
businesses are providing exchange between virtual assets and fiat exchange between convertible
virtual assets, transfer of virtual assets, virtual asset custody service or participation
provision of financial services related to a virtual asset issuance with a sale of a
virtual asset.
Okay, so there's two in here that might already apply to us.
But what we need to know is, are we a virtual asset service?
Are we a virtual asset?
It might seem like it, but let's keep reading.
Virtual asset service license.
Okay, so before I even read the rest of that, what that term means, we already know now
that there's an extra license that's needed if the virtual asset applies to our foundation
sandbox.
Virtual asset service license means a license under section eight.
Okay, so let's go read section eight.
Let's keep going.
So section three, meaning of a virtual asset service provider applies to companies incorporated
under the Companies Act and also applies to those who provide virtual asset service.
So far I'm not seeing anything that would disqualify us or doesn't apply to us.
And I'll go further to say it already names out companies.
We're a company.
We're an exempted company, but we are a company.
So let's keep reading.
Section four.
Section four is what the...
Actually nothing said that.
So section four is registration or license required.
So requires either a waiver or virtual asset service license to conduct virtual asset provide
to be a virtual asset service provider.
Okay, so let's keep going.
So if you go into the virtual asset service providers act regulations, it is 20 pages.
And section three, decisions by the authority regarding issuance of virtual assets.
This is where it defines it.
Okay.
The sale or offer for sale of virtual assets.
Okay, so here we have a definition.
The decision by the authority regarding the issuance of virtual assets applies to companies
or people.
Companies or yeah, companies that offer the sale or the offer for sale of virtual assets.
And what is a virtual asset?
The digital representation of a value that can be digitally traded.
So it's a cryptocurrency.
Or we do a virtual asset service, which could mean the transfer of virtual assets, the asset
custody service.
A lot of these things make it look like it might apply to us.
But the reason why I would say I'm not sure that it does need some legal clarity there
is because the sale or offer for sale.
So does the sandbox DAO offer cryptocurrency for sale?
I don't think it does.
I don't think the sandbox DAO offers the virtual asset to be sold.
Again, I'm not a lawyer.
We need a legal read on that.
But it looks like that fine, fine line that the DAO has, the foundation has not crossed.
But I don't know.
We have to ask a lawyer.
The only thing that might get caught up here is under the virtual asset service, that virtual
asset custody service.
So the DAO foundation has bullets.
Does it have a virtual asset custody service?
I don't know.
I don't know what service means except here, the issuance of virtual assets.
It gets circular again, though.
We didn't issue the coin.
It was part of the white paper that the Sandbox Gaming Limited Company registered in Malta.
You'll see episode 31 for the birth of the DAO.
There's a 34, one of them 31 and 34, where we talk about how the Sandbox Gaming Company
is actually the Sandbox Limited, which is incorporated in Malta.
It used to be incorporated in France, but no longer.
So it's not, it's not beheld to the same law that the Cayman Islands is for the Sandbox
Foundation.
Two different things.
Don't get them confused.
So I don't know.
It looks like it might.
And if it is, then it looks like we need an extra license, I guess.
But that's why you pay lawyers so much money to figure this stuff out.
And they're going to look at the reading of the law.
They're going to look at case law.
They're going to look at how disputes resolved.
They're going to have their own experiences and their own education.
That's why you pay them.
All right.
So there we are.
That is the Virtual Asset Service Providers Act.
And we have one more in our reg stack.
The Citation of Acts of Parliament Law.
So what was so confusing this whole time is one act called it the Companies Management
Act.
Another act called it the Companies Management Law.
A third act called it the Companies Management Act.
They all called each other different things.
And it was so confusing until I saw this one.
The citations of Acts of Parliament's Law, which was 2020, seven pages.
It's super simple.
The part that was the most interesting in section three was the Amendment of Enactments.
And it said the word law replaces the word act and affects past, present, and future
laws.
So that's why, where it said the Companies Management Law and I wrote it as the Companies
Management Act.
That's because this citations of Acts of Parliament's Law, COAPL, says that as of 2020, anything
that said the word law is now saying the word act and this applies to anything past, present,
or future.
There we go.
So the Companies Law is now the Companies Management Act, Companies Management Law is
now the Companies Management Act, Foundation Companies Law is technically, I guess, the
Companies Management Act.
But I kept there because even itself, everyone refers to it as the Companies Management Law.
No one says the Companies Management Act that I could find.
So I just left it there.
It's still the same thing.
Okay.
So all laws and all those acts and there we go.
It doesn't affect anything.
It just is the way you refer to it.
Although it's good to know that this is why it was so confusing this whole time.
Took me a long time to figure out this house.
All right.
So there you go.
The research is all done.
Now we get to apply that research.
It's not gonna take us long to get through all this.
I don't think.
So Yuma put in chat that Yuma was learning things that they didn't even know.
And I completely agree with Yuma.
I couldn't even.
I thought this episode was going to take me like an hour.
And I mean, not just this one, but the birth of the Sandbox Dow episode and the review
of the Sandbox founding documents.
And then when I started reading them, like, man, this thing's really, really big.
And as I start reading through it more, I discovered, oh, this thing's huge.
That's why there's so many management companies and then people have to pay and all these
rules and all the stuff.
It's intense.
So even when I set out for this episode, I thought I was going to get through this and
through all the analysis and the reading of the company documents for the company's Sandbox
Dow foundation.
I thought I could do it all in one episode.
And then as I was doing this slide deck and I was going through here's all the stuff I
found, I figured out, oh my gosh, I'm going to be at like two hours for this thing.
And so that's why I decided to split it up into three different things.
Yeah, I learned a lot.
I'm still learning, by the way.
I don't know everything.
I'm just, it's just, I just read it, wrote it all down and then try to figure it out.
It's yeah, that's why you pay lawyers to go through all this so they can do all the tough
things of figuring out what all this stuff means.
So here we are, here we are.
The last part to go through of our agenda, apply the Cayman Island law to our foundation
at the very least to the beginning of it.
All right, so we're going to try and bring it all together.
TLDR it, look at some flow charts, look at the terminology comparison.
Last part, all right, so we're going to look at the reg stack one more time.
We're going to look at how I think a foundation company is created now and also terminology
comparison.
That's pretty important.
The terminology changes.
So it's important to know what, which one is using what term.
TLDR under one slide and then we'll briefly go over the remaining questions, but that
is going to be a different part where we go through that more.
Okay, it's time to apply.
Remember in the beginning where I showed you this slide, it was when we were talking about
the Cayman Islands, the Cayman Islands, why was everyone there?
Why did I keep mentioning seeing the Cayman Islands when I was doing Birds of the Sandbox
Dow?
I think that was episode 34, right?
And why?
Well, now that we've read through all the, all of the laws that are important to us,
now we know why.
You can start to see when you read these terms, what it really is trying to tell you.
An article of association, which is a required document or foundation company, a foundation,
which is a foundation company, which is an exempted company under the Companies Act.
Alright, so a foundation company that's limited by guarantee, that's telling you that the
people who put in as members and subscribers and they, they had a maximum liability that
they're on the hook to pay the amount that they guaranteed, which spoiler alert, when
we go over the, we searched earlier is $1, right?
The guarantee is $1.
But we're going to be doing over that episode in depth in the future.
So the, the article of association is this fine, all of the roles and all the rules,
the memo of association describes what the company is and it brings it into existence.
Right?
So now we know this phrase, a foundation company, limited by guarantee without any share capital,
share capital meaning units of ownership.
So there's none of that in the foundation for the sandbox.
This is the stuff we're learning that we, when you pay attention to these words, now
we know what they mean.
The Cayman Islands government, we know what that means now.
It means the SEMA, the Cayman Islands Monetary Authority, we know why they're paying $50,
that duty stamp.
We know what a subscriber is.
We know why there is an address here.
We know why there is a company here.
We know why this stamp says exempted foundation company.
What are they exempted from?
Now we know.
They're exempted from a lot of things.
Apparently they're exempted from meetings.
All right.
And then we know that the exist, assistant registrar acts on behalf of the registrar
companies.
We know why there is SEMA, a monetary authority with acts and regulations, why there's a gender
registry with acts and regulations.
Now we know.
So when we go on the next episode and we read through the memo and the articles and the
constitution, we now know what it is we're reading.
Whereas the first time I read those things, just like everybody else in step number one,
two, I had no idea what I was reading.
Why did it mention subscribers and members and officers and it may cease to have members?
Why in the world?
All this stuff was very confusing.
But now it's not confusing.
There's still a lot of questions.
There's still things that I don't have the expertise to answer.
But by and large, we about know what's going on now.
Good.
So let's look at this terminology comparison.
So here's the things we figured out.
Some terms overlap across all three regulations like member, director, secretary.
Those are used across all the regulations that are important to us.
Some are unique to each regulation, which know with no equivalence elsewhere, meaning
they're not defined in anywhere else.
It has one regulation.
So a regulated business and the Companies Act is not defined anywhere.
The founder is not defined anywhere except for Foundations Company Law.
Senior officer is not defined anywhere except the Companies Management Act.
Why?
I don't know.
It's just sometimes regulations are hard.
It's hard to keep track.
Lots of memos.
One of them came out in 1965.
One of them came out in I guess 1999.
Companies Management Act and then the FCL came out in 2017.
So okay, got it.
They're allowed to be a little bit inconsistent.
Some are substitutes across various regulations.
So the word officer in Companies Act also means director in the Companies Act and the
Foundations Company Law and the Companies Management Act.
And senior officer in the Companies Management Act means director.
So it's just kind of weird like some of them mean some of the others but not everything
means all of it.
It's I don't know.
So this table I put together because I had to just keep it straight in my brain when
I'm looking at these regulations, these terms.
Know what I mean?
So I know what belongs where.
When I see the word beneficial owner, I know that I don't know, I know that term isn't
found in the Financial, the Findations Company Law or the Directors Registration Licensing
Act.
But I know that subscribers found in all three except for the Directors Registration Licensing
Law.
But we don't think that the DRLL is applicable because of the reasons we already went through
with the Securities Business Law.
Unsure.
But director is mentioned in all four of them.
So okay, so consistency is not all there.
But you know, it's pretty comprehensive.
Alright, so that's an important bit to know.
Now let's TLDR it.
TLDR it.
I mean, let's TLDR it.
Too long didn't read.
If you decided to happen here and you skipped the past three hours, here's the TLDR.
Here's what we learned.
The Registration Company is both the name of the sandboxed out and a type of company
in the Cayman Islands.
Okay.
It is flexible and how it is structured and operated.
Has maximum has a lot of flexibilities.
Doesn't have to do meetings.
It can direct its own people.
It only needs one subscriber.
It doesn't have to furnish its register to be be inspected by people.
It's exempted from a lot of things.
It's also not.
Oh, here we go.
So the next part is exempted company.
It means a company that does business outside of the Cayman Islands.
So the foundation company for the sandbox does business worldwide, except for the Cayman
Islands.
Because by law, by the Cayman Islands law, it cannot do business in the Cayman Islands,
except with licensed service providers like lawyers and directors and secretaries and
supervisors.
Limited by guarantee means the members of the foundation can only lose what they put
into the company.
And apparently per the sandbox foundation, it means one dollar, which we'll cover in
a future episode.
Without any share capital means no shares, otherwise known as units of ownership, as
we talked about in the beginning with the investopedia definition, means no shares were
created when the company was formed.
I'm still not exactly sure what that plays out.
Like, why is that important?
I think it means that there's no like profit motive.
I don't know.
I have to kind of think through that.
Memos and memos of association.
The memo creates the foundation company, the article describes how it will be operated.
Both of them equal the constitution.
And the constitution is not the bylaws, even though the foundation calls its constitution
to bylaws.
And that's just an oversight.
Lots of business is done in the Cayman Islands.
A lot of business.
21,000 companies are doing business in the Cayman Islands, and 1000 companies registered
in one month alone and 1000 companies registered.
I'm sorry, 10,000 companies registered in one year alone.
A lot of movement.
Foundation roles are flexible and varied in a foundation company.
Subscriber and secretary roles are required and they're very important.
Members, directors, officers, supervisors, managers, all seem secondary with the exception
of the supervisor, which is somehow important and required.
But also it's not emphasized at all.
It's like it gets like a few lines.
But the subscriber and the secretary get a lot.
As you I mean, when it comes down to it all, maybe I should put the supervisor here.
So, their subscriber, secretary, and supervisor roles are required and important.
But the members, directors, officers, managers, they all seem kind of secondary.
It doesn't even seem like you need some of them.
Definitely the founder.
The founder seems like he's just, we don't even need to, he or she, we don't even need
to worry about that person unless you decide to include it in the template.
I don't know.
I don't, I don't fully understand that.
So that's our TLDR.
But what's a TLDR without a flow chart?
So I sat down and I thought about it all.
How do I, how do I think this actually goes when you want to create a foundation company?
All right, so this is my best guess as to how it works.
All right, so you start here.
All right, the DAO wants to become a foundation company.
What happens next?
The DAO then selects a qualified person.
All right, qualified is all defined in our Companies Act.
Then the DAO selects a director and a secretary that provides corporate services.
And those two people are licensed.
We know that the secretary is licensed by SEMA, which is spelled out in the Companies
Management Act.
We think the director is licensed by the Director's Registration and Licensing, although we're
not sure it applies.
And they're licensed by SEMA.
At the very least, we know they're licensed by either DRLL or CMA, Companies Management
Act.
So those qualified people have to be the director and secretary who provides corporate services
and licensed by the proper authority.
Then the director and the secretary create the memo or articles of association.
All right, I actually think now that I've gone through this and the way that I did,
it's actually just a subscriber.
I should have put that, but we keep going.
The registrar then declares the foundation company to be a foundation company.
And that creates the company.
That company can do all the day-to-day voting, the directors, the renewals, the declarations,
do all their general meetings, have members, have officers, create optional bylaws.
They have beneficiaries who benefit from the objects of the company.
They have interested persons who are entitled to different things and reports and stuff.
But what's not clear from all of this is how they all interact together.
And this takes experience to be in this process, to see how it plays out day-to-day.
I don't know how all this plays out.
So in episode 34, I cover the beginnings of this.
I didn't even know what I was delving into until I read these.
But now that I've been through this and I have time to think about it, this reminds
me of episode 34.
And I'm going to play a short clip from it relevant to what we're talking about.
This is where I'd like to pause.
So this right here, this little section here that you're seeing, I like to call this my
triangle of confusion because it's still very unclear the relationships and how everything
works between the foundation and the council and the admin team.
The SIPs kind of brought into being what they had done, but it's still very unclear how
all the relationships work together.
Okay, so I called that my triangle of confusion at the time, because even Google searching
that and reading some things, I couldn't figure out how everyone who reported to who, who
was in charge of what.
I didn't know.
Now, now we do know more of what each person does.
However, we still don't know how they interact.
So my triangle confusion has become my rectangle of confusion.
We added a fourth dimension.
I'm still confused as to how all these people play together, but that is supposed to be
what the constitution of each foundation company spells out in their articles.
Remember their articles creates the structure, talks about the meetings and all that sort
of stuff.
So in our next episode, what I expect to do is to have a lot of these relationships clarified
about how do the members do the day to day stuff?
How are the renewals and declarations done with the director?
Is it just the secretary?
Because apparently that is what their job is.
But is there some sort of different stuff that has to happen?
The optional bylaws, who ended up creating that?
How did the voting happen?
How the meetings happen?
What do the members do?
All of these things we know is included in our sandbox foundation constitution, particularly
in the articles of association.
We know it's spelled out there.
So in our next episode, we're going to delve into that with the benefit of having listened
to and read all of this stuff.
So that's why this thing is three to four hours long.
Because we're setting up the hopefully a much quicker episode with the sandbox constitution
documents, which is the articles of association, the memo of association, what they call the
bylaws.
So we're going to go through that.
All right, almost done.
So here it was.
Here was our reg stack that we just went through.
Companies Act, Foundation of Company Law, Companies Management Act, Directors, Registration
and Licensing Law, the Citation of Acts of Parliament's Law, the Virtual Asset Service
Providers Act, and the Securities Investment Business Law.
All right, we incorporated and fused in all of this and the way I presented it was also
that law firm input, the expertise and all the articles I read.
But what we're going to do is we're going to cover the case law, the professional law
firm input, probably in part three, so episode three of this and episode two or episode three,
I haven't figured out which one yet.
But in episode two, part two, we're going to cover, we're going to read the articles
of the memos and we're going to read it with the benefit of this education.
All right, so in the end, we're going to be doing this.
This reg stack is how we're going to get at what is a foundation company?
What does it mean to be a sandbox foundation?
What does that mean for RDAO?
We are very close to figuring this out now.
That all we need to do is figure out what is, what is, how does that rectangle of confusion
work?
How does that work out day to day?
Okay, so that, that is largely informed by the reg stack, but also by the experience
and people telling us what's going on.
The digging in the sand podcast, which Cyril explained the sausage making behind that.
He didn't like that term.
Explained all the way things were put together in the background.
So super happy with digging in the sand podcast.
I'm so happy to see them do these episodes.
I know they're coming out with an episode somewhat soon about this.
We've talked about it before.
They're going to talk about that legal gray area.
And now by watching this episode, you probably have a good idea for what that legal gray
area might be.
Don't know, but I'm very interested to find out.
And yeah.
So the only thing left to go over now are the key questions.
Right?
So if, if I have an episode in the future where we have a lawyer on, I'm going to be
asking them these questions.
I have specific questions to the, all the laws we went through.
So I have specific questions for all of these, but I'm only going to go over the key questions
for this episode.
Right?
So here's the things that stuck out to me that I really, really, really, really, really
want to know that I think we should be asking.
Is this related to wrapping a Dow?
When they say wrapping a Dow, is this what they're referring to?
I'm pretty sure there is.
I read a recent article by walkers.
Thank you to someone who shared that with me.
I won't dox that person, but thank you so much for that.
They talked about wrapping the Dow specifically and that wrapping Dow was creating a corporate
entity.
Most positively referring to the foundation company, but there might be more to it that
I don't understand.
So is that what we mean by wrapping a Dow, wrapping it in illegal wrapper?
Is there a legal distinction between the sandbox Dow and the sandbox foundation?
I don't know.
I can't tell what I think that where I think that might mean that it is, is if the sandbox
foundation owns the assets of the sandbox Dow, which is the wallet, the cryptocurrency,
the tech stack, the discourse, the Twitter handle, all that stuff.
If they do own it, then is there a legal distinction between the two?
Because there is a world in which the sandbox Dow, the we, us, the people that participates
in the process that is separate and distinct and not part of the legal entity called the
sandbox foundation.
I don't know.
I don't know the answer to that.
I really want to know the answer to that.
That's like my almost my number one question.
My number two question is why take a chance on a foundation company instead of an LLC
or a regular corporation?
What is it that the foundation company is that an LLC and a corp isn't?
Because that part is not obvious to me.
I get that there's more flexibilities, but that foundation company is so untested.
That legal gray area that Kunta and Cyril keep talking about, the reason why we need
so many lawyers to advise us on stuff is because there is not enough case law to benefit from
a legal, from a stable business environment.
Like all the Dow's that are getting sued right now, reason why some of that stuff isn't
already settled is because it's a new type of entity.
So why take a chance?
What is it that a C corp, S corp or an LLC, what is it about them that they that you can't
do what you're trying to achieve with the foundation company?
I can't figure that one out.
I think we would probably need to ask the director that or the lawyer, but I'm not able
to figure that out.
I really want to know that.
Here's another one.
How do the initial subscriber, director, secretary, supervisor roles interact at the start of
the foundation company play out?
We know that the subscriber becomes the member automatically and that can appoint other members,
but it's, I don't, I don't understand.
If a subscriber has to be appointed, does that mean they're automatically there or are
they appointed after the foundation company comes into effect?
Is the director coming in after?
I don't, I don't understand that order of operations.
What's my rectangle of confusion?
All right, let's keep going.
Key questions.
Yeah, like the supervisor is, is an, is an emergency role.
Uh, I don't, I don't know.
Anyways, question number five foundation corp companies can have no members.
So under section eight of the foundation's company law, it says it can cease to have
members.
What does that mean?
What does it mean to not have a member?
I don't know what that means.
In the beginning, you have to have a subscriber, right?
Subscriber to create a company who then automatically becomes a member, but then it can cease to
have members, but also has to have a supervisor at all times.
I don't get it.
And you have to have a secretary to do all the qualified services.
I don't know.
I don't, I don't understand what that means.
All right.
Why does the founder role seem optional?
It's very unclear to me what the founder is in all of this.
I don't know.
All right.
Foundation companies have a choice in carrying out its objects.
That seemed to be almost a plain reading of financial or a foundation company's law in
section seven that it, it only if right.
It said if and only if it has to carry it out as objects, if and only if it says so
in the constitution, I don't understand why it seems to give itself the option to carry
out its objects.
Like what, what does the, what does that mean?
It can just do whatever it wants.
I don't know.
All right.
Question eight, secretary must be properly licensed by SEMA.
Okay.
Does the supervisor and the director need to be like, we're pretty, pretty positive.
The director has to be licensed, although there is some confusion about just how explicit
it is in the company's management act.
The director must be licensed and does the director's registration and licensing law
apply to non securities?
It doesn't seem like it does, but I'm not a legal expert, so I have to, I need to ask
that question of, of legal counsel.
Does a supervisor need to be licensed?
I didn't see anywhere that did, but they have their requirement to be in a foundation company.
Kind of makes me think that there might be a license there, but I didn't see anything.
Okay.
An interested person versus a beneficiary.
We knew, we know that a beneficiary has no rights except to benefit, like to receive
the benefit.
An interested person is someone who is entitled to reports and stuff, to entitled to participate.
But what is the Dow community?
Is the Dow community a beneficiary or an interested person?
What is the legal status of the Dow community in a foundation company?
That's a key question I would be asking.
If I could only choose my top three questions, these are the three that I'm choosing.
All right.
And then my last question.
How does the terminology relate to each other across the Companies Act, the Foundation Company
Law and the Companies Management Act?
They seem like some overlap, some don't, some don't have equivalencies.
Some seem like they do, but they call themselves different things.
It's very inconsistent at times.
So is there some clarity there that legal counsel can give us on why the terminology
difference exists?
Like is there some overarching guidance that I missed in a law that I couldn't find?
I tried to find everything I could.
I think I found most of it, but I'm not a legal advisor, I'm not a legal counsel, I'm
not any of that.
Just an enthusiast community member at this point.
All right.
So like I said, we have more questions, which if I ever get the chance to ask legal counsel
and I have the opportunity to go in depth with them, I'll be asking these.
We'll cover that in another episode.
But if I'm not able to get legal counsel, then I'll probably just end up using the episode
to read it.
And then that'll be the episode.
That'll be part two, probably.
Part three, we will use all of that knowledge to read the memo, articles, and the bylaws
of the Sandbox Foundation.
And then we will apply all of this knowledge to that in real time.
That'll be the real one.
That'll be the end, in my mind, of what is a foundation company to us.
Okay?
I had a few community questions, but I answered them all throughout the course of the four
hours.
So thank you, Roxy, Miguel, and Yuma.
And I know I'm missing one, but my stream cut off, so I couldn't see your name, so sorry.
Thank you for the community questions.
And open topics.
All right.
So, again, I did not do, in the beginning of this episode, I did not do the DAO scoreboard.
I did not do the DAO checkbook.
There are a few other things I didn't do that I normally do.
That's because SandDAL is changing.
Because the community was not able or willing to fund SandDAL's episodes, I'm going to
scale back how many I do and how deep I go.
And so this is one of the last ones.
There's a few more, but this is one of the big ones that I'm going to do for a long time,
just because it takes too much time, effort, and money that I'm paying by myself.
So I can't keep doing that.
So what I did is I started up something called SandDAL Weekly, and I'll probably start it
up this coming week.
And it's basically going to be like a five, 10-minute rehash of what the last week was.
And our DAO community just updates, and that'll be the episode.
I might do an episode every now and again if something really piques my interest, or
an interview, or a discussion topic.
There's a few more I want to accomplish, like the DAO ecosystem, and maybe the gamer ecosystem
within the sandbox ecosystem itself.
I think I might have one more interview coming up with World and Women Tech.
So sorry, I have a four-hour podcast, so it's slipping my mind.
So SandDAL Weekly is coming, and it will replace, or at the very least, it will become the new
SandDAL podcast, so I won't be going so deep into everything.
But it will be like a weekly update of news, events, and SIPs.
So I'll also cover SIPs.
But it will be very brief, like five, 10 minutes, maybe 15.
That's it.
That is the whole agenda.
Like I said, parts two and three will be coming out.
Then we will conclude this mini-series of what is a foundation company?
Let's go over Sandbox Spaces one last time.
I do want to go over this each episode.
So if you are new to SandFam, if this is the first time you're listening to us, after four
hours, thank you for being here.
Thank you again, Yuma.
Appreciate you being in chat.
And so here's where we gather as SandFam.
SandFam again is the community.
All the people who participate in the product, purpose, and the people.
So in Discord, we have the hashtag DAL discussion.
The Sandbox Discord.
We also have the Sandbox DAL forums.
On Twitter, we have hashtag SandFam, hashtag the Sandbox DAL, hashtag the Sandbox game.
There's also the Twitter handle for the Sandbox DAL.
On YouTube, we have the Sandbox DAL, which is the Sand podcast.
Then you have Lancer YT, which is the SandDAL podcast.
That's what you're listening to right now.
And then there's SandFam Cafe, which is usually monthly panels of community members hosted
by Bruno, otherwise known as Pickaxe Master.
And he was, if you want to know about him, he was episode SandDAL episode 17, where we
interviewed Bruno, Pickaxe Master.
Talked a little bit about SandFam Cafe.
Okay.
There are ex Twitter spaces every month and every week they go on.
So on Mondays there's Mogulverse Hall with G is Us.
There on Saturdays there's Bulls on the Block.
Monday through Friday is Coffee with Captain, although they are primarily focused on Apoindao.
And whale members, natively digital, although they primarily focus on art, NFT art.
All right, everyone.
This has been SandDAL podcast number 56.
What is a foundation company in the Cayman Islands and why does it matter to the sandbox
community?
Thanks SandFam.