WEBVTT

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Hello, everybody. Welcome to Sandow Podcast number

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65. I'm Lancer, and today is a very, very special

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episode to me considered one of the most anticipated

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that I've done on the Foundation Company series.

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We'll be interviewing a... an actual foundation

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director, someone who does this for a living.

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And as a reminder, the scope of the talk is an

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analysis of the facts. This is just a question

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and answer session, a learning session, where

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we're looking to equip the Sandbox community

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with good data, good information, so that we

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can make smart decisions in our community. A

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disclaimer, we do not represent the Sandbox game

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or the Sandbox Foundation. We are neither your

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financial or legal advisors, and nothing we say

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is to be taken as financial or legal advice.

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When we say the word SIP, we mean Sandbox Improvement

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Proposal. When we say the word DAO, we mean Decentralized

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Autonomous Organization. And when we use words

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like the SanFam, we mean the Sandbox community,

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those who participate in the people, product,

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or purpose of the Sandbox ecosystem. That ecosystem

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looks a little bit like this. Everything from

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the gamer to the sandbox team, the game client

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to the DAO, the white paper. All that comes together

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in the ecosystem, and today's episode is squarely

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on the DAO portion of that. Today we have Glenn

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Kennedy from Leeward Management. He'll introduce

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himself here in just a second. But he's an actual

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foundation director, professional, and... In

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Lancer. After 65 episodes, we'll just skip over

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that part. So a very brief recap. It all started

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in Sandow 34, where we started to look into the

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Foundation. No pun intended. The origins of the

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Sandbox, where we looked into how it all came

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to be. And we didn't really know much at the

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time. I knew nothing. I still know very little,

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but I knew extremely... I knew nothing. So that

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was more of like a... critical investigative

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look. But then as we started unfurling, what

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is this foundation thing all about? In Sandow

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56, we did a four -hour reading of the foundation,

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company's law, the foundation, the company's

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act, everything into the Cayman Islands law itself.

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And that was extremely eye -opening. What that

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did was it opened the door to us learning about

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how there were very, very many good reasons why

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one would have a foundation company. in the Grand

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Cayman Islands and how it all came to be. Then

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Sandow 57, we hosted a U .S. attorney, a practicing

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U .S. attorney, Ernest, where we looked into

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the case law of DAOs, things that are shaping

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up in mostly the District of California, where

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how it's affecting the way DAOs are perceived

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through dispute resolution and the court system.

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In Sandow 59, we hosted Mel and Carolyn from

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From Rockers Global, an international law firm

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and advisors to many DAOs as legal counsel. And

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we had a brief from them about what a foundation

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company was from the legal perspective. And then

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Sandow 60, we did a six -hour reading of the

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Sandbox DAOs documents. That was the Memorandum

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of Association, the Article of Association, and

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their bylaws. And that was... That was a very,

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very deep dive, so six hours. And Sandow 62 wasn't

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much better, clocking in at four hours. We did

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a reading of Star Atlas dolls and did a comparison

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of the two, how they were different, both of

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them being foundation companies. And then last

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episode was episode 64. We had Carolyn back on,

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did a finishing Q &A with all the questions we

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wanted to ask back in Sandow 59. and pretty much

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cleared up all of the remaining cobwebs and stuff

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that we wanted to learn about foundation companies,

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how they're run, their standing, all that. And

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last but not least, we're now at 65, an interview

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with an actual foundation director, ourself,

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leading us to the TLDR. So TLDR, before we get

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started in this, is a foundation company. It's

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built in the name of the Sandbox DAO, and it's

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a type of company in the Cayman Islands. It's

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very flexible in how it's structured and operates.

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As Carolyn mentioned, it's the very best of a

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corporation and a trust. An exempted company

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means a company that does business outside the

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Cayman Islands. Limited by guarantee means the

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members of the foundation can only lose what

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they put into the company. Without any share

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capital means there's no shares or units of ownership

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that were created when the company was formed.

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And the articles and memorandum of association

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The memo being, it creates a foundation company,

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the articles describes how it will be operated,

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and the bylaws establish internal business rules.

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Lots of business is done on the Cayman Islands.

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In one month alone, over 1 ,000 companies were

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registered, and at last count, there's about

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120, at this point, probably 130 ,000 represented

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active companies. Foundation rules are very varied

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and flexible. The subscriber creates a foundation

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company. The secretary is licensed to document,

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record, and certify things that happen. The director

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leads the foundation company. And the members,

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founders, officers, supervisors, managers, they

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all conduct the daily affairs and activities

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required in a foundation company. And last but

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not least, it's governed by Grand Cayman Islands

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Law, specifically the Companies Act and Foundation

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Companies Act. But as we learned in Sandow 56,

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that's definitely not the only law. that's applicable

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here as we did our reg stack. Go take a look

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at 56 if you'd like to learn more. So, Glenn,

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if you wouldn't mind, please introduce yourself

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and Leeward Management, and very happy to have

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you here. Thank you. Thank you very much for

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having me. I would compliment you on your on

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your deep dive on the Cayman Islands Foundation

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company structure. I think it's been probably

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very helpful to many of our members and others

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listening and very comprehensive. So thank you

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for having me. In terms of a bit of a background,

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I'm I'm the founder of Leeward Management. We

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are a corporate services and governance based

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in the Cayman Islands. We're just under 50 people.

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We do everything from foreign foundations as

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a company. manager, to serving as secretary,

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to fulfilling director roles and supervisor roles,

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not only with foundations, with regular companies

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and funds as well, but increasingly over the

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last few years, foundations have been the focus

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of what we do. Well, thank you very much again

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for coming on. And yeah, let's just jump right

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into it at this point. So the first question

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was, in the TLDR that we just mentioned, was

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there anything that you see that requires correction?

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No, I think that's a very helpful and succinct

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summary of the concept and the attributes of

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the foundation company. Awesome. Thank you. Thank

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you. I'm glad I got... That's really – I'm really

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happy to hear that because it didn't take – we've

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just been trying to figure this out as a community,

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and I'm going to end up pushing this out everywhere

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I can. So question number two, independent director,

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corporate director, licensed director, and I'm

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pulling those words from the Director's Registration

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and Licensing Act. What can you tell me about

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– are you one specific one? How would you phrase

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– look at that. Yeah, these are terms, some of

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which are grounded in Cayman regulation and others

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are more general. Suppose I'm, you know, all

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of those things at various times for various

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clients. I guess starting with independent director,

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that's kind of a universal concept, I would say,

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that describes a director who is not a member

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of senior management of an organization, nor

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an owner, nor a shareholder. So they come to

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the board. And they're appointed in an independent

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capacity where they're not answering to the shareholder,

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the owner, which doesn't exist in a foundation,

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but nor them in our senior management. There

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are some aspects of Cayman regulation where an

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independent director is actually required, others

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where they're not. Independent directors are

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not required on a foundation company, but they

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are required on an entity which is registered

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as a virtual asset service provider or FASP.

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And the idea there is to. give the regulator

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and the financial services industry in Cayman

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some comfort that there is an independent set

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of eyes on a board that's able to challenge management

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or ownership. That's really the concept of an

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independent director, and that's universal. You'll

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find that across public companies in most countries

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and in a lot of offshore centers as well. The

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other words you have are corporate director and

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licensed director via the DRLA. Corporate director

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might mean a few different things. That's a bit

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of a less specific term. It might mean a director,

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which is a company, which can actually happen.

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You can have a company serve in a director role.

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But I think what it probably means more commonly

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is a director. which is an actual board member

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of an organization. So you might have a large

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company, someone who's the director of sales

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or the marketing group, you know, some other

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kind of business title, which is. Unfortunately,

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a bit of a poorly chosen term if you're looking

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at it from a lawyer's point of view, because

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those people are not corporate directors. They're

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really officers given some director term in a

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very loose sense. Corporate director might just

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mean that this person is actually a member of

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the board of directors as opposed to one of those

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other titles. And then your last concept is the

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license director via the DRLA. That's the Director's

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Registration and Licensing Act. That's a specific

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Cayman Islands regulatory law which requires

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directors of quote -unquote covered entities

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to register with the Cayman Islands Monetary

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Authority, pay an annual fee. The covered entity,

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though, is not a foundation. A covered entity

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is really an investment fund and certain entities

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that relate to investment funds. Got it. not

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generally applicable in the space we're talking

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about here, but it's an additional regulatory

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measure for that industry in the Cayman Islands.

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Got it. And if you wouldn't mind, is your background

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law business or something else? I was a partner

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at a Canadian law firm before I moved to the

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Cayman Islands 20 years ago. I was then with

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one of the offshore law firms and did a lot of

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work in the fund space. Fast forward to around

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2018, the Foundation Company Act was passed and

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some crypto projects were started to look at

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using it in the early version of what we're doing

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now with SandboxDAO and others. And I had calls

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from attorneys that knew I was a director in

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the fund space and other space and knew a fair

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bit about technology and was into blockchain.

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So one thing led to another. And I was probably

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one of the first directors along with one of

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my other colleagues in the Cayman Islands to

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actually serve as a director of a foundation

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company for a project. Wow. So you became the

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guy because of blockchain. The only guy for some

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period of time all those years ago. Now there's

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many of us, but I might have the claim to fame

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as being the first. Yeah, I think we learned

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from Carolyn and Mel that Mel was a huge engine

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behind foundation companies, regulations and

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law, but very involved. Yeah, absolutely. She

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was certainly a pioneer, is a pioneer in the

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space. She was also very heavily involved in

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the design of the Limited Liability Company Act,

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as I understand as well. Yeah. Well, how about

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that? The original director. So what would you

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say? Yeah, yeah, yeah. My words, my words. What

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does a director, how would you describe the director's

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role? What do they do in a foundation company?

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Yeah, well, look, in some ways it's very similar

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to being a director of any business company fund.

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In other ways, it's unique and somewhat different.

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The directors really are the executives of the

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foundation. They are responsible for seeing its

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operation, hiring service providers, monitoring

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contracts, being on top of compliance, ensuring

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that what the foundation is doing is within the

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law. taking legal advice where necessary, defending

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or filing lawsuits if necessary. Basically, all

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of the executive functions of a foundation are

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listed in the board of directors who oversee

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its operation and management. I actually have

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no follow -on there. I think that pretty much

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sums it up. So the person who, at the end of

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the day, takes the responsibility of the foundation.

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That's correct. Directors are the ultimate authority.

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There's a big gloss on that with foundations.

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Really? What would you say? Well, the gloss is

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that there's also a supervisor role, which is

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unique to foundation companies. And supervisor

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is really seen as a stand -in for the shareholder.

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The way that Cayman Islands enacted the foundation

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company was to basically... create this bolt

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on to the regular companies act and the regular

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companies moved obviously has a lot of roles

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for shareholders you know making fundamental

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changes to a company i mean its constitution

00:15:11.990 --> 00:15:16.429
terminating it for example those are shareholder

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actions with the classic company and because

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the foundation company is is a bolt onto that

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you needed to have the shareholder power exercised

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by someone. And there isn't a shareholder in

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most foundations. There can be, but there usually

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isn't in the crypto context. So those powers

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vest to the supervisor. And there is sometimes

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a supervisor in the picture who can, for example,

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remove the directors the way a shareholder can

00:15:44.909 --> 00:15:47.509
do in a regular company or take some fundamental

00:15:47.509 --> 00:15:50.250
actions like terminate its existence or amend

00:15:50.250 --> 00:15:52.870
its constitution. But typically, just to come

00:15:52.870 --> 00:15:54.610
back to my earlier point, the director is the

00:15:54.610 --> 00:15:58.289
final say in the operation of a foundation company.

00:15:58.549 --> 00:16:01.590
Got it. And what would you say as a director?

00:16:01.690 --> 00:16:04.909
What is a day in the life of you? How does it

00:16:04.909 --> 00:16:10.860
work? Yeah, good question. A lot of reading,

00:16:10.960 --> 00:16:14.820
I think, is probably the most succinct answer

00:16:14.820 --> 00:16:19.620
I can give you. You know, it's a bit like I remember

00:16:19.620 --> 00:16:23.659
the enthusiasm of getting accepted into law school

00:16:23.659 --> 00:16:25.899
all those years ago, and I didn't know what I

00:16:25.899 --> 00:16:27.740
was going to do. But, you know, your vision of

00:16:27.740 --> 00:16:31.779
a lawyer is like, you know, you picture a movie

00:16:31.779 --> 00:16:37.289
like The Firm. I forget the name of it now, the

00:16:37.289 --> 00:16:39.330
Tom Cruise, Jack Nicholson one with the courtroom

00:16:39.330 --> 00:16:42.070
drama. And a lot of people get excited and go

00:16:42.070 --> 00:16:44.769
into law. Yeah, that's it. Thank you. You know,

00:16:44.809 --> 00:16:47.389
people go into law thinking that's what it's

00:16:47.389 --> 00:16:50.149
all about. And in reality, law is a lot of reading

00:16:50.149 --> 00:16:54.529
and writing and very little. You know, I mean,

00:16:54.529 --> 00:16:57.110
a select few are courtroom lawyers and have that

00:16:57.110 --> 00:17:00.629
level of adrenaline. But most just do a lot of

00:17:00.629 --> 00:17:02.549
reading and writing. And being a director is

00:17:02.549 --> 00:17:05.779
not unlike them. more reading than writing them

00:17:05.779 --> 00:17:08.140
obviously but you know there's an awful lot of

00:17:08.140 --> 00:17:10.759
paper that that comes at the board of directors

00:17:10.759 --> 00:17:14.599
in terms of agreements policies construction

00:17:14.599 --> 00:17:17.740
of the foundation constitution and a lot of my

00:17:17.740 --> 00:17:20.859
day is spent reading through that material and

00:17:20.859 --> 00:17:24.880
you know questioning it or commenting on it or

00:17:24.880 --> 00:17:30.670
ultimately approving it And probably focusing

00:17:30.670 --> 00:17:33.710
in on the approval aspect. So you do a lot of

00:17:33.710 --> 00:17:35.849
reading to understand it, to figure out what

00:17:35.849 --> 00:17:38.569
the intent is or what they're driving at. But

00:17:38.569 --> 00:17:40.549
at the end of the day, you're the one responsible

00:17:40.549 --> 00:17:46.230
for approving it into the Constitution, if need

00:17:46.230 --> 00:17:50.390
be, or elsewhere as required. Well, it can be.

00:17:52.519 --> 00:17:54.579
Again, in the context of a crypto foundation,

00:17:55.079 --> 00:17:58.339
the early stage work is really reviewing a lot

00:17:58.339 --> 00:18:01.420
of the architecture and the constitution of the

00:18:01.420 --> 00:18:05.019
foundation company and maybe the wider DAO. So

00:18:05.019 --> 00:18:07.660
things like the bylaws, which you discussed with

00:18:07.660 --> 00:18:11.059
Carolyn and Melissa earlier, there's a lot of

00:18:11.059 --> 00:18:13.319
detail in there. That is the architecture and

00:18:13.319 --> 00:18:16.730
the governance framework that the... the project

00:18:16.730 --> 00:18:19.390
and the DAO is going to have. So you kind of

00:18:19.390 --> 00:18:21.490
want to get that right at the beginning, and

00:18:21.490 --> 00:18:27.329
it's easy to get it wrong. And it's not so easy

00:18:27.329 --> 00:18:29.190
sometimes to rewind on some of those things,

00:18:29.210 --> 00:18:30.890
particularly if you're talking about decentralized

00:18:30.890 --> 00:18:33.809
governance rights. Got it. What's an example

00:18:33.809 --> 00:18:38.589
of getting it wrong in your experience? Well,

00:18:38.730 --> 00:18:44.569
I'll use the example of... of decentralized governance

00:18:44.569 --> 00:18:48.650
aspects. So, you know, we might start a typical

00:18:48.650 --> 00:18:51.109
foundation in what's sometimes referred to as

00:18:51.109 --> 00:18:54.369
a director -led manner, meaning that most of

00:18:54.369 --> 00:18:58.210
the powers are exercised by the director, and

00:18:58.210 --> 00:19:02.809
the director might take into account the DAO,

00:19:02.809 --> 00:19:05.009
if there is one, or the nascent DAO if it's just

00:19:05.009 --> 00:19:08.690
being spun up. you know direction will be taken

00:19:08.690 --> 00:19:10.869
from the community to the holders and exercise

00:19:10.869 --> 00:19:14.170
ultimately by the director and the director -led

00:19:14.170 --> 00:19:18.190
lobby um with progressive decentralization those

00:19:18.190 --> 00:19:20.950
powers are often seated to the dow but you could

00:19:20.950 --> 00:19:23.910
make a mistake and and do that too soon and and

00:19:23.910 --> 00:19:26.650
for example you know architect the foundation

00:19:26.650 --> 00:19:29.529
in a way that that powers need to be exercised

00:19:29.529 --> 00:19:31.849
by the dow right away under the agreement under

00:19:31.849 --> 00:19:34.970
the colson bible then maybe you haven't got it

00:19:34.970 --> 00:19:37.029
down yet. Maybe there aren't any token holders.

00:19:37.210 --> 00:19:39.690
So you kind of have to think how these powers

00:19:39.690 --> 00:19:42.789
are first set out and to be exercised and how

00:19:42.789 --> 00:19:45.569
they might evolve over time. And that takes some

00:19:45.569 --> 00:19:49.970
careful consideration. Got it. Yeah, I didn't

00:19:49.970 --> 00:19:53.430
even know that director -led and then to token

00:19:53.430 --> 00:19:57.109
holder -led was a thing until Mel and Carolyn

00:19:57.109 --> 00:20:00.740
explained it to us. That was a surprise to me.

00:20:00.759 --> 00:20:03.140
I think it made a lot of sense for the academic

00:20:03.140 --> 00:20:05.200
reading of the laws and then the application

00:20:05.200 --> 00:20:12.400
of them. What would you say are some misconceptions

00:20:12.400 --> 00:20:18.319
that do exist about the director's role? Yeah,

00:20:18.319 --> 00:20:21.480
there's a few. I think one is probably that it's

00:20:21.480 --> 00:20:23.900
an easy job. It would not be nice. You're just

00:20:23.900 --> 00:20:26.259
a director. You just sign stuff, and you can

00:20:26.259 --> 00:20:28.500
spend the rest of the time. golfing on your boat

00:20:28.500 --> 00:20:31.099
or whatever you want to do i mean that's a pretty

00:20:31.099 --> 00:20:35.440
big there may be a class of directors out there

00:20:35.440 --> 00:20:39.000
somewhere that that um you know earn very large

00:20:39.000 --> 00:20:42.059
fee for the one public board they're on and and

00:20:42.059 --> 00:20:44.779
uh might be semi -retired and can enjoy those

00:20:44.779 --> 00:20:47.299
things but uh at least in the world i live in

00:20:47.299 --> 00:20:49.559
being a director is a real job i mean i am on

00:20:49.559 --> 00:20:52.640
you know nearly 24 hours a day but for when i'm

00:20:52.640 --> 00:20:56.539
asleep firm logo or our firm motto, sorry, is

00:20:56.539 --> 00:21:00.099
always on governance. And we need to really move

00:21:00.099 --> 00:21:04.220
and be responsive to the clients we have. Things

00:21:04.220 --> 00:21:06.480
move very quickly in the space we're in. As you

00:21:06.480 --> 00:21:09.839
know, weeks can make a huge difference to a launch,

00:21:10.019 --> 00:21:14.279
to some counterparty negotiations, agreements.

00:21:15.259 --> 00:21:19.119
So being incredibly responsive and being on all

00:21:19.119 --> 00:21:21.539
the time is a requirement of the job, in my view,

00:21:21.619 --> 00:21:24.930
and that makes it a pretty demanding job. You

00:21:24.930 --> 00:21:27.609
know, as you say that, I guess it kind of clicks

00:21:27.609 --> 00:21:31.430
in my brain that, especially crypto folks where

00:21:31.430 --> 00:21:35.369
it's 24 -7, that always -on governance that Leeward

00:21:35.369 --> 00:21:39.609
and yourself offer as a service to support matches

00:21:39.609 --> 00:21:43.210
the ethos of an international community who is

00:21:43.210 --> 00:21:47.089
trading for activities 24 -7 in the blockchain

00:21:47.089 --> 00:21:53.990
space. I didn't quite consider that. And you

00:21:53.990 --> 00:21:57.130
made a good point, which I didn't make. But global

00:21:57.130 --> 00:21:59.650
is the other point, right? So, you know, we support

00:21:59.650 --> 00:22:03.150
client projects out of Asia, Europe, obviously

00:22:03.150 --> 00:22:06.970
North America. And those people have, you know,

00:22:06.970 --> 00:22:08.970
quite a few different time zones to cover. And

00:22:08.970 --> 00:22:11.250
waking up in the morning means there's email

00:22:11.250 --> 00:22:13.910
from Asia and Europe overnight. And, you know,

00:22:13.930 --> 00:22:17.150
when you're ready to log off and sign off for

00:22:17.150 --> 00:22:20.509
the North American clients at 6 or 7 p .m. And

00:22:20.509 --> 00:22:24.029
then they start up again with Far East and Europe.

00:22:24.269 --> 00:22:27.150
So, you know, it's a pretty dynamic piece, and

00:22:27.150 --> 00:22:30.710
it was pretty quick. Yeah. So one misconception

00:22:30.710 --> 00:22:33.069
is that it's an easy job. Were there any others

00:22:33.069 --> 00:22:37.910
that came to mind? Yeah, I mean, I guess there's

00:22:37.910 --> 00:22:40.789
other aspects of it. Easy, you know, directors

00:22:40.789 --> 00:22:46.390
don't do anything. Got it. Service providers.

00:22:46.910 --> 00:22:49.769
work you know that that is is also a misconception

00:22:49.769 --> 00:22:53.369
directors have uh have a lot of risk as well

00:22:53.369 --> 00:22:56.349
great directors can be sued for all kinds of

00:22:56.349 --> 00:23:00.029
things breach of fiduciary duty or to the foundation

00:23:00.029 --> 00:23:02.849
this is the main heading of damages but you could

00:23:02.849 --> 00:23:06.680
get into it with regulators as well so in addition

00:23:06.680 --> 00:23:08.920
to being pretty demanding as a client service

00:23:08.920 --> 00:23:12.619
and in terms of keeping up on reading and documentation

00:23:12.619 --> 00:23:16.000
and the law, you need to be very careful about

00:23:16.000 --> 00:23:19.279
risk and ensure you're managing risk in an intelligent

00:23:19.279 --> 00:23:22.099
way or you'll have a blow up on your hands at

00:23:22.099 --> 00:23:27.000
some point and that will not end. Yeah, we definitely

00:23:27.000 --> 00:23:28.579
have a couple of questions about that later on

00:23:28.579 --> 00:23:33.380
about the fiduciary part. But as you do your

00:23:33.380 --> 00:23:36.500
job day to day, How would you define success

00:23:36.500 --> 00:23:44.400
as a director? Good question. Look, I think for

00:23:44.400 --> 00:23:47.900
me, success is the satisfaction I derive from

00:23:47.900 --> 00:23:51.920
clients referring me to other clients and saying,

00:23:51.960 --> 00:23:54.039
you know, this is a person you can trust and

00:23:54.039 --> 00:23:57.980
I'm not holding back work at the speed you're

00:23:57.980 --> 00:24:02.259
working and help the project succeed. So, you

00:24:02.259 --> 00:24:08.720
know, with that. It was a sense of action and,

00:24:08.720 --> 00:24:13.259
of course, increasing business as well. I, some

00:24:13.259 --> 00:24:15.799
time ago, brought on additional directors at

00:24:15.799 --> 00:24:19.180
Leeward and introduced them. None of the clients

00:24:19.180 --> 00:24:21.059
I've worked with before are firms that have preferred

00:24:21.059 --> 00:24:23.559
work, and that's how we've really built our business,

00:24:23.619 --> 00:24:25.480
based on that sort of reputation and referral.

00:24:25.740 --> 00:24:30.019
And to me, that's success. I think that's...

00:24:31.279 --> 00:24:33.700
I mean, the more we delved into this subject

00:24:33.700 --> 00:24:36.940
from where we started, which is this kind of

00:24:36.940 --> 00:24:39.339
cynical, like there's the Illuminati and the

00:24:39.339 --> 00:24:42.920
offshoring and everyone's on their boat. And

00:24:42.920 --> 00:24:46.819
from where we started to there, to where we are

00:24:46.819 --> 00:24:50.440
now, which is these are real people. They've

00:24:50.440 --> 00:24:52.720
got families. They've got hopes, dreams. They

00:24:52.720 --> 00:24:54.519
want to do a good job, just like anybody else.

00:24:54.619 --> 00:24:56.519
They just happen to live on an island surrounded

00:24:56.519 --> 00:25:03.500
by beautiful water. That's all. That's all. It's

00:25:03.500 --> 00:25:07.440
really humanized the whole process. The tropical

00:25:07.440 --> 00:25:09.599
weather certainly doesn't help in that misconception

00:25:09.599 --> 00:25:13.799
department, but hey, it is where it is. Yeah,

00:25:13.839 --> 00:25:17.619
yeah. I remember, I think it was Mel or perhaps

00:25:17.619 --> 00:25:20.039
it was Carolyn who mentioned kind of the story

00:25:20.039 --> 00:25:23.160
behind that and how Cayman Islands came to be

00:25:23.160 --> 00:25:25.819
like a British protectorate and the whole like

00:25:25.819 --> 00:25:28.819
that. That was cool. That was cool to hear about

00:25:28.819 --> 00:25:34.119
how things happen. So increasing business. That's

00:25:34.119 --> 00:25:37.279
quite the story. Yeah. Yeah. You saved a British

00:25:37.279 --> 00:25:40.740
monarch's family member. And then for time and

00:25:40.740 --> 00:25:44.299
forever, you know, the Cayman Islands has like

00:25:44.299 --> 00:25:48.140
a special status. Well, there's some lore in

00:25:48.140 --> 00:25:50.799
there as well. You know, that story you're referring

00:25:50.799 --> 00:25:53.359
to, I think they've tried very hard to dig up

00:25:53.359 --> 00:25:56.660
actual evidence of what happened. I bet. I bet.

00:25:57.789 --> 00:26:00.109
but i like the story it's it's a neat one and

00:26:00.109 --> 00:26:02.710
uh and uh just the general evolution of the king

00:26:02.710 --> 00:26:05.950
this is a fascinating story from financial services

00:26:05.950 --> 00:26:08.829
perspective and and to see what what the islands

00:26:08.829 --> 00:26:11.329
have created now in terms of both the fun space

00:26:11.329 --> 00:26:13.670
which is by the way a lot larger than what we

00:26:13.670 --> 00:26:16.990
do in the digital asset crypto space and and

00:26:16.990 --> 00:26:19.490
and now with with the foundation company being

00:26:19.490 --> 00:26:22.910
the leading i guess real world interface for

00:26:22.910 --> 00:26:26.430
for them so that's quite remarkable Yeah, when

00:26:26.430 --> 00:26:28.769
I saw just how much business was being conducted,

00:26:28.869 --> 00:26:32.170
and I think at this point, I can definitively

00:26:32.170 --> 00:26:34.769
say there are some really good reasons why you

00:26:34.769 --> 00:26:36.369
would want to have a foundation company in the

00:26:36.369 --> 00:26:38.829
Grand Cayman Islands. Not just foundation companies,

00:26:38.950 --> 00:26:42.369
but the reason why business is the way it is

00:26:42.369 --> 00:26:44.450
there. It's an open environment. It's very flexible.

00:26:44.769 --> 00:26:47.430
There are a lot of benefits, and we've talked

00:26:47.430 --> 00:26:50.609
about that previously. But the more you look

00:26:50.609 --> 00:26:53.390
into it, these are real people, not like… Secret

00:26:53.390 --> 00:26:58.130
cabal behind the scenes trying to take over governments

00:26:58.130 --> 00:27:00.930
and all that stuff. The sort of things that you

00:27:00.930 --> 00:27:02.750
hear in the crypto space that I had to acknowledge

00:27:02.750 --> 00:27:05.609
because those are real. Those are real perspectives.

00:27:05.950 --> 00:27:07.890
But as we delve deeper into this, you definitely

00:27:07.890 --> 00:27:12.410
see people like Glenn who really define success

00:27:12.410 --> 00:27:15.970
as satisfaction from clients, referring him as

00:27:15.970 --> 00:27:18.750
a trusted person, and then increasing business

00:27:18.750 --> 00:27:20.490
based on reputation referral. I mean, that's

00:27:20.490 --> 00:27:24.049
just very relatable. So what would you say are

00:27:24.049 --> 00:27:28.710
some skills that are important to have as a successful

00:27:28.710 --> 00:27:35.109
director? Good question. I guess it would probably

00:27:35.109 --> 00:27:38.190
start with having some subject matter expertise

00:27:38.190 --> 00:27:42.750
and having something to offer. So, you know,

00:27:42.769 --> 00:27:45.309
most of the successful directors I know have

00:27:45.309 --> 00:27:51.690
come from a profession or a business line which...

00:27:51.980 --> 00:27:54.519
gives them something in terms of knowledge and

00:27:54.519 --> 00:27:56.960
expertise that they can offer to their client

00:27:56.960 --> 00:27:59.960
boards. In my case, as I mentioned, I was a lawyer.

00:28:00.119 --> 00:28:03.539
So law, as it turns out, is actually a pretty

00:28:03.539 --> 00:28:05.980
good fit with crypto. I've kind of said it jokingly

00:28:05.980 --> 00:28:08.420
sometimes, but not that jokingly, that if you're

00:28:08.420 --> 00:28:10.339
not a developer in crypto, you're probably a

00:28:10.339 --> 00:28:14.059
lawyer. And I guess that's owing down to the...

00:28:14.920 --> 00:28:17.700
the gray area and the legal uncertainty and the

00:28:17.700 --> 00:28:20.019
legal risk and regulatory risk that the space

00:28:20.019 --> 00:28:22.980
has experienced, at least for the last decade

00:28:22.980 --> 00:28:26.539
or so, hopefully improve it now. But having that

00:28:26.539 --> 00:28:30.579
background has helped me deliver good governance

00:28:30.579 --> 00:28:35.000
to the boards I'm on. It helps me deal with people

00:28:35.000 --> 00:28:38.019
like Nolan and Carolyn and the other many lawyers

00:28:38.019 --> 00:28:41.839
that work in the space. and kind of tackle the

00:28:41.839 --> 00:28:44.380
issues that are often very legal or regulatory

00:28:44.380 --> 00:28:47.319
in nature and often don't have very clear answers.

00:28:47.460 --> 00:28:51.900
So for me, it's first of all having something

00:28:51.900 --> 00:28:53.980
to offer. Now that might not always be a lawyer.

00:28:54.099 --> 00:28:57.920
It could be that there are some founders or developers

00:28:57.920 --> 00:29:01.390
that have been on boards. And they come to the

00:29:01.390 --> 00:29:03.470
board with that experience. You know, they've

00:29:03.470 --> 00:29:05.230
launched a startup before. They've launched,

00:29:05.269 --> 00:29:06.890
you know, maybe a Web2 company. They've been

00:29:06.890 --> 00:29:09.390
in a crypto project before. They know the game

00:29:09.390 --> 00:29:11.869
plan. They're able to see things through a lens

00:29:11.869 --> 00:29:15.430
which is different from mine. And there may also

00:29:15.430 --> 00:29:17.670
be other professionals. You know, accountants

00:29:17.670 --> 00:29:21.230
are pretty common in the Cayman Islands due to

00:29:21.230 --> 00:29:25.089
the funds industry. But on fund boards, it's

00:29:25.089 --> 00:29:27.259
very important to have them. sort of form of

00:29:27.259 --> 00:29:29.700
auditor because financial reporting is a very

00:29:29.700 --> 00:29:32.259
big part of being a director and overseeing financial

00:29:32.259 --> 00:29:35.720
reporting of a fund so i would say the first

00:29:35.720 --> 00:29:37.799
attribute is have something to offer that that

00:29:37.799 --> 00:29:40.700
that you can draw on from your your own professional

00:29:40.700 --> 00:29:47.579
and work experience i mean all this like once

00:29:47.579 --> 00:29:51.240
you say it out loud like it like you said in

00:29:51.240 --> 00:29:53.339
the beginning there are a lot of similarities

00:29:53.339 --> 00:29:57.619
between foundation company and just a regular

00:29:57.619 --> 00:30:00.319
company that this sort of good business sense

00:30:00.319 --> 00:30:02.559
that you would bring to it you also bring to

00:30:02.559 --> 00:30:07.119
a foundation company yeah right that's it that's

00:30:07.119 --> 00:30:11.059
it you know I like to think with my skill set

00:30:11.059 --> 00:30:13.940
I have a lot to offer my boards if I was approached

00:30:13.940 --> 00:30:17.759
to be a director of I don't know a mining company

00:30:17.759 --> 00:30:20.880
say for example you know maybe I wouldn't be

00:30:20.880 --> 00:30:22.990
the best candidate because I don't want to i'm

00:30:22.990 --> 00:30:24.930
not a geologist and i've never run a mining company

00:30:24.930 --> 00:30:27.470
and i don't know anything really about how it

00:30:27.470 --> 00:30:30.289
works so i think you you want to pick your director

00:30:30.289 --> 00:30:32.990
based on the from the client side now and you

00:30:32.990 --> 00:30:34.650
pick your director based on the skills that they

00:30:34.650 --> 00:30:37.329
have to offer and may also be some other things

00:30:37.329 --> 00:30:40.829
like connections you know you can pick a director

00:30:40.829 --> 00:30:43.549
who has very good connections maybe with say

00:30:43.549 --> 00:30:47.029
exchanges or or market makers or development

00:30:47.029 --> 00:30:51.500
teams that can bring that to the project and

00:30:51.500 --> 00:30:55.079
contribute that knowledge and network through

00:30:55.079 --> 00:30:57.359
any other things too. I mean, obviously being

00:30:57.359 --> 00:30:59.819
responsive, as I mentioned earlier, having a

00:30:59.819 --> 00:31:02.859
team of people behind the director, you know,

00:31:02.880 --> 00:31:04.660
Leeward, we're close to 50 people now, a lot

00:31:04.660 --> 00:31:07.579
of those people support what I do and make sure

00:31:07.579 --> 00:31:09.319
that if I happen to be on a plane or whatever,

00:31:09.460 --> 00:31:11.339
there's someone there who can, you know, answer

00:31:11.339 --> 00:31:14.019
or assure a client that I'll be back online very

00:31:14.019 --> 00:31:16.299
soon type of thing. So, you know, having that.

00:31:18.039 --> 00:31:20.519
is an important aspect in the space we're in.

00:31:21.920 --> 00:31:24.119
Making sure the platform or whoever you're choosing

00:31:24.119 --> 00:31:27.420
is one which is licensed, regulated, insured.

00:31:27.740 --> 00:31:30.079
There's a few other attributes to it, but I would

00:31:30.079 --> 00:31:32.619
go back to my first point, which is pick the

00:31:32.619 --> 00:31:34.799
candidate who can bring some knowledge to your

00:31:34.799 --> 00:31:38.440
project and your board. Yeah. And pivoting now

00:31:38.440 --> 00:31:42.349
to DAOs, going down the DAO road. How would you

00:31:42.349 --> 00:31:44.970
know, or what are some indicators where you know

00:31:44.970 --> 00:31:47.690
if the foundation company is successfully serving

00:31:47.690 --> 00:31:54.509
the DAO? That's a good question. And as you said

00:31:54.509 --> 00:31:56.750
earlier, and as I think Carolyn and Mel explained,

00:31:57.049 --> 00:31:59.970
the foundation setup is very plastic and can

00:31:59.970 --> 00:32:03.769
be configured in many different ways. Same configuration

00:32:03.769 --> 00:32:06.849
is where the director's role is very limited.

00:32:07.230 --> 00:32:11.200
And that governance is... is decentralized and

00:32:11.200 --> 00:32:14.660
it's done by token holders through platforms

00:32:14.660 --> 00:32:17.660
like snapshot or tally or whatever and the director's

00:32:17.660 --> 00:32:20.119
role in that case is props for knowing this is

00:32:20.119 --> 00:32:21.500
going to be pretty limited right i mean you're

00:32:21.500 --> 00:32:25.140
kind of what's the sorry say again i said props

00:32:25.140 --> 00:32:27.000
for knowing both of those by the way i expected

00:32:27.000 --> 00:32:36.460
nothing less No, no, no problem. No problem.

00:32:36.579 --> 00:32:39.700
I'll take the compliment. But in those scenarios,

00:32:39.960 --> 00:32:45.859
the foundation is more of an executor, I guess.

00:32:45.920 --> 00:32:49.680
It's just carrying out the will of the DAO. And

00:32:49.680 --> 00:32:53.019
success is probably pretty easily measured there

00:32:53.019 --> 00:32:55.079
because the foundation is really just doing what

00:32:55.079 --> 00:32:57.900
it's told by token holders. And as long as it

00:32:57.900 --> 00:33:00.220
does what it's told, and it should do that, barring

00:33:00.220 --> 00:33:03.019
maybe illegality or whatever. or some other limited

00:33:03.019 --> 00:33:07.640
factor, it will function as designed. And that

00:33:07.640 --> 00:33:10.359
should be a successful marriage between the DAO

00:33:10.359 --> 00:33:13.700
and the foundation company. There are other scenarios,

00:33:14.180 --> 00:33:15.740
I guess, kind of going back to my comment about

00:33:15.740 --> 00:33:19.359
director led foundations or foundations which

00:33:19.359 --> 00:33:21.539
are not really a wrapper for the DAO. There's

00:33:21.539 --> 00:33:24.519
sort of another organ in the governance structure

00:33:24.519 --> 00:33:27.799
of a project. In those scenarios, you could get

00:33:27.799 --> 00:33:31.289
a bit of divergence from what... elements of

00:33:31.289 --> 00:33:33.890
the DAO, groups of token holders expect from

00:33:33.890 --> 00:33:35.829
the foundation and what the foundation's board

00:33:35.829 --> 00:33:40.509
thinks it should be doing. It could be various

00:33:40.509 --> 00:33:43.869
political pressures in the world. Some group

00:33:43.869 --> 00:33:46.730
wants to, you know, for protocol and others don't

00:33:46.730 --> 00:33:49.329
and the board doesn't want to take any risk on

00:33:49.329 --> 00:33:52.769
that. Loud members of the community do. In scenarios

00:33:52.769 --> 00:33:56.369
like that, you can start to, I guess, assess

00:33:56.369 --> 00:33:59.900
your question a little. with a little bit more

00:33:59.900 --> 00:34:03.279
substance because, you know, you might be agreeing

00:34:03.279 --> 00:34:05.839
with the foundation's point and say, the foundation's

00:34:05.839 --> 00:34:07.500
not doing what we need to do. You know, we need

00:34:07.500 --> 00:34:10.920
to move this project forward by doing X, Y, or

00:34:10.920 --> 00:34:13.119
Z, but, you know, the foundation's not doing

00:34:13.119 --> 00:34:15.380
it. The verse could be true. The foundation could

00:34:15.380 --> 00:34:18.940
be plotting a bit of a course, which the DAO

00:34:18.940 --> 00:34:23.179
is not in favor of our elements of the DAO. So,

00:34:23.340 --> 00:34:26.880
you know, I don't know. It may mean success or

00:34:26.880 --> 00:34:29.139
failure, but it might mean a divergence of opinion

00:34:29.139 --> 00:34:32.099
between the token home community and the foundation's

00:34:32.099 --> 00:34:37.860
spirits. You mentioned there are some configurations

00:34:37.860 --> 00:34:40.800
where the foundation company could act as another

00:34:40.800 --> 00:34:43.139
organ, which I took to mean it has a little bit

00:34:43.139 --> 00:34:44.739
more agency rather than just being doing what

00:34:44.739 --> 00:34:48.619
it's told. Is there a way to tell which one we

00:34:48.619 --> 00:34:54.820
have as a DAO? Yeah, generally, that's an answer

00:34:54.820 --> 00:34:57.260
that can be found in the bylaws and the articles

00:34:57.260 --> 00:35:02.699
of the foundation company. If you look at a project

00:35:02.699 --> 00:35:06.420
like, say, Ape Foundation or Arbitrum, those

00:35:06.420 --> 00:35:15.400
are heavily DAO forward or empowered DAOs, I

00:35:15.400 --> 00:35:17.800
suppose, where the foundation role is going to

00:35:17.800 --> 00:35:23.130
be more limited. And so the director of the company,

00:35:23.250 --> 00:35:25.789
and you'll find that by looking at those documents,

00:35:25.929 --> 00:35:27.630
which are, you know, I mentioned those two examples

00:35:27.630 --> 00:35:29.449
because they're online and they're transparent

00:35:29.449 --> 00:35:32.489
and you can read them. They have language in

00:35:32.489 --> 00:35:35.869
the bylaws, which talks about, for example, resolutions

00:35:35.869 --> 00:35:38.769
and token holder voting mechanics and things

00:35:38.769 --> 00:35:41.130
like, you know, voting thresholds for proposals

00:35:41.130 --> 00:35:46.510
and SIPs or PIPs. apes or whatever that whatever

00:35:46.510 --> 00:35:49.550
the acronym is for the proposal mechanism but

00:35:49.550 --> 00:35:52.929
when you see that in in in the documents that's

00:35:52.929 --> 00:35:55.690
say null that this is a decentralized governance

00:35:55.690 --> 00:36:00.170
project they may have different degrees of decentralization

00:36:00.170 --> 00:36:03.690
some might say you know on on the passing of

00:36:03.690 --> 00:36:07.030
a proposal the foundation shall implement it

00:36:08.220 --> 00:36:11.500
might say, you know, the information may be implemented.

00:36:11.519 --> 00:36:13.480
The may implies a bit more discretion to the

00:36:13.480 --> 00:36:18.139
directors where it's not completely, the direction

00:36:18.139 --> 00:36:19.920
is not completely set by the DAO, but there's

00:36:19.920 --> 00:36:22.440
some reserve power by the directors. So there's

00:36:22.440 --> 00:36:25.360
a spectrum there of governance arrangements.

00:36:25.500 --> 00:36:28.380
And if you look in those documents and projects,

00:36:28.739 --> 00:36:32.860
constitution and bylaws, you'll see where that

00:36:32.860 --> 00:36:36.000
project is on the spectrum. Yeah. I'm showing

00:36:36.000 --> 00:36:38.400
right now the timeline event slide that Mel and

00:36:38.400 --> 00:36:43.579
Carolyn gave us from the incorporation over to

00:36:43.579 --> 00:36:45.739
the sliding scale of token holder led from director

00:36:45.739 --> 00:36:53.260
led. And would you say that when you said arbitrage,

00:36:53.320 --> 00:36:59.840
what was that second entity? Bitcoin. Bitcoin,

00:37:00.059 --> 00:37:06.170
got it. Which just recently had a very... seismic

00:37:06.170 --> 00:37:10.250
shift in its approach but another podcast another

00:37:10.250 --> 00:37:14.750
day all right how do you see the relationship

00:37:14.750 --> 00:37:17.110
between the down the foundation company i learned

00:37:17.110 --> 00:37:23.429
from mel and carolyn that that it can be um well

00:37:23.429 --> 00:37:26.090
the between the token holder led and and director

00:37:26.090 --> 00:37:30.389
led the various spectrum of the director led

00:37:30.389 --> 00:37:33.070
as vested with much of the authority and power

00:37:33.659 --> 00:37:36.440
needed to execute, and then as a sliding scale

00:37:36.440 --> 00:37:38.940
over to token -holder -led, either relinquishes

00:37:38.940 --> 00:37:42.360
or, with updating the bylaws, doesn't have as

00:37:42.360 --> 00:37:45.099
much power. How do you see that relationship?

00:37:49.039 --> 00:37:52.860
You particularly set out the kind of spectrum

00:37:52.860 --> 00:37:56.199
where the... pathway, I guess, that is followed

00:37:56.199 --> 00:37:59.059
in terms of decentralized governance. Few of

00:37:59.059 --> 00:38:02.719
them come out of the gate as token holder -led.

00:38:04.239 --> 00:38:08.280
Typically, the difference between one and the

00:38:08.280 --> 00:38:10.980
other in your example is a function of time and

00:38:10.980 --> 00:38:15.260
community growth. So out of the gate, at incorporation,

00:38:15.400 --> 00:38:19.260
a lot of them are director -led and will progressively

00:38:19.260 --> 00:38:22.519
decentralize governance to become token holder

00:38:22.519 --> 00:38:26.349
-led over time. um that's a fairly common approach

00:38:26.349 --> 00:38:30.730
and it's usually one that is calibrated with

00:38:30.730 --> 00:38:33.530
the growth of the dow and the scope of the project

00:38:33.530 --> 00:38:36.789
and the maturity of the dow so you know ensuring

00:38:36.789 --> 00:38:39.769
that sometimes sometimes it might be too early

00:38:39.769 --> 00:38:42.730
to decentralize i know that might be anathema

00:38:42.730 --> 00:38:46.469
to some um some purists in the space but but

00:38:46.469 --> 00:38:49.329
you know um The project may have just launched

00:38:49.329 --> 00:38:53.130
its application, its network, its protocol in

00:38:53.130 --> 00:38:57.349
its very infancy. And the foundation there might

00:38:57.349 --> 00:39:00.030
be more interested in sort of shepherding that

00:39:00.030 --> 00:39:03.110
growth and making sure that the vision for the

00:39:03.110 --> 00:39:08.110
project is carried out. And the DAO really only

00:39:08.110 --> 00:39:11.449
comes to have controlling powers over the protocol

00:39:11.449 --> 00:39:13.610
at a later point when it's sufficiently decentralized,

00:39:13.730 --> 00:39:15.449
when there's enough people and you don't want...

00:39:16.420 --> 00:39:19.820
You could say, how can that be? Why should we

00:39:19.820 --> 00:39:22.260
let two foundation directors have all the power

00:39:22.260 --> 00:39:25.760
over the foundation? But in a very early day,

00:39:25.940 --> 00:39:28.739
in a project's life, there might only be a couple

00:39:28.739 --> 00:39:31.039
of token holders. So either way, you're going

00:39:31.039 --> 00:39:35.139
to be fairly centralized. So I guess to go back,

00:39:35.420 --> 00:39:38.539
typically, they come out of the gate director

00:39:38.539 --> 00:39:42.760
-led. And over time, they will often descend.

00:39:43.239 --> 00:39:44.860
which relies on the point of being token holder

00:39:44.860 --> 00:39:47.360
-led. That's not always true. Some foundations

00:39:47.360 --> 00:39:49.400
come out of the gate that are token holder -led

00:39:49.400 --> 00:39:51.300
and they're, you know, big enough launch with

00:39:51.300 --> 00:39:55.900
a big enough and dispersed group of token holders

00:39:55.900 --> 00:39:58.159
that token holder governance will start from

00:39:58.159 --> 00:40:03.940
day one. So it almost sounds like that relationship

00:40:03.940 --> 00:40:08.860
is with, on a good day, I'd say ideally the foundation

00:40:08.860 --> 00:40:12.949
company is the shield. is the thing that keeps

00:40:12.949 --> 00:40:16.949
the DAO on track to, if it wants to become token

00:40:16.949 --> 00:40:22.769
holder -led, it matures into what that is. I

00:40:22.769 --> 00:40:25.050
think it's a fair statement. There's certainly

00:40:25.050 --> 00:40:27.769
a role there for the directors of a foundation

00:40:27.769 --> 00:40:32.630
in shepherding that growth, that early growth

00:40:32.630 --> 00:40:35.289
of the protocol and the ultimate decentralization.

00:40:42.889 --> 00:40:45.489
All right, moving right along. What responsibility

00:40:45.489 --> 00:40:48.670
– I mean, at this point, I think I'm starting

00:40:48.670 --> 00:40:51.010
to hear a pattern. What responsibility does a

00:40:51.010 --> 00:40:57.750
foundation company have to the Dell? Well, yeah.

00:41:02.289 --> 00:41:05.949
There's some legal answers to that, and then

00:41:05.949 --> 00:41:08.610
there's obviously some variability from project

00:41:08.610 --> 00:41:11.519
to project. But typically, I guess just – coming

00:41:11.519 --> 00:41:13.800
back to the director's role, the duties of the

00:41:13.800 --> 00:41:16.519
director are usually owed to the foundation company

00:41:16.519 --> 00:41:20.840
only and not to a broader group. It's sort of

00:41:20.840 --> 00:41:24.960
a legal construct which is in keeping with the

00:41:24.960 --> 00:41:31.119
concept of a corporation and then added to that

00:41:31.119 --> 00:41:35.840
though are Sometimes a constitution, not the

00:41:35.840 --> 00:41:37.619
memorandum articles, but a separate document

00:41:37.619 --> 00:41:41.920
constitution, which talks about the overall construct

00:41:41.920 --> 00:41:46.940
of the project. And the bylaws, which deal with

00:41:46.940 --> 00:41:49.639
token holder voting. So it may be that through

00:41:49.639 --> 00:41:52.260
those other instruments, there is a sort of an

00:41:52.260 --> 00:41:56.139
expanded set of duties and responsibilities owed

00:41:56.139 --> 00:42:01.960
to the DAO and to the wider project. legal duties

00:42:01.960 --> 00:42:04.460
of the director or to act in the best interest

00:42:04.460 --> 00:42:12.019
of the company, of the foundation company. Earlier

00:42:12.019 --> 00:42:14.300
when you said it was responsibility to the foundation

00:42:14.300 --> 00:42:17.219
company only, what I would read there is not

00:42:17.219 --> 00:42:19.780
the DAO, not the thing it's wrapping, but the

00:42:19.780 --> 00:42:27.610
actual legal entity. Yeah, that's right. What

00:42:27.610 --> 00:42:29.590
is in the best interest of the foundation company

00:42:29.590 --> 00:42:31.849
is then the next question. And if you're talking

00:42:31.849 --> 00:42:33.849
about a foundation company, which is there to

00:42:33.849 --> 00:42:37.409
serve a DAO and enable a project to contract

00:42:37.409 --> 00:42:40.070
and own whole real world assets or whatever,

00:42:40.309 --> 00:42:44.630
really its objects are to further the DAO and

00:42:44.630 --> 00:42:47.090
further the project and further the protocol.

00:42:47.789 --> 00:42:51.670
So it's not, in my view, fair to say that even

00:42:51.670 --> 00:42:54.050
though the legal duties are said to be owed.

00:42:54.429 --> 00:42:56.670
only to the foundation company that you can ignore

00:42:56.670 --> 00:42:59.650
as a director the wider dao and the community

00:42:59.650 --> 00:43:03.090
and the token holders so it's uh it's a little

00:43:03.090 --> 00:43:04.849
bit of a circular discussion as you're probably

00:43:04.849 --> 00:43:08.070
picking up on but but uh that that's the construct

00:43:08.070 --> 00:43:10.230
we're working from yeah probably some healthy

00:43:10.230 --> 00:43:12.789
disagreement i imagine within the community itself

00:43:12.789 --> 00:43:16.349
and certainly on on the the lower end it's called

00:43:16.349 --> 00:43:19.940
the voters and Being in the receiving end of

00:43:19.940 --> 00:43:23.059
you've got a foundation director who can do what

00:43:23.059 --> 00:43:26.460
he wants, so to speak, in quotations, or she

00:43:26.460 --> 00:43:29.480
do what they want. But then you've got the foundation

00:43:29.480 --> 00:43:31.679
company that's far away on the other side of

00:43:31.679 --> 00:43:35.159
the world and offshoring and boats and yachts.

00:43:35.179 --> 00:43:37.559
And then just things start to take a life of

00:43:37.559 --> 00:43:40.820
its own from there. But I think what's been clear

00:43:40.820 --> 00:43:44.780
between you, Mel, and Carolyn is you don't just

00:43:44.780 --> 00:43:47.159
get to ignore the doubt, especially if the objects.

00:43:47.719 --> 00:43:51.079
are specific in furthering the Dow's growth,

00:43:51.199 --> 00:43:53.679
furthering the protocol, as you mentioned. And

00:43:53.679 --> 00:43:56.760
then there are all sorts of mechanisms in place

00:43:56.760 --> 00:43:59.059
to ensure a check and balances on both sides.

00:43:59.659 --> 00:44:02.980
You check and balancing us, the Dow, and then

00:44:02.980 --> 00:44:04.940
the Dow check and balancing the foundation company.

00:44:05.139 --> 00:44:07.500
It seems like there's a symbiosis there in an

00:44:07.500 --> 00:44:10.800
ideal scenario. Yeah, that's very well described.

00:44:11.039 --> 00:44:15.739
And as to that, at the decentralized end, at

00:44:15.739 --> 00:44:20.460
the DAO -led project end of the spectrum, there

00:44:20.460 --> 00:44:25.460
is typically, or quite often anyway, a right

00:44:25.460 --> 00:44:27.679
of removal that the DAO might have to remove

00:44:27.679 --> 00:44:30.099
directors or remove a supervisor who can in turn

00:44:30.099 --> 00:44:35.559
remove directors. So these are not, at that end

00:44:35.559 --> 00:44:39.260
of the spectrum anyway, sort of a... of the foundation

00:44:39.260 --> 00:44:43.039
anymore. They're organizations where the directors

00:44:43.039 --> 00:44:46.239
are subject to removal by the DAO if they are

00:44:46.239 --> 00:44:47.800
not seen to be doing what they're supposed to

00:44:47.800 --> 00:44:52.019
be doing. And let's take a maybe less obvious

00:44:52.019 --> 00:44:55.059
case, which would be if it's not just, say the

00:44:55.059 --> 00:44:57.900
director, you've got everyone on the side, the

00:44:57.900 --> 00:45:01.039
director's on the side of the DAO pursuing to

00:45:01.039 --> 00:45:05.139
the objects, but then the lower levels management,

00:45:05.280 --> 00:45:10.610
like the officers or... They start becoming,

00:45:11.090 --> 00:45:14.110
I'm just going to use some terrible phrasing,

00:45:14.230 --> 00:45:17.530
you know, bureaucrats, you know, just getting

00:45:17.530 --> 00:45:20.369
in the way of the objects and the purpose. But

00:45:20.369 --> 00:45:23.510
then there's a situation where the director maybe

00:45:23.510 --> 00:45:27.230
just hasn't taken any action against them. So

00:45:27.230 --> 00:45:29.469
the DAO might view those lower level officers

00:45:29.469 --> 00:45:33.289
as getting in the way of the DAO and not acting

00:45:33.289 --> 00:45:37.309
in the best interest of the DAO. How does that

00:45:37.309 --> 00:45:41.110
– like in that hypothetical, what are your thoughts

00:45:41.110 --> 00:45:43.309
on – it's not the director that's the problem,

00:45:43.449 --> 00:45:47.030
but maybe the lower levels. And it's all interpretation,

00:45:47.349 --> 00:45:53.349
people's viewpoint. Well, I guess one of the

00:45:53.349 --> 00:45:55.570
very first questions you asked, what are the

00:45:55.570 --> 00:45:58.730
director's duties? And it's to – the duties really

00:45:58.730 --> 00:46:00.829
don't precede the operation of the foundation.

00:46:00.829 --> 00:46:03.349
So if there are officers that are not performing

00:46:03.349 --> 00:46:08.780
or doing their job. poorly or seem to have very

00:46:08.780 --> 00:46:10.960
little support amongst the DAO for the direction

00:46:10.960 --> 00:46:13.719
they're plotting and the day -to -day actions

00:46:13.719 --> 00:46:17.199
they're taking, that would quite likely become

00:46:17.199 --> 00:46:19.719
a discussion at the foundation company board

00:46:19.719 --> 00:46:22.119
level as to whether those officers are the right

00:46:22.119 --> 00:46:29.019
people to have in place. And how would the DAO

00:46:29.019 --> 00:46:31.639
raise that to a foundation company to begin with,

00:46:31.659 --> 00:46:36.250
to alert you to that? It could be a lot of different

00:46:36.250 --> 00:46:41.969
ways. It can sometimes be informal. Large token

00:46:41.969 --> 00:46:44.329
holders or groups of token holders might reach

00:46:44.329 --> 00:46:47.329
out and say they're not agreeing with the direction

00:46:47.329 --> 00:46:51.230
of the project, that they see Mr. or Mrs. X as

00:46:51.230 --> 00:46:56.849
not the appropriate leader for the time, or maybe

00:46:56.849 --> 00:46:58.710
they suggest someone else. Maybe they suggest

00:46:58.710 --> 00:47:03.329
adding people to the management side of the project.

00:47:04.059 --> 00:47:06.199
It could be that way or it could also be formally

00:47:06.199 --> 00:47:10.820
through proposals to either remove or add officers.

00:47:12.400 --> 00:47:16.340
I guess that makes actually a lot of sense. If

00:47:16.340 --> 00:47:19.920
you say it like that, we could just put a proposal

00:47:19.920 --> 00:47:23.099
out, which would be the will of the DAO and any

00:47:23.099 --> 00:47:30.059
other proposal. So reaching out to you informally

00:47:30.059 --> 00:47:33.079
and – I mean all I'm hearing at this point is

00:47:33.079 --> 00:47:37.860
– is good business sense like the sort of thing

00:47:37.860 --> 00:47:40.119
that you would conduct in normal business operations

00:47:40.119 --> 00:47:43.480
you know email phone call writing them a letter

00:47:43.480 --> 00:47:47.340
just the dow adds the you know snapshot or tally

00:47:47.340 --> 00:47:50.300
votes and formalized voting with token holders

00:47:50.300 --> 00:47:55.119
that's here you know and then you just said a

00:47:55.119 --> 00:48:00.079
judgment right and and and and you know emphasizing

00:48:00.079 --> 00:48:05.559
powers with a fair bit of discretion and in a

00:48:05.559 --> 00:48:10.420
reserved way. These are the kind of attributes

00:48:10.420 --> 00:48:14.500
that I think should be present in a board of

00:48:14.500 --> 00:48:19.139
directors. Not really maybe getting into it with

00:48:19.139 --> 00:48:22.699
various factions that might exist and personalizing

00:48:22.699 --> 00:48:25.739
it and becoming a... We're a HUD for one group

00:48:25.739 --> 00:48:29.159
within the community versus another. My view

00:48:29.159 --> 00:48:32.599
of exercising those kind of powers in situations

00:48:32.599 --> 00:48:35.659
like that is to be very judicious and reserved

00:48:35.659 --> 00:48:40.139
and exercise good judgment carefully. When directors

00:48:40.139 --> 00:48:44.840
start becoming politicians, this is when governance

00:48:44.840 --> 00:48:47.800
constructs start to break down, if you ask me.

00:48:49.699 --> 00:48:52.579
I think that's very well said. I think that clears.

00:48:53.389 --> 00:48:58.369
Makes it pretty clear. So I had an episode some

00:48:58.369 --> 00:49:02.409
time ago, and not even some time ago. It feels

00:49:02.409 --> 00:49:05.369
like it was so long ago. But when the reading

00:49:05.369 --> 00:49:07.690
of the Cayman Islands law, I think it was, where

00:49:07.690 --> 00:49:10.909
I was trying to figure out with the reading of

00:49:10.909 --> 00:49:14.730
it, all these positions started popping up. The

00:49:14.730 --> 00:49:18.110
director, the officers, and each law had its

00:49:18.110 --> 00:49:21.369
own. sometimes its own word. I create a table

00:49:21.369 --> 00:49:23.730
out of this, a terminology translation table,

00:49:23.889 --> 00:49:26.590
where it would use director in one, it would

00:49:26.590 --> 00:49:31.210
use officers in another, and all these different

00:49:31.210 --> 00:49:33.530
positions started. And I was so confused. I called

00:49:33.530 --> 00:49:38.210
it my triangle of confusion. And it basically

00:49:38.210 --> 00:49:41.949
was all of the roles, subscriber, director, secretary,

00:49:42.150 --> 00:49:46.070
supervisor, founder, how do they interact with

00:49:46.070 --> 00:49:51.920
each other? How does that work? Yeah, there's

00:49:51.920 --> 00:49:55.539
sort of an alphabet soup of terms and acronyms

00:49:55.539 --> 00:50:00.300
that can apply to a foundation company. Remember,

00:50:00.500 --> 00:50:03.280
the foundation company was not designed to do

00:50:03.280 --> 00:50:05.739
what it's doing now in the context of DAOs and

00:50:05.739 --> 00:50:08.900
crypto projects. It was there really as an alternative

00:50:08.900 --> 00:50:14.739
to trust for... mainly people who would look

00:50:14.739 --> 00:50:17.219
to use the jurisdiction from civil law countries.

00:50:17.380 --> 00:50:18.960
So, you know, Europeans don't know what a trust

00:50:18.960 --> 00:50:20.420
is. Well, they know what it is, but it doesn't

00:50:20.420 --> 00:50:22.260
exist out of their laws. So the Foundation Campaign

00:50:22.260 --> 00:50:25.179
was designed to be more familiar for that. And

00:50:25.179 --> 00:50:30.449
it was designed sort of... as a vehicle to manage

00:50:30.449 --> 00:50:33.670
estate planning, maybe carry on some dynastic

00:50:33.670 --> 00:50:37.289
family business that will hopefully exist for

00:50:37.289 --> 00:50:40.409
hundreds of years and we'll need to have a mechanism

00:50:40.409 --> 00:50:43.849
to roll with the changes in the family over generations.

00:50:44.090 --> 00:50:46.989
That's what it was designed for and historically

00:50:46.989 --> 00:50:52.110
used for in Europe. Turns out it actually is

00:50:52.110 --> 00:50:56.489
a pretty good vehicle. call for DAOs in that

00:50:56.489 --> 00:51:01.250
the foundation exists in a tax neutral jurisdiction,

00:51:01.489 --> 00:51:04.730
the Cayman Islands, with a very familiar and

00:51:04.730 --> 00:51:09.150
established legal system staffed by very competent

00:51:09.150 --> 00:51:11.190
law firms that have been in business for years.

00:51:11.530 --> 00:51:14.409
So these things just sort of aligned and with

00:51:14.409 --> 00:51:16.429
some ingenuity on the part of some practitioners

00:51:16.429 --> 00:51:20.250
in Cayman sort of repurposed this. this vehicle

00:51:20.250 --> 00:51:24.769
for dows and and foundation companies so a lot

00:51:24.769 --> 00:51:27.110
of to go back to your question a lot of the the

00:51:27.110 --> 00:51:31.349
kind of verbiage uh that that exists in and around

00:51:31.349 --> 00:51:34.409
the foundation company beneficiary founder for

00:51:34.409 --> 00:51:39.190
example um they kind of drawn from that use case

00:51:39.190 --> 00:51:41.769
that i described the original updated use case

00:51:41.769 --> 00:51:45.719
so the founder might be the you know the the

00:51:45.719 --> 00:51:48.239
man or woman who started the business empire

00:51:48.239 --> 00:51:51.760
and is now in his or her 70s and wants to set

00:51:51.760 --> 00:51:55.780
up a foundation for the two generations of descendants

00:51:55.780 --> 00:52:00.239
to own this very well -known iconic business

00:52:00.239 --> 00:52:03.880
that he or she created. Founders in the context

00:52:03.880 --> 00:52:07.929
of Crypto foundations and DAO -facing entities

00:52:07.929 --> 00:52:12.349
is not commonly used. There is at least one law

00:52:12.349 --> 00:52:14.610
firm I know of that does use the founder concept,

00:52:14.750 --> 00:52:18.969
and they sort of suggest it. TTA, right? Yeah,

00:52:19.030 --> 00:52:23.769
that's right. So TTA, they take the view that

00:52:23.769 --> 00:52:26.429
the founder is an important, I guess, break on

00:52:26.429 --> 00:52:32.579
governance. and can be powers of removal of a

00:52:32.579 --> 00:52:34.679
rogue director, for example, or even a rogue

00:52:34.679 --> 00:52:38.260
supervisor. And they kind of, I think, position

00:52:38.260 --> 00:52:41.800
it as in, okay, well, you know, we're a law firm,

00:52:41.920 --> 00:52:43.840
we've been around forever, we're trusted, we

00:52:43.840 --> 00:52:46.539
can exercise these, you know, break glass in

00:52:46.539 --> 00:52:48.840
case of fire type powers as the founder if things

00:52:48.840 --> 00:52:52.760
really go bad. And some founders and some projects

00:52:52.760 --> 00:52:57.019
think that's very helpful. other law firms don't

00:52:57.019 --> 00:52:59.239
use the founder concept at all so it falls away

00:52:59.239 --> 00:53:02.960
and then the beneficiary concept again you know

00:53:02.960 --> 00:53:04.800
going back to my example the family business

00:53:04.800 --> 00:53:07.360
wrapped in a foundation company you know those

00:53:07.360 --> 00:53:10.360
would be the the grandchildren and and and whatever

00:53:10.360 --> 00:53:13.019
uh typically that have a beneficial interest

00:53:13.019 --> 00:53:16.139
in the foundation company We don't use that concept

00:53:16.139 --> 00:53:19.179
in the crypto sense either. So token holders

00:53:19.179 --> 00:53:23.800
are not beneficiaries of foundations. Their rights

00:53:23.800 --> 00:53:27.500
exist only as to the token they hold and the

00:53:27.500 --> 00:53:30.400
powers they have are granted under the bylaws

00:53:30.400 --> 00:53:33.280
or the articles. So we don't use the beneficiary

00:53:33.280 --> 00:53:35.500
concept. So founder and beneficiary, put that

00:53:35.500 --> 00:53:38.199
aside as something pertaining more to state planning

00:53:38.199 --> 00:53:43.699
and generational businesses. um secretary supervisor

00:53:43.699 --> 00:53:47.519
subscriber director um those are very applicable

00:53:47.519 --> 00:53:50.159
to to what we do i'm the director i don't say

00:53:50.159 --> 00:53:51.480
anything more about as i've been speaking about

00:53:51.480 --> 00:53:54.659
for most of this uh this podcast um the supervisor

00:53:54.659 --> 00:53:56.699
as i mentioned earlier is sort of a stand -in

00:53:56.699 --> 00:53:59.940
for the shareholder to you know make this legal

00:53:59.940 --> 00:54:04.219
contract work and can have numbers of removal

00:54:04.219 --> 00:54:07.000
appointment or sometimes very little power at

00:54:07.000 --> 00:54:10.289
all And then the last two roles I'll touch on,

00:54:10.449 --> 00:54:12.170
and feel free to ask me about others if we missed

00:54:12.170 --> 00:54:17.070
any, but secretary, that's actually, I think,

00:54:17.090 --> 00:54:21.070
a bit of a poorly named term. Typically a secretary

00:54:21.070 --> 00:54:24.090
is someone who sort of keeps the clerk's records

00:54:24.090 --> 00:54:27.030
and has custody of the minute book and makes

00:54:27.030 --> 00:54:31.030
sure filings are made and sort of supports the

00:54:31.030 --> 00:54:36.389
board in terms of minute taking. drafting corporate

00:54:36.389 --> 00:54:39.130
resolutions. That's what a secretary is historically.

00:54:39.630 --> 00:54:42.130
In this case, though, the secretary role is actually

00:54:42.130 --> 00:54:45.530
more of an AML control role. I would have probably

00:54:45.530 --> 00:54:47.510
called it a money laundering reporting officer

00:54:47.510 --> 00:54:51.630
or an AML responsible person. Yeah, because the

00:54:51.630 --> 00:54:54.670
real function of the secretary is in a foundation

00:54:54.670 --> 00:54:58.610
company context is to look into any transfers

00:54:58.610 --> 00:55:01.630
of assets into a foundation, which are gratuitous,

00:55:01.630 --> 00:55:06.320
i .e. not paid for, and ensure that the assets

00:55:06.320 --> 00:55:09.639
coming in are not derived of criminal origin.

00:55:09.760 --> 00:55:11.960
So, you know, that's a money laundering control,

00:55:12.179 --> 00:55:15.079
really. So that's what the secretary does. And

00:55:15.079 --> 00:55:21.079
that's quite a commonly acted thing. Secretaries

00:55:21.079 --> 00:55:23.699
have to be licensed entities. Leeward is a licensed

00:55:23.699 --> 00:55:27.280
entity. So we act as a secretary for a lot of

00:55:27.280 --> 00:55:30.480
foundations and quite often assets will be transferred

00:55:30.480 --> 00:55:32.639
into a foundation via tokens or intellectual

00:55:32.639 --> 00:55:36.760
property or cash sometimes in the form of stable

00:55:36.760 --> 00:55:39.860
coins and we'll have to look at the source of

00:55:39.860 --> 00:55:42.420
those assets and say okay well you know the tokens

00:55:42.420 --> 00:55:46.000
were minted so we're okay with this or the usdc

00:55:46.000 --> 00:55:48.260
came from a coinless sale which was you know

00:55:48.260 --> 00:55:50.760
done with aml controls so we're okay with it

00:55:50.760 --> 00:55:54.199
that's really what the secretary does um And

00:55:54.199 --> 00:55:59.079
then a subscriber is, as you said, and in your

00:55:59.079 --> 00:56:05.400
TLDR, this is the entity quite often, which is

00:56:05.400 --> 00:56:08.360
the initial guarantor or subscriber to the memorandum

00:56:08.360 --> 00:56:10.159
of association, which creates the foundation.

00:56:10.539 --> 00:56:12.639
And that's just a point -in -time role, really.

00:56:13.519 --> 00:56:18.679
Got it. And say, like, when you have a meeting,

00:56:19.000 --> 00:56:22.199
how do these, like, you call the meeting to order.

00:56:22.860 --> 00:56:25.179
Who is doing what in the meeting at that point?

00:56:27.960 --> 00:56:33.400
For me? When you have a board meeting or a foundation

00:56:33.400 --> 00:56:35.699
company meeting, you call the meeting to order.

00:56:36.760 --> 00:56:40.159
Who is doing what in that meeting? If there is

00:56:40.159 --> 00:56:41.739
a founder, what is the founder doing? What is

00:56:41.739 --> 00:56:43.460
the supervisor doing? Is it just the director

00:56:43.460 --> 00:56:45.880
most of the time talking? How does that work?

00:56:47.199 --> 00:56:51.829
Well, typically, it's only the directors. okay

00:56:51.829 --> 00:56:55.630
founders don't want to meet a board meeting suppose

00:56:55.630 --> 00:56:58.269
they could be invited in theory um as could the

00:56:58.269 --> 00:57:01.130
supervisor sometimes supervisors are invited

00:57:01.130 --> 00:57:03.630
to a board meeting but not always and typically

00:57:03.630 --> 00:57:06.369
they don't have a right of attendance but uh

00:57:06.369 --> 00:57:10.690
you know as to the the kind of process of a board

00:57:10.690 --> 00:57:12.989
meeting. It's typically called by one director

00:57:12.989 --> 00:57:15.929
with, you know, some number of days notice. Sometimes

00:57:15.929 --> 00:57:17.989
that notice is waived if it's our, you know,

00:57:18.010 --> 00:57:19.690
no shine on what we have to approve contract.

00:57:20.369 --> 00:57:23.030
Other times you'll let the notice run and have

00:57:23.030 --> 00:57:25.070
the meeting on the day specified in the notice.

00:57:25.769 --> 00:57:29.329
The agenda is set, could be set out in the notice

00:57:29.329 --> 00:57:31.989
of meeting. So we're now a meeting to discuss,

00:57:32.150 --> 00:57:36.190
you know, this contract approval or this amendment

00:57:36.190 --> 00:57:42.989
to It's another item of business. And the meeting

00:57:42.989 --> 00:57:44.909
will proceed to nominate a chairman, which would

00:57:44.909 --> 00:57:47.610
be one of the directors, and to work through

00:57:47.610 --> 00:57:50.909
the business. I'm sure Orem is there to disclose

00:57:50.909 --> 00:57:54.349
any conflicts and then proceed to the business,

00:57:54.429 --> 00:57:58.110
the meeting, majority rules. And after that,

00:57:58.210 --> 00:58:00.909
minutes are prepared and filed on the minimum.

00:58:01.989 --> 00:58:05.849
Is non -nomination of the chairman, is that like

00:58:05.849 --> 00:58:07.690
a temporary role just for the meeting, or is

00:58:07.690 --> 00:58:12.489
there a... a more persistent role there? Typically

00:58:12.489 --> 00:58:15.809
the former. So a chairman is a chairman of the

00:58:15.809 --> 00:58:17.789
meeting, and that might be a different director

00:58:17.789 --> 00:58:21.030
each time, or it could be usually the same director.

00:58:21.429 --> 00:58:24.769
It's different from the kind of chairman of the

00:58:24.769 --> 00:58:30.230
board term that you might see in public companies.

00:58:30.650 --> 00:58:32.570
Yeah, okay. Yeah, I think that's what I was getting

00:58:32.570 --> 00:58:39.789
at. All right. A secretary must be licensed by

00:58:39.789 --> 00:58:42.130
SEMA. When does the director need to be? I think

00:58:42.130 --> 00:58:43.449
you covered that earlier. When is the covered

00:58:43.449 --> 00:58:50.670
entity? That's right. Yeah. Okay. And when it's

00:58:50.670 --> 00:58:54.949
not a covered entity, does an independent director,

00:58:55.250 --> 00:59:00.449
do they have any licensing requirements? Yes

00:59:00.449 --> 00:59:02.710
and no. So it depends where they live. I guess

00:59:02.710 --> 00:59:06.219
is the answer to that question. If the director

00:59:06.219 --> 00:59:10.000
was in the U .S. or the U .K., I'm not aware

00:59:10.000 --> 00:59:12.719
of any licensing requirement in those jurisdictions

00:59:12.719 --> 00:59:16.179
to be a director of a company. The Cayman Islands

00:59:16.179 --> 00:59:18.340
doesn't require directors to be resident in the

00:59:18.340 --> 00:59:22.079
Cayman Islands, so that person, resident in the

00:59:22.079 --> 00:59:23.980
U .S. or the U .K., can be director of a Cayman

00:59:23.980 --> 00:59:27.340
Islands foundation. If they live in the Cayman

00:59:27.340 --> 00:59:30.000
Islands, then there are some local laws which

00:59:30.000 --> 00:59:34.820
would apply. Are they employed by a licensed

00:59:34.820 --> 00:59:37.179
company manager like Leeward? Then there's no

00:59:37.179 --> 00:59:42.599
further licensing required. If they're not employed

00:59:42.599 --> 00:59:44.599
by a firm like Leeward, then they would need

00:59:44.599 --> 00:59:46.739
the authorization of a work permit to be in the

00:59:46.739 --> 00:59:49.079
Cayman Islands and fulfill the director role.

00:59:49.480 --> 00:59:53.760
Okay, I see. Okay. So work visa requirement type

00:59:53.760 --> 00:59:56.619
things and they're just natural citizens. Yeah,

00:59:56.639 --> 01:00:01.019
exactly. Okay. All right. That's correct. Got

01:00:01.019 --> 01:00:03.239
it. It would be different than if I were to move

01:00:03.239 --> 01:00:05.659
to Miami and wanted to, I don't know, wait tables

01:00:05.659 --> 01:00:08.119
or something. I'd need a green card or a work

01:00:08.119 --> 01:00:13.480
permit or something to do it. Got it. Yeah, that

01:00:13.480 --> 01:00:17.460
makes sense. So what would be the major advantage

01:00:17.460 --> 01:00:21.860
of having, I guess you could say, an unnatural

01:00:21.860 --> 01:00:24.400
-born citizen of the Grand Cayman Islands be

01:00:24.400 --> 01:00:26.599
a director of a foundation company in the Grand

01:00:26.599 --> 01:00:34.119
Cayman Islands? Well, the main reason why projects

01:00:34.119 --> 01:00:37.119
would choose to have a director in Cayman is

01:00:37.119 --> 01:00:41.739
to ensure that the mind and management of the

01:00:41.739 --> 01:00:44.219
project of the foundation company is in the Cayman

01:00:44.219 --> 01:00:46.539
Islands. You probably have not accomplished very

01:00:46.539 --> 01:00:50.280
much if you're looking for a crypto -friendly

01:00:50.280 --> 01:00:52.340
jurisdiction and you choose to incorporate in

01:00:52.340 --> 01:00:55.239
the Cayman Islands, but then remote control the

01:00:55.239 --> 01:00:58.139
foundation from London or New York. For Hong

01:00:58.139 --> 01:01:01.320
Kong, if you're doing that, you're probably at

01:01:01.320 --> 01:01:05.079
risk regulatory -wise, tax -wise. There are other

01:01:05.079 --> 01:01:09.659
reasons being said to be resident in one of those

01:01:09.659 --> 01:01:12.260
other places. So being in the Cayman Islands

01:01:12.260 --> 01:01:14.300
is important, obviously. It's probably the number

01:01:14.300 --> 01:01:17.619
one reason. But then the other reasons are really

01:01:17.619 --> 01:01:22.239
expertise and specialization. Yeah, the network

01:01:22.239 --> 01:01:25.460
effect, as you might have heard, and the crypto

01:01:25.460 --> 01:01:29.510
space. Yeah, all the things you would need to

01:01:29.510 --> 01:01:32.630
do, conduct good business and be successful in

01:01:32.630 --> 01:01:36.110
the environment that you're in. See, this is

01:01:36.110 --> 01:01:38.849
all just starting to just make sense. It's very

01:01:38.849 --> 01:01:44.710
civilized. I'm glad I've been able to shed some

01:01:44.710 --> 01:01:47.809
light on it. Yeah, the last couple of questions

01:01:47.809 --> 01:01:50.210
we're on now, let's get to the fiduciary thing.

01:01:50.590 --> 01:01:55.039
The director is a fiduciary of... Is it the objects,

01:01:55.239 --> 01:01:57.460
the members, beneficiaries, some, all of it?

01:02:00.400 --> 01:02:04.880
Well, they have fiduciary duties to act. Fiduciary

01:02:04.880 --> 01:02:07.519
duties owed to the foundation company. So that

01:02:07.519 --> 01:02:12.719
is a duty of utmost good faith. So it means things

01:02:12.719 --> 01:02:17.199
like not acting with a conflict of interest,

01:02:17.360 --> 01:02:22.889
not being interested in contracts. you as a director

01:02:22.889 --> 01:02:26.570
are then improving by the foundation uh it it

01:02:26.570 --> 01:02:30.929
means to fulfill your duties with honesty and

01:02:30.929 --> 01:02:35.130
integrity those are the the types of concepts

01:02:35.130 --> 01:02:37.809
of duties that are owed to the foundation company

01:02:37.809 --> 01:02:42.190
as a director okay so it's it's to the foundation

01:02:42.190 --> 01:02:44.949
company itself so we're not talking like just

01:02:44.949 --> 01:02:48.449
the objects or just the members whatever the

01:02:48.449 --> 01:02:51.780
foundation company is there to do The entity

01:02:51.780 --> 01:02:55.059
itself is what you owe the fiduciary duty to.

01:02:55.219 --> 01:03:05.000
Yes? Yeah. So my answer was in response to the

01:03:05.000 --> 01:03:09.059
concept of a fiduciary duty. I think you're now

01:03:09.059 --> 01:03:13.880
mentioning the objects and the director. need

01:03:13.880 --> 01:03:16.420
to, you know, discharge his or her duties and

01:03:16.420 --> 01:03:19.059
govern the foundation in accordance with the

01:03:19.059 --> 01:03:20.619
objects. That's another very important point,

01:03:20.860 --> 01:03:23.860
right? So if the object were to, you know, further

01:03:23.860 --> 01:03:27.900
the use of the protocol and the network, then,

01:03:27.900 --> 01:03:31.460
you know, going off to, I don't know, have the

01:03:31.460 --> 01:03:33.500
foundation company open an ice cream stand or

01:03:33.500 --> 01:03:35.980
something like that is not in keeping with the

01:03:35.980 --> 01:03:38.199
objects. The director could be liable for taking

01:03:38.199 --> 01:03:40.500
decisions like that. They're in keeping with

01:03:40.500 --> 01:03:45.579
the objects. Yeah. That makes sense. Discharge

01:03:45.579 --> 01:03:47.219
the duties and govern the foundation company

01:03:47.219 --> 01:03:51.960
in accordance with its objects. Okay. I think

01:03:51.960 --> 01:03:53.679
one of the last things that I wanted to get here

01:03:53.679 --> 01:03:56.099
was I created a little flow chart that I sent

01:03:56.099 --> 01:03:59.920
you. And that flow chart was my best representation

01:03:59.920 --> 01:04:03.480
of what actually happens when you try and create

01:04:03.480 --> 01:04:06.340
a foundation company. Were there any adjustments?

01:04:07.559 --> 01:04:09.579
Carolyn recommended that I take out the whole

01:04:09.579 --> 01:04:11.980
semen license director. So I put a big X there.

01:04:12.440 --> 01:04:14.880
What adjustments would you have for me? Oh, you

01:04:14.880 --> 01:04:17.059
see my rectangle of confusion there on the far

01:04:17.059 --> 01:04:19.679
right, which is no longer confusion. Now I get

01:04:19.679 --> 01:04:26.820
it. Yeah, I think it's a good flowchart. I'm

01:04:26.820 --> 01:04:29.139
just trying to bring it up here now. It seems

01:04:29.139 --> 01:04:31.420
to me my computer's gone slightly sleepy as I've

01:04:31.420 --> 01:04:34.800
been talking. But yeah, I think Carolyn's suggestion

01:04:34.800 --> 01:04:37.889
of removing the SEMA licensing is... It's probably

01:04:37.889 --> 01:04:39.769
on the basis that that's already there, that

01:04:39.769 --> 01:04:42.190
already exists. There's already a leeward willing

01:04:42.190 --> 01:04:46.289
to incorporate a foundation, and it is already

01:04:46.289 --> 01:04:50.550
SEMA licensed. So that's a good change. The rest

01:04:50.550 --> 01:04:53.329
of it, though, no, I feel like you've set out

01:04:53.329 --> 01:04:56.949
graphically the general process for forming a

01:04:56.949 --> 01:04:59.590
foundation, and over on the right side of it,

01:04:59.650 --> 01:05:04.269
a lot of the kind of inputs needed for it. Okay.

01:05:06.219 --> 01:05:08.460
Well, Glenn, is there anything that you'd like

01:05:08.460 --> 01:05:14.179
to leave us with, any closing remarks? Well,

01:05:14.179 --> 01:05:16.840
first, a big thank you. I think that what you've

01:05:16.840 --> 01:05:19.820
done here in this series is incredibly helpful.

01:05:20.559 --> 01:05:23.019
You know, some people have firsthand knowledge

01:05:23.019 --> 01:05:25.300
of the foundation company and the formation process

01:05:25.300 --> 01:05:29.739
and how they work in practice from having worked

01:05:29.739 --> 01:05:31.920
with projects, but probably a lot of other people

01:05:31.920 --> 01:05:36.420
don't really know the inner workings of. of the

01:05:36.420 --> 01:05:39.539
foundation company and the legal concepts that

01:05:39.539 --> 01:05:41.920
go with it and the people behind it and the attorneys

01:05:41.920 --> 01:05:44.800
and, in my case, the director. So I think you've

01:05:44.800 --> 01:05:48.480
done a great public service here to both your

01:05:48.480 --> 01:05:51.440
DAO and to any other listeners out there wondering

01:05:51.440 --> 01:05:53.019
about some of these things and how they actually

01:05:53.019 --> 01:05:56.300
work. So a big thank you from me and from the

01:05:56.300 --> 01:05:59.820
Leeward team. Yeah, well, the pleasure is all

01:05:59.820 --> 01:06:03.780
mine. I have thoroughly enjoyed. Trying to poke

01:06:03.780 --> 01:06:07.139
prod and examine and turn this around and upside

01:06:07.139 --> 01:06:10.659
down to try and figure out what exactly. I mean,

01:06:10.679 --> 01:06:15.559
it really surprises me that a year ago, almost

01:06:15.559 --> 01:06:22.079
12, 13 months ago, the Sandbox DAO came out with

01:06:22.079 --> 01:06:25.880
its foundation company in the DAO. And it was

01:06:25.880 --> 01:06:30.179
very sudden at NFC Lisbon. And I interviewed

01:06:30.179 --> 01:06:32.260
Cyril, the current DAO administrator, and Seb,

01:06:32.440 --> 01:06:36.159
the COO, and they explained that that was by

01:06:36.159 --> 01:06:38.800
design. They wanted to be like, bam, the DAO,

01:06:38.800 --> 01:06:41.119
and bam, the foundation company, and progress

01:06:41.119 --> 01:06:43.280
this decentralization, and let's go vote. And

01:06:43.280 --> 01:06:45.980
the reaction from the community was, first of

01:06:45.980 --> 01:06:49.119
all, what is a DAO? What is a foundation company?

01:06:49.579 --> 01:06:52.139
What are all these things you're saying? And

01:06:52.139 --> 01:06:55.239
it's now like we all laugh about it for the most

01:06:55.239 --> 01:06:58.280
part, but it wasn't the reception they were expecting.

01:06:58.280 --> 01:07:01.360
They were expecting, and most of it was just

01:07:01.360 --> 01:07:03.559
confusion on our end. Like, what are we supposed

01:07:03.559 --> 01:07:06.940
to do with this thing that we now have? And that's

01:07:06.940 --> 01:07:08.960
what really started this podcast, was an attempt

01:07:08.960 --> 01:07:12.280
to understand, what is this DAO thing? And then

01:07:12.280 --> 01:07:14.500
the DAOs led to foundation companies, and now

01:07:14.500 --> 01:07:19.280
here we are toward the end. Oh, Glenn just left

01:07:19.280 --> 01:07:21.699
for a second. But what is a foundation company?

01:07:22.119 --> 01:07:27.389
And yeah, now here we are, episode 65. And the

01:07:27.389 --> 01:07:29.130
thing looks a little bit weird, but it's okay.

01:07:29.889 --> 01:07:33.429
Glenn gave us so much of his time, and perhaps

01:07:33.429 --> 01:07:39.150
it was time for him to go. There we go. So, here

01:07:39.150 --> 01:07:46.030
we are at the end, and 65 episodes later. Lynch

01:07:46.030 --> 01:07:49.070
has imparted a lot of knowledge, and that knowledge

01:07:49.070 --> 01:07:52.869
was extremely helpful to understanding foundation

01:07:52.869 --> 01:07:57.710
companies and what it is that we do. I thank

01:07:57.710 --> 01:08:02.289
Glenn very much for his time and all of the wisdom

01:08:02.289 --> 01:08:04.150
that he just imparted on us and how foundation

01:08:04.150 --> 01:08:06.630
companies are run. We went through our questions,

01:08:06.750 --> 01:08:11.369
and I will likely do a recap episode here in

01:08:11.369 --> 01:08:15.230
the near future from episode 34, covering 56,

01:08:15.570 --> 01:08:22.390
57, 59, 60, 62, 64, and now episode 65. So thank

01:08:22.390 --> 01:08:25.710
you all for your time, and thank you very much,

01:08:25.770 --> 01:08:29.319
Glenn. for giving us a look into what does it

01:08:29.319 --> 01:08:31.380
mean to be a director. All right, everybody.

01:08:31.840 --> 01:08:32.539
Have a great day.