Enrolled Copy H.B. 318
1 DECENTRALIZED AUTONOMOUS ORGANIZATION ACT AMENDMENTS
2024 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Jordan D. Teuscher Senate Sponsor: Kirk A. Cullimore
2
3 LONG TITLE
4 General Description:
5 This bill makes changes to the Decentralized Autonomous Organization Act.
6 Highlighted Provisions:
7 This bill:
8 ▸ clarifies that the Division of Corporations and Commercial Code files a decentralized
9 autonomous organization's certificate of organization and does not issue a certificate of
10 organization;
11 ▸ makes modifications to the permitted names of a decentralized autonomous organization
12 to align with permitted names for other entities formed in the state; and
13 ▸ makes technical and conforming changes.
14 Money Appropriated in this Bill:
15 None
16 Other Special Clauses:
17 None
18 Utah Code Sections Affected:
19 AMENDS:
20 48-5-103, as enacted by Laws of Utah 2023, Chapter 85
21 48-5-105, as enacted by Laws of Utah 2023, Chapter 85
22 48-5-201, as enacted by Laws of Utah 2023, Chapter 85
23
24 Be it enacted by the Legislature of the state of Utah:
25 Section 1. Section 48-5-103 is amended to read:
26 48-5-103 . Powers of the division.
27 (1) (a) The division may make, amend, or rescind a rule, form, or order when necessary
28 to carry out this chapter.
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29 (b) The division shall make rules in accordance with Title 63G, Chapter 3, Utah
30 Administrative Rulemaking Act.
31 (2) The division may by rule:
32 (a) provide the form and content of a registration requirement required under this
33 chapter;
34 (b) provide the method of determining whether formation requirements described in
35 Section 48-5-201 have been met and when to [issue] file a certificate of organization;
36 and
37 (c) identify industry standards for determining whether the decentralized autonomous
38 organization has undergone security review for quality assurance.
39 Section 2. Section 48-5-105 is amended to read:
40 48-5-105 . Permitted names.
41 (1) (a) The name of a limited liability decentralized autonomous organization shall
42 contain the words limited liability decentralized autonomous organization or limited
43 decentralized autonomous organization or the abbreviation L.L.D., LLD, L.D., or LD.
44 (b) Limited may be abbreviated as Ltd., and decentralized autonomous organization may
45 be abbreviated as DAO.
46 (2) Except as authorized by Subsection (3), the name of a decentralized autonomous
47 organization shall be distinguishable as defined in Subsection (4) upon the records of the
48 division from:
49 (a) the actual name, reserved name, or fictitious or assumed name of any entity
50 registered with the division; or
51 (b) any tradename, trademark, or service mark registered with the division.
52 (3) (a) A decentralized autonomous organization may apply to the division for approval
53 to reserve a name that is not distinguishable upon the division's records from one or
54 more of the names described in Subsection (2).
55 (b) The division shall approve the name for which the decentralized autonomous
56 organization applies under Subsection (3)(a) if:
57 (i) the other person with a name that is not distinguishable from the name under
58 which the applicant desires to file:
59 (A) consents to the filing in writing; and
60 (B) files a form approved by the division to change the person's name to a name
61 that is distinguishable from the name of the applicant; or
62 (ii) the applicant delivers to the division a certified copy of the final judgment of a
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63 court of competent jurisdiction establishing the applicant's right to use the name in
64 this state.
65 (4) A name is distinguishable from other names, trademarks, and service marks registered
66 with the division if the name contains one or more different words, letters, or numerals
67 from other names upon the division's records.
68 (5) The following differences are not distinguishing:
69 (a) the term:
70 (i) decentralized autonomous organization;
71 (ii) DAO;
72 (iii) limited liability decentralized autonomous organization;
73 (iv) L.L.D. or L.L.DAO; or
74 (v) L.D. or L.DAO;
75 (b) an abbreviation of a word listed in Subsection (5)(a);
76 (c) the presence or absence of the words or symbols of the words "the," "and," "a," or
77 "plus";
78 (d) differences in punctuation and special characters;
79 (e) differences in capitalization; or
80 (f) differences in singular and plural forms of words.
81 (6) The division may not approve for filing a name that implies that a decentralized
82 autonomous organization is an agency of this state or any of the state's political
83 subdivisions, if the decentralized autonomous organization is not actually such a legally
84 established agency or subdivision.
85 (7) The authorization to reserve or register a decentralized autonomous organization name
86 as granted by the division does not:
87 (a) abrogate or limit the law governing unfair competition or unfair trade practices;
88 (b) derogate from the common law, the principles of equity, or the statutes of this state
89 or of the United States with respect to the right to acquire and protect names and
90 trademarks; or
91 (c) create an exclusive right in geographic or generic terms contained within a name.
92 (8) The name of a decentralized autonomous organization may not contain:
93 (a) the term:
94 (i) association;
95 (ii) corporation;
96 (iii) incorporated;
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97 (iv) partnership;
98 (v) limited liability company;
99 (vi) limited partnership; or
100 (vii) L.P.;
101 (b) any word or abbreviation that is of like import to the terms listed in Subsection (8)(a);
102 (c) without the written consent of the United States Olympic Committee, the words:
103 (i) Olympic;
104 (ii) Olympiad; or
105 (iii) Citius Altius Fortius; or
106 [(d) without the written consent of the Division of Consumer Protection issued in
107 accordance with Section 13-34-114, the terms:]
108 [(i) university;]
109 [(ii) college; or]
110 [(iii) institute or institution; or]
111 [(e)] (d) the number sequence 911.
112 (9) A person, other than a decentralized autonomous organization formed under this chapter
113 or another decentralized autonomous organization that is authorized to transact business
114 in this state, may not use in the person's name in this state the term:
115 (a) limited liability decentralized autonomous organization;
116 (b) limited decentralized autonomous organization;
117 (c) L.L.DAO or L.L.D; or
118 (d) L.DAO or L.D.
119 Section 3. Section 48-5-201 is amended to read:
120 48-5-201 . Formation requirements.
121 (1) (a) One or more persons may act as organizers to form a decentralized autonomous
122 organization by delivering to the division for filing a certificate of organization.
123 (b) At least one of the organizers of a decentralized autonomous organization shall be an
124 individual.
125 (2) (a) A certificate of organization shall provide:
126 (i) the name of the decentralized autonomous organization, which shall comply with
127 Section [48-3a-108] 48-5-105;
128 (ii) the name of an organizer that is an individual;
129 (iii) the street and mailing address of the organizer described in Subsection (2)(a)(ii);
130 (iv) the name and address of the legal representative; and
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131 (v) the information required by Subsection 16-17-203(1).
132 (b) An organizer may request that the information provided in Subsections (2)(a)(ii) and
133 (iii) is redacted by the division before any public disclosure of the filing.
134 (3) A decentralized autonomous organization shall submit evidence to the division in a
135 form required by the division that the decentralized autonomous organization has
136 complied with the following requirements:
137 (a) the decentralized autonomous organization is deployed on a permissionless
138 blockchain;
139 (b) the decentralized autonomous organization has a unique public address through
140 which an individual can review and monitor the decentralized autonomous
141 organization's transactions;
142 (c) the software code of the decentralized autonomous organization is available in a
143 public forum for any person to review;
144 (d) the software code of the decentralized autonomous organization has undergone
145 quality assurance;
146 (e) the decentralized autonomous organization has a graphical user interface that:
147 (i) allows a person to read the value of the key variables of the decentralized
148 autonomous organization's smart contracts;
149 (ii) allows a person to monitor all transactions originating from, or addressed to, the
150 decentralized autonomous organization's smart contracts;
151 (iii) specifies the restrictions on a member's ability to redeem tokens;
152 (iv) makes available the decentralized autonomous organization's by-laws; and
153 (v) displays the mechanism to contact the administrator of the decentralized
154 autonomous organization;
155 (f) the governance system of the decentralized autonomous organization is decentralized;
156 (g) the decentralized autonomous organization has at least one member;
157 (h) (i) there is a publicly specified communication mechanism that allows a person to
158 contact the registered agent of the decentralized autonomous organization and
159 provide legally recognized service; and
160 (ii) a member or administrator of the decentralized autonomous organization is able
161 to access the contents of this communication mechanism; and
162 (i) the decentralized autonomous organization describes or provides a dispute resolution
163 mechanism that is:
164 (i) binding on the decentralized autonomous organization, the members, and
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165 participants of the decentralized autonomous organization; and
166 (ii) able to resolve disputes with third parties capable of settlement by alternative
167 dispute resolution.
168 (4) Notwithstanding the requirements of Subsection (3)(e)(iv), a decentralized autonomous
169 organization may redact sensitive information from the by-laws before making the
170 by-laws available, if those redactions are necessary to protect the privacy of individual
171 members or participants in the decentralized autonomous organization.
172 (5) A decentralized autonomous organization is formed when the decentralized autonomous
173 organization's certificate of organization becomes effective and the decentralized
174 autonomous organization submits the evidence required in Subsection (3).
175 (6) Upon formation, the decentralized autonomous organization shall have limited liability,
176 subject to the provisions of Section 48-5-202.
177 [(7) A decentralized autonomous organization may request a certificate of organization
178 from the division to signify that the decentralized autonomous organization has
179 complied with the requirements for legal personality under this act.]
180 Section 4. Effective date.
181 This bill takes effect on May 1, 2024.
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Statutes affected:
Introduced: 48-5-103, 48-5-105, 48-5-201
Enrolled: 48-5-103, 48-5-105, 48-5-201