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Legal Structure: D2G2M Foundation

Overview

The D2G2M Foundation uses a hybrid legal structure combining German nonprofit and for-profit entities to maximize compliance, tax benefits, and operational flexibility.

┌─────────────────────────────────────────────────────────────┐
│           D2G2M FOUNDATION LEGAL ARCHITECTURE               │
├─────────────────────────────────────────────────────────────┤
│                                                             │
│  ┌─────────────────────┐                                   │
│  │  D2G2M e.V.         │ ← German Nonprofit (Parent)       │
│  │  (Gemeinnützig)     │   Tax-exempt donations            │
│  └──────────┬──────────┘                                   │
│             │ 100% owns                                     │
│  ┌──────────▼──────────┐                                   │
│  │  D2G2M Tech UG      │ ← German Limited (Operations)     │
│  │  (haftungsbeschränkt)│   Token issuance, services       │
│  └──────────┬──────────┘                                   │
│             │ Controls                                      │
│  ┌──────────▼──────────┐                                   │
│  │  D2G2M DAO          │ ← On-chain Governance             │
│  │  (Aragon/Snapshot)  │   $D2G2M token holders vote       │
│  └─────────────────────┘                                   │
│                                                             │
└─────────────────────────────────────────────────────────────┘

Entity Comparison

Structure Formation Cost Liability Token Issuance Recommendation
e.V. (Verein) ~€100 None ⚠️ Complex ✅ Parent Entity
gGmbH (gemeinnützig) €25,000 Limited ⚠️ Restricted ❌ Capital intensive
UG (haftungsbeschränkt) €1 min Limited ✅ Possible ✅ Operations
GmbH €25,000 Limited ✅ Possible ⚠️ Future scale

Formation Timeline

Week Action Cost Responsible Duration
1 Draft e.V. Satzung (statutes) €0 Founder 5 days
2 Gründungsversammlung (founding meeting, 7+ members) €0 Founders 1 day
3 Notary appointment €100-200 Notary 1 day
4 Register at Amtsgericht (local court) €75 Court 2-4 weeks
5 Apply for Gemeinnützigkeit (nonprofit status) €0 Tax office 4-8 weeks
6 Form UG (parallel to e.V. process) €1+ capital Founder 1 day
7 Register UG at Handelsregister (commercial registry) €150 Court 2-3 weeks
8 Open bank accounts €0-50 Bank 1-2 weeks

Total Timeline: 8-12 weeks
Total Cost: €326-426 + €1 UG capital

e.V. (Verein) - Nonprofit Parent

What is an e.V.?

e.V. = eingetragener Verein = Registered Association

Key Features: - German nonprofit legal form - Requires 7+ founding members - Purpose: Public benefit (gemeinnützig) - Tax-exempt for donations - No profit distribution to members

Benefits

✅ Tax-exempt donations - Donors get tax deduction
✅ Low formation cost - ~€100 total
✅ Trusted reputation - Germans trust e.V. structure
✅ Stable governance - Board elected by members

Limitations

⚠️ Slow decision-making - Member votes required
⚠️ No profit distribution - Surplus stays in entity
⚠️ Complex token issuance - Needs careful structuring

Use Cases for D2G2M

  • Accept tax-deductible donations
  • Own intellectual property
  • Control UG as 100% shareholder
  • Provide public benefit (open source, education)

UG (haftungsbeschränkt) - Operations

What is a UG?

UG = Unternehmergesellschaft (haftungsbeschränkt) = Entrepreneurial Company (Limited Liability)

Key Features: - German limited liability company - Minimum capital: €1 (!) - Limited liability for founders - Can issue tokens/equity - For-profit operations

Benefits

✅ Minimal capital - Start with €1
✅ Fast formation - 2-3 weeks
✅ Limited liability - Personal assets protected
✅ Token issuance - Legally straightforward
✅ Profit distribution - To shareholders (here: e.V.)

Limitations

⚠️ 25% retained earnings - Until €25K equity reached
⚠️ Higher accounting costs - Annual audit required
⚠️ No tax exemption - Standard corporate tax (~30%)

Use Cases for D2G2M

  • Day-to-day operations
  • Token issuance ($D2G2M)
  • Service contracts with dealers
  • Revenue generation
  • DAO control interface

DAO (Decentralized Autonomous Organization)

What is a DAO?

DAO = Smart contract-based governance system

Key Features: - Token holders vote on proposals - On-chain execution via Aragon/Snapshot - Transparent decision-making - No central authority

Benefits

✅ Decentralized - No single point of failure
✅ Transparent - All votes public on blockchain
✅ Global - Anyone can participate
✅ Automated - Smart contracts execute decisions

Limitations

⚠️ Legal uncertainty - No German DAO law yet
⚠️ Gas costs - Voting requires MATIC
⚠️ Complexity - Technical barrier for non-crypto users

Use Cases for D2G2M

  • Feature prioritization votes
  • Fee structure changes
  • Partnership approvals
  • Treasury spending proposals

Governance Flow

Decision Types

graph TD
    A[Proposal Created] --> B{Decision Type}
    B -->|Legal/Compliance| C[e.V. Board]
    B -->|Operational| D[UG Management]
    B -->|Community| E[DAO Vote]

    C --> F[Board Vote]
    D --> G[Executive Decision]
    E --> H[Token Holder Vote]

    F --> I{Approved?}
    G --> I
    H --> I

    I -->|Yes| J[Execute via UG]
    I -->|No| K[Rejected]

    style C fill:#FFE0B2
    style D fill:#FF6E40
    style E fill:#FF9E80

Authority Matrix

Decision Type e.V. Board UG Management DAO Vote Examples
Legal contracts ✅ Approve ❌ Propose ❌ Consult Partnership agreements
Hiring ✅ Approve ✅ Execute ❌ N/A Team expansion
Major spending ✅ Approve ❌ Propose ✅ Advisory >€50K expenses
Feature roadmap ❌ N/A ❌ Propose ✅ Decide New product features
Fee changes ❌ N/A ❌ Propose ✅ Decide Transaction fee updates
Day-to-day ops ❌ N/A ✅ Execute ❌ N/A Bug fixes, deployments

Satzung (Statutes) - Key Clauses

e.V. Satzung Highlights

§1 NAME UND SITZ
(1) Der Verein führt den Namen "D2G2M Foundation e.V."
(2) Der Sitz des Vereins ist in [CITY], Deutschland.

§2 ZWECK
(1) Zweck des Vereins ist die Förderung von:
    - Open-Source-Software
    - Digitaler Bildung
    - Dezentraler Technologien

§3 GEMEINNÜTZIGKEIT
(1) Der Verein verfolgt ausschließlich gemeinnützige Zwecke.
(2) Mittel des Vereins dürfen nur für satzungsgemäße Zwecke verwendet werden.

§4 MITGLIEDSCHAFT
(1) Gründungsmitglieder: 7 Personen (namentlich aufgeführt)
(2) Beitritt: Antrag an Vorstand, Aufnahme nach Beschluss

§5 VORSTAND
(1) Vorstand besteht aus mindestens 2 Personen
(2) Amtszeit: 2 Jahre
(3) Vertretungsberechtigung: Einzeln oder gemeinsam

§6 MITGLIEDERVERSAMMLUNG
(1) Mindestens einmal jährlich
(2) Beschlussfähig bei 50% Anwesenheit
(3) Einfache Mehrheit, Satzungsänderungen 2/3-Mehrheit

Formation Checklist

Pre-Formation

  • [ ] Identify 7+ founding members
  • [ ] Draft Satzung (statutes)
  • [ ] Define roles (board members)
  • [ ] Reserve entity names
  • [ ] Secure initial funding (€500)

e.V. Formation (Weeks 1-8)

  • [ ] Week 1: Finalize Satzung
  • [ ] Week 2: Hold Gründungsversammlung (founding meeting)
  • [ ] Week 3: Notarize documents
  • [ ] Week 4: Submit to Amtsgericht
  • [ ] Week 5: Apply for Gemeinnützigkeit (tax exemption)
  • [ ] Week 6-8: Wait for registration confirmation

UG Formation (Parallel)

  • [ ] Week 6: Draft UG Gesellschaftsvertrag (articles)
  • [ ] Week 6: Deposit €1 capital to notary account
  • [ ] Week 7: Notarize UG formation
  • [ ] Week 7: Submit to Handelsregister
  • [ ] Week 8-9: Wait for registration

Post-Formation

  • [ ] Open bank accounts (e.V. + UG)
  • [ ] Apply for tax ID (Steuernummer)
  • [ ] Set up accounting system
  • [ ] Transfer IP from founder to e.V.
  • [ ] e.V. becomes 100% UG shareholder

Ongoing Compliance

e.V. Requirements

Task Frequency Responsible Deadline
Mitgliederversammlung (Annual general meeting) Yearly Board Q1 each year
Financial report Yearly Treasurer 3 months after fiscal year
Board minutes Per meeting Secretary 2 weeks after meeting
Member registry Ongoing Board Updated within 1 month

UG Requirements

Task Frequency Responsible Deadline
Annual audit Yearly Tax advisor 5 months after fiscal year
Tax declaration Yearly Tax advisor July 31
Gesellschafterversammlung (Shareholder meeting) Yearly Management Q1 each year
Retained earnings (25%) Ongoing CFO Until €25K equity

Costs Breakdown

One-Time Formation Costs

Item e.V. UG Total
Notary €100-200 €150-300 €250-500
Court registration €75 €150 €225
Capital deposit €0 €1 €1
Legal consultation (optional) €500-1,000 €500-1,000 €1,000-2,000
TOTAL €675-1,275 €801-1,451 €1,476-2,726

Ongoing Annual Costs

Item e.V. UG Total
Accounting/bookkeeping €300-600 €1,500-3,000 €1,800-3,600
Tax advisor €0 (exempt) €500-1,500 €500-1,500
Liability insurance €200-400 €300-600 €500-1,000
Bank fees €0-120 €0-120 €0-240
TOTAL €500-1,120 €2,300-5,220 €2,800-6,340

First Year Total: €4,276-9,066
Subsequent Years: €2,800-6,340/year

Frequently Asked Questions

Why not just a GmbH?

Answer: GmbH requires €25,000 capital. UG starts with €1. Both have limited liability, but UG is accessible for early-stage projects.

Why e.V. + UG instead of just UG?

Answer: e.V. provides tax-exempt donation acceptance and public trust. UG handles commercial operations. Best of both worlds.

Can non-Germans be board members?

Answer: Yes, but at least one board member must have a German address for legal correspondence.

What if crypto regulations ban tokens?

Answer: UG can pivot to traditional equity. DAO becomes advisory board. Legal structure remains intact.

How long until we can issue $D2G2M token?

Answer: UG must be registered first (~8-10 weeks). Then token issuance is legally straightforward via UG.

Next Steps

Immediate Actions

  1. Recruit 7 founding members for e.V.
  2. Draft Satzung based on template above
  3. Schedule Gründungsversammlung (in-person required)
  4. Find notary in target city

Resources

Related: - Funding Stages - D2G2M Vision - Token Economics