Can a DAO be dissolved or shut down? If so, how?
In general, the members of a DAO can decide to dissolve or shut down the DAO. Depending
on whether the DAO qualifies as a legal entity or not, different rules may apply regarding the
If the DAO does not qualify as a legal entity, there are no specific rules or obligations to be
observed. Therefore, a DAO can basically be shut down or closed whether temporarily or
permanently and at any time. Contracts related to the DAO are not directly affected, for the
reason that if the DAO is not a legal entity, only its members can enter into contracts.
However, such contracts may need to be modified or terminated by the respective
If the DAO qualifies as a legal entity, in particular as a company, it can only be shut down or dissolved in accordance with the applicable laws. This means that the DAO must observe all relevant obligations, e. g. obligations related to the allocating of the assets. Regarding DAOs registered with the Commercial Register (Handelsregister), additional registry
obligations may apply.
Which obligations apply in a given case, depends mainly on the legal status of the respective DAO. A DAO may basically qualify as a company, in particular as a civil law partnership
(Gesellschaft bürgerlichen Rechts – GbR) or a general partnership (offene
Handelsgesellschaft-OHG). Under certain circumstances other legal forms may apply as
well, however, in current legal practice these are rather unlikely to be relevant for DAOs.