diff --git a/contracts/schemes/TransitionScheme.sol b/contracts/schemes/TransitionScheme.sol
new file mode 100644
index 00000000..fd28db21
--- /dev/null
+++ b/contracts/schemes/TransitionScheme.sol
@@ -0,0 +1,100 @@
+pragma solidity 0.5.17;
+
+import "../controller/Controller.sol";
+
+/**
+ * @title A scheme for transitioning the DAO's assets to a new one.
+ */
+
+contract TransitionScheme {
+
+    uint256 public constant ASSETS_CAP = 100;
+
+    event OwnershipTransferred(Avatar indexed _avatar, address indexed _newAvatar, address indexed _asset);
+
+    Avatar public avatar;
+    address payable public newAvatar;
+    address[] public externalTokens;
+    address[] public assetAddresses;
+    bytes4[] public selectors;
+
+    /**
+     * @dev initialize
+     * @param _avatar the avatar to migrate from
+     * @param _newAvatar the avatar to migrate to
+     * @param _externalTokens external tokens to allow transfer to the new avatar
+     * @param _assetAddresses the assets to transfer
+     * @param _selectors the functions to call to to transfer the assets
+     */
+    function initialize(
+        Avatar _avatar,
+        address payable _newAvatar,
+        address[] calldata _externalTokens,
+        address[] calldata _assetAddresses,
+        bytes4[] calldata _selectors
+    ) external {
+        require(_assetAddresses.length <= ASSETS_CAP, "cannot transfer more than 100 assets");
+        require(_assetAddresses.length == _selectors.length, "Arrays length mismatch");
+        require(avatar == Avatar(0), "can be called only one time");
+        require(_avatar != Avatar(0), "avatar cannot be zero");
+        avatar = _avatar;
+        newAvatar = _newAvatar;
+        externalTokens = _externalTokens;
+        assetAddresses = _assetAddresses;
+        selectors = _selectors;
+    }
+
+    /**
+     * @dev transferAssets function
+     * transfer the DAO assets to a new DAO
+     */
+    function transferAssets() external {
+        for (uint256 i=0; i < assetAddresses.length; i++) {
+            bytes memory genericCallReturnValue;
+            bool success;
+            Controller controller = Controller(avatar.owner());
+            (success, genericCallReturnValue) =
+            controller.genericCall(
+                assetAddresses[i],
+                abi.encodeWithSelector(selectors[i], newAvatar),
+                avatar,
+                0
+            );
+            if (success) {
+                emit OwnershipTransferred(avatar, newAvatar, assetAddresses[i]);
+            }
+        }
+    }
+
+    /**
+     * @dev sendEther function
+     * @param _amount the amount of ether to send to the new avatar
+     */
+    function sendEther(uint256 _amount) external {
+        require(
+            Controller(avatar.owner()).sendEther(_amount, newAvatar, avatar),
+            "Sending ether should succeed"
+        );
+    }
+
+    /**
+     * @dev sendExternalToken function
+     * @param _amounts the amounts of tokens to send to the new avatar
+     */
+    function sendExternalToken(uint256[] calldata _amounts) external {
+        require(externalTokens.length == _amounts.length, "Arrays length mismatch");
+        for (uint256 i=0; i < externalTokens.length; i++) {
+            if (_amounts[i] > 0) {
+                require(
+                    Controller(avatar.owner()).externalTokenTransfer(
+                        IERC20(externalTokens[i]),
+                        newAvatar,
+                        _amounts[i],
+                        avatar
+                    ),
+                    "Sending external token should succeed"
+                );
+            }
+        }
+    }
+}
diff --git a/package-lock.json b/package-lock.json
index ae83e662..2d81c9f3 100644
--- a/package-lock.json
+++ b/package-lock.json
@@ -1,6 +1,6 @@
 {
   "name": "@daostack/arc",
-  "version": "0.0.1-rc.41",
+  "version": "0.0.1-rc.42",
   "lockfileVersion": 1,
   "requires": true,
   "dependencies": {
@@ -221,9 +221,9 @@
       "integrity": "sha512-GnZbirvmqZUzMgkFn70c74OQpTTUcCzlhQliTzYjQMqg+hVKcDnxdL19Ne3UdYzdMA/+W3eb646FWn/ZaT1NfQ=="
     },
     "acorn": {
-      "version": "6.4.0",
-      "resolved": "https://registry.npmjs.org/acorn/-/acorn-6.4.0.tgz",
-      "integrity": "sha512-gac8OEcQ2Li1dxIEWGZzsp2BitJxwkwcOm0zHAJLcPJaVvm58FRnk6RkuLRpU1EujipU2ZFODv2P9DLMfnV8mw==",
+      "version": "6.4.1",
+      "resolved": "https://registry.npmjs.org/acorn/-/acorn-6.4.1.tgz",
+      "integrity": "sha512-ZVA9k326Nwrj3Cj9jlh3wGFutC2ZornPNARZwsNYqQYgN0EsV2d53w5RN/co65Ohn4sUAUtb1rSUAOD6XN9idA==",
       "dev": true
     },
     "acorn-globals": {
@@ -4683,9 +4683,9 @@
       }
     },
     "lodash": {
-      "version": "4.17.15",
-      "resolved": "https://registry.npmjs.org/lodash/-/lodash-4.17.15.tgz",
-      "integrity": "sha512-8xOcRHvCjnocdS5cpwXQXVzmmh5e5+saE2QGoeQmbKmRS6J3VQppPOIt0MnmE+4xlZoumy0GPG0D0MVIQbNA1A==",
+      "version": "4.17.19",
+      "resolved": "https://registry.npmjs.org/lodash/-/lodash-4.17.19.tgz",
+      "integrity": "sha512-JNvd8XER9GQX0v2qJgsaN/mzFCNA5BRe/j8JN9d+tWyGLSodKQHKFicdwNYzWwI3wjRnaKPsGj1XkBjx/F96DQ==",
       "dev": true
     },
     "lodash.findindex": {
@@ -4837,9 +4837,9 @@
       }
     },
     "minimist": {
-      "version": "0.0.8",
-      "resolved": "https://registry.npmjs.org/minimist/-/minimist-0.0.8.tgz",
-      "integrity": "sha1-hX/Kv8M5fSYluCKCYuhqp6ARsF0="
+      "version": "1.2.5",
+      "resolved": "https://registry.npmjs.org/minimist/-/minimist-1.2.5.tgz",
+      "integrity": "sha512-FM9nNUYrRBAELZQT3xeZQ7fmMOBg6nWNmJKTcgsJeaLstP/UODVpGsr5OhXhhXg6f+qtJ8uiZ+PUxkDWcgIXLw=="
     },
     "mixin-deep": {
       "version": "1.3.2",
@@ -4863,11 +4863,11 @@
       }
     },
     "mkdirp": {
-      "version": "0.5.1",
-      "resolved": "https://registry.npmjs.org/mkdirp/-/mkdirp-0.5.1.tgz",
-      "integrity": "sha1-MAV0OOrGz3+MR2fzhkjWaX11yQM=",
+      "version": "0.5.5",
+      "resolved": "https://registry.npmjs.org/mkdirp/-/mkdirp-0.5.5.tgz",
+      "integrity": "sha512-NKmAlESf6jMGym1++R0Ra7wvhV+wFW63FaSOFPwRahvea0gMUcGUhVeAg/0BC0wiv9ih5NYPB1Wn1UEI1/L+xQ==",
       "requires": {
-        "minimist": "0.0.8"
+        "minimist": "^1.2.5"
       }
     },
     "mocha": {
@@ -4918,6 +4918,21 @@
             "path-is-absolute": "^1.0.0"
           }
         },
+        "minimist": {
+          "version": "0.0.8",
+          "resolved": "https://registry.npmjs.org/minimist/-/minimist-0.0.8.tgz",
+          "integrity": "sha1-hX/Kv8M5fSYluCKCYuhqp6ARsF0=",
+          "dev": true
+        },
+        "mkdirp": {
+          "version": "0.5.1",
+          "resolved": "https://registry.npmjs.org/mkdirp/-/mkdirp-0.5.1.tgz",
+          "integrity": "sha1-MAV0OOrGz3+MR2fzhkjWaX11yQM=",
+          "dev": true,
+          "requires": {
+            "minimist": "0.0.8"
+          }
+        },
         "ms": {
           "version": "2.0.0",
           "resolved": "https://registry.npmjs.org/ms/-/ms-2.0.0.tgz",
@@ -5404,6 +5419,21 @@
           "integrity": "sha512-MVuS359B+YzaWqjCL/c+22gfryv+mCBPHAv3zyVI2GN8EY6IRP8VwtasXn8jyyhvvq84R4ImN1OKRtcbIasjYA==",
           "dev": true
         },
+        "minimist": {
+          "version": "0.0.8",
+          "resolved": "https://registry.npmjs.org/minimist/-/minimist-0.0.8.tgz",
+          "integrity": "sha1-hX/Kv8M5fSYluCKCYuhqp6ARsF0=",
+          "dev": true
+        },
+        "mkdirp": {
+          "version": "0.5.1",
+          "resolved": "https://registry.npmjs.org/mkdirp/-/mkdirp-0.5.1.tgz",
+          "integrity": "sha1-MAV0OOrGz3+MR2fzhkjWaX11yQM=",
+          "dev": true,
+          "requires": {
+            "minimist": "0.0.8"
+          }
+        },
         "source-map": {
           "version": "0.6.1",
           "resolved": "https://registry.npmjs.org/source-map/-/source-map-0.6.1.tgz",
diff --git a/package.json b/package.json
index 1f9593c8..9213c62e 100644
--- a/package.json
+++ b/package.json
@@ -1,6 +1,6 @@
 {
   "name": "@daostack/arc",
-  "version": "0.0.1-rc.41",
+  "version": "0.0.1-rc.42",
   "description": "A platform for building DAOs",
   "files": [
     "contracts/",
diff --git a/test/transitionscheme.js b/test/transitionscheme.js
new file mode 100644
index 00000000..a86d1b7c
--- /dev/null
+++ b/test/transitionscheme.js
@@ -0,0 +1,208 @@
+const helpers = require('./helpers');
+const DaoCreator = artifacts.require('./DaoCreator.sol');
+const ControllerCreator = artifacts.require('./ControllerCreator.sol');
+const DAOTracker = artifacts.require('./DAOTracker.sol');
+const constants = require('./constants');
+const ERC20Mock = artifacts.require('./test/ERC20Mock.sol');
+const Wallet = artifacts.require("./Wallet.sol");
+const TransitionScheme = artifacts.require('./TransitionScheme.sol');
+
+let selector = web3.eth.abi.encodeFunctionSignature('transferOwnership(address)');
+
+const setup = async function(
+  accounts,
+  testInitDifferentArrayLength=false,
+  testLimit=false,
+  testOverLimit=false,
+) {
+  var testSetup = new helpers.TestSetup();
+  var controllerCreator = await ControllerCreator.new({
+    gas: constants.ARC_GAS_LIMIT
+  });
+  var daoTracker = await DAOTracker.new({ gas: constants.ARC_GAS_LIMIT });
+  testSetup.daoCreator = await DaoCreator.new(
+    controllerCreator.address,
+    daoTracker.address,
+    { gas: constants.ARC_GAS_LIMIT }
+  );
+
+  testSetup.org = await helpers.setupOrganization(
+    testSetup.daoCreator,
+    accounts[0],
+    1000,
+    1000
+  );
+
+  testSetup.wallet = await Wallet.new();
+  await testSetup.wallet.transferOwnership(testSetup.org.avatar.address);
+  testSetup.assets = [testSetup.wallet.address];
+  
+  testSetup.standardToken = await ERC20Mock.new(testSetup.org.avatar.address, 100);
+  
+  testSetup.transitionScheme = await TransitionScheme.new();
+  testSetup.selectors = [selector];
+  if (testInitDifferentArrayLength) {
+    testSetup.selectors = [selector, selector];
+  }
+
+  if (testLimit) {
+    for (let i=0; i < (testOverLimit ? 100 : 99); i++) {
+      let wallet = await Wallet.new();
+      await wallet.transferOwnership(testSetup.org.avatar.address);
+      testSetup.assets.push(wallet.address);
+      testSetup.selectors.push(selector);
+    }
+  }
+
+  await testSetup.transitionScheme.initialize(
+    testSetup.org.avatar.address,
+    helpers.SOME_ADDRESS,
+    [testSetup.standardToken.address],
+    testSetup.assets,
+    testSetup.selectors,
+    { gas: constants.ARC_GAS_LIMIT }
+  );
+
+  var permissions = '0x00000010';
+  await testSetup.daoCreator.setSchemes(
+    testSetup.org.avatar.address,
+    [testSetup.transitionScheme.address],
+    [web3.utils.asciiToHex('0')],
+    [permissions],
+    'metaData'
+  );
+
+  return testSetup;
+};
+
+contract('TransitionScheme', accounts => {
+  it('initialize', async () => {
+    let testSetup = await setup(accounts);
+
+    assert.equal(
+      await testSetup.transitionScheme.avatar(),
+      testSetup.org.avatar.address
+    );
+    assert.equal(
+      await testSetup.transitionScheme.newAvatar(),
+      helpers.SOME_ADDRESS
+    );
+    assert.equal(
+      await testSetup.transitionScheme.externalTokens(0),
+      testSetup.standardToken.address
+    );
+    assert.equal(
+      await testSetup.transitionScheme.assetAddresses(0),
+      testSetup.wallet.address
+    );
+    assert.equal(await testSetup.transitionScheme.selectors(0), selector);
+  });
+
+  it('initialize assets and selector arrays must be same length', async () => {
+    try {
+      await setup(accounts, true);
+      assert(false, 'assets and selector arrays must be same length');
+    } catch (error) {
+      helpers.assertVMException(error);
+    }
+  });
+
+  it('initialize with more than 100 assets should fail', async () => {
+    try {
+      await setup(accounts, false, true, true);
+      assert(false, 'initialize with more than 100 assets should fail');
+    } catch (error) {
+      helpers.assertVMException(error);
+    }
+  });
+
+  it('transfer assets', async () => {
+    let testSetup = await setup(accounts);
+    assert.equal(await testSetup.wallet.owner(), testSetup.org.avatar.address);
+    let tx = await testSetup.transitionScheme.transferAssets();
+    await testSetup.transitionScheme.getPastEvents('OwnershipTransferred', {
+        fromBlock: tx.blockNumber,
+        toBlock: 'latest'
+    })
+    .then(function(events){
+        assert.equal(events[0].event,"OwnershipTransferred");
+        assert.equal(events[0].args._avatar, testSetup.org.avatar.address);
+        assert.equal(events[0].args._newAvatar, helpers.SOME_ADDRESS);
+        assert.equal(events[0].args._asset, testSetup.wallet.address);
+    });
+    assert.equal(await testSetup.wallet.owner(), helpers.SOME_ADDRESS);
+  });
+
+  it('transfer many assets', async () => {
+    let testSetup = await setup(accounts, false, true);
+    assert.equal(await testSetup.wallet.owner(), testSetup.org.avatar.address);
+    let tx = await testSetup.transitionScheme.transferAssets();
+    await testSetup.transitionScheme.getPastEvents('OwnershipTransferred', {
+        fromBlock: tx.blockNumber,
+        toBlock: 'latest'
+    })
+    .then(function(events){
+        assert.equal(events.length, 100);
+        assert.equal(events[0].event,"OwnershipTransferred");
+        assert.equal(events[0].args._avatar, testSetup.org.avatar.address);
+        assert.equal(events[0].args._newAvatar, helpers.SOME_ADDRESS);
+        assert.equal(events[0].args._asset, testSetup.wallet.address);
+    });
+    assert.equal(await testSetup.wallet.owner(), helpers.SOME_ADDRESS);
+  });
+
+  it('transfer avatar ether', async () => {
+    let testSetup = await setup(accounts);
+    await web3.eth.sendTransaction({from:accounts[0],to: testSetup.org.avatar.address, value: web3.utils.toWei('1', 'ether')});
+    assert.equal(await web3.eth.getBalance(testSetup.org.avatar.address),web3.utils.toWei('1', "ether"));
+    assert.equal(await web3.eth.getBalance(helpers.SOME_ADDRESS), 0);
+    await testSetup.transitionScheme.sendEther(web3.utils.toWei('1', 'ether'));
+    assert.equal(await web3.eth.getBalance(testSetup.org.avatar.address), 0);
+    assert.equal(await web3.eth.getBalance(helpers.SOME_ADDRESS),web3.utils.toWei('1', "ether"));
+
+    await web3.eth.sendTransaction({from:accounts[0],to: testSetup.org.avatar.address, value: web3.utils.toWei('1', 'ether')});
+    assert.equal(await web3.eth.getBalance(testSetup.org.avatar.address),web3.utils.toWei('1', "ether"));
+    assert.equal(await web3.eth.getBalance(helpers.SOME_ADDRESS),web3.utils.toWei('1', "ether"));
+    await testSetup.transitionScheme.sendEther(web3.utils.toWei('1', 'ether'));
+    assert.equal(await web3.eth.getBalance(testSetup.org.avatar.address), 0);
+    assert.equal(await web3.eth.getBalance(helpers.SOME_ADDRESS),web3.utils.toWei('2', "ether"));
+  });
+
+  it('transfer avatar external tokens', async () => {
+    let testSetup = await setup(accounts);
+    assert.equal(await testSetup.standardToken.balanceOf(testSetup.org.avatar.address), 100);
+    assert.equal(await testSetup.standardToken.balanceOf(helpers.SOME_ADDRESS), 0);
+    await testSetup.transitionScheme.sendExternalToken([100]);
+    assert.equal(await testSetup.standardToken.balanceOf(testSetup.org.avatar.address), 0);
+    assert.equal(await testSetup.standardToken.balanceOf(helpers.SOME_ADDRESS), 100);
+  });
+
+  it('external tokens and amounts arrays must be same length', async () => {
+    let testSetup = await setup(accounts);
+    assert.equal(await testSetup.standardToken.balanceOf(testSetup.org.avatar.address), 100);
+    assert.equal(await testSetup.standardToken.balanceOf(helpers.SOME_ADDRESS), 0);
+    try {
+      await testSetup.transitionScheme.sendExternalToken([100, 10]);
+      assert(false, 'external tokens and amounts arrays must be same length');
+    } catch (error) {
+      helpers.assertVMException(error);
+    }
+  });
+
+  it('cannot initialize twice', async () => {
+    let testSetup = await setup(accounts);
+    try {
+      await testSetup.transitionScheme.initialize(
+        testSetup.org.avatar.address,
+        helpers.SOME_ADDRESS,
+        [testSetup.standardToken.address],
+        [testSetup.wallet.address],
+        testSetup.selectors,
+        { gas: constants.ARC_GAS_LIMIT }
+      );
+      assert(false, 'cannot initialize twice');
+    } catch (error) {
+      helpers.assertVMException(error);
+    }
+  });
+});