https://idol-company.com/tos/ I don't know what they changed after they posted, that it was updated, but everything in regards to derivative works at least makes sense. More or less the only things, that are prohibited, are merchandise, something pretending to be official content, registering music on sites like spotify for copyright purposes and illegal/fucked up shit. They also explicitly claim they will not try to sue you, for as long as you comply with rules. The community section however... not so great. It reads more or less as trying to bully all unofficial discord servers, after launching their own, out of existence. But at the same time, sites like this or other forums seem to be largely ignored by them. Or even something along the lines of "EN vtubers server" would fly just fine
rrat time: the "valid auditions" line in announcement for gen2 was referring to people who tried to act like nothing they were doing on account they were auditioning with and being edgelords
less rrat time: it's because they had a lot of impersonators similar to how Noel learnt about Hololive - when someone tried to pretend to be her and she got DM asking to verify the audition credentials