Can I build a commercial OS based on FreeBSD? Can I distribute such a system without source code? I dont wanna have any legal issue. What is the true way to distribute a new Os based on freebsd without any legal issue?
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The BSD license is a permissive license, so yes, you can base a commercial product upon BSD-licensed code (which, for the most part, FreeBSD is).
Be aware, however, that some of the code in the base FreeBSD distribution is actually licensed under the GPL (or other non-permissive licenses). You would need to ensure that you didn’t use any such code in your project.