LEGAL KIT

Information to be added by issuers to their legal documentation for tokenized securities.
 

Issuance

• the securities issued will be issued in the form of security tokens. Movement on the blockchain will be reflected in the official register of securities by the Issuer or its authorized agents.

Example: “The ownership and transfer of the Token Units will be authenticated and recorded via an open source, public, blockchain-based distributed computing platform and operating system featuring smart contract functionality. The books and records of the Fund with respect to the ownership of the Limited Partnership Interests will be concurrently updated by the General Partner in order to properly reflect the ownership of the Limited Partnership Interests represented by the Token Units.”

• under which law the security token is issued;
• clarify whether the security token is native or if it is the representation of a position in a “base-register” (which then needs to be clarified);
• On which precise blockchain will the tokens be initially issued (“blockchain of reference”)
• confirmation that in case of a fork and even if existing tokens are replicated on this fork, only the tokens issued on the reference blockchain will be recognised as validly representing the security by the issuer;
• confirmation that the issuer keeps the right to change blockchain of reference during the life of the security but that this will be treated as a corporate event and duly communicated to token holders in terms of timing and procedure;
• confirmation that the tokens will be issued under the ERC-3643 token protocol;

Qualification

• that only duly “authorised” investors will be allowed to hold and transact in the security token. “Authorised” means an investor having been “Qualified” by the issuer, i.e. checked by the issuer or his mandated agent against KYC and AML rules applying as well as confirmed as being compliant with any additional rules (to be detailed by the issuer if any) imposed for other then regulatory reasons by the issuer;
• the investors commits to provide all data and documents requested by the issuer and/or his mandated agent as needed to have him qualified;
• the investor acknowledges that, as a result of the qualification process, and if he does not have one yet, he will be provided with an ONCHAINID digital identity deployed on his behalf on the blockchain of reference;
• the investor acknowledges that to receive an ONCHAINID digital identity, he will have to agree with the ONCHAINID Terms and Conditions and ONCHAINID Privacy policy as part of the qualification process. ONCHAINID T&C to be added as an annex to the issuer legal documentation supporting the security token;
• the investor acknowledges that data and documents provided during the qualification process for the security token will be maintained on his behalf by Tokeny;
• the investor commits to update in ONCHAINID compatible applications, during the entire period of holding of the security token, any data provided during the qualification process that would change during such period. The investor further acknowledges that any such change will be communicated to any “authorised 3d party”;
• the investors acknowledges that any party (“agent”) appointed by the issuer to administer the security token (e.g. KYC agent, paying agent, settlement agent, corporate actions agent, etc …) will be an “authorised 3d party” and will have access to the investor data linked to his ONCHAINID. The investor further acknowledges that he will be ables to revoke access to his data to an authorised 3d party as long as he will not hold any position in the security token anymore;

Subscription

• Currency of reference of the token and other currencies and/or crypto-currencies accepted for subscribing in the token;
• Payment methods allowed for subscribing in the token, with details of the process by payment method (delay of validation of the order, refund policy, fees);
• the investor acknowledges that an exchange rate and/or quantity of tokens to be received mentioned during the subscription process are provided indicatively only and that the exchange rate finally used and the quantity of tokens he will finally be granted with will be based on the exchange rate at the moment of receipt (reconciliation ?) of his payment proceeds by the issuer or his mandated agent;
• The investor acknowledges that he will be asked, during the subscription process, to provide the address of a wallet which he owns on the blockchain of reference and/or will be provided with a wallet by the issuer (depending on the option(s) selected by the issuer);

Custody

• the investor is informed that in case he would lose the private key of his non-custodial wallet (as the case may be), he will have to validly identify himself with the issuer or his mandated agent in order to have a “tokens recovery process” executed;

Transfers

the investor acknowledges that in case he would want to transfer part or all of his position in the security token, such transfer: (one option to be selected among the two following) will only be possible to a counterpart having been qualified by the issuer or his mandated agent / will only be possible to a counterpart having been qualified by the issuer or his mandated agent and subject to an approval of the transfer by the issuer or his mandated agent (conditional transfer)