Step 16: Adding Token Issuing Documentation

Mandatory

Corporate Governance Documentation

  1. Board of Directors Resolution

    1. A formal resolution passed by the company’s Board of Directors authorizing the issuance of tokens.

    2. Details:

      1. Confirms the legal status of tokens by formally recognizing them as claims on the Issuer that provide the aforementioned rights.

      2. Specifies the purpose and goals of the token issuance (e.g., fundraising, asset tokenization).

      3. Provides approval for using company resources to support tokenization.

      4. Confirms the token issuance complies with corporate governance policies and applicable regulations.

    3. Importance:

      1. Demonstrates that the decision was made with full knowledge and consent of the company’s leadership.

      2. Legally frames the token issuance as an official corporate action.

  2. Articles of Association or Corporate Charter

    1. Legal amendments to the company’s foundational documents to reflect the inclusion of token issuance activities.

    2. Details:

      1. Specifies changes made to governance structures, such as adding the ability to issue tokens or recognize token holders’ rights.

      2. May include provisions for token holders’ voting rights, profit-sharing, or other governance structures.

    3. Importance:

      1. Ensures the company’s foundational documents align with the token issuance and reduce risks of legal disputes.

      2. Provides a transparent record for regulators and stakeholders.

Token Issuance Framework

  1. Token Issuance Specification (TIS)

    1. A legally binding document that governs the terms and conditions of the issuance of tokenized assets. This document is typically referred in or attached to the Board's Resolution.

    2. Details:

      1. Defines the nature of the tokenized asset being issued (e.g., tokenized equity, real estate, debt instruments).

      2. Outlines the rights and obligations of the issuer and token holders, such as profit-sharing, asset claims, or voting rights.

      3. Specifies the total token supply, allocation, and mechanisms for distribution (e.g., private placement, public offering, or institutional sales).

      4. Includes provisions for lock-up periods, vesting schedules, or redemption rights tied to the underlying tokenized asset.

    3. Importance:

      1. Protects the issuer and token holders by clearly defining legal and operational parameters for the tokenized asset.

      2. Serves as a critical document for regulatory approval and demonstrates compliance with relevant asset tokenization laws.

  2. Security Token Purchase Agreement (STPA)

    1. A Security Token Purchase Agreement (STPA) is a contract between the issuer and an investor purchasing security tokens. This agreement outlines the purchase terms, investment risks, compliance obligations, and the issuer’s commitments to token holders.

    2. Details:

      1. Identification of Parties

        1. Names the issuer (company or entity issuing the tokenized security).

        2. Names the investor (individual, institutional, or accredited investor acquiring the tokens).

      2. Investment Terms & Payment Structure

        1. Specifies the purchase price of tokens and any applicable discounts for early investors.

        2. Defines the minimum and maximum investment thresholds per investor.

        3. Details the accepted payment methods (e.g., fiat currency, stablecoins, cryptocurrency).

      3. Token Transfer & Delivery Mechanisms

        1. Outlines the process for transferring security tokens to investors’ wallets or custody solutions.

        2. Specifies the expected timeframe for token issuance upon completion of the purchase.

      4. Regulatory Compliance & Investor Eligibility

        1. Includes KYC/AML verification requirements to prevent illicit activities.

      5. Investor Rights & Restrictions

        1. Defines whether the token provides equity rights, profit-sharing, or debt repayment.

        2. Specifies transfer restrictions (e.g., holding period limitations, regulatory lock-up).

        3. Clarifies whether investors have voting rights in the issuing company or entity.

      6. Risk Disclosures & Legal Protections

        1. Provides disclaimers protecting the issuer from liability in cases of market fluctuations or regulatory changes.

      7. Exit Strategies & Redemption Options

        1. Defines whether tokens can be redeemed for equity, fiat, or underlying assets.

        2. Specifies whether investors can sell tokens on secondary markets or must hold them until maturity.

Regulatory Compliance Documentation

  1. Legal Opinion

    1. A document from a certified legal expert confirming that the token issuance complies with the regulatory requirements.

    2. Details:

      1. Validates the accuracy of data and assumptions made in earlier phases of the tokenization process.

      2. Confirms whether the token qualifies as a security, utility, or has another classification under applicable laws.

      3. Outlines compliance with licensing requirements, securities regulations, AML/CTF laws, and investor protection standards.

    3. Importance:

      1. Demonstrates to regulators and investors that the issuer has conducted thorough legal due diligence.

      2. Reduces the risk of legal disputes or regulatory penalties.

  2. AML/KYC Policy

    1. A formal document outlining the issuer’s procedures for verifying the identities of token holders and complying with anti-money laundering (AML) and counter-terrorism financing (CTF) laws.

    2. Details:

      1. Describes the processes for onboarding token holders, including identity verification and risk assessments.

      2. Specifies measures to detect and prevent money laundering or fraudulent activities.

      3. Ensures compliance with global AML/CTF standards, such as FATF guidelines or jurisdictional requirements.

    3. Importance:

      1. Builds trust by demonstrating the issuer’s commitment to financial integrity.

      2. Ensures the issuer complies with regulatory requirements for onboarding investors and token holders.

  3. Privacy Policy

    1. A formal document outlining the issuer’s approach to managing, processing, and protecting the personal data of token holders, users, and other stakeholders.

    2. Details:

      1. Describes the types of personal information collected, such as identification details, transaction history, and usage data.

      2. Specifies how personal data is stored, processed, and shared, including whether third parties are involved.

      3. Outlines the security measures implemented to protect personal information from unauthorized access or breaches.

      4. Describes the rights of individuals regarding their data, including the ability to access, correct, or delete their personal information.

      5. Facilitates compliance with data protection regulations, such as GDPR, CCPA, and other applicable privacy laws.

    3. Importance:

      1. Instills confidence in users by demonstrating the issuer’s commitment to privacy and data protection.

      2. Reduces the risk of privacy violations and associated penalties by ensuring adherence to relevant data protection regulations.

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