# Legal Link Between the Issuing SPV/SPC and the Asset

When the SPV/SPC is incorporated in a foreign jurisdiction, the local operating company (which owns or manages the underlying asset) **must be legally linked** to the token-issuing entity.

This is essential for regulatory compliance, investor protection, and the distribution of revenue.

***

### Key Legal Agreements Connecting SPV/SPC with Underlying Asset <a href="#key-legal-agreements-connecting-spv-spc-with-underlying-asset" id="key-legal-agreements-connecting-spv-spc-with-underlying-asset"></a>

| Agreement Type                  | Purpose                                                             | Key Provisions                                                                                                               |
| ------------------------------- | ------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------- |
| Asset Holding Agreement         | Establishes the legal framework of the asset’s ownership.           | Defines the rights, obligations, and transferability of the asset from the local entity to the SPV/SPC.                      |
| Revenue Distribution Agreement  | Regulates how income is shared with token holders.                  | Defines the distribution of rental income, dividends, or profit-sharing mechanisms between the local entity and the SPV/SPC. |
| Management Agreement            | Defines operational control and asset maintenance responsibilities. | Specifies whether the local entity retains operational control or transfers it to a third-party management company.          |
| Regulatory Compliance Framework | Ensures adherence to domestic and foreign financial regulations.    | Outlines investor reporting requirements, KYC/AML procedures, securities compliance, and tax obligations.                    |

These agreements ensure clear ownership rights, enforceable investor protections, and transparent financial operations.

{% hint style="info" %}
**Example:** A real estate developer in Germany tokenizes a residential property portfolio through a Liechtenstein SPV. The SPV issues security tokens, while a Revenue Distribution Agreement ensures that rental income is transferred to the SPV for distribution to token holders.
{% endhint %}

***


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