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Legal Advice on Tokenising Equity / Stocks on Ethereum
Category
Business > Legal
Posted
May 19, 2017
Status
Open

Description

We need guidance on tokenising equity of our company on Ethereum. Following this, we need clear legal advice on how to structure it. The basis of our requirements are:

Is it legally feasible to tokenise equity / stock / shares of a UK (England & Wales) listed company on the Ethereum blockchain?  E.g. 20% of our company would become tokens.
 
We want to do this to:

  • Initially pay and incentivise people (advisors, brand ambassadors, referrals, competitions, etc.)
  • With growth and traction, list our token on exchanges so the tokens can be traded / easily transferred (kind of like penny stocks)

This is roughly how it would work:

  • 20% of equity from the UK LTD company would be allocated to tokens, e.g. 1 million tokens
  • Whoever owns the tokens would have legal ownership of the company, and Moneo could never take that ownership away
  • We would not need to register share ownership with Companies House in the UK (maybe the 20% is held by a custodian)

The questions are:

  • Is this legally possible?
  • Do we need to perform any KYC/AML on the token holders?
  • Do we need a custodian, and how can we avoid listing every shareholder with Companies House (just the 20%)?

We’ve technically validated that this is straightforward with Lucas Cullen (https://moneo.io/bitcoinbrisbane), we just need those tokens to have legal standing.

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