Legal & Tokenization
Security Token Offerings: Legal Structures to Understand First
Before choosing a structure for a security token offering, understand the legal shapes it can take and what each one assumes.
Direct issuance vs. tokenized interest
A security token can represent the security directly or a tokenized interest in a separate vehicle. The choice changes the legal entity stack.
Each layer adds its own formation, tax, and governance questions. Start by mapping the layers you would actually need.
The vehicle matters
LLCs, series entities, and funds each carry different duties to token holders. The structure decides who owes what to whom.
Governance terms in the entity documents should match what the token promises. Misalignment shows up as disputes later.
Plan the cap table and transfers
Transfer restrictions have to be enforceable on-chain and off-chain. A whitelist that the documents ignore is a gap.
Think about secondary markets before launch, not after. Retrofitting compliance is harder than building it in.
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