Tokenization checklist
You have decided to tokenize the shares of your company. Congratulations to that great decision!
In order to go-live successfully, you will need to take some important steps in preparation.
Share Name & Ticker
The first thing you should probably decide is the official name of your tokenized shares and your share ticker, under which your company shares will be traded. The ticker is typically a 3-4 letter code, unique to your company.
The ticker should not contain special characters and punctuation, to ensure compatibility with existing systems. It CAN’T BE CHANGED after the deployment of your shares.
Some examples from companies on our platform
- Aktionariat AG Shares -> DAKS
- TBô Shares -> TBOS
- Boss Info AG -> BOSS
- quitt.shares -> DQTS
Shareholder Agreement
Another thing that needs to be available during your token launch is a shareholder agreement. This document defines the terms and conditions for your shares, and what rights and responsibilities your shareholders will have. It is not only a legal requirement, but also a crucial part of building a solid foundation for your shareholder relations.
Aktionariat provides a template that can be used as a starting point, but the exact content and terms on it will depend on the specific configuration of your share tokens.
In case you need help, our legal partner LEXR will be happy to help you in finalizing the Shareholder Agreement, while making sure it correctly covers all the required information in a compliant way.
Initial Price of Share Token
As your company is the counterparty for all purchases / sales regarding your share token, you will have full control on the price and its behavior.
The first thing to decide is the starting price for the sale of your tokens. This, of course, is determined by the number of shares your company has and its valuation. Note that you don’t have to tokenize 100% of your shares, but the share supply while determining the price and market cap of your tokens should include non-tokenized shares.
As an example, a company with 1.000.000 shares outstanding, with a valuation of 20.000.000 CHF, should set the initial price of 1 share to 20 CHF, regardless of whether all 1M shares are tokenized or not.
As our share tokens are legally 1-to-1 representation of real shares, it is not possible to have fractional shares. The price of 1 share will be the minimum amount an investor would need to pay when investing in your company.
The trading price of the token can be changed through the dashboard (by agreement through the company board multi-signature contract) at any time. However, as this will significantly impact your market and your shareholders’ expectations, it is best to use a forced price change only on significant events and let the market forces define the price otherwise.
Changing the price can also be used to define a multi-tier initial sale, where early investors are allowed to buy in at lower prices, before setting a final price for the long term. TBô has used this mechanism successfully during their offering.
Price Behavior
Typically, the price is adjusted slightly up for every investment made on your website, and down for every share sold back to your company. This rewards early investors, while also keeping a balance between supply & demand. The mechanism is similar to the “bonding curve” approach used in various tokens, except it defines a linear relationship between the shares outstanding and the price.
Using Aktionariat Dashboard, you can define the “slope” of the share price bonding, which is used when calculating the price impact of each transaction.
The linear increment mechanism also lets companies set a range of price for their shares, instead of setting a single price where shares would be traded. The market can decide where exactly in that range the share price will settle.
Please check the graph and the case study below for an example on setting the price and price change of your shares.
Currencies and Payment Methods
The investors will need to be able to pay you, either using fiat bank transfers or cryptocurrencies.
Cryptocurrencies are the most suitable when trading tokenized shares, since they provide immediate settlement and delivery of your tokenized shares. However, we are aware that not everyone interested in investing in your company may own cryptocurrencies. Therefore, it is possible to accept bank transfers as payment. Note that when using payments through bank transfer (a) typical bank transfer durations and additional costs may apply, (b) you will manually need to confirm the receipt of the bank transfer for a certain placed order in the dashboard, (c) the settlement is not guaranteed, since the shares may be sold out, or significantly changed in price after the order but before the payment is received.
It is not possible to reserve a number of shares for purchases made via bank transfers, since it’s not guaranteed that the transfer will happen at all. If the shares were to be reserved, a malicious actor could block your market by supposedly buying all shares through bank transfer and never sending the payment.
We currently don’t enable payments through credit or debit cards, although an easier payment flow using tools like TWINT are in development.
Other things to consider regarding payment methods are:
- Which fiat currencies you would like to accept. (CHF, USD, EUR, …)
- Which cryptocurrencies you would like to accept (ETH, XCHF, DAI, …)
- In case of receiving non-stable cryptocurrencies, such as ETH, whether or not you would like to keep it as ETH or convert automatically to a stablecoin.
Using Allowlisting
Allowlisting limits the addresses that can trade share tokens to only addresses recognized explicitly by the company.
First of all, please note that Aktionariat doesn’t recommend an allow-list for share tokens. Having custody of the share token and being legally registered as a shareholder are different things. The check for accepting a certain person as a shareholder can be done off-chain during shareholder registration, which is much easier and less expensive for both the company and investors.
That being said, if you decide that you need an on-chain allow-list, our tools are able to handle your request. Our Brokerbot will only allow purchases done by allow-listed addresses. Using Aktionariat Dashboard, company admins will have the chance to review and approve requests to be allow-listed.
Additional Functionality
Share tokens issued using the Aktionariat platform are fully compliant will existing ERC20 standard. On top of the typical ERC20 standard, we also provide the following additional capabilities:
Recoverability – ERC20Recoverable
We provide a decentralized way of retrieving a shareholder’s tokens, in case the keys or wallet holding those shares are lost. This process includes depositing a collateral that can be claimed back using the “lost” private keys. After a certain period (1-6 months), the claimant can get back the collateral + the previously stuck shares. If the request was malicious and the keys were not lost, the original owner can cancel the claim and also take the collateral. The whole process can be overseen by the company admins to prevent abuse.
Draggable – ERC20Draggable
We offer a way to add a drag-along mechanism into the smart contract. Using this mechanism, an investor that purchases majority shares in the company can force out the small investors, by paying the fair price of the share acquisition. This way, the existing shareholders still get a fair compensation, but future investors that would only accept to get 100% of the share supply can still do so.
Final Steps
Once you have taken all the necessary decisions, you are ready to deploy the Brokerbot and enable your market.
The only thing left is to prepare the website and start offering your tokenized shares to the public!
Please don’t hesitate to get in touch with us for any help in taking these decisions. We will be more than happy to make sure you understand them fully and set the ideal configuration before launching your market.