What is important to know when STO?

Frequently asked questions

  1. What are the standard steps to start my STO?
    1. choose the company type
    2. choose the security type
    3. incorporate the company
    4. start writing the prospectus
    5. define the deadlines for each of the above steps
    6. set up a general roadmap and start spreading the word
  2. Is No Limit a licensed securities broker?
    1. No, we are working alongside licensed securities broker to place your offering on the public and private market.
  3. Can my team promote our own offering?
    1. There are ways that your own team can promote the offering across online channels, but please also understand that there are certain rules and laws you must follow; you will be liable for any wrongdoing.
  4. Is the Offering only targeting Accredited Investors?
    1. Usually token offerings are securities; therefore, they must be promoted to accredited investors only. Since this market is very new, a person who invested wisely into crypto currencies could have made a good amount, but would not qualify as an accredited investors in typical terms. We are currently working with our securities broker to provide access to those people, which we believe are accredited investors in this space, but may not be considered accredited investors in the traditional retail world.
    2. Please understand that the kind of investors (accredited, retail, etc.) you are able to market to will depend on how your prospectus is structured.
  5. What kinds of Security Token Offerings exist?
    1. This can only be decided on a case-by-case basis; nonetheless, we identified some basic characteristics that might provide some guidelines:
      1. Financing Purpose: The Token is being issued as a means of raising equity or debt capital.
      2. Counterparty and Legal Effect: The Token construes a legally binding relationship between the holder and the issuer of the Token.
      3. Company Participation Rights: The Token construes a legally enforceable right to exercise controlling activities in the company.
      4. Financial Participation Rights: The Token promises some form of legally enforceable monetary participation rights, e.g. dividends, interests etc.
      5. Investment Instrument: The Token is designed as an instrument to invest, or is being sold as such.
  6. Which blockchain will be used as the TT System is approved in Liechtenstein? Can the FMA also host nodes?
    1. Only once blockchain law is passed
  7. How does the smart contract work with rights and dividend structure? Which blockchain can deliver this?
    1. To be defined
  8. Will No Limit proof whether or not my planned financial instrument will be possible to execute?
    1. Yes, we always do an initial assessment.
  9. Will No Limit help us write the prospectus?
    1. Yes. We will also submit the prospectus to the FMA in Liechtenstein and, if needed, submit it to other authorities within Europe. In fact, if you are interested, we can even help you draft a prospectus for outside of Europe.
  10. Who will help us make the STO trustworthy?
    1. This will be ensured with the due diligence of assets/an audit by BDO, proving the business model.
  11. Will No Limit take care of my legal documents?
    1. Yes, we take care of legal opinions/writing intercompany agreements, and Share Purchase Agreements, if needed.
  12. Will No Limit help us with tax advisory?
    1. We will do this through our Partner, BDO.
  13. Will No Limit help us incorporate the company in Liechtenstein?
    1. We will help you fast track your application with BDO Liechtenstein, yes.
  14. Which program will No Limit use to ensure transparent project management?
    1. We use JIRA as our project management tool; each of our stakeholders will have access.
  15. Will No Limit help us achieve a decentralised share register?
    1. Yes, with https://dsr.weown.com/
  16. Will No Limit write smart contracts to successfully launch the STO?
    1. Yes, we will do this per today with an ERC-20, ERC-1400 or ERC-721 token standard. If you wish to use existing platforms like Polymath, WeOwn or anything similar, please let us know beforehand.
  17. How do you currently handle secondary trading with Security Tokens?
    1. We will help you identify the right strategy post-STO to choose the right exchanges, or even make your asset tradeable within your platform.
  18. What can i expect from the KYC?
    1. We do KYC with BDO and with the approval from Bank Frick, so we can help open your bank account with maximum success rate. We are also evaluating other Banks.
  19. Will I be able to accept FIAT?
    1. If you successfully go beyond the pre-approval process from Bank Frick, we can help you understand the necessary requirements to be able to accept FIAT.
  20. Setting up a website
    1. We will help you that your website is accordingly created also fully compliant with jurisdiction Liechtenstein
  21. How do I handle the issue of custodian?
    1. Is custodian service for security tokens on behalf of the shareholders
  22. Setting up payment merchant agreement for FIAT acceptance (check flowchart with Crypto Finance).
    1. Is an STO also possible?
  23. Who will take care of the revisions and auditing the company in Liechtenstein?
    1. Revisions and audits are done by BDO Liechtenstein.
  24. Fatca Compliance
    1. TBA – what to expect.
  25. Mifid
    1. TBA – what to expect.
  26. Psd2
    1. TBA – what to expect.
  27. What will the company structure look like?
    1. Please refer to following flow charts for directions as to how a company may be incorporated as a protected cell company.
  28. How to market to retail investors?
    1. We can market to European users, as long as there is a prospectus in Liechtenstein. If we want to market outside of the EU we can only accept accredited investors; otherwise, we would need to file for a prospectus in that respective country to market this to so-called “retail investors”.
  29. There is no special licensing needed to promote (e.g. create Facebook advertisements for the startup) the advertisements. This will be done with the same company account, as well as issuing security.
  30. Who issues the financial instrument?
    1. The company which is newly incorporated for this purpose. Along with BDO Liechtenstein, a lawyer close to BDO and Benjamin Buergi are responsible for the legal and compliance to-dos for issuing this security.
  31. Ease of token exchange
    1. Exchanging tokens will only be possible in a listing page for approved investors only (KYC by BDO). It’s possible that everyone will be able to join and buy and sell once verified, with no need to be an accredited investor once you found our project yourself.
  32. Marketing for this project
    1. Also, it is currently open in regards to who will do the marketing for this project; however, it should be as affordable as possible. No Limit can offer insight and help in the social media space as it has managed over 1 million USD on FB spending for a client. The initial marketing of the financial instrument and project should be executed with a own marketing team who is working only for this project.
  33. Code of conduct
    1. We will sell an honest product and project to our customers. We want them to understand that such a deal is usually only for private accredited investors, usually sold in private sales to the wealthy people.
  34. How will we achieve good user experience and transparency?
    1. With direct access to their Dashboard, customers are able to see the total revenue, produced wind energy, sold wind energy by location, etc. This gives the user a very close feeling of being a part of something big.
    2. Also, the Dashboard can be used as a voting gateway for those that are able to vote on important decisions in situations where the management want their insights.
  35. Security of financial instrument
    1. Our auditors make sure that there is enough substance to issue an STO. (what are the assets etc.)
  36. We will always be in direct contact with FMA, so that they understand we are serious. With transparency and industry leaders they should understand that we plan on something big in and for Liechtenstein as a long-term company.
  37. Secondary trading of the security token
    1. At the time of conversion, the Company must (if shares are registered) at least know in principle who the shareholder is and whether or not the conversion conditions are fulfilled. The share may then, in the absence of a transfer or transfer restrictions, be passed on in secondary trading. The company receives no more money in this case. In my understanding, the company then no longer has a duty to make KYC for all shareholders, as it no longer “takes” any money. At most, the parties involved in the transfer of shares have the obligation to check KYC/AML, the company m.E.—but not anymore.
  38. What rights do I have when I hold an Equity Token?
    1. Anyone who has tokens converted becomes the official shareholder of the company, with all the rights that go with it. On the one hand, the co-determination right as a shareholder, on the other hand dividend rights. Participation is different in comparison to pure debt participation (i.e. theoretically, 100% of the business development, and of course, the value of the share)..
  39. How complex can my financial instrument be?
    1. As long as you have a blockchain and the underlying protocol supporting your financial instrument, you are entitled to make it as complex as you wish because your financing requirements are that unique; however, keep in mind sometimes it’s best to keep it simple.
  40. What is a notification of the prospectus?
    1. Once the prospectus is issued in Liechtenstein and approved by FMA in Liechtenstein, you can use the complete European Union to promote your financial instrument once it has been notified for each individual country within the EU.
  41. How do I get notification of the prospectus in those EU countries?
    1. This is done by either us or your own lawyer, which will coordinate with the lawyer. Usually, a notification of a new country is completed very quickly, especially when FMA Liechtenstein approved it.
  42. What are the costs for the approval by FMA for my prospectus?
    1. Get in touch with us to get the detailed question overview. Here are the 2 most important ones
      1. Approval and deposit of a securities prospectus or base prospectus: 5k CHF
      2. Approval and deposit of a security description and a summary: 1.5k CHF
  43. Can I also issue a convertible note?
    1. Yes, this is legal; however, from a technical perspective, once you have filled out our questionnaire about convertible notes, we will be able to finalise the workflow charts for each individual part (company structure, token design, financial instrument, money flows and token holder rights).
  44. How do you make sure that claimed interest and dividends are always auditable?
    1. For each interest payment and dividend transaction, we have the possibility to create a snapshot, which means we can always have this data available. Each investor also needs to KYC prior to claiming any of these payments. In addition to these snapshots, we have all contract data online on etherscan.io.
  45. If I issue a bond, what will it’s pair value be?
    1. From a legal perspective, this is subject to the issuer. From a technical perspective, as tokens can also be traded within decimals (which is also not an issue) from a retail investor perspective, you should think about what the minimum investment is and use this for example.
  46. How can we as Asset Managers embrace blockchain in our day-to-day business?
    1. We have a specific landing page for this industry; consider checking it out by clicking here: https://initialcoinoffering.sg/pages/blockchain-consulting-for-asset-managers/
  47. I want to get your sales pitch – how can I do that?
    1. Go to this website and sign the NDA – then we’ll send you the sales pitch via e-mail. https://initialcoinoffering.sg/pages/security-token-offering-pitch/
  48. Is a PCC (Protected Cell Company) the right vehicle if we want to issue a bond?
    1. In addition to certain other purposes (charitable purpose, exploitation of patents and trademarks, etc.), a PCC may only (or combined with the other exclusive purposes): acquire, manage and exploit participation in other companies (subsidiaries).
    2. Now it is so that the bond should be issued via the PCC. It is perfectly legitimate for a PCC to provide such funding. You can, for example, also hold land; however, this doesn’t require a separate listing in the purpose of the company. As far as can be seen, the PCC will have (at least once) a subsidiary, namely XXX AG, and accordingly, a PCC would be possible.
  49. How do we achieve a prospectus conformity?
    1. As we do KYC and subscription form in one, it’s proved to speed up the process of the offering; in addition, compliance has all the information they need whenever they need it.
    2. Beside compliance, we also have the subject of securities act where our legal partners are trained to make sure our prospectus is fully compliant in the jurisdictions requiring it.