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Financial assets

Equity Tokenization

Shares issued as tokens, with the cap table, voting, dividends and pre-emption rights held in one register.

Standards, ordered by control over a transferFour token standards as rungs, from one where anyone may hold up to one where a transfer can be refused by the contract itself.ERC-20anyone may holdERC-1155batched, still openERC-4626a vault around oneERC-3643a transfer can be refused

Definition

Equity tokenization represents shares in a company as transfer-restricted tokens. The register is the cap table, and the rights attached — voting, dividends, pre-emption, liquidation preference — are properties of the share class rather than of the token format.

What it solves

  1. Cap tables that driftMost private cap tables live in a spreadsheet that disagrees with the share register and the option ledger. One register removes the disagreement.
  2. Secondary transfer frictionPrivate share transfers involve consent, pre-emption waivers and paperwork. Encoding the constraints makes the process legible even when it stays deliberately slow.
  3. Shareholder communicationKnowing exactly who holds what today is the precondition for a vote or a dividend.

How it works

  1. Classes are definedOrdinary, preferred and any bespoke class, each with its rights recorded.
  2. Shares are issued to the registerIssuance is a movement, and the register is the authoritative cap table.
  3. Corporate actions adjust itSplits, consolidations and buybacks are planned, approved and applied to every position at once.
  4. Dividends pay holders of recordDeclared, computed against the record-date register, and paid per holder.

Architecture

A register with per-class positions, a corporate-action engine that plans a unit adjustment before applying it and refuses any ratio that would not divide a holding exactly, and a distribution engine for dividends.

How the platform is arrangedFour stages — asset, compliance, offering and register — connected left to right, all enclosed by a single transaction boundary that rests on a double-entry ledger.AssetStructured and documentedCompliancePolicy in forceOfferingA book that is derivedRegisterHolders of recordOne transaction boundaryA movement and the entries behind it commit together, or neither doesDouble-entry ledgerEvery movement, both sides, in minor unitsBalanced at COMMIT
Four stages inside one transaction boundary, on one ledger. A register that disagrees with the cash is not a state the software can reach.

Tokenization lifecycle

  1. Incorporate and structureCompany, classes, articles and shareholder agreement.
  2. IssueFounders, investors and any employee scheme.
  3. Corporate actionsSplits, consolidations, buybacks, new rounds.
  4. Distributions and votesDividends where declared; governance where the class carries it.
  5. ExitSale, listing or wind-down.

Supported token model

Permissioned fungible token, one series per share class. Shares within a class are interchangeable; across classes they carry different rights and must not be pooled. Transfers depend on the recipient and often on consent, so on-chain restriction is required.

Asset requirements

What must be true before this can responsibly be tokenized at all.

  • Articles and a shareholder agreement consistent with a tokenized register.
  • Company-law recognition of the register format in the jurisdiction of incorporation.
  • Clear treatment of pre-emption and consent on transfer.
  • A plan for employee options and any convertible instruments.

Compliance considerations

  • Share issuance and transfer are governed by company law as well as securities law, and the two do not always align.
  • Pre-emption rights must be honoured mechanically or waived explicitly.
  • Shareholder registers carry statutory obligations that the platform records rather than replaces.
A compliance policy as ordered rulesRules are evaluated in sequence and the first match decides. A subject matching no rule is denied, and a fact the platform does not know never satisfies a rule.Subjectan investor's facts#1Screening hit is openreject#2Country in the blocked listreject#3Professional or institutional, verifiedallowMatched no ruledenyFirst matchdecides. A laterallow cannot undoan earlier reject.Eligibility comesfrom a rule saying so.
Rules are data, evaluated in sequence, and the first match decides. A subject matching nothing is denied — eligibility comes from a rule saying so, never from no rule objecting.

Investor workflow

  • Verify and be approved as a shareholder.
  • Subscribe in a round and fund by reference.
  • Hold; vote where the class permits; receive dividends where declared.
  • Transfer subject to consent and pre-emption.

Issuer workflow

  • Define classes and rights.
  • Run rounds as offerings with allocation.
  • Maintain the register through corporate actions.
  • Declare and pay dividends; run votes.

Payments

Dividend pools are funded by the company, recognised as a payable to holders alongside any withholding, and paid per holder. Subscription money in a round is held as an investor liability until the round allocates.

The payment railMoney is matched to a subscription by its reference and no other attribute, then screened and settled. Provider adapters for card and crypto rails are not built, and are drawn as an absent component.ReferencechecksummedFunds arrivebank or custodyReconcilereference or nothingScreenAMLSettlesecond authoriserSuspense (2900)unidentified, and visibleNo reference matchProvider adaptersCard, local rail, stablecoinNot built — the registry ships empty
A reference is the only thing that matches money to a payment. Everything else is an exception for a person, and unidentified credits post to suspense where they stay visible.

Lifecycle servicing

Equity servicing is dominated by corporate actions. A split or consolidation rewrites every position at once, so it is planned against the record-date register, hashed into the approval, and re-checked at execution — a position that has moved since invalidates it.

How a distribution is splitA funded pool is divided among holders of record as at the record date using largest-remainder allocation, then withholding is deducted from each holder's gross rather than from the pool.Funded poolone exact amountRegister as atthe record dateRebuilt from confirmedmovements, not today’sbalancesNet to the holderWithheld, from that holder’s grossThe lines sum to exactly what was fundedLargest-remainder allocation, so no minor unit is created or lost. Rounding each slice independently leaves the issuer a few units out every cycle.There is no per-jurisdiction withholding matrix in this build — one rate is entered per run.
Holders of record as at the record date, split by largest remainder so the lines sum exactly, with withholding taken from each holder’s gross rather than off the top of the pool.

Secondary transfer

Private equity transfers are deliberately constrained. Consent, pre-emption and eligibility are all expressible, and the register records the transfer only when it is confirmed.

The transfer gateA transfer request passes through eight compliance checks. Any single failure refuses the transfer; the same gate is evaluated off-chain and on-chain.Senderholds unitscanTransfer( )Sender holds the unitsNeither party frozenLockup expiredRecipient eligible under policyJurisdiction permittedInvestor type permittedHolding limit not breachedSanctions screening clearRecipientunits move, or none doOne implementation. The Solidity module and the register evaluate the same rules.
One implementation of the gate, not two. The function the register calls is the same one that mirrors the Solidity compliance module check for check, so an off-chain gate and an on-chain gate cannot drift.

Risks

Named plainly. An instrument whose risks are only in a footnote has been mis-sold before it has been issued.

  1. DilutionLater rounds dilute earlier holders, and the mechanics must be understood before subscribing rather than after.
  2. Illiquidity and minority positionA minority stake in a private company may never be saleable at any price.
  3. GovernanceA class without votes has no say in outcomes that determine its value.
  4. Fractional entitlementsA corporate action that does not divide a holding exactly leaves fractions, which must be paid out rather than truncated away.

How we support it

  • A cap table computed in integer basis points and truncated, because a percentage held as a float and summed across a thousand holders does not reach 100.
  • Unit adjustments refused outright where the ratio would not divide some holding exactly, naming the holders it fails on.
  • Ownership positions rebuilt from movement history and checked against the running totals.

Questions

Is a tokenized share register legally valid?

It depends entirely on the jurisdiction of incorporation. In several it is; in others the statutory register remains authoritative and the token mirrors it. That must be settled before issuance.

How are employee options handled?

As a separate instrument until exercised. Exercising issues shares to the register.

What happens in a split that leaves fractions?

It is refused, with the affected holders named. Truncating would take units from small holders and give them to nobody; cash in lieu is the correct remedy and must be paid.

Next steps

Bring an instrument you are actually considering. Structuring something real is the only way to judge whether the model fits.

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