What is the purpose of the Private Market?
- The purpose of the Private Market is to offer a registry service for private limited companies, where tokenised SPV share representations are issued to the shareholders of the companies using the service.
- The Private Market offers companies an alternative to the expensive and time-consuming task of managing their share registry while token holders have access to real-time global settlement framework through BlockSettle.
What is the process for interested companies?
- For new issues, the process begins with submitting an application
- BlockSettle works directly with eligible companies to setup a Special Purpose Vehicle (SPV) in Sweden. A share register for each SPV is created in the BlockSettle system.
- Each investor maintains an account in the BlockSettle system and for the initial account balances - the shares held by the investor - BlockSettle issues tokens on the bitcoin blockchain and distributes them to the account holder.
What is the general tax treatment?
Any profits which arise in a Private Limited Company, as a result of holding shares in an unlisted target company, are deemed as trade-related profits (“näringsbetingade andelar”) according to Swedish tax legislation. This means that profits which arise in the Private Limited Company will not be taxed with any Corporate Income Tax.
How are corporate actions handled?
- The SPV is obliged by law to call an Annual General Meeting (AGM) to which all shareholders are invited to participate. The points covered by the AGM can be found in the Articles of Association of the relevant Private Limited Company.
- Voting can be conducted electronically.
How are disbursements administered?
Disbursements are made to the shareholders account with BlockSettle.
How does matching and settlement work?
- Matching is done through Request-for-Quotes using the BlockSettle Terminal. Settlement of tokens is executed by the investors by means of assigning specific UTXOs to the trade counterpart in exchange for bitcoin in a coinjoin transaction.
- Once the transaction is mined six blocks deep, BlockSettle updates account balances and the share registry.
Does BlockSettle help companies raise capital?
- BlockSettle is neutral and independent party offering a share registry service for private limited companies.
- We do not provide primary market services.
Does BlockSettle employ a selection process for companies wishing to use the service?
- We aim to work with quality projects and will therefore retain discretion as to which we select
- There are no restrictions as to number of companies using the service
- Below we list the principal requirements for Projects
What are the principal requirements for a Project wishing to use the service?
- The Project must be of interest to holders of bitcoin (as token transfers are settled using bitcoin). This generally means that the Project is in the blockchain area and that the stakeholders are familiar with blockchain technology
- The Project needs to have its first product in the market and can demonstrate customer uptake
- The Project needs to be a going concern for at least 24 months (either on expected profits and/or confirmed funding)
- More than 10% of the Project’s fully diluted float of shares shall be held in the SPV (and typically no more than 50% as this would make the SPV the parent company of the Project)
- While the underlying business can be based anywhere globally, for regulatory reasons BlockSettle does not currently onboard Participants who are US citizen or resident alien of the US for tax purposes. This currently excludes US based Operational Companies that have local investors.