Investors FAQ

Security Token (“ST”) is a virtual asset, a financial instrument represented in tokenized form and being transacted and settled on the distributed ledger technology network. ST is emerging as an innovative way to facilitate capital raising and investment in businesses and projects.

True Global Private Placement

Initial offering of digitized securities, tokenized assets, or derivative tokens to investors are often referred to as Security Token Offering (STO), Tokenized Asset Offering (TAO), or Digitized Securities Offering (DSO). Tokenizing assets can create a new “token economy” through a frictionless transaction cycle from creation, from buying to selling of securities.

STO allows access to a broader base of investors globally with higher liquidity. Transactions through smart contracts reduce transaction costs and shorten settlement time. Pre-defined business rules in smart contracts and the immutable nature of blockchain provide additional transparency and improved corporate governance. The unique nature of tokens allows global settlement on digitized securities on the blockchain where underlying assets can be traded in a highly divisible way and 24/7 globally. This new way of fractional ownership, with a smaller investment size, and a cost effective model, could bring investment and secondary trading to a new frontier.

  • Invest in underlying real-world assets
  • Isolated risk structure backed by RWA
  • Lower barrier of entry with smaller investment ticket size
  • Transparency of performance of underlying assets
  • Flexibility of payouts with auto-execution through smart contracts
  • Global 24/7 settlement on blockchain in multi-markets

Only the persons are qualified to be Professional Investors (“PI”) set out by Securities and Futures Ordinance (“SFO”) and Securities and Futures (Professional Investor) Rules. There are 3 principal categories of professional investors - Institutional Professional Investors, Corporate Professional Investors and Individual Professional Investors.

  1. Institutional Professional Investors
    1. any recognized exchange company, recognized clearing house, recognized exchange controller or recognized investor compensation company, or any person authorized to provide automated trading services under section 95(2) of the SFO;
    2. any SFC-licensed corporation or SFC-registered institution, or any other person carrying on the business of the provision of investment services and regulated under the law of any place outside Hong Kong;
    3. any authorized financial institution, or any bank which is not an authorized financial institution but is regulated under the law of any place outside Hong Kong;
    4. any insurer authorized under the Insurance Companies Ordinance, or any other person carrying on insurance business and regulated under the law of any place outside Hong Kong;
    5. any scheme which
      • is a collective investment scheme authorized under SFO; or
      • is similarly constituted under the law of any place outside Hong Kong and, if it is regulated under the law of such place, is permitted to be operated under the law of such place,
    6. any registered scheme as defined in the Mandatory Provident Fund Schemes Ordinance or any person who, in relation to any such registered scheme, is an approved trustee or service provider as defined in section 2(1) of that Ordinance or who is an investment manager of any such registered scheme or constituent fund;
    7. any registered scheme as defined in section 2(1) of the Occupational Retirement Schemes Ordinance (Cap 426); or is an offshore scheme as defined in section 2(1) of that Ordinance and, if it is regulated under the law of the place in which it is domiciled, is permitted to be operated under the law of such place, or any person who, in relation to any such scheme, is an administrator as defined in section 2(1) of that Ordinance;
    8. any government (other than a municipal government authority), any institution which performs the functions of a central bank, or any multilateral agency; or
  2. Corporate Professional Investors - Corporate Professional Investors are trust corporations, corporations or partnerships falling under sections 4, 6 or 7 of the Securities and Futures (Professional Investor) Rules (the PI Rules). These are:
    1. Trust Corporations - a trust corporation which has been entrusted under the trust or trusts of which it acts as a trustee with total assets of not less than HK$40 million or its foreign currency equivalent.
    2. Corporations which has a portfolio1 of at least HK$8 million or its equivalent in any foreign currency or total assets of at least HK$40 million or its foreign currency equivalent; OR a corporation whose principal business is to hold investments and which is wholly owned by one or more of the following:
      • a trust corporation referred to in section 4 of the PI Rules;
      • an individual referred to in section 5(1) of the PI Rules;
      • a corporation referred to in this paragraph;
      • a partnership referred to in section 7 of the PI Rules;
      • a professional investor within the meaning of paragraph (a), (d), (e), (f), (g) or (h) of the definition of “professional investor” in section 1 of Part 1 of the SFO;

      OR a corporation which wholly owns a corporation referred to in paragraph (2b) above.

    3. a partnership which has:
      • a portfolio2 of at least HK$8 million or its equivalent in any foreign currency; or
      • total assets of not less than HK$40 million or its equivalent in any foreign currency.
  3. Individual Professional Investors - Individual Professional Investors are individuals who have a portfolio2 of at least HK$8 million (or its foreign currency equivalent) when any one or more of the following are taken into account:
    1. a portfolio in his or her own account;
    2. a portfolio in a joint account with his or her associate;
      • an “associate” is a spouse or child.
    3. his or her share of a portfolio on a joint account with one or more persons who are not associates.
      • an individual's share is the share specified in a written agreement between the accountholders, or if none, an equal share of the portfolio;
    4. a portfolio of a corporation which, at the relevant date, has as its principal business the holding of investments and is wholly owned by the individual.

A smart contract is a self-executing digital contract with the terms of the agreement between buyer and seller being directly programmed into lines of code. These contracts run on blockchain technology and automatically execute, enforce, or facilitate the negotiation or performance of a contract when predefined conditions or triggers are met. Smart contracts are typically deployed on blockchain platforms like Ethereum, which was one of the first to support them, but they can potentially run on other blockchain networks as well.

Key characteristics of smart contracts include:

  1. Self-execution: Once deployed on a blockchain, a smart contract automatically executes its predefined instructions without the need for intermediaries, like lawyers or notaries.
  2. Trust: Smart contracts are trustless, meaning that parties involved in the contract don't need to trust each other. They can trust the code and the underlying blockchain technology to enforce the contract.
  3. Transparency: The code of a smart contract is visible and transparent on the blockchain, making the terms and execution process open for all parties to verify.
  4. Immutable: Once a smart contract is deployed, it cannot be altered or tampered with. This immutability ensures that the contract's terms and execution are fixed and secure.
  5. Decentralized: Smart contracts run on decentralized blockchain networks, meaning there is no single point of control or failure. This decentralization enhances security and resilience.

Smart contracts have a wide range of applications, including:

  1. Token creation and management: Creating and managing cryptocurrencies, tokens, and assets.
  2. Supply chain management: Tracking the movement of goods and ensuring transparency in supply chains.
  3. Legal agreements: Executing legal agreements like wills, deeds, and intellectual property contracts.
  4. Automated payments: Facilitating automatic payments based on predefined conditions, such as milestone completion in a project.
  5. Voting systems: Implementing secure and transparent voting systems.
  6. Insurance and financial services: Automating insurance claims, loans, and other financial transactions.

In summary, smart contracts have the potential to streamline various industries by reducing the need for intermediaries, lowering costs, increasing transparency, and improving security.

 

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