Securtities Listing & Compliance

At Valuit, we pride ourselves on adhering to the highest standards of regulatory compliance and market integrity. Our expertise in navigating the complex regulatory landscape of the European Union (EU) ensures that our clients can confidently issue security tokens and asset-referenced tokens (ARTs). Below, we provide a detailed guide on the process and requirements for listing these tokens in compliance with the Markets in Crypto-Assets Regulation (MiCA) and other relevant EU regulations.

Note: The SPVs will be managed by Valuit Lithuania UAB, which is licensed under MiCA, ensuring authorization and compliance throughout the process.

End-to-End Compliance Process

1. Issuing Security Tokens through Exempt Securities Laws in the EU
   1. Legal Entity Formation
      • Requirement: The issuer must be a legal person or a specific type of undertaking based in the EU.
      • Action: Establish a legal entity in an EU Member State to facilitate the issuance process.
   2. Exempt Securities Laws Compliance
      • Regulation: Directive 2014/65/EU (MiFID II) and Prospectus Regulation (EU) 2017/1129.
      • Requirement: Ensure the security token offering qualifies for an exemption under the Prospectus Regulation, such as small offerings, offerings to qualified investors, or offerings with a limited number of investors.
      • Action: Our team will work closely with legal experts to determine the appropriate exemption and structure the offering accordingly.
   3. White Paper Preparation
      • Regulation: MiCA Regulation.
      • Requirement: Prepare a detailed white paper outlining the terms of the token issuance, including information on the underlying asset, rights of token holders, and risk factors.
      • Action: Valuit will draft and publish a compliant white paper to meet regulatory standards.
   4. KYC/AML Compliance
      • Regulation: Anti-Money Laundering Directive (AMLD5) and MiCA.
      • Requirement: Conduct Know Your Customer (KYC) and Anti-Money Laundering (AML) checks on potential investors.
      • Action: Integrated KYC/AML procedures and verify investor identities using our advanced compliance tools.
   5. Registration with National Competent Authority (NCA)
      • Regulation: Prospectus Regulation (EU) 2017/1129.
      • Requirement: If applicable, submit the white paper and relevant documents to the NCA for approval.
      • Action: Valuit will handle the submission and approval process with the NCA.
   6. Token Issuance and Distribution
      • Requirement: Issue and distribute security tokens to investors in accordance with the terms outlined in the white paper.
      • Action: Utilize Valuit’s platform to manage the issuance and distribution process, ensuring a seamless experience for both issuers and investors.
   7. Issuing Asset-Referenced Tokens (ARTs)
      1. Legal Entity Formation
         • Requirement: The issuer must be a legal person or a specific type of undertaking based in the EU.
         • Action: Ensure the legal entity used for security tokens is also suitable for issuing ARTs or form a new entity if necessary.
      2. Authorization as an Issuer of ARTs
         • Regulation: MiCA Regulation.
         • Requirement: Obtain authorization from the home EU Member State’s competent authority.
         • Action: Apply for authorization by submitting the required documentation and demonstrating compliance with MiCA requirements.
      3. Reserve Assets and Own Funds
         • Regulation: MiCA Regulation.
         • Requirement: Maintain a reserve of assets to cover liabilities and ensure the issuer holds sufficient own funds.
         • Action: Establish and document the reserve assets and own funds as per MiCA standards.
      4. White Paper Preparation
         • Regulation: MiCA Regulation.
         • Requirement: Prepare a white paper specifically for the issuance of ARTs, detailing the asset reference, redemption rights, and risk factors.
         • Action: Draft and publish the white paper, ensuring it complies with MiCA requirements.
      5. Redemption and Reserve Asset Management
         • Regulation: MiCA Regulation.
         • Requirement: Implement procedures for the redemption of ARTs at market value or delivery of referenced assets and manage the reserve assets appropriately.
         • Action: Treasury management services for reserve assets in compliance with MiCA.
      6. KYC/AML Compliance
         • Regulation: Anti-Money Laundering Directive (AMLD5) and MiCA.
         • Requirement: Conduct KYC/AML checks on investors.
         • Action: Embedded KYC/AML for investors verification and integrated smart contract enforcement.
      7. Market Abuse Prevention
         • Regulation: MiCA Regulation.
         • Requirement: Implement measures to prevent insider trading, unlawful disclosure of inside information, and market manipulation.
         • Action: Automated enforcement of policies to ensure market integrity through smart contracts.
      8. Token Issuance and Management
         • Requirement: Issue ARTs to investors and manage the tokens in accordance with the white paper and MiCA regulations.
         • Action: Use Valuit’s platform to handle the issuance and ongoing management of ARTs.

Introduction to SPVs

Special Purpose Vehicles (SPVs) are separate legal entities created to isolate financial risk, protect assets, and facilitate various financial transactions. In the Valuit ecosystem, SPVs are integral to our tokenization process, ensuring that assets are securely and efficiently managed.

Benefits of Using SPVs

1. Isolating Financial Risk:
   • SPVs created through Valuit allow companies to separate certain assets and liabilities from the parent company, reducing financial risk. By creating a distinct legal entity, the parent company can protect its core assets from potential financial losses associated with specific projects or investments.
2. Facilitating Structured-Finance Transactions:
   • SPVs are used to attract equity and debt investors through securitization. They are commonly utilized in property deals, joint ventures, and other structured-finance transactions, making it easier to raise capital for specific projects within the Valuit ecosystem.
3. Creating a Bankruptcy-Remote Structure:

• As separate legal entities, SPVs are generally “bankruptcy remote,” meaning they can continue operating even if the parent company fails. This structure ensures that investors and creditors have a layer of protection, enhancing their confidence in the stability and resilience of the assets managed by Valuit.

1. Raising Capital:
   • SPVs are effective tools for raising capital for future projects. By ring-fencing funds for specific purposes, SPVs provide transparency and security to investors, enhancing their confidence and willingness to invest in Valuit's tokenized assets.

Key European Jurisdictions for SPVs

1. Ireland:
   • Ireland is a hub for collateralized loan obligations (CLOs) and structured-finance vehicles, supported by a robust legal framework.
   • Incorporation is fast and efficient, typically completed in 3-5 business days.
   • Favorable tax treatments, including potential tax neutrality for qualifying SPVs.
   • Extensive network of financial services providers and infrastructure.
2. Luxembourg:
   • Luxembourg offers legal certainty and flexibility through its securitization law, making it ideal for structured-finance transactions.
   • The incorporation process is efficient, usually taking 5-10 business days.
   • The country provides a tax-neutral regime for SPVs, enhancing their financial efficiency.
   • Strong government support and a well-established financial ecosystem.
3. United Kingdom:
   • The UK is renowned for its high standards of corporate governance and transparency, making it a preferred choice for complex, high-risk transactions.
   • Fast incorporation process, with private companies limited by shares (Ltd) typically established within 24 hours online.
   • Robust legal framework based on common law, providing flexibility and business-friendly regulations.
   • Access to the extensive financial services infrastructure of the City of London.

Compliance and Reporting Obligations

1. Regulatory Compliance:
   • SPVs established through Valuit comply with local regulations, including filing accounts, undergoing audits, and holding annual general meetings (AGMs) as required by the jurisdiction.
2. Anti-Money Laundering (AML) and Know Your Customer (KYC):
   • SPVs implement rigorous AML and KYC procedures to prevent financial crimes and ensure transparency.
3. Tax and Legal Considerations:
   • Each jurisdiction offers specific tax treatments and legal requirements. Valuit ensures that all necessary tax returns are filed and compliance with double-taxation agreements is maintained.

Choosing the Right SPV Jurisdiction with Valuit

Factors to Consider:

1. Purpose of the SPV:
   • The specific financial or investment goals of the SPV will influence the choice of jurisdiction. Different jurisdictions offer varying advantages depending on the intended use of the SPV.
2. Regulatory Environment:
   • The regulatory framework and ease of compliance in the jurisdiction are critical factors. Jurisdictions with supportive regulations for SPVs are preferable.
3. Tax Treatment:
   • Tax neutrality and favorable tax treatments can significantly impact the efficiency and attractiveness of the SPV.
4. Speed and Cost of Incorporation:
   • The time and cost associated with incorporating an SPV vary across jurisdictions. Faster and more cost-effective jurisdictions are often more desirable.
5. Service Provider Ecosystem:
   • Access to experienced service providers, including legal advisors, auditors, and financial institutions, is essential for the effective management of SPVs.

Valuit’s Expertise:

• Valuit leverages its extensive network and expertise in key European jurisdictions to provide tailored solutions for establishing and managing SPVs. Our deep understanding of local regulations, tax implications, and market conditions ensures that your SPV is set up efficiently and operates smoothly.

Strategic Benefits for Asset Owners

1. Enhanced Security and Risk Management:
   • By utilizing SPVs, asset owners can isolate financial risks and protect their core assets, creating a secure investment environment.
2. Efficient Capital Raising:
   • SPVs provide a transparent and structured method for raising capital, attracting investors by offering clarity and security.
3. Regulatory Compliance:
   • Valuit’s expertise in navigating the complex regulatory landscape of different European jurisdictions ensures that all SPVs are fully compliant, reducing the risk of legal issues and enhancing investor confidence.
4. Operational Efficiency:
   • The streamlined process of establishing and managing SPVs with Valuit reduces administrative burdens, allowing asset owners to focus on their core business activities.

Primary Jurisdiction SPV Comparison Matrix

JURISDICTION	IRELAND	LUXEMBOURG	UK
SPECIALISM	All SPVs, CLOs	All SPVs, securitization vehicles	Private debt securitization deals and real estate
ON / OFFSHORE	On	On	On
TYPICAL SPV STRUCTURE	DAC	SA or SARL	Ltd or Plc
TYPICAL TIME TO INCORPORATION	3–5 business days	5–10 business days (longer if bank account required)	Ltd: 24 hours online (up to 8 days offline) PLC: 5–15 business days
REGULATORY REGIME	Moderate	High	Moderate
TAX	Tax neutral for qualifying vehicles	Tax regime aims to achieve tax neutrality	Tax exemptions but not tax neutral
REPORTING OBLIGATIONS	An SPV has to file accounts, undergo an annual audit and hold an AGM	An SPV has to file accounts, undergo an annual audit and hold an AGM	An SPV has to file accounts, an audit requirement is subject to balance sheet size. Plc companies must hold an AGM (which can be waived)
PERSONNEL AND SUBSTANCE	Minimum of two directors and one shareholder, plus company secretary and registered office in Ireland.	Minimum of one director and one shareholder, plus registered office or agent in Luxembourg. No company secretary required.	Minimum of one director and one shareholder, plus a registered office in the UK. A company secretary is required for Plc, but only recommended for a private company.