Legal setup

Detailed legal setup of company tokens

Trust the standard - GmbH-optimized and already used multiple times. Each GmbH-token represents profit participation rights (so-called “Genussrechte”) and limited information rights with respect to a specific company. In addition, a token holder has the option to request a conversion of the token to traditional GmbH shares or stocks.

When you receive a GmbH-token via the platform, you are doing so based on a public promise (a so-called “Auslobung”) by your company plus either (i) an investment agreement or (ii) an employee allocation agreement.

Below is a brief explanation of the key concepts of “Auslobung” and “Genussrecht” as well as a summary of the token agreement contents.

Token agreements

We provide companies with templates of all necessary legal documents in order to launch their own GmbH-token. Below is a list of the templates and a brief explanation of what each document is intended to do. You can download the templates after onboarding on the platform.

Investment overview and public reward ("Auslobung")

  • A summary of what the investor gets by purchasing a token. AA high-level overview of the tokenized profit participation and information rights your company will be offering to investors
  • Contains your company token smart contract address and links to the General Investment Terms and the Investment Agreement Terms.

General Investment Terms

  • The "fine print" about token rights and token mechanics
  • A detailed explanation of the profit participation and information rights attached to your company tokens. It describes the legal nature of the tokens and the requirements for holding a token and exercising the token rights.
  • It also contains an explanation of the Investment Agreement, which governs the initial purchase of tokens by an investor via the platform. In addition, it describes the nature of the "Public Reward" your company makes by launching the tokens, which ensures that your tokens retain the attached rights even after an investor's sale or transfer of tokens to third parties.

Investment Agreement Terms

  • What an investor agrees to by pushing the "invest now" button on the platform.
  • A short agreement between your company and an investor governing the purchase of tokens from your company. It incorporates the General Investment Terms by reference.

Employee Allocation Agreement

  • What your employees sign with you as a lean alternative to a traditional ESOP/VSOP program.
  • A short agreement between your company and an employee who is receiving tokens from your company. You can specify a vesting schedule and cliff just like with traditional employee participation programs. But instead of a paper agreement, your employees receive options for tokens that they can choose to exercise anytime after they are vested.

Shareholder resolution

  • What your shareholders need to approve before you can launch your company token.
  • A document allowing shareholders to permit company management to create a specific amount of tokens and sell them to investors or provide them to employees or stakeholders as an incentive. Does not need to be notarized.

Profit participation right

Under German law, a "Genussrecht" is a form of profit participation right in a company where the holder of the "Genussrecht" receives certain financial benefits. It is a special form of investment that allows investors to participate in the profits of a company without owning shares in the company. Unlike stocks or shares in a limited liability company ("GmbH"), a "Genussrecht" does not grant the holder any voting rights regarding the company. Rather, it is a purely financial participation where the holder has a claim to specific proceeds.

In the case of, the participation rights are intricately linked to a company’s GmbH-token and are governed by the token agreements available on the platform.

Public award

Under German law, an "Auslobung" refers to a public announcement or invitation where a reward or prize is offered for the fulfillment of a specific performance or action. The German "Auslobungsrecht" governs the legal aspects of such announcements.

According to §657 of the German Civil Code ("Bürgerliches Gesetzbuch" or "BGB"), an Auslobung consists of a public announcement that promises a specific benefit once someone fulfils the required performance. Typical examples of "Auslobungen" include competitions, prize contests, or rewards for finding lost items.

The "Auslobung" (public reward) must be clear and unambiguous to define the participants' expectations. It should also include specific conditions, deadlines, and, if applicable, exclusion criteria to avoid potential misunderstandings.

When someone fulfils the required performance and meets the conditions, the "Auslobung" creates a legal entitlement to the promised benefit. The person making the announcement ("Auslobende") is then obliged to grant the reward or prize.

In the case of, each company creates its own "Auslobung" as part of the setup process. This specific "Auslobung" promises certain participation rights (each, a "Genussrecht") to holders of its GmbH-token.

Because each company "Auslobung" requires the holding of a company token as a prerequisite for the promised participation rights, secondary trades without an assignment of the investment contract become feasible.