Overview of the Tokenize.it Standard Contracts

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General Investment Terms and Conditions

💡
The “fine print” — the detailed rules governing participation in your company through virtual shares (“tokens”).

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Content Summary

Part I – Investor Rights

Investor Rights

• What rights do investors receive?
  Investors receive participation rights (Genussrechte) that grant them economic benefits. The key rights include:

  • Profit participation: Investors are entitled to a share in company profits if a distribution is resolved.

  • Participation in liquidation proceeds: If your company is liquidated, investors receive a share of the remaining assets.

  • Information rights: Investors are entitled to inspect the annual financial statements.

  • Exit right: If the company is sold or goes public, investors may return their participation rights and receive a payout.

  • Put option: Investors may resell their participation rights to your company at regular intervals (quarterly).

• Rights are tied to tokens
  Investor rights are represented by tokens — only token holders may exercise these rights. If an investor transfers their tokens, the associated rights automatically transfer to the new holder.

• Rights may be limited or revoked
  Your company may amend or revoke investor rights only under specific circumstances, such as:

  • After 29 years and 11 months,

  • Three years after an exit, or

  • If required by court or regulatory order.

• No shareholder rights
  Important: Investors do not receive voting rights or control rights. They are not shareholders but hold purely economic participation rights.

💡 What this means for you as a founder

• Investors receive economic upside without governance influence.

• You retain full control over your company.

• Token ownership simplifies investor administration.

• Rights may be modified under clearly defined circumstances.

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Granting of Participation Rights

• Investors receive participation rights based on:

  • Their invested amount (initial investors), or

  • The number of tokens held (subsequent investors).

• Participation rights are not certificated.

• Existing shareholders have no pre-emptive rights to receive participation rights.

💡 Founder implications

• Flexible allocation mechanism.

• No administrative burden from issuing certificates.

• No preferential treatment required for existing shareholders.

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Profit Participation Rights

• Investors participate pari passu with shareholders in profit distributions.

• Calculation is formula-based and designed to mirror economic shareholder treatment.

• Distributions depend on:

  • Tokens held,

  • Total capitalization (including options and other participation rights),

  • Distributable profits (net of any preferred dividends).

• No guarantee of distribution.

• Payment occurs after year-end resolution within 10 banking days.

• Token holder at the time of resolution receives the payout.

• Taxes are deducted at source if required.

💡 Founder implications

• Distributions remain at shareholder discretion.

• Clear formula simplifies administration.

• Profit rights follow token ownership automatically.

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Participation in Liquidation Proceeds

• Investors share in liquidation proceeds after creditors are satisfied.

• Same economic rank as shareholders.

• No guaranteed minimum payout.

• Token holder at liquidation date receives proceeds.

💡 Founder implications

• Investors bear economic risk.

• No seniority over creditors.

• Claims remain token-linked.

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Exit Right

• Defined as:

  • Sale of >50% shares,

  • Sale of >50% assets,

  • Merger reducing prior shareholders below 50%,

  • IPO.

• Investors must return all tokens to claim payout.

• Return deadline: within 3 years.

• Company may burn unreturned tokens.

• Payment earliest 7 months after exit.

💡 Founder implications

• Full control over exit mechanics.

• Token return required before payout.

• Unreturned tokens can be extinguished.

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Put Option

• Quarterly exercisable (example model).

• Exercise declaration within one week of quarter end.

• Token transfer within 3 months.

• Price based on:

  • Recent transactions,

  • Market price (if AG),

  • Independent valuation.

• Company may offer:

  • Cash,

  • Shares (AG),

  • GmbH shares (Share Offer).

• Investor must return whole tokens only.

• Pooling may be required upon share conversion.

💡 Founder implications

• Structured repurchase mechanism.

• Flexibility in settlement method.

• Administrative protection mechanisms available.

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Legal Nature of Participation Rights

• Purely contractual claims.

• No shareholder status.

• Subordinated in insolvency.

• Qualified subordination clause protects company liquidity.

💡 Founder implications

• No governance dilution.

• Investor claims subordinated in insolvency.

• Financial flexibility preserved.

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No Anti-Dilution Protection

• Company may issue new shares, options, participation rights.

• No automatic investor protection.

• Market-standard liquidation preferences allowed.

• Employee participation programs may be introduced freely.

💡 Founder implications

• Maximum capital structure flexibility.

• No investor veto except in exceptional non-market terms.

• Strong freedom for future financing rounds.

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Exercise of Investor Rights (Part IV)

• Requires specific “exercise acts.”

• Smart contract interaction required.

• AML/KYC compliance mandatory.

• Company may refuse or burn tokens if requirements unmet.

💡 Founder implications

• Rights are not automatic.

• Blockchain-based verification ensures security.

• Compliance protection mechanisms included.

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Risk Disclosures

• High risk of total loss.

• No investment advice.

• Limited secondary market.

• Tax treatment depends on individual circumstances.

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Taxes

• Investor bears full tax responsibility.

• Company may withhold taxes if legally required.

• No tax advisory provided.

• Indemnification clause included.

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AML & Sanctions

• No illegal use of tokens.

• Funds must originate from lawful sources.

• Sanctions screening required.

• Reporting obligation for compliance issues.

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Dispute Resolution

• German law applies.

• Commercial investors: jurisdiction at company seat.

• Arbitration by certified public auditor for payment disputes.

• No consumer arbitration participation.

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Investment Agreement Terms (“Purchase Agreement”)

• Platform publication = invitation to offer.

• Investor submits binding offer.

• Company must actively accept.

• Contract effective upon token transfer or confirmation.

• 2 banking days payment deadline.

• Crypto payments optional.

💡 Founder implications

• You retain acceptance control.

• Clear payment deadlines.

• No automatic contract formation.

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Transfer of Tokens

• Contract transfer required.

• No separate sale of token without participation rights.

• Allowlist and lock-up possible.

• Company may block unauthorized transfers.

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Term & Termination

• Unlimited duration.

• Ordinary termination after 29 years + 11 months.

• Severance at market value.

• Extraordinary termination for cause possible.

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Allocation Agreement

💡
Individual agreement for granting token options to employees or stakeholders.

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Shareholder Resolution

💡
Agreement authorizing issuance of a defined number of virtual shares (tokens) by management. No notarization required.

• Signed once by all existing shareholders.

• Future shareholders should accede upon entry in commercial register.

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