Leveraging Swiss DLT Law for Native Tokenisation Success Stories
- Béla von Mérey
- May 10, 2024
- 5 min read
Written by Béla von Mérey from Aktionariat
This article explores the advanced regulatory framework surrounding equity tokenisation in Switzerland, offering a comprehensive overview of its practical application and the advantages it presents to Swiss startups and SMEs.
1. Switzerland’s regulatory framework (Distributed Ledger Technology Law)
The Swiss DLT (Distributed Ledger Technology) law became effective on February 1, 2021.
It facilitates the use of blockchain by introducing regulations for issuing and trading digital securities. Additionally, it clarifies requirements for decentralised trading platforms and recognises the legal validity of decentralised digital registers. The law aims to promote innovation and investment using blockchain while also ensuring legal clarity and protection for digital assets.
One of the key advantages provided by the DLT law is the efficient transferability of tokenised shares. With the elimination of the need for written contracts to confirm regulatory compliance, the administrative burden associated with share transfers is significantly reduced.
This legal and technical innovation unlocks a variety of benefits, paving the way for distinct use cases that will be explored in the following sections.
2. The added value that tokenisation brings to the private equity sector
In today’s private equity and venture capital landscape, high entry barriers, lack of liquidity, and opaque valuations pose challenges for investors. The time-consuming and expensive onboarding process limits participation to established investment firms and business angels. Additionally, the absence of market liquidity results in prolonged holding periods and makes valuations difficult. However, by addressing these inefficiencies, blockchain can create a more inclusive and transparent investment environment, unlocking new opportunities for growth and innovation.
3. Aktionariat AG and three uses cases demonstratin the benefits of blockchain integration
We at Aktionariat AG focus on making the 99% of unlisted companies in Switzerland tradable. Leveraging the DLT-law and applying it to our toolset, we allow companies to sell their shares over their own website, facilitate the distribution of employee shares, manage their shareholders, and distribute dividends. In the current solution, companies have the capability to add liquidity for secondary trades, enabling shareholders not only to purchase shares but also to sell them. As liquid assets are known to be more valuable, we recommend that our clients allocate approximately 5-10% of the capital raised through the token offering as liquidity for potential share buybacks. This allows shareholders facing liquidity constraints to benefit from the available liquidity.
In addition to these core functionalities, every company benefits from a personalised dashboard offering a range of supplementary features, including:
Digital Share Registry: Displaying holders of both traditional and tokenised shares.
Corporate Event Invitation & Voting Tool: Enhancing shareholder communication and engagement.
Market Settings: Facilitating the opening and closing of share sales.
Tax Value Input Field: Enables Aktionariat to generate tax reports that shareholders can directly download through the app.
Below, three use cases are presented to demonstrate the concrete advantages that blockchain technology can offer to startups and SMEs:
3.1 Farmy – Capital raise over a community (https://www.farmy.ch/)
About the company: Farmy AG was founded in 2014 by Roman Hartmann and Tobias Schubert in Zurich and now has over 160 employees at its locations in Zurich and Lausanne as well as in its offices in Berlin and Barcelona. The technology-driven company relies on a sophisticated logistics concept that delivers products freshly and conveniently to customers throughout Switzerland and prevents food waste.
Use-Case: Farmy was exploring various avenues to finance the next phase of its company’s growth. With approximately 100,000 customers, they aimed to democratise the upcoming funding round by enabling all stakeholders to partake in the company’s future success. Beyond simply raising capital, this approach simultaneously strengthening the bond between customers and the brand. Utilizing our toolkit, Farmy issued shares beforehand, retained them in treasury, tokenised them, and then directly sold them through their own website. Farmy’s stakeholders simply downloaded the Aktionariat App, entered their shareholder information, and purchased shares with a few clicks. The feasibility of the valuation improves with an increased volume of transactions, all of which are readily visible on the issuer’s website via the Aktionariat transaction widget. These transactions are presented without exposing any personal information, solely showcasing the transaction details.
With the Aktionariat Toolset, Farmy successfully raised over 4 million within a span of two weeks.
3.2 Trustsquare – Dividend distribution (https://www.trustsquare.ch/)
About the company: Founded by entrepreneurs, for entrepreneurs, Trust Square provides a space where innovation can flourish. With disruptive technologies as its common denominator, the company connects founders, early-stage ventures, businesses, investors, and academics, enabling them to pursue their visions in an open, forward-thinking environment. Trust Square empowers companies to maximise their potential by offering comprehensive support for daily operations, allowing them to concentrate on their core business.
Use-Case: Previously, Trust Square provided its stakeholders with the opportunity to join the cap table, resulting in over 1000 holders of non-voting shares. However, when Trust Square sought to distribute dividends, the conventional approach proved to be both time-consuming and costly. Leveraging Aktionariat’s toolset, the company enabled all non-voting shareholders to request tokenisation through the Aktionariat App. Following this tokenisation process, the company seamlessly distributed a Swiss stablecoin to all eligible tokenholders with the click of a button.
3.3 Auviso – Employee participation (https://auviso.ch/en/)
About the company: Auviso operates passionately in the field of event and media technology on a daily basis, amassing significant expert knowledge and experience since its inception in 2003. Auviso – audio visual solutions ag stands as one of the leading centers of excellence for audio-visual solutions in Switzerland. As a full-service provider for events and media technology installations, Auviso finds the right solution for any event and location, whether temporary or permanent.
Use-Case: Celebrating its 20th anniversary, Auviso made the decision to offer its employees the chance to invest in the company. Out of approximately 150 employees, over 40 have opted to purchase shares, demonstrating a significant commitment from nearly a third of the workforce. This move enhances the alignment between the owner-managed company and its employees.
By utilising tokenised shares, employees not only have visibility of their shares within the app but can also engage in bilateral transactions with their colleagues, eliminating the need for additional signed contracts.
To safeguard against shares being sold to third parties outside of the existing share registry, Auviso employs Aktionarat’s allowlist function. This feature restricts the transfer of shares to only registered addresses within the share registry, ensuring greater control and security over the ownership structure.
4. A brief outlook – Aktionariat’s next steps
As demonstrated above, blockchain technology offers numerous advantages for startups and SMEs. However, widespread adoption of the technology is not imminent, with usability remaining a critical factor. Consequently, the team at Aktionariat is diligently working to enhance the customer experience day by day. The overarching vision is to develop a product wherein users are not required to possess any knowledge about blockchain but can still harness all the benefits tailored to their preferences.
Additionally, Aktionariat is set to release a new product in 2024, solely focusing on facilitating secondaries. This product will enable issuers to reduce administrative efforts when they receive selling intentions from shareholders, streamlining communication, identifying buying interest and supporting settlements.
The infrastructure will be designed in a way, where the issuer remains in control of secondaries, while leveraging transparency and on chain settlements.
Contact Details:
Béla von Mérey
Chief Growth Officer
Aktionariat AG
Investors in private equity and venture capital face high entry barriers, opaque valuations, illiquidity and long holding periods. By addressing these inefficiencies, blockchain can create a more inclusive and transparent investment environment, unlocking new opportunities for growth and innovation.
Native Tokenisation