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What to expect from your STO legal adviser

I have previously written about the steps to prepare for a security token offering (“STO”) and now would like to zero in on one of them: selecting the team.The choice of the STO legal adviser can render your offering a success or failure.  Don’t select merely based on price.  It is important to look at the prior experience with this type of offerings and the overall qualifications.  Get references.  Remember that you are hiring a legal team whose core members are experts in securities and corporate law, and its other members cover tax and other relevant subject areas.Below is a summary of the services that (in my opinion) you should expect from your legal team: Advising on the choice of jurisdiction, both from the corporate and tax perspective, depending on the physical location of an asset/interest to be tokenized, targeted investors, availability of banking services, and relevant securities regulations and other applicable laws;Choosing the right corporate structure for the special purpose entity (“SPE”) that will conduct the STO; Engaging with local counsel to implement chosen structure and supervise its organization and corporate governance; Preparing all necessary corporate governance documentation; Assisting in developing the token terms; Structuring the STO to qualify for an exemption from registration in the U.S.; Preparing a private placement memorandum (“PPM”), including the offering details, legal disclaimers, company overview, risks relating to the offering, the company and the industry, and financial reports; Preparing subscription / token purchase agreement or Simple Agreement for Future Tokens (“SAFT”) that summarizes the terms of the investment and captures investors’ consent to such terms; Conducting a legal review of the issuer website, announcements on all social media platforms, the White Paper, if any, and marketing materials;Preparing Terms of Use for the issuer website; Developing or reviewing Know-Your-Customer / Anti-Money Laundering questionnaires; Reviewing and commenting on the agreements with other service providers in the STO process; Making applicable U.S. federal and state securities law filings; Working together with the tax, accounting, marketing, and other service providers to create legally compliant internal and external documentation related to the STO; and Working with local counsel in the selected jurisdictions (as applicable) where the tokens will be sold to ensure that the tokens are offered and sold within the legal parameters of each such jurisdiction and that correct lock-up periods and caps on investor counts are implemented.Conducting an STO is not a small undertaking.  And selecting the right legal team is one of its key components.This article is not legal advice and was written for general informational purposes only.  It does not express anyone else’s views except for the author’s.  If you have questions or comments about the article or are interested in learning more about this topic, feel free to contact its author Arina Shulga.  

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