Incorporate’s stakeholders initiative is paving the way for a new era of ownership and collaboration. In our previous blog post, we provided an overview of this program. Now, it’s time to delve deeper into what virtual shares mean in the context of Estonian law and who is responsible for maintaining the register of these shares.
A quick recap: Incorporate’s stakeholders initiative
But before we plunge into the legal labyrinth, let’s offer a quick recap for those who missed our previous blog post on our stakeholders initiative.
Incorporate’s stakeholders initiative is a visionary program that aims to recognize and reward our customers and partners who share our mission and actively contribute to our goals. Within this initiative, we issue virtual shares to those who play a significant role in our achievements. These virtual shares represent more than just tokens; they symbolize a new era of ownership and collaboration, where success is a collective endeavor.
Now, let’s get down to the legal nuts and bolts of these virtual shares.
The legal framework of virtual shares
Virtual shares, when viewed through a legal lens, are electronic records that confer specific rights upon the recipient. Typically, these rights translate into the ability to demand a payment from the issuer under specific conditions or upon reaching predefined dates.
In essence, it establishes a legally binding obligation on the issuer to fulfill the promise embedded within the virtual share. This legal relationship between the issuer and recipients is documented in a document known as the “terms of virtual shares.”
Uniqueness of virtual shares
What sets virtual shares apart is that the rights they represent are unique and can only be exercised or enforced by individuals registered in the virtual share register as virtual shareholders. It’s important to note that a virtual share is not equivalent to a traditional (actual) share issued by a company. Virtual shareholders do not possess the full spectrum of rights enjoyed by traditional shareholders, such as voting rights. Instead, virtual shares bestow benefits as defined in the terms of the respective virtual share.
Managing the virtual share register
The register of virtual shares and the entitled recipients is maintained by the issuer through the KOOS platform. KOOS plays a pivotal role in the seamless management of virtual shares:
- It operates a user-friendly web-based platform that enables issuers to maintain a comprehensive register of virtual shares.
- This application offers a range of functionalities, including recording contributors for whom the issuer has reserved the right to receive a virtual share.
- It collects essential information from entitled contributors and conducts eligibility verifications in line with the criteria outlined in the terms of virtual shares.
- KOOS records the issuance of virtual shares and registers contributors as virtual shareholders, ensuring transparency and accuracy throughout the process.
- Furthermore, it actively manages the register, granting contributors secure access to their virtual share information.
- When the time comes, KOOS arranges payouts to entitled recipients, streamlining the entire process and ensuring that the benefits reach the deserving parties.
However, it’s essential to understand that while KOOS provides support for virtual share management, it is not a direct party to the legal relationship established between the issuer and recipients via the terms of virtual shares.
How does the service of KOOS and virtual shares qualify under financial sector regulations?
Virtual shares are not intended to function as financial instruments, e-money, payment instruments, or virtual currencies. Their primary purpose is to reward the desirable behavior of the issuer’s community.
To provide more clarity, here are specific characteristics of virtual shares and KOOS services that limit their applicability within the realm of financial regulations:
- Virtual shares are not issued in exchange for cash or any form of consideration other than cash. This makes them distinctly different from traditional investments.
- These shares are issued exclusively to individual recipients based on their behavior and contributions. Importantly, virtual shares are genuinely non-transferable, meaning that only the designated recipient can exercise the rights embedded in the virtual share.
- Virtual shares are not instruments recorded and transferable through blockchain technology. Furthermore, they should not be accepted as a means of payment by third parties.
- KOOS platform does not facilitate fundraising or the transferability of virtual shares. It does not serve as an intermediary connecting issuers with recipients, nor does it mediate between parties with sale or purchase interests.
Embracing a new era of ownership and collaboration
Incorporate’s stakeholders initiative, combined with the issuance of virtual shares, marks a significant shift in the landscape of ownership and collaboration. Understanding the legal aspects and limitations surrounding virtual shares is essential for all stakeholders involved. This innovative approach ensures that recognition and rewards are shared collectively, fostering a sense of community and shared success.
Can virtual shares ever be converted into traditional financial instruments like stocks or bonds?
No, virtual shares are distinct from traditional financial instruments and are not convertible into stocks, bonds, or any other financial assets. They retain their non-financial nature.
Can virtual shares be used as collateral or security for loans or financial transactions?
No, virtual shares are not intended to function as collateral or security for loans or any form of financial transactions. They are awarded as a form of recognition and reward within the issuer’s community, and their use is limited to the benefits specified in the terms of virtual shares.
How does KOOS verify the eligibility of contributors for virtual shares?
KOOS verifies the eligibility of contributors based on the criteria outlined in the terms of virtual shares. This verification process ensures that virtual shares are awarded to those who meet the specified requirements.
Can virtual shares be inherited or passed on to heirs in the event of the recipient’s passing?
The transferability of virtual shares in the event of a recipient’s passing would depend on the terms and conditions set forth by the issuer. It’s essential to review the specific terms of virtual shares to understand any provisions related to inheritance or transfer upon the recipient’s passing.
Are virtual shares tradeable on secondary markets or cryptocurrency exchanges?
No, virtual shares are not tradeable on secondary markets or cryptocurrency exchanges. They are non-transferable and intended solely for the designated recipient.
How are payouts to virtual share recipients typically processed?
Payouts to virtual share recipients are typically processed through the KOOS platform. KOOS efficiently manages the payout process, ensuring that the benefits associated with virtual shares are distributed to the deserving parties.
Can virtual shares be revoked or removed from a recipient if they no longer meet the eligibility criteria?
The ability to revoke or remove virtual shares from a recipient would depend on the terms and conditions established by the issuer. Some virtual share programs may have provisions for such actions if a recipient no longer meets the eligibility criteria. Recipients should refer to the terms of virtual shares for clarity on this matter.