A Strong Corporate Governance is a Must for an ICO's Credibility
Corporate governance has has traditionally required a transparent and fair system for shareholders. For example, the board of directors has a fiduciary duty to work in the best interests of the shareholders. However, in the world of Initial Coin Offerings (ICOs) and digital assets, this is no longer valid. Investors in tokens or digital currencies have no claim to the equity of the company and are therefore not represented by the board of directors. Therefore, they have no say in how the company operates once the ICO is over. While token holders may have a huge say in how the utility of the token affects the company's products and services, they essentially have no say in the corporate governance of the company. Therefore the interests of equity holders and token holders may possibly be in conflict.
A Framework for Corporate Governance
- A. Token purchaser and investor management: Development of a plan to communicate with your token purchasers beyond the ICO and as your blockchain-based platform develops and reaches various milestones
- B. Secondary Market Considerations Creation of a plan to monitor and regulate the secondary market to ensure that your company’s token is not being traded in violation of U.S. securities regulations
- C. Regulatory Obligations Fulfill continuing obligations related to applicated securities regulations and tax laws, especially as the SEC and IRS increases its regulatory efforts of ICO’s
- D. KYC & AML Continuing Compliance Draft policies and procedures to train your employees to administer, enforce, and update your policy to comply with evolving AML