September 30, 2025
September 10, 2026
Author: JoĂŁo Lages
“Securitization of equity” is often used to describe any structure that turns private-company ownership into a digital investment product. That label is convenient, but legally imprecise. In Europe, a project may instead involve direct tokenized shares, securities issued by a special purpose vehicle that holds shares, or units in a pooled investment vehicle. Those structures do not give investors the same rights and do not follow the same regulatory route.
The practical question is therefore not whether equity can be placed on a blockchain. It can. The real question is what the investor owns after subscribing, which register proves that ownership, who controls the underlying shares, and which rules apply to issuance, distribution, management and secondary transfers.
Under the EU Securitisation Regulation, securitisation is built around credit risk associated with an exposure or pool of exposures, with payments depending on those exposures and losses allocated through tranches. A straightforward sale or digital issuance of company shares normally does not meet that definition merely because the shares are placed in an SPV or represented by tokens.
Market participants nevertheless use “equity securitization” more broadly for transactions that package equity interests into transferable instruments. That commercial usage can obscure the legal analysis. A transaction team should classify the structure from its actual rights and cash flows, not from the label used in a pitch deck.
This distinction changes the workstream. A regulated securitisation can engage risk-retention, transparency and institutional-investor due-diligence requirements. A tokenized share issue instead starts with national company law and securities regulation. An SPV note backed by shares is analysed as a debt or profit-linked instrument. A pooled vehicle may raise an AIFMD question because capital is being raised from investors and managed under a defined investment policy.
In the direct model, the company issues or transfers shares to investors and uses a digital ledger to record or administer those positions. The token is intended to correspond to the share itself, not merely to a contractual claim against an intermediary.
This model offers the clearest economic alignment: investors participate directly in dividends, voting, information rights and sale proceeds according to the relevant share class. It can also be the hardest model to implement across borders. Corporate law remains national. The issuer must determine whether its jurisdiction recognises the chosen electronic form, which shareholder register has legal effect, how transfers become effective, and whether notarial, filing or pre-emption requirements apply.
The governing documents need to answer a basic operational question: if the blockchain balance and the legally authoritative shareholder register diverge, which record prevails and who must correct the discrepancy? A smart contract cannot resolve that question by itself. The articles of association, shareholder agreement, subscription terms and registry procedures must work together.
Direct digital shares are most suitable when the issuer wants investors to become shareholders, can manage corporate governance at the resulting scale, and has a national-law route for issuing and transferring the relevant share class electronically.
An SPV wrapper separates the underlying company’s cap table from the investor base. The SPV acquires a block of shares, while investors receive notes, profit-participation instruments or shares in the SPV. The token represents that issued instrument. It does not make the tokenholder a direct shareholder of the underlying company unless the documents expressly create and legally perfect that result.
This structure is common where an issuer wants to aggregate many investors into one cap-table line, enforce transfer restrictions consistently, or distribute access to a private-equity or pre-IPO allocation. The wrapper can simplify administration, but it adds another layer of risk and cost.
Investors need to know:
The wrapper should not promise a direct pass-through of value if its own liabilities, fees or governance can interrupt that result. Bankruptcy remoteness is a legal and factual conclusion, not a marketing phrase. The SPV’s permitted activities, bank accounts, service contracts, security package and replacement arrangements all matter.
A vehicle holding several companies may be commercially described as an equity basket, tokenized portfolio or digital club deal. Its legal character depends on how it operates. If it raises capital from multiple investors to invest under a defined policy for their benefit, the structure may be an alternative investment fund even if the interests are represented on a blockchain.
This changes the decision from product structuring to fund structuring. The sponsor must assess the manager’s authorisation or registration, delegation, valuation, depositary or safekeeping arrangements, investor disclosures, marketing passport and national private-placement rules. Calling the vehicle a technology company or an SPV does not remove those questions.
A single-asset holding company may fall outside fund treatment in some circumstances, but that conclusion depends on the facts and applicable national interpretation. Relevant factors include whether the investors exercise day-to-day control, whether there is a defined investment policy, whether capital is pooled and whether the vehicle operates as a genuine commercial holding company. Legal classification should be settled before investor-facing materials or smart contracts are finalised.
Before selecting a chain or token standard, the transaction team should build a rights matrix comparing the underlying shares, the SPV or fund documents and the token logic. Each row should state the legal right, its holder, its source document, the authoritative register, the responsible operator and the on-chain control, if any.
Voting illustrates why this matters. The underlying company may recognise only the SPV as shareholder. Tokenholders might receive no direct vote, an advisory vote, or a contractual instruction right that the SPV director must follow subject to law and fiduciary duties. Those outcomes are materially different. The token interface should not display “voting rights” without explaining which one applies.
The same exercise is needed for dividends, information rights, anti-dilution protections, pre-emption, tag-along and drag-along provisions, liquidation preferences and exit decisions. A preferred share with a liquidation preference cannot be reduced to a generic percentage of “equity ownership.” The waterfall must reproduce the actual share-class economics.
Shares, securities equivalent to shares and other transferable securities fall within the financial-instrument framework described in MiFID II. A tokenized representation does not move them into MiCA simply because a distributed ledger is used. ESMA’s guidelines on classifying crypto-assets as financial instruments require a substance-based assessment.
The issuer must separately assess the offering route. A public offer of transferable securities or admission to trading on an EU regulated market can require a prospectus under the Prospectus Regulation, unless an exemption applies. An exemption from publishing a prospectus does not exempt the distributor from MiFID II rules or remove national company-law, marketing, PRIIPs, AML and consumer-protection requirements.
Placement, investment advice, reception and transmission of orders, execution, custody and operation of a trading venue are distinct regulated services. The transaction map should assign each activity to an authorised entity and record the client classification, target market, suitability or appropriateness test, conflicts and communication controls that apply.
The EU DLT Pilot Regime creates a framework for authorised DLT market infrastructures handling eligible tokenized financial instruments. It does not give every issuer a public secondary market. Private transfers may still be restricted by company documents, investor eligibility, market-infrastructure rules and the availability of willing buyers.
An SPV acquires shares in a private company subject to a shareholders’ agreement and transfer restrictions. It issues asset-linked notes to investors. The noteholders receive net proceeds when the SPV receives dividends or sells the shares, after taxes, costs and the contractual waterfall.
The critical diligence is not the token contract. It is whether the SPV validly owns the shares, whether the underlying company consented to the acquisition, how transfer and lock-up provisions affect the exit, how the notes rank, and who controls the sale decision. The documents must also address an IPO, a private secondary sale, a drag-along, dilution and a down round. A token transfer between investors cannot give the buyer better rights than the note terms or distribution rules permit.
A vehicle raises money to acquire minority positions in several growth companies. A manager selects investments, rebalances exposure and decides exits. Tokens record investor interests and automate eligible transfers.
Here the manager’s discretion and the pooled investment policy are central. The vehicle may be functioning as an alternative investment fund rather than a passive securitisation SPV. The sponsor must solve fund governance, valuation, conflicts, custody or safekeeping and marketing before treating token administration as the main workstream.
Digitising an instrument can improve register maintenance, transfer checks and settlement coordination. It does not guarantee price discovery or demand. Private-company shares may be difficult to value, subject to information asymmetry and contractually restricted. An SPV instrument adds issuer credit and structural risks. A portfolio vehicle adds manager and valuation risk.
A credible liquidity plan states where buyers may be found, who can intermediate or operate the venue, which investors are eligible, how valuations are produced and when transfers can be refused. A bulletin board, periodic auction, matched secondary transaction and DLT trading venue are not interchangeable. The broader guide to European tokenized-securities infrastructure explains why issuance, distribution, custody, trading and settlement must be mapped separately.
Lympid is relevant when a sponsor has a defined private-equity asset or allocation and needs to turn it into a distributable digital investment product. Its private-equity tokenization service can support structuring coordination, investor onboarding, regulated distribution workflows, issuance and investor administration.
That role does not replace the issuer, manager, corporate lawyer, tax adviser, valuer, custodian or the underlying company’s share register. The related guide to operating a tokenized private-equity vehicle shows how those functions need to connect throughout the investment lifecycle. For distribution questions, the analysis of securitisation and MiFID II separates product obligations from investment-service obligations.
A sound equity tokenization project gives investors a traceable chain from the underlying shares to the issuing vehicle, from that vehicle to their instrument, and from the instrument to each governance and payment right. If that chain cannot be explained without referring to the blockchain, the legal product is not ready. Technology should administer a well-defined security, not conceal an undefined claim.
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