Legal structure
The legal structure for the issuance of AXC tokens is specifically designed to enhance the transferability and financial privacy associated with the tokens while providing tokenholders exposure to the returns of the underlying as well as the access to the value of the tokens in case of liquidation.
The basic structure of the AXC token is as follows
The generalized legal structure shown above highlights the tokenization structure for all assets that AXC assists in bringing to market. Shares of the underlying asset are purchased from an asset manager and fully owned by a Series DAO LLC, which operates under a Master DAO LLC. In the case of Growth Yield Token, the Master DAO is RWAfi DAO LLC, which is currently a non-profit filed with just one member. The Series DAO (In this case RWAfi DAO LLC - Series 1) then issues tokens that attempt to track the value of the underlying, but never grants ownership or legal recourse to tokenholders. This process is done with the technical support provided by AXC, who acts as the “Token Service Provider”, and receives a 1% management fee for operating the token-related platform.
| Actor (In Chart) | Entity | Role | Legal Domicile |
|---|---|---|---|
| Master/Series DAO LLC | RWAfi DAO LLC / RWAfi DAO LLC - Series 1 | Master sets up Series LLC’s to hold assets and has direct relationship with custodian Series has beneficial ownership of underlying asset | Marshall Islands |
| Token Service Provider | AXC | Provides technical support in connection with issuance and management of tokens - receives 1% management fee | Hong Kong |
| Underlying | See product sheet for asset manager | Asset manager (FoHF here) | HK Open Fund Company |
| Custodian | See product sheet for custodian | Broker-dealer relationship/holds cash | HK Trust company |
Legal agreements¶
The legal structure highlighted earlier is governed by a series of contracts between entities and relevant parties.
| Contract | Parties | Description |
|---|---|---|
| Terms and conditions contract | Token holders and Series LLC | Governs obligations to tokenholders |
| Token memorandum | Token holders and Series LLC | Governs use of funds for the token |
| Custody/Ownership contract | Master LLC and Series LLC | Permits Master LLC to act on behalf of Series |
| Blockchain services Contract | Series LLC and AXC | Permits AXC to provide services to Series LLC |
| Custodial account | Master LLC and Custodian | Trust account agreement |
Terms and conditions: Emphasizes high investment and legal risk, non-custodial token structure, no equity or ownership rights, broad transfer and jurisdictional restrictions, and strong limitations on issuer liability with Marshall Islands law and HKIAC arbitration governing disputes.
Token memorandum: Describes an ERC‑20 token that economically tracks a fund by the issuer holding its shares, allows only indirect participation (no right to receive underlying securities), permits liquidity and fee management that can cause imperfect tracking, and highlights significant market, liquidity, and underlying-asset risks.
Custody/Ownership contract: Clarifies that series assets (cash, tokens, underlying securities, and proceeds) are beneficially owned by the specific series even if legally titled in the master company’s name, must be segregated and not used for other series or master‑level liabilities, and must be re‑titled back to the series on termination with Marshall Islands/Delaware‑reference law governing.
Blockchain services contract: Appoints a non‑fiduciary token services provider on a non‑exclusive basis, sets flexible fee mechanics (including unilateral changes with a termination right), heavily limits liability except for negligence or fraud, and uses a force‑majeure and HKIAC arbitration framework under Marshall Islands/Delaware‑reference law.
Custodial account: Opens a Hong Kong institutional/professional investor securities account (cash/margin/options/futures) with a licensed custodian, where the client accepts product risk disclosures (including derivatives), agrees that the broker may suspend the account and request information for suspicious activity.
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Takeaways¶
Special purpose vehicle (SPV) structure¶
Each separate fund is set up as a separate Marshall Island series LLC which contains only the underlying and has no contracts other than with token holders, the custodian, or service providers. To reduce risks associated with recognition of the master/series structure, all of the series holdings are long only.
Bankruptcy remoteness¶
The legal structure is intended to be bankruptcy remote and isolates the assets in one fund from claims against the service provider or from other funds. All assets are held in a special purpose vehicle (SPV) consisting of Marshall Islands Master/Series DAO LLC. This SPV contains only assets and incurs no material liabilities (except any withdrawal or rights attaching to the tokens), and there is a legal separation between the SPV and any service providers. All accounts and holders in relation to the assets held by the SPV are in the name of the Master/Series DAO LLC, and any service providers have no ownership or collateral rights to the assets in the LLC.
Separation between different funds is accomplished by a Series DAO LLC structure in which each fund has a separate balance sheet under Marshall Island law. To mitigate legal risks from possible non-recognition of the series structure, the master/series structure will be used in long-only funds in which potential token holder claims cannot exceed the assets available in a series fund. In situations where the fund undertakes strategies in which there is any possibility of excess liability, a separate master DAO LLC with separate custody accounts will be used.
Bankruptcy remoteness from custodians will be undertaken by ensuring that beneficial ownership of all assets will remain with the SPV, and that all custodians are licensed to undertake the trust business.
Liquidation rights¶
Both the General Terms and Conditions and the Investor addendum provide that the token holders will be entitled to a pro-rata share of assets held by the SPV in the event of SPV liquidation.