The Technical and Legal Side of ICONOMI’s Transformation

Why are we doing this? What is the process?

Please note: Due to changes in the ICN exchange process, the information below is subject to change. The last change occurred on November 23, 2018. Please also consider finding updated information regarding eICN in our Help Center and recent blog posts:

We are bringing legal clarity to the shareholders of ICONOMI.

In recent months, we have seen that legal frameworks are not yet able to support the kind of corporate governance we envisioned for ICONOMI and that our current corporate setup is not the best way to achieve the ideal position for token holders. We have therefore made the decision to move toward a traditional legal structure for the company itself by establishing a joint-stock company in Liechtenstein while at the same time making it future-proof by tokenizing its shares and issuing security tokens (eICN).

Who is eligible to be an ICONOMI shareholder?

All eligible holders of ICN tokens will be given the right to convert their ICN tokens into shares of the Liechtenstein holding company (herein tentatively referred to as “ICONOMI AG”). ICN tokens whose holders opt into converting their tokens to ICONOMI AG shares will be transferred to ICONOMI AG as an in-kind contribution, raising the share capital of ICONOMI AG and instituting the former ICN holders as shareholders of ICONOMI AG. The value of one share will be set to 1 CHF, and the ICN/CHF exchange rate will be determined and duly published at a later stage, taking into consideration the specifics of this case and the provisions of applicable laws.

Eligible owners will be token holders registered on the ICONOMI platform as Tier 2 or higher. All token holders who are not able to verify as Tier 2 users on the ICONOMI platform will be able to exchange their ICN tokens for ETH.

Timeline

The process will start on November 1, 2018. By then, the user interface will be prepared for token holders to either convert their ICN tokens to shares of ICONOMI AG, which will ultimately be presented as eICN tokens, or to exchange ICN tokens for ETH.

The deadline for submission of ICN tokens to the ICONOMI platform and subsequent conversion of ICN tokens into ICONOMI AG shares is set at December 31, 2018 (herein referred to as the conversion deadline). Until January 10, 2019, all gathered data will be analyzed and the final shareholding structure prepared, enabling us to increase the share capital of ICONOMI AG.

The process of tokenization of shares will begin in Q1 2019.

What will opting in for the eICN security token look like?

If an eligible ICN token holder opts to receive the eICN token, the first step in this process will be to assert their ICN token balance according to a technical process that will be prepared in due time. Based on the balance of each user, ICONOMI AG shares will be assigned, thus making them shareholders in said company. Once we continue with the next stage in our plan, shares of ICONOMI AG will be tokenized and shareholders of ICONOMI AG will receive eICN security tokens.

What will happen next?

After conversion, former ICN token holders who are eligible and have applied to become shareholders of ICONOMI AG will be given corporate governance rights, such as voting rights, via the General Assembly of ICONOMI AG, and will be able to vote on the approval of annual reports, electing and discharging members of the board of directors, amendments to the Statute, dissolution and liquidation of the company, etc. Therefore, standard shareholder rights will be given to shareholders of the company based on the corporate law of Liechtenstein, bringing not only clarity but also legal certainty and security to the relationship between the shareholders and ICONOMI AG.

After the first phase of the transformation process ends, shares of ICONOMI AG will be assigned to former ICN holders who opt into becoming ICONOMI AG shareholders. This will be the basis for the tokenization of ICONOMI AG shares and the issuance of the eICN security token.

What about ICN utility?

The utility functions of the ICN token will be discontinued on December 31, 2018. Consequently, wherever the ICN token was used to pay for additional services for DAA managers, ETH or fiat currencies will be used instead.

What if ICN token holders do not want to become ICONOMI shareholders?

If holders of ICN tokens do not want to become ICONOMI AG shareholders, they have multiple options. They will by no means be left empty-handed.

Token holders will be able to sell their ICN tokens on exchanges. If trading on exchanges stops, ICONOMI will take over and buy ICN tokens from token holders in exchange for ETH at an exchange rate set at 0.0019 ETH for 1 ICN, but not before November 1, 2018. This exchange rate is set on the basis of the average exchange price of the ICN token to ETH in the period of the last 180 days (preceding September 27, 2018), which is 5% higher than the current market price of ICN expressed in ETH. This exchange rate will be valid until December 31, 2018.

Nevertheless, the option to convert ICN to shares of ICONOMI AG or to ETH will not end on December 31, 2018. If ICN token holders want to hold their ICN for a longer period, they will be able to do so. We will prepare a process of exchange of the ICN tokens either for shares of ICONOMI AG or for ETH. However, we encourage all ICN token holders to make the conversion during the first set period, as additional costs may apply after December 31, 2018, or the conversion/exchange rate after December 31, 2018 may be less favorable.

What are the next steps?

Leading up to November 1, 2018, more blog posts and information about the process will be published. We will follow our set principles of transparency, diligence, and integrity and will place particular emphasis on the interests of ICN holders.

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