Paper without owner. Legal structures, chain of title and investor protection in the pre-IPO secondary market

Paper without owner. Legal structures, chain of title and investor protection in the pre-IPO secondary market

Abstract:

This article analyses, from a comparative law perspective, the legal structures through which secondary investments in private companies are channelled before an initial public offering. It examines the market and its transfer mechanics, the vehicles employed –SPVs, limited partnerships and nominee arrangements–, the United States federal framework for offering and investment adviser exemptions
and, more briefly, offshore structures, tokenisation as a distribution layer, and the European legal setting.

It identifies the chain of title as the cross-cutting vulnerability of the model
and warns of the risks associated with fractionalised resale to retail investors.

Keywords: pre-IPO secondary market; special purpose vehicles (SPV); registration exemptions; chain of title; investor protection.