Yule Needham (“Yule”) is the founder and CEO of Vaxchain Pharmaceutical Company (the “Company”), a private company in Singapore that develops and supplies COVID-19 and other vaccinations. The Company owns the patent for a ground-breaking vaccine that has proved effective against the COVID-19 virus. Yule estimates that the patent is worth S$5 million to the Company. Other than Yule, the Company has 45 shareholders who were early investors in the Company. Yule holds 51% of the shares in the Company.
Yule heard about the potential of blockchain / distributed ledger technology and wishes to accelerate the business by implementing blockchain technology to monitor proper vaccinations and improve the overall supply chain of vaccines by capturing, tracking and tracing improperly stored or expired vaccines. He has also read the news about the high demand for certain non- fungible tokens (“NFTs”) and is thinking of ways to make NFTs work for the business. Yule also wishes to invest in more research and development (“R&D”) activities to develop new vaccines for emerging viruses.
Yule seeks your advice on how to raise funds to implement his vision. He estimates that the Company will need S$7 million in funding over the next 12 months for the R&D and implementation of the blockchain platform.
Given his inclination towards new ways of doing things (including raising capital) using new technologies, Yule is leaning towards raising funds through digital token offerings via initial coin offerings (“ICOs”) and/or security token offerings (“STOs”) instead of a traditional initial public offer (“IPO”) of shares.
On behalf of the Company, Yule has come to you for advice on the following:
- In a table format, compare the key differences between an IPO, ICO and STO. Discuss the key regulatory issues relating to each funding method, given the above facts. (15 marks)
- In a table format, compare the benefits and disadvantages of an IPO, ICO and STO if the Company were to consider raising funds using these methods (13 marks)
- If Yule was to choose to raise funds through an ICO and/or an STO, discuss the legal and any other issues that the Company should be mindful of for both an ICO and an STO(10 marks)
- Discuss the legal and any other issues if the Company wishes to raise funds through the issue of NFTs where the underlying asset is the Company’s patent. (12 marks)
Review the Agreement in Annex 1.
- In respect of each clause in the Agreement, analyse and discuss if the clause may be coded into a smart contract;
- For each clause which you identify in (a) as capable of being encoded in a smart contract, discuss the advantages and disadvantages of having such clause coded into the smart contract
Assume that the dates and times and location of the Goods can be automatically ascertained for the smart contract to execute any actions. (50 marks)
Answer to Question 1
The key differences between IPO, ICO and STO has been adequately discussed in a table format. The discussion is carried out in relation to the given case information on Vaxchain Pharmaceutical Company. Get the complete solution as provided by the Student Life Saviour experts in Singapore……
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