This Note explains that:

1. Security Tokens are “securities” as defined in the Securities Act 2005, in digital format;

2. When STOs are conducted in or from Mauritius, this offering will be subject to the Securities Act 2005 and to any Regulations made thereunder by the FSC, as may be applicable;

3. No Offerings of Security Tokens may be made without the FSC’s prior approval save and except in respect of offerings to the following categories of investors:

(i) Sophisticated Investors;

(ii) Expert Investors;

(iii) Expert Funds;

(iv) Professional Collective Investment Schemes;

(v) Specialised Collective Investment Schemes.

The above-mentioned terms are defined in the Securities Act or in the Securities (Collective Investment Schemes and Closed-end Funds) Regulations 2008.

4. Any person soliciting another person to enter into transactions involving Securities Tokens must hold the appropriate license under the Securities Act 2005 and must ensure compliance with the following non-exhaustive requirements:

(i) Undertaking adequate due diligence regarding the STO;

(ii) Disclosure obligations to clients regarding the STO and risks associated thereto.

5. Investors must ascertain all risks associated to Securities Tokens prior to committing to the same. Any investment in Securities Tokens is at the investor’s own risk and no compensation arrangement exists in Mauritius in relation thereto.

For further information please reach out to Malcolm, Melissa or your usual Appleby contact.

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