# Equities

Source: https://docs.settlemint.com/docs/executive-overview/use-cases/equities
Equity tokenization through DALP enables companies to issue, manage, and service digital shares with embedded governance voting, real-time cap table management, and automated dividend distribution — replacing transfer agents, paper proxies, and manual record-keeping.



**Who should read this:** Corporate secretaries, CFOs, investor relations teams,
and legal counsel evaluating tokenized share structures.

**Business value:** Eliminate transfer agent fees, enable real-time cap table
visibility, automate dividend entitlement calculations with on-demand claiming,
and give shareholders on-chain governance voting rights.

## Business challenge [#business-challenge]

NovaTech is a growth-stage company with 2,000 shareholders across multiple share
classes. Managing shareholder records, processing dividend payments, conducting
proxy votes, and handling secondary transfers consumes significant resources and
introduces delays at every step.

### Traditional approach [#traditional-approach]

<Mermaid
  chart="`
flowchart TB
  COMPANY(Company Shares<br/>2,000 Shareholders)
  AGENT(Transfer Agent<br/>Monthly Fees)
  MANUAL(Manual Processes)

  CAPTABLE(Cap Table Updates<br/>Monthly Reconciliation)
  DIVIDENDS(Dividend Processing<br/>Wire to 2,000 Accounts)
  PROXY(Proxy Voting<br/>Paper Ballots + Solicitation)
  TRANSFERS(Secondary Transfers<br/>Weeks of Paperwork)
  REPORTING(Shareholder Reporting<br/>Quarterly Statements)

  COMPANY --> AGENT
  AGENT --> MANUAL
  MANUAL --> CAPTABLE
  MANUAL --> DIVIDENDS
  MANUAL --> PROXY
  MANUAL --> TRANSFERS
  MANUAL --> REPORTING

  style COMPANY fill:#8571d9,stroke:#654bad,stroke-width:2px,color:#fff
  style AGENT fill:#b661d9,stroke:#8a3fb3,stroke-width:2px,color:#fff
  style MANUAL fill:#b661d9,stroke:#8a3fb3,stroke-width:2px,color:#fff
  style CAPTABLE fill:#b661d9,stroke:#8a3fb3,stroke-width:2px,color:#fff
  style DIVIDENDS fill:#b661d9,stroke:#8a3fb3,stroke-width:2px,color:#fff
  style PROXY fill:#b661d9,stroke:#8a3fb3,stroke-width:2px,color:#fff
  style TRANSFERS fill:#b661d9,stroke:#8a3fb3,stroke-width:2px,color:#fff
  style REPORTING fill:#b661d9,stroke:#8a3fb3,stroke-width:2px,color:#fff

`"
/>

![Tokenized equities with on-chain compliance.](/docs/screenshots/equity/equity-listing.webp)

## How DALP solves it [#how-dalp-solves-it]

### Share issuance with embedded rights [#share-issuance-with-embedded-rights]

NovaTech tokenizes its equity structure as compliant digital securities.
Each token represents one share and carries embedded ownership rights, dividend
entitlements, and governance voting power.
Share classes (common, preferred) are represented as separate token deployments
with distinct compliance rules and economic terms.

![Equity token details with company information and voting rights parameters.](/docs/screenshots/equity/equity-detail-1.webp)

### On-chain governance voting [#on-chain-governance-voting]

The platform gives shareholders on-chain
voting rights proportional to their token holdings. Shareholders delegate voting
power and cast votes on corporate resolutions directly through the platform.
Historical balance snapshots ensure voting weight reflects ownership at the
record date, not at the time of the vote — preventing vote manipulation through
last-minute transfers.

### Shareholder onboarding [#shareholder-onboarding]

Investors complete identity verification through the platform's identity
system. Their verified credentials enable participation across multiple NovaTech
share classes without re-verification. Only verified investors can receive
equity tokens; transfers to unverified recipients are blocked automatically.

### Real-time cap table [#real-time-cap-table]

Every share transfer updates the cap table instantly. NovaTech's IR
team sees current ownership distribution, shareholder counts per class, and
concentration metrics in real time. No waiting for monthly transfer agent
reconciliation. Regulatory reporting pulls current data on demand.

### Dividend distribution [#dividend-distribution]

When NovaTech declares a dividend, the yield engine calculates entitlements for
every shareholder based on their balance at the record date snapshot.
Shareholders claim their dividends on-demand through the platform.
What previously required wire instructions to 2,000 bank accounts now settles
through claim-based distribution with instant finality.

The platform supports:

* **Tokenized cash settlement** — shareholders claim distributions funded by
  stablecoins or tokenized deposits in the yield wallet
* **Off-chain payment adapters** — integration with treasury systems for
  traditional wire/ACH settlement
* **Per-class calculations** — different dividend rates for common vs preferred
  shares handled by separate token deployments

### Custodian controls [#custodian-controls]

The custodian role enables corporate actions that traditional equity structures
require: freezing shares during legal disputes, forced transfers for court
orders, and account recovery for lost wallets. These operations execute through
role-based access controls with full audit trails.

### Secondary trading [#secondary-trading]

When shareholders want to sell, the platform facilitates compliant transfers
through DALP's XvP settlement system. Compliance checks verify buyer eligibility
before settlement. Transfer restrictions — right of first refusal, lock-up
periods, maximum holder limits — are enforced programmatically. Settlement
happens atomically via DvP.

## Key capabilities [#key-capabilities]

| Capability              | Traditional                       | With DALP                                   |
| ----------------------- | --------------------------------- | ------------------------------------------- |
| **Cap table updates**   | Monthly reconciliation            | Real-time on-chain                          |
| **Dividend processing** | Wire to 2,000 accounts, days      | Calculated entitlements, on-demand claiming |
| **Governance voting**   | Paper proxies, solicitation firms | On-chain voting with balance snapshots      |
| **Secondary transfers** | Weeks of paperwork                | Hours with embedded compliance              |
| **Transfer agent fees** | Ongoing monthly/quarterly fees    | Eliminated                                  |
| **Shareholder reports** | Quarterly statements              | Real-time dashboard access                  |

## Measurable outcomes [#measurable-outcomes]

**Operational efficiency** — Transfer agent fees and manual record-keeping
eliminated. Dividend distribution that consumed days of coordination now
executes through automated entitlement calculation and self-service claiming.

**Governance participation** — On-chain voting removes the friction of paper
proxies and solicitation firms. Shareholders vote directly, increasing
participation rates and reducing governance costs.

**Cap table accuracy** — Real-time ownership records eliminate reconciliation
errors. Regulatory reporting and investor communications reference a single
source of truth that updates with every transaction.

**Secondary liquidity** — Compliant share transfers that took weeks of legal
paperwork now settle in hours with compliance enforced at the platform level.

<Mermaid
  chart="`
flowchart TB
  COMPANY(Company Shares<br/>2,000 Shareholders)
  TOKEN(Tokenized Equity<br/>Compliant Digital Securities)
  REALTIME(Real-time Cap Table<br/>Instant Updates)
  AUTO(Automated Platform)

  DIVIDENDS(Dividend Distribution<br/>Claim-based Settlement)
  VOTING(On-chain Governance<br/>Snapshot Voting)
  TRANSFERS(Compliant Transfers<br/>Atomic Settlement)
  CUSTODY(Custodian Controls<br/>Freeze / Recover / Force)
  REPORTING(Real-time Reporting<br/>Shareholder Dashboard)

  COMPANY --> TOKEN
  TOKEN --> REALTIME
  REALTIME --> AUTO
  AUTO --> DIVIDENDS
  AUTO --> VOTING
  AUTO --> TRANSFERS
  AUTO --> CUSTODY
  AUTO --> REPORTING

  style COMPANY fill:#8571d9,stroke:#654bad,stroke-width:2px,color:#fff
  style TOKEN fill:#5fc9bf,stroke:#3a9d96,stroke-width:2px,color:#fff
  style REALTIME fill:#5fc9bf,stroke:#3a9d96,stroke-width:2px,color:#fff
  style AUTO fill:#5fc9bf,stroke:#3a9d96,stroke-width:2px,color:#fff
  style DIVIDENDS fill:#5fc9bf,stroke:#3a9d96,stroke-width:2px,color:#fff
  style VOTING fill:#5fc9bf,stroke:#3a9d96,stroke-width:2px,color:#fff
  style TRANSFERS fill:#5fc9bf,stroke:#3a9d96,stroke-width:2px,color:#fff
  style CUSTODY fill:#5fc9bf,stroke:#3a9d96,stroke-width:2px,color:#fff
  style REPORTING fill:#5fc9bf,stroke:#3a9d96,stroke-width:2px,color:#fff

`"
/>

The diagram above shows the DALP equity lifecycle, from tokenization through
automated governance and dividend distribution to compliant secondary trading.

## Compliance considerations [#compliance-considerations]

Equity tokens operate under securities regulations requiring:

* **Investor verification** — enforced via identity claims for KYC/AML
* **Transfer restrictions** — lock-up periods, ROFR rights, maximum holder
  limits configured in compliance modules
* **Jurisdiction controls** — geographic restrictions via country allow/block
  lists
* **Shareholder caps** — investor count limits per share class for regulatory
  thresholds (e.g., Section 12(g) reporting triggers)
* **Audit trails** — every transaction, vote, compliance check, and corporate
  action recorded on-chain

For detailed compliance architecture, see
[Compliance & Security](/docs/executive-overview/compliance-security).

## Implementation checklist [#implementation-checklist]

1. Define share structure (classes, par value, total authorized shares)
2. Select compliance template (Reg D, Reg S, or custom ruleset)
3. Integrate KYC/AML provider for investor verification
4. Configure dividend payment adapter (tokenized cash or off-chain settlement)
5. Upload corporate documents (articles of incorporation, shareholder agreement)
   and link to token metadata
6. Deploy asset with voting extensions enabled
7. Configure custodian roles and multi-signature controls
8. Test dividend distribution, voting workflow, and secondary transfer
   restrictions

## Limitations and considerations [#limitations-and-considerations]

* **Voting complexity** — On-chain voting supports simple majority/quorum
  models; complex voting structures (cumulative voting, supermajority per class)
  may require custom addon development
* **Dividend calculation** — Out-of-the-box implementation supports pro-rata
  distributions; preferential dividend waterfalls across share classes use
  separate token deployments with independent yield schedules
* **Regulatory approval** — Legal counsel should review tokenized share
  structure for compatibility with corporate charter and applicable securities
  regulations

## Next steps [#next-steps]

* Review [Compliance & Security](/docs/executive-overview/compliance-security)
  to understand embedded compliance controls
* Explore [Developer Documentation](/docs/developer-guides) for
  governance and voting customization
* Contact your SettleMint representative to discuss an equity tokenization pilot