A Web3 holding structure can fail investor due diligence when the group chart describes one arrangement but the legal records support another. An investor needs to identify the entities and people it is investing in, trace rights to the assets that create value, understand where decisions and regulated activities occur, and connect any token issuance to an identifiable issuer and set of terms. A company diagram is a starting point; the test is whether each important line on it can be supported by evidence.
Key takeaways
- Trace the proposed investment entity through every material subsidiary, shareholder and asset. Check the registers and signed transfers, not just the cap table slide.
- Identify who owns or may use the code, brand, domains and other IP. Paying a developer does not, by itself, answer that question in every jurisdiction.
- Compare each entity’s stated role with what it actually does, where decisions are made and what its licence permits.
- If tokens have been issued or promised, reconcile the issuer, recipient, rights, allocations and vesting across contracts, disclosures and on-chain records.
- Treat a gap as a question to investigate. Its legal effect and the remedy depend on the facts, governing law and transaction.
What does an investor need to verify?
The useful question is “Can someone unfamiliar with this group follow a claim from the pitch deck to a signed document or reliable record?” Use that test across four connected parts of the structure:
| Diligence question | Evidence to assemble | A gap that needs investigation |
|---|---|---|
| Who owns and controls the group? | Entity registers, share issuances and transfers, constitutional documents, beneficial-ownership records | A company appears on the chart but its shares were never issued or transferred as described |
| Who controls the product’s value? | Founder and contractor IP terms, assignments or licences, domain records, repository access and open-source inventory | The operating company uses code or a brand without a clear documented right |
| Where and by whom does the business operate? | Board approvals, management roles, service agreements, people and activity records, relevant licences | A passive holding entity is described as the operator, or decisions are attributed to a location the records do not support |
| Who issued or promised the tokens? | Issuer approvals, offer terms, purchaser agreements, allocation ledger, vesting terms and relevant disclosures | The whitepaper, contracts and token allocation records name different parties or promise different rights |
This is a preparation framework, not a list of documents every investor will request. The scope will change with the investor, transaction, jurisdictions and whether a token exists.
Where can the ownership chain break?
Start with the entity that will receive the investment. Trace its shareholders upward to the people or entities that ultimately control it, then trace its subsidiaries and material assets downward. Do the same for options, warrants, nominee arrangements and any promised equity that affects the fully diluted picture.
The chart may show a parent owning a subsidiary, while the register still names a founder. A transfer may have been agreed but not completed, or a newly formed company may not yet have issued the shares shown in the deck. The immediate task is to reconcile the chart, cap table, registers, resolutions and signed instruments. Do not assume that an unsigned transfer can be fixed by updating a spreadsheet.
For an ADGM entity, ADGM’s beneficial-ownership guidance explains that applicable entities must keep their ownership records current. Other jurisdictions use different tests and filing rules; check each entity under its own law.
Who owns the code, brand and other IP?
A repository login proves access, not necessarily legal title. Review the contracts under which founders, employees, contractors and agencies created the product. Identify the entity that owns each asset, any licence granted to another group company, and whether the investor’s proposed entity can rely on those rights.
This matters especially when the product was built before incorporation. A founder may still hold the domain or trademark application; a contractor agreement may describe a deliverable but say nothing about ownership; or the group may depend on open-source components whose licence conditions have not been assessed. None of those facts alone proves the company lacks the rights it needs. Ownership and permitted use depend on the work, agreements and applicable law. WIPO’s copyright guidance explains why the original creator is generally the first owner, subject to important national exceptions.
Build an asset schedule with one row per material item: creator, current rightsholder, basis of title or licence, entity using it and the document that supports the answer. Escalate unclear assignments and open-source obligations to the appropriate IP specialist before making ownership statements to investors.
Does the entity’s actual role match the structure?
A holding company, operating company, token issuer and licensed service provider may be separate entities. Their roles should be reflected in contracts, management decisions, bank and wallet authority, invoices and customer terms. If the deck calls an entity “passive” but it signs customer contracts or employs the product team, the discrepancy needs an explanation.
For example, ADGM describes its SPVs as passive holding companies and states that they cannot conduct operational business or hire staff. That is a specific rule about an ADGM vehicle, not a rule for every holding company. An SPV’s incorporation also does not establish permission to carry out a regulated activity.
Where the group says key decisions occur in one jurisdiction, compare that statement with board records, directors’ actual conduct and operational evidence. Differences may raise tax, governance or regulatory questions, but no single fact, such as a director’s residence, settles those questions. Tax and regulatory advisers should apply the relevant legal tests to the real operating model.
Can the group identify the token issuer and the rights it promised?
If a token has been sold, allocated or promised, identify the legal person responsible for each step. Reconcile the whitepaper and marketing statements with sale agreements, side letters, treasury records, vesting schedules and on-chain transfers. A smart contract may show when a wallet receives tokens; it does not necessarily explain the legal rights, restrictions or remedies agreed with the holder.
Do not infer the issuer from the token symbol, foundation name or deployment wallet. An issuer mismatch can affect disclosure, contractual responsibility and the regulatory analysis in each relevant market. For Dubai issuances within VARA’s scope, the current Virtual Asset Issuance Rulebook distinguishes issuance categories and includes disclosure requirements. It does not answer the position for every token or jurisdiction. See also our guide to token vesting versus equity vesting.
What should you put in the data room first?
- One dated group chart that identifies the investment entity, subsidiaries, shareholders and each entity’s intended role.
- An ownership reconciliation tying the chart and cap table to registers, signed issuances, transfers and relevant approvals.
- An asset schedule covering code, trademarks, domains, data, key contracts and any IP assignments or licences between group companies.
- An operations map showing who employs people, contracts with customers, controls bank accounts and wallets, makes decisions and holds any licence.
- A token record, if relevant, naming the issuer and linking each material allocation or promise to its agreement, disclosure and on-chain implementation.
- A gap log that says what is known, what is disputed or missing, who is responsible for resolving it and whether specialist legal, tax or accounting advice is needed.
An illustrative gap log might say: “The deck names HoldCo as owner of the protocol code; the contractor agreement names OpCo as client and contains no express IP clause. Confirm governing law and ownership before telling investors HoldCo owns the code.” That description is more useful than silently changing the chart. It identifies the evidence and the precise question to resolve.
Frequently asked questions
Is an ADGM SPV enough to make a Web3 group ready for investment?
No single entity type makes a group diligence ready. An ADGM SPV may serve a defined passive holding role, but the investor still needs to verify ownership, asset rights, operating roles, token arrangements and any required permissions.
Does a paid contractor automatically assign code to the company?
Do not assume so. The answer depends on the governing law, the contractor’s status and the contract. Review the agreement and any later assignment or licence against the actual work delivered.
Does a token allocation spreadsheet prove what holders are entitled to?
It may help reconcile quantities, but it may not establish the issuer, the legal terms or a holder’s rights. Read it with the signed agreements, disclosures, approvals and on-chain record.
Can a structure be corrected during a funding round?
Some gaps may be resolved with evidence, a valid assignment, updated filings or revised transaction terms. Others require broader changes or advice across jurisdictions. The right next step depends on what the current documents and operations actually show.
This article provides general information, not legal, tax, investment or regulatory advice. The analysis of any group structure or token issuance depends on its facts and the law of each relevant jurisdiction.
Victoria Wells
Stephan Roberto