Issuer consent and transfer restrictions in SAFTs and warrants

Most SAFT holders learn about transfer restrictions the day they try to sell. The buyer is found, the price is agreed, and then someone reads the assignment clause. It says the agreement may not be assigned without the prior written consent of the company. Nearly every SAFT, token warrant and side letter contains a clause like it. This note explains why, what a consent request needs to contain to get a yes, and how consent turns into transfer rules that a registry can enforce.

Why nearly every instrument restricts transfer

Issuers are not hostile to secondaries. They are hostile to surprises. A transfer restriction is the issuer's way of controlling four things.

Who holds its future supply. A SAFT or warrant holder becomes a token holder at launch. The issuer wants to know who that will be. It also wants to keep out counterparties it cannot deal with: sanctioned persons, competitors, or holders in places where it cannot lawfully deliver tokens.

Eligibility. The original investor qualified for the round as an accredited or professional investor. The issuer needs the buyer to qualify the same way, or the transfer can undermine the basis on which the round was done.

Lock-ups and vesting. Post-delivery restrictions are part of the bargain the issuer struck with its investors. An uncontrolled transfer is a way to escape them. Consent lets the issuer confirm the lock-up survives.

Information. The issuer wants to know how much of its future supply is changing hands, at what price, and to whom. Not to block it, but to manage its own launch.

Seen from the issuer's side, a consent clause is not an obstacle to liquidity. It is the mechanism that makes orderly liquidity possible.

The clauses you will meet

Assignment language varies, but it falls into a few patterns.

• Consent required. The most common. No assignment without the issuer's prior written consent, sometimes "not to be unreasonably withheld", often without that qualifier.
• Prohibited until TGE. No transfer at all before delivery, occasionally with an affiliate carve-out.
• Affiliates only. Transfers permitted to entities under common control, and nothing else.
• Silence. The instrument says nothing about assignment. Silence is not permission. A buyer who relies on it has no way to compel the issuer to recognize the transfer at delivery.

Warrants add a second question: whether the warrant can be separated from the equity it was issued with. Side letters add a third: whether the token rights can move without the SAFE they attach to. A deeper treatment of how these instruments fit together is in the Asset Haus note on token warrants, SAFTs and convertibles.

What a good consent request contains

A request that says "someone wants to buy my allocation" gets silence. A request the issuer can say yes to contains three things.

A named, KYC-verified buyer. Legal name, jurisdiction, investor status evidenced, and beneficial ownership disclosed where the issuer asks for it. The issuer is being asked to accept a new counterparty. It needs to know who that is before it can answer.

A clean transfer instrument. A short assignment agreement that moves the position as it is, without renegotiating terms, with the seller, the buyer and the issuer's acknowledgment on it. Issuers push back on transfer documents that quietly amend the original.

Lock-ups kept intact. An express statement that every post-delivery restriction in the original instrument binds the buyer exactly as it bound the seller. This is usually the point on which consent turns.

Put together, the request tells the issuer that the transfer changes one thing, the name of the holder, and nothing else. On MarsBase deals, Asset Haus, the structuring and platform partner, maps the restrictions and prepares the request. MarsBase brings the buyer. In practice consent takes days to weeks and sets the timeline for the deal. The end-to-end sequence is in how to sell a SAFT before TGE.

How consent becomes transfer rules

This is the step that separates a tokenized secondary from a signed side letter. Once the issuer has consented on stated conditions, those conditions are encoded as transfer rules on the registry position that represents the wrapped rights.

• A whitelist limits holders to counterparties who have passed KYC/KYB and evidenced eligibility, which is what the issuer's eligibility condition asked for.
• Lock-up dates are applied as restrictions the registry enforces, so a position cannot move in a window the instrument closes.
• Jurisdiction blocks exclude the places the issuer named.
• Issuer approval on transfer, where the consent requires it for every onward transfer, is applied as a condition the registry checks before it moves the position.

The result is that the issuer's consent conditions apply not just to this transfer but to every later one. The buyer who wants to sell on next year is bound by the same rules, without the issuer having to re-read the original consent letter. The wrapper that holds the rights, typically a BVI or Cayman SPV, is described in the how it works section.

No consent, no deal

Some consent requests are refused, and some issuers do not answer. The response to either is the same. The deal does not proceed.

There is a temptation to work around a refusal. The usual routes are a post-TGE side agreement, a nominee arrangement, or a "sale" of the economic interest that leaves the seller as holder of record. Each of these puts the buyer in a position the issuer has not agreed to and may decline to honor at delivery. Each leaves the seller with an obligation to a buyer that it may not be able to perform. Neither MarsBase nor Asset Haus will structure a transfer the issuer has not consented to.

A refusal is also information. It tells the seller what the issuer will and will not accept. A second request, with a different buyer or on tighter conditions, sometimes succeeds where the first did not.

What this means for buyers

Ask about consent before you ask about price. A seller who can show a mapped set of restrictions and a consent path is offering something transferable. A seller who cannot is offering a negotiation with the issuer that has not started. The price should reflect which of the two you are being offered.

If you hold a SAFT, warrant or side letter and want to know whether it can be transferred, or want to buy one that can, submit the deal. You will hear within days whether a consented, compliant transfer is possible and at what indicative price.