Articles of Association of Swiss Trustnet International

I. General Provisions

Art. 1 – Name

Under the name Swiss Trustnet International, an association according to articles 60 et seq. of the Swiss Civil Code exists. The association is politically neutral, and non-denominational.

The duration of the association is not limited in time.

Art. 2 – Seat

The association’s registered office shall be in Bern, Switzerland.

Art. 3 – Purpose

The purpose of the association is to develop and support Distributed Ledger Technology, related technologies and businesses in Switzerland and internationally.

The association governs one or several Blockchains.

The association may conduct and promote all businesses and/or enter into all transactions and generally perform all acts as may be necessary, appropriate, incidental or desirable to assist in achieving or furthering its purpose.

II. Blockchain

Art. 4 – Principles

The Blockchain governed by the association is an Ethereum based permissioned blockchain that offers transparent transaction recording for individuals, businesses and authorities.

In particular, the association shall govern the access to and the operations of the Blockchain in fair and transparent manner for all blockchain participants (node operators, validators, service providers and end users) and ensure its good reputation.

The association strives for a diverse composition of its members to ensure that no member or group of members can take control of the blockchain for their individual benefit.

Art. 5 – Duties of the association regarding the Blockchain

In particular, the association has the following duties regarding the Blockchain:

• ensuring business continuity and fair exit strategies for service providers;
• providing options for smooth forks if necessary;
• fostering scalability to avoid transaction confirmation delays;
• providing predictable transaction prices for service providers.

Art. 6 – Principles of governance of the Blockchain

All decisions regarding the governance of the blockchain are taken by all members of the association on equal footing by on-chain voting.

The members grant access to Blockchain to node operators and determine the validators. They actively decide on protocol and other smart contract upgrades as well as on changes of the quorums by which decisions are taken.

Art. 7 – Relationship to users

The association sells blockchain capacity to service providers in form of the Blockchain’s cryptocurrency (TETH) and determines the reward mechanisms for all stakeholders.

The association grants all users of the Blockchain, upon substantiated request, the right to have access to the Blockchain at any time in the form of a temporary access to the block explorer.

In addition, the association undertakes to provide all users with units of TETH in return for payment, in the event that no service provider takes over this function.

Art. 8 – Relationship to service providers

The association shall be the contractual partner of any service provider that wants to use the Blockchain, if the service provider does not misuse the Blockchain for illegal purposes and does not violate the principles and objectives of the Blockchain pursuant to Art. 4 et seqq.

III. Membership

Art. 9 – Admission to membership

The association shall exclusively consist of members that are trustworthy and well-reputed.

Companies, academic institutions and/or state authorities (hereafter: “businesses”) can become members, provided they acknowledge and support the association’s purpose.

Each member needs to have a fundamental understanding of blockchain technology, its risks and its potential. Particularly, each member shall be willing to contribute with its name to the reputation of the Blockchain under its governance.

All members shall be on equal footing.

All members decide on the admission of new members. Members must apply electronically on-chain. More detailed instructions for application are provided by the association.

Art. 10 – Membership fee

The general assembly decides on the annual membership fee, which has to be paid by each member at the beginning of the business year. The full annual membership also has to be paid if a member joins the association during the business year.

Art. 11 – End of Membership

The membership ends by exclusion, resignation or liquidation of the association. Members who have resigned or have been excluded have no right to a share in the assets of the association. The association shall be under no obligation to refund any fees or contributions of the member already paid.

Art. 12 – Exclusion of members

Possible reasons to exclude a membership are, inter alia, the following:

1. If a member is in material breach of any of the articles of association;
2. If a member brings the other members or the Blockchain into disrepute or takes actions which can be assumed to damage the reputation of the other members or the Blockchain. This includes in particular the commission of fraudulent or dishonest acts. Irrespective of whether they are directly related to the purpose and activities of the association;
3. If a member does not comply with its obligations according to art.15 despite a corresponding reminder from the Management Board:
4. If a member does not pay his membership fee despite a corresponding reminder from the Management Board.

Art. 13 – Resignation of Membership

A member may resign from membership electronically at any time.

Art. 14 – Rights of Members

Subject to the availability of sufficient funds of the association, each member is entitled to the following individual rights:

1. to receive a compensation for its contribution to the blockchain governance and its reputation, limited to CHF 100,000.- per member per annum;
2. to run one validator node, i.e. to validate blocks and to receive the validator rewards.

The members jointly execute the following rights:

1. to grant or remove the rights of businesses to run a node;
2. to grant or remove the rights of businesses to validate the blocks with the consensus protocol agreed upon;
3. to decide on changes of protocol (soft and hard forks);
4. to select service providers which want to provide services on the Blockchain;
5. to sell TETH to service providers;
6. to set the price or price mechanism for TETH, if required;
7. to determine the compensation scheme for validators.

Each member is responsible to exercise its rights hereunder. The Management Board shall provide the necessary support and coordination.

Art. 15 – Obligations of members

Each member shall comply with the following obligations:

1. to take knowledgeable, conscious and timely decisions regarding the functionality and reputation of the Blockchain, the technology as well as its participants;
2. to adapt the quorums defined in the blockchain governance smart contract and to expand the list of Blockchain-relevant decisions;
3. to supervise the operational business, take decisions required to ensure the proper operation of the Blockchain, and to sign and publish them within the defined deadlines.
4. investigate indications of abusive behaviour by validators and, if necessary, request their removal from the list of validators.
5. to keep the membership diverse and actively avoiding conflicts of interest between the association members;
6. to report and act against any disruptions of the Blockchain;
7. to make its company or brand name available in order to represent or advertise the Blockchain;
8. to resign from membership if its brand name causes damage for or does not contribute to the trustworthiness of the blockchain.

Each member is responsible to exercise its obligations hereunder on a best effort basis. The Management Board shall provide the necessary support and coordination for any decision to be taken by the members.

IV. Organisation

Art. 16 – Bodies of the association

The bodies of the association are:

1. the General Assembly
2. the Management Board
3. the Auditors (if elected).

A. General Assembly

Art. 17 – Articles of Association, Agenda, Participation

The General Assembly is the supreme body of the association.

The chairman shall preside over the meetings of the General Assembly.

The ordinary General Assembly will take place annually. The Management Board determines the term of the business year.

The Management Board shall announce the agenda items to the members electronically or via online publication at least 20 days before the General Assembly.

Requests to put an item on the agenda must be directed to the Management Board at least four weeks prior to the date of the General Assembly. The Management Board has to include the requested items in the agenda.

The General Assembly shall normally take place online or virtually. The association uses an electronic or online voting system for this purpose.

The Management Board may decide to hold a physical General Assembly if required by the circumstances.

Each member has one vote.

Art. 18 – Extraordinary General Assembly

An extraordinary General Assembly shall take place in the following circumstances:

1. Decision of the Management Board or the General Assembly;
2. Request of at least one fifth of the members;
3. Request of the auditor, provided such has been elected.

Requests to put an item on the agenda must be directed to the Management Board at least four weeks prior to the date of the extraordinary General Assembly. The Management Board has to include the requested items in the agenda.

Art. 19 – Responsibilities

The General Assembly shall have the following responsibilities:

1. Amendment of the articles of association;
2. Approval of the financial statements and the annual report of the Management Board;
3. Determination of the membership fees;
4. Determination of reward schemes for its members, validators and blockchain maintenance;
5. Determination of the price mechanism for the Blockchain cryptocurrency (TETH);
6. Determination of the annual budget;
7. Election of the members of the Management Board and the Auditors;
8. Resolutions discharging the Management Board and the Auditors;
9. Handling of motions of the Management Board and the members;
10. Dissolution of the association.

Art. 20 – Ballot Vote

All resolutions of the General Assembly, including the resolutions of the ordinary and extraordinary General Assemblies may be taken in form of a ballot vote.

The ballot votes shall be conducted by electronic voting of the members on a platform designated by the Management Board. The voting results will be recorded directly on the Blockchain.

The Management Board decides on the holding of a ballot vote. However, the following resolutions must be taken by ballot:

1. Admission of new members;
2. Exclusion of members;
3. Modification of the Blockchain Governance Smart Contracts;
4. All other resolutions regarding the organization and maintenance of the Blockchain

The members shall be informed about an upcoming ballot vote through the platform designated by the Management Board.

Art. 21 – Quorums

Elections and resolutions of the General Assembly are passed with a simple majority of the valid votes cast, unless otherwise specified.

However, resolutions regarding the following matters require a qualified majority of 75% of the valid votes cast:

1. Amendment of articles of association
2. Dissolution of the association.

In addition, the following approval quorums shall apply to the following resolutions of the association which must be passed by ballot:

1. Admission of new members: 82%;
2. Exclusion of members: 66%;
3. Modification of the Blockchain Governance Smart Contracts: 100%.

A change of the quorums mentioned in this article requires the approval of all members.

B. Management Board

Art. 22 – Composition

The Management Board will be composed of a minimum of 3 and a maximum of 5 members and will be elected by the General Assembly for a term ending with the completion of the next ordinary General Assembly. Re-election is possible. Members of the Management Board are either representatives of the members or any individual that can represent the interest of the association.

The Management Board shall constitute itself. It will be composed of a chairman and a vice chairman. The Management Board appoints a secretary to administer the legal affairs and operations of the association.

Where a vacancy arises, the Management Board may appoint an interim substitute until the next extraordinary or ordinary General Assembly.

The Management Board may issue and publish one or several regulations about the details of the organization and management (Organizational Regulations). Within the purpose of the association, changes of the Organizational Regulations are allowed at any time.

The Management Board is capable of passing resolutions if at least 2 of its members are present. Upon motion of the chairman or on request of a member of the Management Board, the Management Board will convene.

Art. 23 – Responsibilities

The Management Board generally has all powers and duties that are not expressively assigned to the General Assembly or to the resolution of all members by ballot voting.

In particular, the Management Board’s responsibilities include the following:

1. Preparation and execution of ordinary and extraordinary General Assemblies;
2. Proposal of amendment of the articles of association;
3. Adoption of Organizational Regulations;
4. Signing of contracts with Service Providers.

The Management Board strives to ensure transparency and diversity in and among the bodies of the association. The Management Board reports annually to the General Assembly on this matter.

Art. 24 – Representation & Signatures

The Management Board and the chairman publicly represent the association.

The chairman plus any other member of the Management Board shall have a right to bind the association when signing jointly by two.

The Secretary may independently carry out the day-to-day business of the Association, in particular payment transactions.

C. Auditor

Art. 25 – General provisions

The Association generally refrains from auditing.

However, the association must submit its accounts to a full audit by external auditors if two of the following figures are exceeded in two successive business years:

1. total assets of CHF 10 million;
2. turnover of CHF 20 million;
3. average annual total of 50 full-time staff.

Art. 26 – Appointment of the auditor

If the conditions of Art. 25 are fulfilled the general assembly appoints the auditosr.

One or more natural persons or legal entities or partnerships may be appointed, provided they are registered with the Federal Audit Oversight Authority. The provisions on independence apply mutatis mutandis. At least one member of the auditor must be resident in Switzerland, or have its registered office or a registered branch office in Switzerland.

The provisions of the Code of Obligations on external auditors for companies apply mutatis mutandis.

V. Assets of the association

Art. 27 – Assets

The assets of the association consist of fees from service providers, membership fees, public or private grants or subsidies, any gifts, contributions and other sources permitted by law.

Art. 28 – Liability

Only the Association’s assets shall cover for the liabilities of the association. The member’s personal liability for the liabilities of the association is excluded.

Art. 29 – Liquidation proceeds

In the event of the dissolution of the association, the General Assembly determines the distribution of the liquidation proceeds.

VI. Dissolution of the Association

The association will be dissolved on the basis of a corresponding resolution.

In addition, the association is automatically dissolved if only one member remains in the association and no second member joins the association within three months.