Earth-Credit-denominated distributions characterized as securities transaction

Scenario

Foreign or US regulator characterizes in-kind distribution of Earth Credits to beneficiaries as a securities transaction.

Cost / impact

Distributions in cash become non-substitutable; in-kind option is foreclosed.

Prevention

Cash-only default in operating agreements (Q1 set aside). Discipline holds at deployment.

Mitigation

Cash distributions only; in-kind distribution is a Q1 future-resolution path requiring counsel-confirmation per jurisdiction.

Residual risk

Set aside via cash-only default. Revisitable when counsel confirms favorable.