Quote from: LorenzoMoney on November 05, 2013, 07:33:22 PM

Please explain what direct shares mean and what passthrough means.

Direct shares
The issuer maintains a database of Bitcoin addresses and how many shares are owned by each one. (You own shares via a Bitcoin address you can prove you control.)
The issuer can pay dividends to this address and if you want to sell a direct share the issuer is notified that x amount of shares are being moved from address a to address b.
Like ASICMINER, the issuer normally does not provide extra escrow service. They will move shares after you prove you own the current address. Escrow for transfers is normally setup between you and the buyer and does not involve the issuer. (Otherwise the issuer spends all their time escrowing and not building miners.)

Pass through.
A pass through is a trusted member of the community that buys up lots of direct shares and offers these shares as proxy shares on an exchange. For example I might buy 1,000,000 ActiveMining direct shares where Ken sees I control 1,000,000 with address A.
Now I go to cryptostocks and issue 1,000,000 pass through shares. I promise to pay dividends that I get from Ken to the proxy/pass through shares (thats why the pass through operator has to be trusted)

Now lots and lots of trade happens on cryptostocks and all Ken sees is that I control a million shares and pays out that dividend. Ken no longer deals with the exchange, instead I deal with the exchange, and take the dividend Ken pays my 1,000,000 direct shares and I split that amoung the 1,000,000 pass through shares.

I should have went to sleep hours ago I hope that makes sense.