CONFLICTS OF INTEREST POLICY

 

This is CrowdedHero’s Conflict of Interest Policy (“Policy”) applies to the Services (as defined below). This Policy forms an integral part of CrowdedHero’s Terms and Conditions.

The Policy may be made available in several languages; all versions are legally binding, but in the event of inconsistency between the English version and a translated version, the English version prevails.

The version of this Policy is effective as of 16th of May, 2022.

 

1    DEFINITIONS

“Board Member”

a natural person appointed as a member of the Board.

“Board”

the management board of CrowdedHero.

“Client”

a Prospective Investor, Investor or Project Owner.

“Conflict of Interest”

a situation where the interests of different parties are contradictory, and a duty of care or trust exists between those parties. A Conflict of Interest under this Policy includes both an actual Conflict of Interest (i.e., a Conflict of Interest that has arisen) and a potential Conflict of Interest (i.e., a Conflict of Interest that may arise given particular facts and circumstances). It also includes a perceived Conflict of Interest (i.e., a situation which may give rise to the perception of a Conflict of Interest), even where a Conflict of Interest may not exist.

“CrowdedHero’s Group”

the Shareholder and its subsidiaries.

“CrowdedHero”, “we”, “us” or “our”

SIA “CrowdedHero Latvia”, registration number: 50203309441, registered address: 58A – 8 Bauskas Street, Riga, LV-1004, Latvia.

“ECSPR”

Regulation (EU) 2020/1503 of the European Parliament and of the Council of 7 October 2020 on European crowdfunding service providers for business, and amending Regulation (EU) 2017/1129 and Directive (EU) 2019/1937 (Text with EEA relevance), PE/37/2020/INIT, OJ L 347, 20.10.2020, p. 1–49.

“Employee”

natural person employed by CrowdedHero, including the Board Members and Managers, as applicable, on the basis of a valid employment agreement.

“Investment Committee Member”

a natural person nominated and approved by the Board to manage and to ensure transparent, clear and fair execution of the onboarding and evaluation process of a Projects.

“Investor”

a natural or legal person who acts as an investor, meets all the eligibility requirements set in CrowdedHero’s Terms and Conditions, opens and holds a Payments Account, thereby agreeing with Lemonway’sTerms and Conditions, and through the Platform makes investments.

“Manager”

a natural person who is a senior executive tasked with overseeing the day-to-day supervision of a specific department in CrowdedHero.

“MiFID II”

Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU Text with EEA relevance, OJ L 173, 12.6.2014, p. 349–496.

“Outsourced Service Provider”

a vendor, supplier and another service provider to us under service, outsourcing or other agreement.

“Platform”

a publicly accessible internet-based information system that is branded as ‘CrowdedHero’, available via the Website and operated or managed by CrowdedHero.

“Policy”

this Conflict of Interest Policy concerning the Services available on the Platform as may be amended from time to time.

“Project Owner”

a legal person who seeks funding through the Platform by way of the Offer and is directly responsible for the information to be included in the key investment information sheet.

“Project”

a business activity or activities for which the Project Owner seeks funding through the Platform.

“Related Person”

any of the following persons:

[a] the Shareholder and its shareholders holding 20%, or more, of share capital or voting rights;

[b] any natural person or legal person linked to the Board Members, Employees or to persons specified in point [a] above by control as defined in Point (35)(b) of Article 4(1) of the MiFID II.

“Services”

the matching of business funding interests of Investors and Project Owners through the use of the Platform by us providing the services that enable:

[a] Offers to raise funds;

[b] Investors to invest in the Offers;

[c] advertising interest in buying and selling shares/stocks of a Project Owner’s company that had a successful Offer on the Platform.

“Shareholder”

Crowdedhero OÜ, registration number: 14811328, registered address: Narva mnt 5, 10117 Tallinn, Estonia.

“Website”

the website branded as ‘CrowdedHero’ and referring to the domain https://www.crowdedhero.com/.

 

2    GENERAL INFORMATION

2.1      We, without taking on its own risk, operate and manage the Platform. At the date of the Policy the ECSPR is in force, and we are in licencing process, but have not yet regulated under crowdfunding service provider licence. The Services are provided in a professional, fair and transparent way, we apply the requirements of the ECSPR when rendering the Services and to our internal operations.

2.2      We are committed in line with our size and organization as well as the nature, scale, and complexity of the Services to ensure that there are no Conflicts of Interests when providing the Services to our Clients. We have established, implemented, and maintain necessary measures to prevent, identify and manage circumstances that constitute or may give rise to a Conflict of Interest during the provision of the Services to our Clients.

2.3      The Board and Employees are expected to act in accordance with the highest ethical standards when carrying out their duties at CrowdedHero.

2.4      We recommend to download or print a copy of this Policy and store it for your records and future reference. If you want a copy of this Policy, please e-mail to [email protected]  with the words ‘Conflicts of Interest Policy’ in the subject line of your e-mail message.

3    PURPOSE AND SCOPE

3.1      This Policy explains our overall approach in identifying, preventing, managing and disclosing the Conflicts of Interest that may arise during the provision of the Services.

3.2      This Policy shall apply to all our business areas and is directed mainly to:

3.2.1      the Board Members;

3.2.2      the Employees;

3.2.3      the Related Persons;

3.2.4      the Outsourced Service Providers; and

3.2.5      the entities belonging to the CrowdedHero’s Group.

3.3      This Policy does not replace our requirement to observe any applicable laws and regulations relating to Conflicts of Interest situations.

4    PERSONS BETWEEN WHO THE CONFLICTS OF INTEREST MAY ARISE

4.1      A Conflict of Interest may arise between (listed in no particular order):

4.1.1      the entities belonging to the CrowdedHero’s Group, including CrowdedHero;

4.1.2      us and our Shareholder;

4.1.3      us and our Shareholder’s shareholders;

4.1.4      us and one or several Board Members;

4.1.5      us and the one or several Employees;

4.1.6      us, our Board Members or Employees and the Related Persons;

4.1.7      us, our Board Members or Employees and one or more Clients;

4.1.8      two or more Clients in the context of the provision of the Services by us to those Clients;

4.1.9      us, our Board Members or Employees and the Outsourced Service Providers; or

4.1.10  a Related Person and a Client.

5    IDENTIFYING CONFLICTS OF INTEREST

5.1      Conflicts of Interest or the appearance of Conflicts of Interest may arise with respect to the provision of the Services. For the purposes of identifying the types of Conflicts of Interest that may arise in course of providing the Services, we, as a minimum, take into account whether we, our Board Members, Employees or Related Persons falls into any of the following situations, whether as a result of providing the Services or otherwise:

5.1.1      we, our Shareholder, Board Members or Employees is likely to make a financial gain, or avoid a financial loss, at the expense of the Client;

5.1.2      we, our Shareholder, Board Members, or Employees or Related Person has an interest in the outcome of the Service provided to the Client which is distinct from the Client's interest in that outcome;

5.1.3      we, our Shareholder, Board Members or Employees or Related Person has a financial or other incentives to favour the interest of another Client or group of Clients over the interests of the Client.

5.2      Additionally, when identifying Conflicts of Interest that might arise between us and our Board Members, Employees or Related Person or within CrowdedHero, we also consider whether:

5.2.1      the person’s individual interests in the outcome of a particular activity are directly contrary to the interests of CrowdedHero or a Client;

5.2.2      the person can influence our decisions in a manner that leads to a personal gain or an advantage for that person;

5.2.3      the person receives monetary or non-monetary benefit because of its position in CrowdedHero;

5.2.4      its engagement impairs or could impair his/her independence, judgment, objectivity or capability in carrying out its duties.

6    CONFLICTS OF INTEREST

6.1      We operate as a neutral intermediary between our Clients, therefore we do not accept the Board Members, Employees and Related persons or  any natural or legal persons closely linked to CrowdedHero by way of control as Project Owners. The Customer Support is responsible for monitoring the possible Conflict of Interest during the evaluation and onboarding process of Project Owner.

6.2      We have identified the main areas where a potential Conflict of Interest related to us while providing the Services to the Clients may arise (listed in no particular order):

6.2.1      competing projects – companies from the same industry sector or geography may wish to raise funds within the same timeframe, thus competing for the same Investors;

6.2.2      gifts – there is a risk that gifts or hospitality may be provided by a third party to us, our Board Members or Employees that may materially influence a decision that effects the Client. We have the Gifts and Hospitality Policy in place to manage this;

6.2.3      inducements – we, our Board Members and Employees are not allowed to receive or pay inducements (i.e., fees, commission fees, other monetary and non-monetary benefits) from/to third persons in the course of providing the Services, but in certain cases, we may give and receive financial and non-financial benefits to/from the third parties, when providing the Services (for example, to the Outsourced Service Providers who assist to us in promoting the Services or making introductions, either to Investors or to prospective Project Owners or when providing the Project Owners with support in their fundraising campaign of their Projects). We inform that inducements are not fees, payments or benefits, which are necessary for the provision of the Services or their ancillary services (for example, fees to the Outsourced Service Providers and other payments);

6.2.4      personal transactions – we accept our Board Members, Employees and Related Persons as Investors in the Projects published on the Platform. We shall fully disclose on the Platform the fact that said persons have been accepted as Investors in specific Offer, ensuring that such investments are made under the same conditions as those of other Investors and that those persons do not enjoy any preferential treatment or privileged access to information.;

6.2.5      remuneration – there is a risk that our Employees would want to take account of their own earnings from a potential transaction rather than the best interests of the Client. All Employees are aware of their obligations to act in the Client’s best interests regardless of personal benefit. Employees will be incentivised towards the success of our business through variable pay (bonuses). To avoid the doubts, all variable pay to the Employees are related to the fulfilment of the work.

6.3      It is important to note that the examples above are not exhaustive. Our Employees are reminded that they are required to identify and consider Conflicts of Interest, and the need to act independently of such Conflicts of Interest at all times. If in any doubt, Employees must consult with the Manager in charge of the respective business line.

7    MANAGING CONFLICTS OF INTEREST

7.1      The prevention and management of Conflicts of Interest are performed in view of the following core principles:

7.1.1      assessment of the risk damage to the interests of the Clients;

7.1.2      monitoring of the execution of the Personal Transactions;

7.1.3      keeping and maintaining the register of the Related Persons;

7.1.4      keeping and maintaining the register of the Personal Transactions;

7.1.5      monitoring and management of circumstances, which constitute or may give rise to a Conflict of Interest.

7.2      We have established an internal systems and controls framework to ensure identification, prevention, management, disclosing and recording of Conflicts of Interest. The following internal policies aim to efficiently handle Conflict of Interest situations within CrowdedHero (listed in no particular order):

7.2.1      Code of Conduct – setting out our core values and professional standards;

7.2.2      Complaints Policy – setting out how a Client can submit a complaint to us and how it will be handled by us;

7.2.3      Information Technology and Risk Management Policy – setting out the policy of information security and information technology management within CrowdedHero;

7.2.4      Project Onboarding and Evaluation Policy – setting out the policy according to which we conduct the onboarding and evaluation process of the Projects thus ensuring fair, clear and not misleading communication between the Clients;

7.2.5      Privacy Policy – setting out the policy according to which we collect, handle and process personal data;

7.2.6      Segregation of Duties Policy – setting out the principles according to which different functions of our operations are separated and defining authority and responsibility for our operations. The Segregation of Duties Policy establishes the four-eyes principle in relation to the supervision of our operations.

7.2.7  Whistleblowing Policy – setting out the guidelines and protections available to persons who suspect misconduct, illegal acts or failure to act within CrowdedHero.

7.3     As we grow and hire more employees, we will develop and implement additional policies to handle more efficiently potential conflicts of interests, as we see fil.

7.4     Each Employee, Board Member and Shareholder is obliged to report any incident that could create a risk of violation of this Policy and other regulatory enactments by sending an e-mail to the Chief Legal Officer at the e-mail address [email protected] (hereinafter - “Reporting”), describing the circumstances of the incident, involved persons, as well as attaching documents, pictures, records, etc., if any (hereinafter - the “Report”). Reporting is required in the following cases, but not limited to:

7.4.1   any situation of conflict of interest or the possibility that such a situation may arise;

7.4.2   for any fact of receipt of the Gift Offer or receipt of the Gift, for any intention to present a Gift;

7.4.3   an offer by a partner or competitor to engage in activities that are contrary to the provisions of this Policy;

7.4.4   for other circumstances that could cause doubts about the objectivity and neutrality and compliance with this policy of the person;

7.4.5   for the actions of the other Employees that may conflict with the provisions of this Policy.

7.5    Upon receipt of the Report, the Chief Legal Officer will inform the Board about receipt of the Report and investigate the information contained therein, if necessary, by contacting the sender of the Report or other parties involved and requesting additional information and will provide written instructions on how to proceed by sending them to the Employees e-mail. Each Employee are obliged to follow the instructions of the Chief Legal Officer as far as they are concerned.

7.6    If an Employee finds that there is a conflict of interest or there is a likelihood that such a situation may arise in the foreseeable future, the Employee must immediately send a Report on the circumstances of the conflict of interest to the Chief Legal Officer and follow the Chief Legal Officer's instructions. At the same time, an Employee shall refrain from taking any action, including, but not limited to, prohibiting any decision or otherwise from continuing to act until receiving written instructions from the Chief Legal Officer.

7.7   If the Chief Legal Officer identifies a Conflict of Interest, the Chief Legal Officer shall inform the Management Board, which shall decide on the action to be taken to terminate existing Conflict of Interest.

7.8   If an Employee, Board Member and Shareholder have not complied with the provisions of this Policy, he / she may incur disciplinary liability (for example, reduction of additional bonuses, reprimand or termination of employment), as well as civil and criminal liability stipulated in the legal enactments of Republic of Latvia, where applicable.

8    RECORD KEEPING

8.1      We maintain a record on all activities where a Conflict of Interest has arisen or may arise and on steps taken to mitigate and resolve the Conflict of Interest. The Legal Department is responsible for keeping register of Related Parties. In the register shall be included data owned by us, disclosed by the Board Members, Shareholders and Employees. The data in register shall be kept 1 (one) year after termination of employment, directorship or shareholding.

8.2      The Board Members, Employees and Investment Committee Members shall sign a disclosure form when taking up their positions and annually to disclose the names of any entity of which they are shareholders, members of the council, members of the Board, employees or persons related by control as defined in Point (35)(b) of Article 4(1) of the MiFID II.

8.3      The Board Members, Employees and Investment Committee Members are required to update the disclosure form whenever they acquire new affiliations or make changes to existing affiliations.

9    DISCLOSURE OF CONFLICTS OF INTEREST

9.1      To ensure that the Clients are able to make an informed decision about the Services and Offers published on the Platform, we disclose to Clients the details of any such arrangements which could be a potential Conflict of Interest.

9.2      We accept our Board Members, Employees and Related Persons as Investors in the Projects published on the Platform. We will inform our Clients about the Projects in which such investments will be made by fully disclosing it on the Platform in a place that is easily accessible and can be easily found by the Clients. The information will provide a specific and clear description of the Conflict of Interest and of the risks to the Clients that arise as a result of the Conflict of Interest.

9.3      We ensure that the investments by the Board Members, Employees and Related Persons are made under the same conditions as those of other Investors. The Board Members, Employees and Related Persons do not enjoy any preferential treatment or privileged access to information about the Offer and/or the Project.

10 ROLES AND RESPONSIBILITIES OF THE BOARD

10.1  The Board establishes and approves this Policy and implements this Policy by setting and overseeing an adequate and effective internal control system for Conflict of Interest management.

10.2  The Board is required to:

10.2.1  ensure regular risk assessment in the Conflict of Interest area;

10.2.2  develop and maintain effective Conflict of Interest management practices;

10.2.3  to identify actual or potential Conflicts of Interests that could adversely influence the daily activities of CrowdedHero as well performance of the Board duties and decisions taken;

10.2.4 to decide on the termination of the Conflict of Interest.

10.3  Each Board Member shall act independently and in the best interests of CrowdedHero and its Clients, without owing duties to any other group entity, business line or other person with potentially conflicting interests.

11 ROLES AND RESPONSIBILITIES OF THE MANAGERS

11.1  All Managers are responsible for overseeing the identification, documentation, escalation and management of all Conflicts of Interest as they arise within their relevant areas of responsibility at CrowdedHero.

11.2  Every Manager is required to:

11.2.1  ensure that his/her direct Employees have adequate knowledge of the Policy and that all activities within his/her department are carried out in accordance with this Policy. The Employees shall confirm the acquaintance with the Policy and its amendments with their signatures;

11.2.2  raise awareness of and promote the adherence of Employees to completing regular training;

11.2.3  promote the ethical culture which emphasises the importance of fair treatment of the Clients and efficient handling of Conflicts of Interest;

11.2.4  and act in a manner that sets a proper example for avoiding Conflicts of Interest as well as undertake full responsibility for a decision taken on acceptance and management of Conflict of Interest situation regarding the Employee under direct subordination;

11.2.5  adopt a holistic view to identifying Conflicts of Interest within CrowdedHero and to facilitate informed judgements with respect to materiality and the manner in which Conflicts of Interests are handled;

11.2.6  be engaged in the implementation of policies, procedures and arrangements for the identification, documentation, escalation, management and ongoing monitoring of Conflicts of Interest;

11.2.7  declare his/her own actual or potential Conflict of Interest ahead of any decisions made by them as a Manager individually or collectively to the Board, and abstain from decision-making where potential harm to CrowdedHero or its Clients cannot be avoided;

11.2.8  utilise management information to remain sufficiently up-to-date and informed in connection with the matters listed above.

12 ROLES AND RESPONSIBILITIES OF THE INVESTMENT COMMITTEE MEMBERS

12.1  A natural person nominated to be an Investment Committee Member shall assess the profile of the Project Owner and acknowledge that there is no Conflict of Interest between him/her and the Project Owner.

12.2  A natural person who has a Conflict of Interest with the potential Project Owner shall not be appointed as the Investment Committee Member and shall not be a participant of the onboarding and evaluation process of the respective Project.

12.3  Investment Committee Members who have knowledge of any Conflict of Interest that has not previously been disclosed shall notify the chairman of the Board and the Investment Committee, as the case may be, so that appropriate action can be taken.

12.4  Each Investment Committee Member shall act independently and in the best interests of CrowdedHero and its Clients, without owing duties to any other group entity, business line or other person with potentially conflicting interests.

13 ROLES AND RESPONSIBILITIES OF EMPLOYEES

13.1  An Employee is responsible for keeping in mind the Conflict of Interest situations described in this Policy, and for identifying and escalating potential Conflicts of Interest so that they may be prevented or appropriately managed and resolved.

13.2  Employees shall observe high ethical standards in performing their duties. To ensure compliance with this Policy and applicable regulations, every Employee is responsible for keeping in mind the Conflict of Interest situations described herein, and for identifying and escalating potential Conflicts of Interest so that they may be prevented or appropriately managed and resolved.

13.3  The failure to identify, escalate and appropriately manage actual or potential Conflicts of Interest and to comply with this Policy and with relevant regulations may expose CrowdedHero and its Employees to fines, penalties, judgments, damages, and settlements related to regulatory or legal actions and may result in damage to CrowdedHero’s reputation and a general loss of trust in CrowdedHero.

13.4  CrowdedHero ensures that all Employees involved in the provision of the Services have the necessary knowledge to it.

13.5  CrowdedHero prevents the exchange of information about the Services provided to the Clients between Employees and Related Persons if such information may harm the interests of one or more Clients.

13.6  Employees are prohibited from providing investment advice, personal recommendation or consulting service, including legal or tax advice, in any manner or form to an Investor and may not enter into or recommend any transaction of investing in a Project.

13.7  Each Employee has an individual responsibility for ensuring compliance with the Policy and other internal rules and principles governing the management of Conflicts of Interest in CrowdedHero and are required to:

13.7.1  comply with this Policy and other applicable policies and procedures relating to the identification, documentation, escalation and management of Conflicts of Interest;

13.7.2  uphold a high standard of ethical behaviour in performing his/her duties;

13.7.3  observe Client’s interests and have a non-discriminatory attitude towards Clients;

13.7.4  not interfere with another department’s decision-making;

13.7.5  when starting the employment relationship and during employment to disclose data about Related Party;

13.7.6  immediately disclose the information to CrowdedHero if she/he or its Related Party has invested in the Project;

13.7.7 act honestly, fairly and professionally in providing the Services and handling Client matters, including also acting independently and objectively when the circumstances so require. Independence and objectivity mean that in providing the Services to the Clients, the Employees act independently of any interest which may conflict with the duties owed to different Clients or between CrowdedHero and the Clients;

13.7.8  not put themselves in situations giving rise to Conflicts of Interest or the perception of a Conflict of Interest wherever possible and not allow their personal interest or previous, current or potential future involvement in an activity or endeavour, or their role and responsibilities at the Company, to compromise or otherwise call into question their judgement, ability to act objectively or properly discharge their duties and responsibilities owed to CrowdedHero and/or its Clients, or otherwise give rise to the risk of reputational damage to CrowdedHero, including the risk of the appearance of impropriety around the manner in which business is awarded to or by CrowdedHero or of CrowdedHero having obtained an improper advantage or treatment;

13.7.9  avoid Conflict of Interest situations related to personal financial interests of the Employee or his/her Related Persons stemming from previous, current or potential future involvement in activities in CrowdedHero or externally;

13.7.10  manage work-related information on a need-to-know basis, respecting information barriers and duties of confidentiality at all times;

13.7.11  not misuse information obtained in the course of working at CrowdedHero including in connection with dealing with the Project Owners, Projects and their Offers;

13.7.12    immediately inform his/her direct Manager and/or the Chief Legal Officer of the existence and general nature of Conflict of Interest;

13.7.13    upon joining CrowdedHero and on a periodic basis at least once per year and when the essential amendments to the Policy is approved thereafter, complete all training and attestations required by the Chief Legal Officer.

13.8   It is forbidden to the Employees and its Related Parties to be the Project Owners.

14 REVISION AND MONITORING OF THIS POLICY

14.1  We reserve the right, at our sole discretion, to modify, amend, supplement or replace this Policy at any time. We will review and revise this Policy when there are any material circumstances arisen that may affect our ability to apply this Policy pursuant to the provisions of statutory and law requirements. What constitutes a material change will be determined at our sole discretion.

14.2  The Legal department is responsible for reviewing and refining this Policy and Policy related processes on a regular basis, but at least once a year and to report to the Bord on necessary improvements in the Policy or practices.

14.3  The Legal department is responsible for training and attesting the Employees at least once per year.  

14.4  The Policy's approval and implementation is the responsibility of the Board.

14.5  We will inform our Clients on all amendments to this Policy by publishing the updated version of this Policy on our Platform.

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