CONFLICT OF INTEREST PREVENTION AND MANAGEMENT POLICY
1. GENERAL PROVISIONS
1.1. This Conflicts of Interests Prevention and Management Policy (”Policy“) of UAB HEAVY FINANCE (“Company“) establishes measures to identify and prevent conflicts of interest that may arise in the activities of the Company, as a crowdfunding service provider, and that may adversely affect the interests of Company’s clients. This Policy also sets out the measures that Company takes to appropriately manage conflicts of interest that arise in Company’s business.
1.2. The Policy has been developed taking into account the nature, scale and complexity of the crowdfunding services provided by the Company, as well as the size and operational / business organisation of the Company.
1.3. This Policy is intended to reasonably ensure that, in relation to the Company’s Clients, damage to their interests is avoided or, if this is not possible, adequately managed and minimised.
1.4. The Policy has been drawn up in accordance with 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 (“Regulation”) and other applicable laws and regulations which are governing activities of the Company.
2. DEFINITIONS
2.1. Capitalised terms used in this Policy shall have the meanings set out below, unless the context requires otherwise:
2.1.1. Client – Project owner of Investor;
2.1.2. Company – UAB HEAVY FINANCE, legal entity code 305576227, registered office address Birutės g. 18-1, Vilnius, Republic of Lithuania;
2.1.3. Controlling relationship – a situation where two or more natural or legal persons are linked by control, i.e. linked by a relationship between the parent undertaking and the parent undertaking in all the cases referred to in Article 22(1) and 22(2) of Directive 2013/34/EU, or where any natural or legal persons and the undertaking are linked by a similar relationship; all subsidiaries of subsidiaries of subsidiaries of the undertakings in question shall be deemed to also be the subsidiaries of the subsidiary of the parent undertaking which is at the top of the hierarchy of such undertakings;
2.1.4. Investor – a natural or legal person who, through the Platform, provides financing (in the form of loans) to Projects published on the Platform (Project Owners);
2.1.5. Platform – a publicly accessible online information system (https://heavyfinance.com/), administered and managed by the Company;
2.1.6. Policy – this document;
2.1.7. Project – one or more business activities for which the Project Owner seeks funding through a crowdfunding proposal;
2.1.8. Project owner – a legal entity or a natural person (entrepreneur) seeking funding through the Platform;
2.1.9. Regulation – 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;
2.1.10. Related parties – the following persons are considered to be related parties:
2.1.10.1. any shareholder of the Company holding 20 % or more of the share capital or voting rights of the Company;
2.1.10.2. directors or employees of the Company;
2.1.10.3. any other natural or legal persons related to the persons, referred to in 2.1.10.1 – 2.1.10.2 of this Policy, by a Controlling relationship
2.2. Other definitions used in this Policy shall be construed as defined in the Regulations or other documents of the Company unless the context requires otherwise.
3. AVOIDANCE OF CONFLICTS OF INTERESTS
3.1. The Company shall, as a minimum, implement the following measures to avoid conflicts of interests:
3.1.1. not participate in crowdfunding offers (Projects) published on the Platform administered by the Company;
3.1.2. not publish on the Platform administered by the Company Projects owned by any of the Related Parties;
3.1.3. determine whether any of the Related Parties previously was an Investor in the Project announced on the Platform;
3.1.4. require Related Parties to declare and periodically update information on persons with whom they have a Controlling Relationship;
3.1.5. require all Related Parties, in the exercise of their functions in the operation of the Company, to monitor at all times whether their activities and (or) decisions give rise to any conflict of interest;
3.1.6. require the Related Parties to immediately inform the Company’s manager in the event that they become aware of a potential risk of a conflict of interest and to indicate the cause and nature of the potential conflict of interest;
3.1.7. require Related Parties to act objectively and impartially with respect to the relevant entities in all actions they take in relation to Clients;
3.1.8. oblige the Related Parties to observe the requirements of confidentiality, to act in a fair and professional manner towards the Clients, and to endeavour to take into account the interests of the Clients at all times, irrespective of the interests of the other Clients, of its other business activities, of the Related Parties or of the Company
3.1.9. ensure that the system of remuneration applied to Related Parties does not allow Related Parties to benefit financially from situations which give rise to, or are likely to give rise to, conflicts of interest and prejudice the interests of Clients;
3.1.10. prohibit the Related Parties from publishing, exchanging information about the Clients known to them, which may adversely affect the interests of the Client, as well as publishing, exchanging information that is not publicly available and any other information relating to the Client that is not necessary for the performance of the Related Parties’ direct functions;
3.1.11. ensure that all Investors are granted the same terms and conditions for the financing of Projects published on the Platform, except where differentiated interest rates are set according to the amount of the Investor`s investment in the Project;
3.1.12. ensure that all Clients have access to the same information about the Projects published on the Platform and their owners, and that Related Parties are prevented from obtaining additional sensitive information for their own benefit or for the benefit of third parties;
3.1.13. Company’s manager shall continuously monitor and ensure that the Company’s employees have access only to information that is necessary for the performance of their direct functions;
3.1.14. ensure that the organisational structure of the Company does not allow any of the Related Parties to exert any influence on the other Related Parties which could give rise to a conflict of interest;
3.1.15. identify any other circumstances which may give rise to an actual or potential conflict of interest between the Company, the Related Parties and the Clients, or between one Client and another Client.
3.2. Upon receipt of a notification under paragraph 3.1.6 of this Policy, the Company’s manager shall promptly consider the validity of the notification and, upon determining that a conflict of interest has actually arisen or that there is a real risk of a conflict of interest arising, shall take a decision setting out any measures he considers necessary to avoid or manage the conflict of interest (e.g. removing the employee from the performance of his/her functions; delegating the employee’s functions to another employee on a temporary basis, etc). If a conflict of interest cannot be completely avoided, the Company’s manager must take all measures to manage the conflict in question, to the maximum extent possible, in order to act objectively and fairly in the interests of the Client.
3.3. In the event that the Company allows Related Parties to be Investors in Projects published on the Platform, the Company shall take the following measures:
3.3.1. fully discloses such fact on the Platform it administers, including information about the specific Projects in which the relevant Related Parties have invested;
3.3.2. ensures that the investments of the relevant Related Parties are concluded on the same terms and conditions as those applicable to other Investors;
3.3.3. ensures that no preferential treatment or privileged access to information on specific Projects published on the Platform is granted to the relevant Related Parties.
4. IDENTIFICATION AND MANAGEMENT OF CONFLICTS OF INTERESTS
4.1. In order to identify and manage conflicts of interest between the Company, Related Parties and Clients, or between one Client and another Client, the Company shall assess whether the relevant persons:
4.1.1. may obtain financial gain or avoid financial loss at the expense of the Client;
4.1.2. has an interest in the outcome of the service provided to the Client which is different from the interest of the Client concerned in that outcome;
4.1.3. has a financial or other incentive to put the interests of the Client or a group of Clients ahead of the interests of another Client.
4.2. Conflicts of interests may potentially arise in the following key areas of Company’s activities:
4.1.4. give priority to Projects and Project Owners related to the Company or Related Parties;
4.1.5. Clients may be treated differently from other Clients on the basis of their direct or indirect relationship with the Company or Related Parties;
4.1.6. Related Parties may enter into crowdfunding transactions on the Platform for their own personal account using information known to them;
4.1.7. certain Clients are given the opportunity to announce and (or) finance Projects on more favourable terms than other Clients.
4.2. If the Company determines that a conflict of interest is unavoidable and may adversely affect the Client’s interests, the Client must be informed of the conflict of interest, specifying the nature and source of the relevant conflict of interest and the means of appropriately managing the conflict.
4.3. In cases where the Project Owner is related to the Company by property or other relationships (with Company’s executives, shareholders, employees, etc.), Company shall apply at least the following conflict of interest management measures:
4.3.1. Investors are informed of the relationship between the Project Owner and the Company in the Project description on the Platform;
4.3.2. the Project Owner’s Project shall be evaluated in accordance with the Company’s internal procedures by employees of the Company who have no relationship with the relevant Project Owner;
4.3.3. contracts with the Project Owner are signed, executed, monitored, terminated and referred for recovery by employees of the Company who have no relationship with the relevant Project owner;
4.3.4. the measures taken to manage the conflict of interest are documented;
4.3.5. if it is not possible to manage the potential conflict of interest and there is a risk that the interests of the Investors may be adversely affected, the Company shall refuse to enter into, or continue, a business relationship with the relevant Project owner.
4.4. In order to properly manage conflicts of interest, the Company shall also ensure that:
4.4.1. Related Parties shall not adversely affect the Company, other Related Parties, or Clients for their own personal gain;
4.4.2. Related Parties should not be involved in specific decisions regarding the Client if such involvement would be detrimental to the effective management of the conflict of interest;
4.4.3. where a Related Parties seeks to finance a Project published on the Platform, it shall ensure that the relevant person concerned is granted the same terms and conditions as other Investors.
5. MONITORING OF MEASURES TAKEN TO AVOID, IDENTIFY AND MANAGE CONFLICTS OF INTEREST
5.1. The Company’s manager or a responsible person appointed by the Company’s manager shall continuously monitor whether the Company’s measures for the avoidance, identification and management of conflicts of interests are sufficiently effective to ensure and protect the interests of Clients.
5.2. The Company’s manager or a responsible person appointed by the Company’s manager shall periodically, but not less than once a year, review the provisions of this Policy and assess whether the measures set out in the Policy for the avoidance, identification and management of conflicts of interests are appropriate and ensure the interests of the Company’s Clients.
5.3. The Company’s manager or a responsible person designated by the Company’s manager shall inform the Company’s employees and shareholders of the Company’s conflict of interest management procedures and measures in place.
5.4. The Company’s manager or a responsible person appointed by the Company’s Manager shall also advise the Related parties whether a potential or actual conflict of interest exists in a particular situation and shall assist in avoiding the conflict of interest in question, or, if it is not possible to avoid the conflict of interest in question, shall take measures to manage the conflict.
6. DISCLOSURE OF CONFLICTS OF INTERESTS
6.1. The Company shall publish on the website of the Platform it administers information for Clients on the general nature and causes of conflicts of interests, as well as the steps taken to mitigate them.
6.2. The Company shall ensure that any information provided to Clients in relation to conflicts of interest is sufficiently detailed to enable each Client to make an informed decision regarding the use of the Company’s crowdfunding services where a conflict of interest may arise.
7. FINAL PROVISIONS
7.1. This Policy shall be approved and (or) amended by order of the Company’s manager. Amendments to the Policy shall come into force on the date of the Company’s manager order, unless otherwise specified in the relevant order.
7.2. This Policy is published on the website of the Platform administered by the Company.
7.3. All employees and shareholders of the Company must be acquainted with this Policy by signature.