General About the Service Provider
This notice summarises the information regarding Springvest Oy (”Springvest”) required under the Finnish Act on Investment Services and the authority regulation issued based on same, the investment services provided by it and the nature of the financial instruments related to the services provided by it, along with the risks most typically pertaining to same. More detailed information regarding the services and the product-specific risks as well as the contract terms applicable to same are provided in conjunction with providing the investment service.
2. Information regarding springvest oy and its supervisor
Springvest is a Finnish investment services company to which the Finnish Financial Supervisory Authority has granted a license as stipulated under Chapter 1, Section 11 of the Finnish Act on Investment Services for:
- intermediating orders as referred to under item 1;
- provision of investment advice concerning financial instruments as referred to under item 5; and
- emission arrangement as referred to under item 7
- as well as for the following ancillary services referred to under Chapter 2, Section 3, Subsection 1:
- rendering advice referred to under item 2 in relation to the capital structures and business strategy of companies and other related questions, along with corporate mergers, corporate acquisitions and other corporate arrangements;
- services pertaining to the arranging of the emissions as referred to under item 5; and
- other services than the custody of financial instruments referred to under Chapter 1, Section 11, Sub-Section 9, as referred to under item 7
Springvest Oy has been entered in the Trade Register maintained by the Finnish Board of Patents and Registration under the Business ID of 2492165-6. The company’s domicile is Helsinki. The company’s headquarters are located at Aleksanterinkatu 48 B, 00100 Helsinki, Finland.
The authority supervising Springvest’s activities under the Finnish Act on Investment Services is the Finnish Financial Supervisory Authority, Snellmaninkatu 6, P.O. Box 103, 00101 Helsinki, Finland, telephone +35810 831 51 (switchboard), fax 010 831 5328. Further information: www.finanssivalvonta.fi.
3. Information regarding the investment and ancillary services being provided
Springvest acts as a subscription venue for financial instruments in the target company emissions arranged by it, which entails that it receives the clients’ subscription orders and intermediates same to the target company.
Investment advice is deemed to include proposals to be made to the client to subscribe for the shares of target companies available from time to time (non-independent investment advice) as well as recommendations made to the client to acquire equity or interest investments or mutual fund units (independent investment advice). The client may subscribe for the target company shares either via the online service or by signing a client agreement containing the subscription order. In order to obtain independent investment advice, the client concludes an investment advice and order intermediation agreement. The suitability of the investment advice for the client is evaluated based on the information provided by the client and the client agreement serves as the documentation of the investment advice.
Springvest arranges emissions, which refers to the carrying out of the target company’s financing round in accordance with the emission agreement concluded with each target company.
Ancillary services include advice concerning capital structures, business strategy and other related issues, advice concerning corporate mergers, corporate acquisitions and other corporate arrangements and services related to same, along with services pertaining to the arranging emissions. The investment services to be provided are also associated with money transfers passing through Springvest’s client funds account, considered to comprise the custody of financial instruments as an ancillary service. Ancillary services are part of the investment services being provided and are not provided separately.
4. Methods for dealings
Springvest’s clientship may arise either via the online services or on the basis of a personal meeting. Following the creation of a clientship, the client may carry on dealings with Springvest and its tied agents via the online service, by mail, by email, over the telephone or through personally meeting with their representatives.
Springvest shall have the right to send written information pertaining to the investment service to the client electronically, by mail or in another manner separately agreed upon with the client.
Any reports concerning the service as well as the intervals and timing of providing the reports are apparent from the terms and conditions concerning the service or from the agreement, if any. Using email as a means of communication is associated with various risks, inter alia, because the message may not arrive and in relation to information security. Springvest shall be entitled to rely upon the integrity and correctness of any message it has received by email.
5. Expenses and fees pertaining to investment and ancillary services
The fees chargeable for the investment and ancillary services, along with any other expenses are indicated in the client agreement pertaining to each service.
6. Use of tied agents
In the provision and marketing of investment services, Springvest uses tied agents acting on behalf of and under the responsibility of Springvest. A public register is maintained of Springvest’s tied agents, available at Financial Supervisory Authority’s web site.
An incentive refers to payments or other benefits to be provided to or received from a third party in connection with providing investment or ancillary services. In its operations, Springvest utilises tied agents acting under its responsibility. Tied agents’ receive payments based on the agreements concluded with them that are tied to the success of the financing rounds. Tied agents also receive other remuneration from the target companies, payable in the form of share options of the target company on the basis of the success of the financing rounds. The remuneration to be paid does not increase the costs incurred by the client from the service.
8. Client classification
Pursuant to the Finnish Act on Investment Services, an investment services company must inform the client of their classification as a non-professional client, professional client or acceptable counterparty. The classification occurs directly on the basis of the law and the Finnish Act on Investment Firms contains detailed provisions of the factors impacting the classification. The Client’s classification has an effect upon the scope of investor protection and the applicable procedural rules.
As a point of departure, at the beginning of the client relationship Springvest classifies all of its clients as non-professional clients. The client shall be informed of the client classification in writing. The Client shall have the right to seek a modification to its client classification by means of a written application. A modification of the classification may have an effect upon the scope of investor protection and the application of the procedural rules.
Impacts of classification upon investor protection
Only non-professional clients are covered by the protection of the Investors’ Compensation Fund. The fund compensates for the losses incurred by the investor in circumstances where a member of the fund has not paid the unequivocal and undisputed receivables falling within the scope of investor protection in accordance with the agreement.
The amount of the compensation payable out of the Investors’ Compensation Fund to one investor amounts to 9/10 of the amount of its receivable from one investment services company, however, no more than EUR 20 000. The fund does not provide compensation for losses incurred from incorrect investment decisions, which entails that the Client continues to be responsible for the consequences of its own investment decisions.
Non-professional clients shall have the right to have a disagreement between themselves and an investment services company resolved by an independent body issuing resolution recommendations. The Investment Complaints Board functions as such a body. The Investment Complaints Board does not process statement requests from professional clients.
Effect of classification on the applicable procedural requirements
Non-professional clients must be providedwith the terms and conditions of the Agreement prior to concluding the Agreement, along with sufficient information regarding Springvest and the service to be provided. Also any material changes to the information provided must be notified. The information must be provided in a permanent manner so that it is capable of being printed out or saved. Information regarding Springvest and the services provided by same, as well as any material changes occurring in same, is available on Springvest’s website at www.springvest.fi.
In providing order intermediation and investment advice to a non-professional client, Springvest requests from the Client details of their investment experience and expertise regarding the Financial Instrument or Investment Service, as well as their financial standing and investment objectives in order to be able to assess, whether or not the Financial Instrument or Investment Service is appropriate and suitable for the Client in question. Springvest shall be entitled to rely upon the information provided by the Client.
Should Springvest deem a Financial Instrument or Investment Service not appropriate or suitable for the Client, or if the Client has failed to provide the information required for assessing appropriateness and/or suitability, Springvest shall inform the Client of same and shall be unable to recommend the Financial Instrument or Service in question to the Client.
A professional client falls only partially under the scope of application of the aforementioned procedural rules, and, therefore, no assessment of the appropriateness of a financial instrument is conducted in relation to a professional client.
A professional client must be provided with a general description of the nature of the financial instruments that the service relates to and of the typical risks pertaining thereto, if this is necessary taking into account the investment experience of the Client in question.
By means of a written application, an acceptable counterparty may request Springvest to extend the procedural rules intended for the protection of the investor to be applicable to business transactions conducted with it either generally or in relation to a single transaction. Springvest shall consider on a case-by-case basis whether or not to agree to the presented request. In all other cases, the procedural rules and provisions governing investor protection shall not be applicable to acceptable counterparties.
9. Principles followed in the management of orders
Springvest acts as the subscription venue for Financial Instruments in the Target Company emissions arranged by it and intermediates the Client’s subscription undertaking to the target company. Springvest receives subscription undertakings electronically via the online service, as an email attachment or from the client in person. The subscriptions are recorded in the order they are received in the database created for each financing round. The time of arrival of a subscription order shall be deemed to be the time of arrival as concerns a subscription order sent electronically, and in relation to a subscription order submitted in a personal meeting, the time of submission of same.
Subscription undertakings are intermediated to the target company in the order they arrive. Carrying out a subscription order is subject to the client paying the subscription price in accordance with the payment instructions issued.
In addition to the non-fulfilment of the implementation prerequisites set forth in the terms of the issue, Springvest shall have the right to cancel the client’s subscription order in case the subscription has been made on behalf of a legal person without the appropriate authorisation, the investment is based on its magnitude or otherwise is not suitable for the client or the client refuses to provide the information required to assess appropriateness.
In case the issue is not carried out or the client’s subscription order is not accepted, any subscription fee paid shall be promptly reimbursed to the bank account designated by the client in connection with the subscription, without any interest.
10. Retention of client funds
In emissions arranged by Springvest, clients pay the subscription fee to Springvest Oy’s client funds account in a deposit bank operating in Finland. For each emission, a specified client funds account is indicated in the investment agreement pertaining to the issue, from which Springvest shall transfer the subscription fees paid by the clients to the target company upon the closing of the round.
Funds in the client funds account have been segregated from Springvest’s own funds and they fall under the scope of protection of the Investors’ Compensation Fund as set forth above. Springvest’s auditor shall issue and deliver at least once a year a statement to the Finnish Financial Supervisory Authority of whether the arrangements concerning the retention of the assets of Springvest’s investors and target companies correspond to the requirements set forth on the basis of the stipulations under Chapter 9, Sections 1 through 4, and Section 5 of the Finnish Act on Investment Services.
No interest shall be payable in relation to the funds in the client funds account.
11. Managing conflicts of interest
Conflicts of interest may arise in connection with the provision of investment services between the investor or the target company and Springvest (including persons working for Springvest), between the investor and target company or between two or more investors or the target company. Springvest’s Board of Directors has approved the procedural principles concerning the management of conflicts for the company, which the company follows in order to identify and prevent potential conflicts of interest. Conflicts of interest are managed, inter alia, with the continuous training of tied agents, internal rules concerning the personal business transactions and secondary occupations of the personnel and management, as well as with the aid of other internal principles governing the operations.
In case a conflict of interest is unavoidable, the investor must be provided with adequate information of the nature of the conflict of interest and the reasons for same in a permanent manner prior to carrying out the business transaction.
Springvest’s Board of Directors shall ensure that the procedural principles governing the identification, prevention and management of conflicts of interest are updated so that they correspond to the requirements of the regulation in force from time to time. Springvest’s Board of Directors and operative management shall ensure that the approved principles are complied with.
12. Information about financial instruments and risks pertaining thereto
This section provides a general description of the nature of the financial instrument classes pertaining to Springvest’s investment services and of the risks typically associated with same. The below description is not exhaustive and does not include all of the risks potentially related to the financial instruments in question. Indeed, prior to making their investment decision, the client should carefully familiarise themselves with the terms and conditions and characteristics pertaining to the financial instrument, and with the obligations entailed by same in order for the client to be able to comprehend the risks associated with the financial instruments and the potential effects of the investment decision upon the client’s financial standing, including the tax effects.
Investment activities are also associated with financial risk. The sought return may not be obtained and the invested capital may be partially or fully lost. The client shall always be itself responsible for the financial effects of its own investment decisions. The past performance of financial instruments is no guarantee of future profits. Investing in Springvest’s target company in its growth stage contains considerable risks, the materialisation of which may cause the client to lose all or part of their invested capital. The price formation of financial instruments may not be reliable, and Clients may not be able to sell financial instruments at the desired time or at all. Consequently, no functioning market is created for the financial instruments. In its capacity as an unlisted company, the target company is also not under a similar disclosure obligation stipulated for under the law or the rules of the stock exchange towards its shareholders as listed companies. Furthermore, the financial instruments may lack any voting rights and the administrative rights of the owner of a financial instrument are very limited.
Development stage of the target company
Target companies are typically growth companies in their start-up phase. According to general consensus, an average of 1/10 of investments made into growth companies generate a good or excellent return, 4/10 generate a moderate return and 5/10 fail at least in part. The target companies may not yet have any significant amount of turnover or operating profit, but, rather, their value is largely based upon future expectations that may not materialise. Owing to the lack of any established operations of the target companies, the subscription of the target company shares is associated with risks that are considerably higher than investments made into more developed companies.
Price formation and liquidity of target company shares
The price of unlisted companies, such as the target companies, may not be reliable and subscribers may not be able to sell their shares at the desired time or at all. Therefore, no functioning aftermarket is formed for the shares.
Rights of owners of target company shares
The administrative rights of the owner of target company shares are very limited. The shares lack any voting rights and they may not confer the right to demand minority dividends. Owners of shares shall, nevertheless, have the right to participate in the Annual General Meeting of Shareholders and to obtain copies of the minutes of meeting of Annual General Meetings of Shareholders upon request.
Transference of the shares is associated with considerable restrictions that may render transferring the shares more difficult or preclude it altogether. The Articles of Association of the target company typically contain a redemption clause providing that certain shareholders and/or target companies are entitled to redeem a share transferring to a new owner from a party other than the target company. Furthermore, the Articles of Association of the target company additionally often contain a consent clause stipulating that acquiring a share through a share transfer is subject to the target company’s consent. Usually the Board of Directors of the target company resolves upon the granting of such consent. In case all or a significant portion of the shares of the target company or of the shares are sold, the subscriber authorises by means of signing the subscription undertaking the representative to sell on their behalf all of the shares of the target company owned by them in the same transaction, at the same terms as all other owners of shares in the target company. By signing the subscription undertaking, the subscriber typically agrees not to require share certificates relating to the shares.
During its operation, the target company has typically not paid dividends to any significant extent and there are no guarantees of it paying any dividends in the future in relation to the shares issued by the target company. The payment of dividend and the amount of same is contingent upon the discretion of the target company’s Board of Directors and, ultimately, upon the resolution of the target company’s Annual General Meeting and its cash flows, the selected business strategy, the estimated financing needs, result of the target company, its financial standing and the terms and conditions of any loan agreements binding upon the target company or its subsidiaries, as well as other factors impacting the matter.
Future share issues
Going forward, the target company may require additional equity financing through new share issues or other equity-based forms of financing. For such purposes, share issues may be arranged in compliance with the shareholder’s right of first refusal, or in the form of private placements in deviation from the right of first refusal. Private placements and rights issues in which the shareholder does not participate at all or only partially shall dilute the shareholder’s proportional ownership right in the target company.
Irrevocability of subscription
In case the prerequisites for carrying out the share issue are met, the share subscription shall be binding and cannot be retracted or amended once the subscription has been made and paid for. Therefore, subscribers are compelled to make their investment decision at a time when the final outcome of the share issue is not yet known.
The client shall always be themselves responsible for the tax consequences related to their investment activities, for which reason the client must carefully familiarise themselves with the taxation related to the financial instrument prior to making their investment decision. Taxation is based upon the individual circumstances of the client and taxation may change during the investment period. Further information regarding taxation may be obtained, inter alia, from the tax office and from the Finnish Tax Administration’s website www.vero.fi.
14. Client support, processing of client complaints and legal remedies
In questions pertaining to the service, the client must always primarily contact their own contact person at Springvest. The client shall promptly notify Springvest in the manner mentioned above of any error related to the service and of their potential claim pertaining to same.
Springvest has in place operational principles approved by the company’s Board of Directors concerning the processing of client complaints, in accordance with which all client complaints received by Springvest are processed and responded to.
In case an amicable solution cannot be achieved between Springvest and the client, the client may request assistance from the Finnish Financial Ombudsman Bureau to clarify the situation and, if necessary, to refer the disagreement to be resolved by the Investment Complaints Board. The telephone number of the Finnish Financial Ombudsman Bureau is +3589 685 0120 and website www.fine.fi. The Investment Complaints Board may issue a recommendatory ruling in a dispute between a client and a company providing investment services. The dispute may relate, for instance, to the application of law, authority regulations, good securities market practice or contractual terms, or the course of action of the service provider. The service is free of charge and in use for all non-professional clients in a client relationship with an investment services company.
A non-professional client may also refer the matter for resolution by the Consumer Disputes Board. The Consumer Disputes Board is an impartial and independent expert body, whose members represent consumers and businesses in an equal proportion. It issues resolution recommendations for consumer and housing transaction disputes. The complaint must be lodged in writing, preferably using the board’s form. The complaints form along with instructions and advice can be obtained from the website of the Consumer Complaints Board at www.kuluttajariita.fi.
Agreements between Springvest and the client as well as the provision of investment services shall be governed by the laws of Finland. Disputes between the parties shall be resolved at the Helsinki district court, unless a non-professional client to be considered a consumer requires the matter to be processed in the general court of law of the judicial circle of their place of residence.
Investors’ Compensation Fund
Only non-professional clients fall under the scope of the Investors’ Compensation Fund protection. The fund will compensate for any losses incurred by the Client in case Springvest has not paid the Client’s unequivocal and undisputed receivables falling under the scope of the protection in accordance with the Agreement. The amount of compensation payable out of the Investors’ Compensation Fund to one investor amounts to 9/10 of the amount of its receivable from one investment services company, however, no more than EUR 20 000. The fund does not provide compensation for losses incurred from incorrect investment decisions, which entails that the Client continues to be responsible for the consequences of its own investment decisions.
Funds in the client funds account have been segregated from Springvest’s own assets and they fall under the scope of the Investors’ Compensation Fund protection as mentioned above.