In accordance with the criteria defined by the applicable regulation, namely the provisions of Articles 30 and 317 to 317-D of the Portuguese Securities Code, applicable by reference to Article 141 of the RGA, the Management Entity will classify its clients into two categories: Retail and Professional.
Each of these categories is assigned different levels of protection and information, with Retail clients benefiting from the highest level of protection.
This categorization, as well as the category in which the client shall be included, will be communicated to the client, together with the right to opt for a different classification and the respective implications.
Clients whom the Management Entity considers do not meet the criteria defined for the other categories, as their level of knowledge and experience justifies a higher level of protection when assessing the risks inherent to investment operations.
By default, the Management Entity will classify all individual clients in this category – Retail.
(i) Entities providing investment services or carrying out investment activities and large companies whose size, according to their latest individual accounts, meets two of the following criteria:
– Net equity of €2 million;
– Total assets of €20 million;
– Net turnover of €40 million.
(ii) Clients who have requested classification as Professional Investors (as described below).
(iii) Credit Institutions, Investment Firms, Insurance Companies, Pension Funds and their Management Companies, other authorized Financial Institutions, National Governments and their corresponding services, including Public Bodies, Central Banks, and Supranational Organizations, as well as others legally classified as such.
The Client may, at any time, request a change to the classification assigned by the Management Entity, under the terms described below.
Treating a Professional Investor as a Retail Investor depends on a written agreement to be entered into between the Management Entity and the client who has requested it.
If such agreement does not expressly specify the services, financial instruments, and operations to which it applies, it shall be presumed to apply to all contracted services, financial instruments, and operations.
The Client may, at any time, terminate said agreement by means of a written declaration sent to the Management Entity.
Whenever a Retail Investor requests to be treated as a Professional Investor, the Management Entity shall conduct a prior assessment of the Client’s knowledge and experience, through which it will seek to ensure that the Client is capable of making their own investment decisions and understands the risks associated with venture capital investments.
It is a prerequisite for conducting the above assessment that, in relation to the Client, at least two of the following requirements are met:
(i) Has carried out transactions of significant volume in the relevant market, with an average frequency of ten transactions per quarter during the last four quarters;
(ii) Holds a portfolio of financial instruments, including cash deposits, exceeding €500,000.00;
(iii) Has performed functions in the financial sector, for at least two years, in a position requiring knowledge of the relevant services or operations.
If the request is made by a legal entity, both the above assessment and the fulfillment of requirement (iii) must be carried out in relation to the natural person responsible for the investment activities.
The Client must submit the request to the Management Entity in writing, specifying precisely the fund subscription operations for which they wish to be treated as a Professional Investor.
If the request is granted, the Management Entity will inform the client in writing of such decision, warning them of the consequences of the re-categorization and clarifying that it will entail a reduction in the legal protection afforded to them.
The Client must then send the Management Entity a separate written document expressly declaring that they are aware of the consequences of their choice. The Management Entity may only treat a Retail Investor as a Professional Investor after all the above procedures have been completed.
It is the responsibility of the investor who has requested treatment as a Professional Investor to keep the Management Entity informed of any changes likely to affect the assumptions that led to their qualification.
If the Company becomes aware of any fact that implies non-compliance with the requirements for the client’s treatment as a Professional Investor, the Management Entity shall inform the client that, unless they prove compliance with the requirements within fifteen (15) days, they will be treated as a Retail Investor.
Without prejudice to stricter legal and regulatory requirements, the Management Entity shall keep on file, for a minimum period of five years, all documents relevant to the investor’s qualification.
At the beginning of a contractual relationship, it is necessary for the Management Entity to comply with a set of duties mainly related to the information to be collected from the client.
The applicable regulation on this matter expressly provides for the differentiation of clients (here understood as Investors) based on their level of knowledge and experience.
The Management Entity intends to be guided by the following principle: “The better you know the client, the lower the risk that they will carry out an operation based on incorrect assumptions.”
Thus, it is important to fulfill the duty of determining the client’s complete profile.
The Management Entity will obtain, through a questionnaire completed by the client, the information allowing it to assess the client’s level of knowledge and experience, both in general terms and specifically in relation to investment in financial instruments. In the case of a legal entity, the suitability assessment is carried out in respect of its representative, particularly their knowledge and experience.
The said questionnaire is completed once by the client prior to subscribing for participation units/shares in AIFs managed by the Management Entity, although during the contractual relationship, and if deemed necessary, the Management Entity may request the client to regularly update the information initially provided.
The Management Entity does not refrain from requesting information it deems relevant nor does it discourage clients in any way from providing information on their knowledge and experience.
The selection of information to be collected shall take into account the nature of the investor, the nature and scope of the service to be provided, and the type of financial instrument or transaction envisaged, including their complexity and inherent risks.
The information to be collected shall cover, in particular:
(i) The types of investment services with which the client is familiar;
(ii) The transactions with which the client is familiar;
(iii) The financial instruments with which the client is familiar;
(iv) The nature of the transactions carried out by the client in the past;
(v) The volume of the transactions carried out by the client in the past;
(vi) The frequency of the transactions carried out by the client in the past;
(vii) The period during which the client has carried out past transactions;
(viii) The client’s level of education;
(ix) The client’s current profession; and
(x) The client’s previous professions.
The assessment of the information collected about the client is carried out consistently, and the Management Entity shall take into account any relevant contradictions among the information collected.
Based on the information collected, the Management Entity will assess whether or not the Client has the necessary knowledge and experience. If the Management Entity concludes that, based on the information received, the AIF is not suitable for the client, it shall inform the client in writing, and the client must return the signed warning.
If the client refuses to provide the requested information or if the information provided is insufficient, the Management Entity shall inform the client in writing that it is not possible to determine the suitability of the AIF to the client’s investor profile. The client must return the signed warning to the Management Entity.
In both situations, after the warning, the client may maintain their decision to invest in the AIF, provided they send a written communication of this intention to the Management Entity. The Management Entity may accept or refuse the client’s request, for example, if there is an increased risk of conflicts of interest or if the AIF’s level of complexity or risk is considered too high for that particular client.
(For more information, please refer to the Portuguese version of this document.)