1 About FinReg Solutions AB

FinReg Solutions AB (the “Company”) offers products and services with technical solutions in finance and law. The Company is also a provider of equity-based crowdfunding services in accordance with the EU Crowdfunding Regulation and is therefore under the supervision of the Swedish Financial Supervisory Authority (“FI”) in respect of this part of its operations. The company’s registered office is in Malmö, Sweden. The company is an independent, wholly-owned subsidiary of Spotlight Group AB (556797–0750).

2 Crowdfunding

The company’s grassroots financing service aims to match an investor’s interest in investing in companies with a project owner’s interest in financing their businesses. A project owner is a collective term for a company seeking financing. The company provides a platform exclusively for equity-based grassroots financing, where matching is done. The company provides its platform for unlisted public limited companies seeking capital. The project owners that the company chooses to offer its grassroots financing platform to must meet various requirements. These requirements comply with the EU Regulation on grassroots financing and the company’s internal regulations. In addition, the company operates a so-called notice board on its grassroots financing platform through which the company allows its customers to advertise interest in buying and selling transferable securities originally offered on the company’s grassroots financing platform.

3 Information about Risks

Equity-based grassroots financing is a method of raising capital that allows a company to offer shares in the company to a large number of investors through an online platform. This method of capital raising is particularly attractive for small businesses and early-stage companies to access a larger group of potential investors and allows investors with less capital to participate in investment opportunities at an early stage.

Investing in an early-stage company through equity-based grassroots financing can provide an opportunity for higher returns but also involves a higher level of risk. This makes grassroots financing an attractive investment option for investors willing to take on a higher level of risk in exchange for the opportunity for higher returns.

The risks identified by FinReg and associated with the grassroots financing service are as follows:

• They cannot be bought or sold at any time. On major stock exchanges, there is usually always someone willing to buy or sell a share.
• It can be difficult to know the price at which you will sell a share since there are normally few buyers. You risk not finding a buyer at the true value, and, therefore, you may have to sell at a very low price.
• The transparency of companies that are not listed is often poorer. They are simply not subject to regulations regarding quarterly reports, etc., in the same way as listed companies are.

Historically, stocks have provided higher returns than traditional fixed-income investments, but the stock price can fluctuate significantly, especially for unlisted stocks. Therefore, investing in stocks is primarily an option for those willing to take on higher risk in exchange for the possibility of higher returns. Grassroots financing is primarily carried out for companies in the early stages of their growth journey, which contributes to a greater risk that the company may fail in its endeavor and, in the worst case, be subject to bankruptcy. Therefore, investment in unlisted shares always comes with a higher risk where the invested amount can increase and decrease in value, and all or parts of it may be lost. Historical returns are no guarantee of future returns.

4 Information about Fees Related to Grassroots Financing Service or Investments

The cost of raising financing through grassroots financing is based on a percentage of the capital raised. The percentage is related to the capital to be raised. In addition, there is a fixed cost for the issuance process, along with a variable cost per subscriber.

No fees are charged to investors in connection with an investment through grassroots financing with the company.

5 Selection Criteria for Grassroots Financing Projects

As a provider of grassroots financing, sound and well-defined criteria are required for the selection of the company. The selection is based on the following criteria:

• Credible business plan.
• Experienced management and a well-functioning organization.
• The company or management is not subject to suspicions of financial crimes, business bans, or previous bankruptcies.
• The company maintains proper records of shares, legal agreements, and is not involved in ongoing legal disputes.
• Clear financing goal.
• Reasonable valuation based on demand and market conditions.
• A clear goal of providing investors with an opportunity to recover their investment within 2 years.

6 Investor Protection

In connection with registration on the company’s platform, the company needs to verify certain information about prospective investors to assess their knowledge of grassroots financing projects.

To ensure good protection for all investors, a distinction is made between sophisticated and non-sophisticated investors.

A non-sophisticated investor normally refers to all private individuals, non-financial companies, small businesses, and all other customers not classified as sophisticated investors or professional clients. The company has established higher protection for non-sophisticated investors to ensure that they possess adequate knowledge of grassroots financing services.

A sophisticated investor, as assessed by the company, is aware of the risks associated with investments in grassroots financing projects and has the financial resources to withstand significant financial consequences.

The company may classify an investor as a sophisticated investor upon request from the investor. To make this assessment, the following criteria must be met:

For legal entities, they must meet at least one of the following:

• Equity of at least 100,000 EUR.
• Turnover of at least 2,000,000 EUR.
• Balance sheet total of at least 1,000,000 EUR.

For individuals, they must meet at least two of the following:

• Personal gross income of at least 60,000 EUR per taxable year or a portfolio of financial instruments – defined as including funds in an account and financial assets – exceeding 100,000 EUR.
• Work, or have worked for at least one (1) year, in the financial sector in a position requiring knowledge of the relevant transactions or services or held an executive position for at least 12 months in a legal entity as referred to in point 1 below.
• On the capital market, an average of at least ten significant-size transactions were carried out per quarter in the previous four quarters.

The company will obtain documentation such as employment contracts, transaction history, and portfolio overview for documentation.

7 Deposit Guarantee

Investing in a grassroots financing project carries risks where all or part of the invested capital can be lost. The company’s grassroots financing service is not covered by deposit guarantee systems established in accordance with European Parliament and Council Directive 2014/49/EU. Investments are also not covered by compensation systems established in accordance with European Parliament and Council Directive 97/9/EC.

8 Cooling-Off Period

After the investor has completed their investment, they will be directed to the grassroots financing page where the investment will be visible. For four calendar days, a withdrawal button will be available for the investor to exercise their cooling-off period. After this time, the opportunity to withdraw will disappear.

Subscribers who choose to withdraw their investment will be identified by the company on a separate list. If the investor has paid for their shares, a refund will be made within five business days.

9 Conflict of Interest

A conflict of interest arises when there is a conflict between the company’s interests or the interests of individuals associated with the company and the company’s obligations to a customer or between the various interests of two or more of the company’s customers to whom the company has an obligation.

The company’s fundamental principle is always to prioritize customer interests. The company must always act honestly, fairly, and professionally to maintain public trust. The company takes all reasonable steps to identify and manage conflicts of interest that may arise in the provision of regulated services and prevent customer interests from being negatively affected by conflicts of interest. The company continuously works to identify, manage, and eliminate conflicts of interest by establishing rules and building internal control systems, all to provide a secure and reliable grassroots financing service. If the measures taken are insufficient to prevent customer interests from being negatively affected by conflicts of interest, the company will inform the customer of the conflicts of interest before the institution undertakes to provide a service within the framework of its operation of its grassroots financing platform.

The company manages conflicts of interest through an escalation process, which is carried out in the following steps:

• Identify the risks.
• Report to the designated responsible person.
• Assess and limit the risks.
• Monitor and manage remaining risks.
• Allocate sufficient financial resources to handle unexpected adverse events without jeopardizing the company’s financial stability.
• Follow-up.

Additionally, the company and its employees are not allowed to participate in any grassroots financing offering on the platform.

10 Complaints

The company has established a complaints handling function. The company’s policy for handling complaints is based on the principle that complaints should be handled efficiently and carefully. Complaints should primarily be submitted in writing using the form that can be found on eaktiebok.se and the form should be sent by mail.

Oral complaints are also documented. If an orally submitted complaint is more extensive, the complainant may be asked to submit a written complaint.

All received complaints are documented. The complainant receives written confirmation of the receipt of the complaint with an indication of the estimated response time. If the handling of the complaint needs to be passed to another person, the complainant is informed of this.

The company’s ambition is to complete all complaints in writing within 20 days. If this timeframe cannot be met, the complainant will be informed of this.