The Guiding Principles
A conflict arises when competing professional or personal interests are present. Although nothing unethical may happen, it can be difficult for someone to separate those interests appropriately. Abundance is committed to doing all that it can to identify, monitor and manage all actual and potential conflicts of interest that may arise between us and our customers, and in between our customers.
Abundance has two key areas of business. The Retail part provides a platform for our retail customers to purchase one or more Debentures or Bonds from infrastructure companies and monitor the performance of those Debentures throughout their life. It also provides a Bulletin Board which connects buyers and sellers of Debentures or Bonds from funded projects. The Projects part of Abundance works with companies, providing structuring, marketing and distribution services in support of issuing Debentures or Bonds to raise money.
This policy sets out Abundance’s procedures for identifying, monitoring and managing any conflicts, actual and potential.
Overview and Obligations in respect of the Management of Conflicts
Abundance regards that a conflict of interest arises where there is a conflict between:
- the interests of Abundance or certain persons connected with Abundance and the duty Abundance owes to a client;
- the differing interests of two or more of Abundance’s clients, to whom Abundance owes in each case a duty.
This policy sets out the procedures to be followed to identify and manage any conflicts of interest that arise in the course of business activities at Abundance.
Abundance is obligated to anticipate, assess and manage any possible conflicts of interest that arise.
Criteria for the Identification of Actual or Potential Areas of Conflict
Abundance will assess whether Abundance or a person directly or indirectly linked by control to the Firm:
- is likely to make a financial gain, or avoid a financial loss, at the expense of the client;
- has an interest in the outcome of a service provided to the client or of a transaction carried out on behalf of the client, which is distinct from the client’s interest in that outcome;
- has a financial or other incentive to favour the interest of another client or group of clients over the interests of the client;
- carries on the same business as the client; or
- receives or will receive from a person other than the client an inducement in relation to a service provided to the client, in the form of monies, goods or services, other than the standard commission or fee for that service.
Acting as Arranger and Distributor
Responsibility — Louise Wilson — Co-founder and Managing Director responsible for Projects
The following procedures must be followed to manage the conflicts inherent in acting as both arranger and distributor of Debentures.
Accepting an engagement
- The process for accepting new business must include a discussion on the level of conflict, actual or potential, associated with accepting a particular engagement.
- All new business must be approved by the executive management team and ratified by the Board and should include a discussion of the proposed terms in order that the Board may assess whether a conflict does or could exist. The Board may request more information in advance of accepting any engagement.
- If the potential for conflict is more than in the normal course of acting as both arranger and distributor, an additional member of the Board should be appointed to monitor the progress of the engagement.
Terms of the engagement letter
- The engagement letter should allow for termination by Abundance if Abundance is not satisfied that the issuer understands or intends to act in the interest of prospective Debenture holders.
Prior to launch of a Debenture
- Before posting a new issue on the website, an update on due diligence must be provided to the executive management team, including review of the proposed terms and the readiness of the issuer. Any significant departure from the original terms should be justified and approved by the Board.
Prior to closing a Debenture
- Before closing a Debenture, a final update on due diligence must be provided to the executive management team, including review of the proposed terms and the readiness of the issuer. Any significant departure from the original terms should be justified and approved by the Board.
Responsibility — Bruce Davis — Co-founder and Managing Director responsible for Retail Marketing
The potential for conflict between Abundance and individual retail customers is very low. All staff should however take care to ensure that all aspects of their dealings with customers are handled in a professional and timely manner and on an equal basis.
The key risk arises when members of the Abundance team buy or sell investments via the Bulletin Board when they may be in possession of more information on the investments than our retail clients — see section 6.
Employee Ownership or Sale of Debentures
Abundance employees can purchase Debentures. Orders must be submitted through their Abundance account in the same way as orders from customers and will be allocated in the same way as orders from customers.
All material purchases of Debentures must be approved by their line manager before an order is submitted. A material purchase is considered one where an employee buys more than 25% of an investment issue. On an annual basis the Compliance Officer will review what each employee has purchased via the platform.
An employee may also use the Bulletin Board. All purchases and sales must be approved by the Issuer Management Team and the Compliance Officer, if there is material information on the performance of a project which has not been published on the website, the Issuer Management Team may put a Stop order on the sale or purchase of any investment from that project by employees of Abundance.
The employee must declare to both their counterparty and the Compliance Officer before any purchase or sale that they are not in receipt of any unpublished information that could have an impact on value.
If Senior Management concludes that there is a possibility of a conflict of interest which could lead to a material risk of damage to a client, the Director responsible will notify the client or potential client in writing within 24 hours of becoming aware of such a conflict. For a potential client that has not been engaged the disclosure must be made in sufficient detail for the potential client to make an informed decision.
Senior Management Responsibilities, Record-Keeping and Reporting
Senior management responsibilities
Senior Management has overall responsibility to ensure controls and systems are in place to anticipate, assess and manage any potential areas of conflicts of interest.
Conflicts of interest will be a permanent item at the monthly Board meetings. The Director of Corporate is responsible for providing the updates.
A record of all engagements must be maintained by the Managing Director responsible for Projects Where the potential for conflict is deemed higher than in the normal course of acting as both arranger and distributor, this must be entered on a register to be kept with the Compliance Officer, and to include the name of the Board member appointed to monitor its progress.
Personal Account Dealing
Abundance has in place a personal account dealing policy to monitor employees’ activity in the renewable energy sector.
Appendix 1: Policy of Independence
This Policy on Conflicts of Interest is important and must be read, understood and followed by the Firm’s Directors and Employees at all times. The Policy is intended to set out the minimum standards of propriety that the Firm expects from its Directors and Employees. Every Director and Employee of the Firm is required, as a condition of their continued appointment by the Firm to read, understand and comply with this Policy of Independence. Violations will lead to disciplinary sanctions including possible termination of employment.
Each of the Firm’s Directors and Employees is an agent of the Firm and, as such, is obligated to act for and in the best interests of the Firm and its clients. Certain personal activities or interests of a Partner or Employee may have some connection with the Firm’s activities or interests but involve little or no conflicts of interest (for example charitable or civic activities). No attempt is made to limit or prohibit activities or interests of this kind. However, certain interests or activities of Directors and Employees may involve a significant actual or potential conflict with the interests or activities of the Firm and/or its clients or may give the appearance of conflict though no actual or potential conflict exists. Each Partner and Employee must be alert to such conflicts of interest. He/she should scrupulously examine and avoid any activity or situation in which personal behaviour directly or indirectly conflict with the interests of the Firm or its clients. Such behaviour typically, but not exclusively, arises when it involves the use of knowledge acquired in conducting the Firm’s business or from relationships with the Firm’s clients or others.
One of the principal areas of potential conflict of interest is in the use of confidential information. Clients conduct business with the Firm with the expectation that all information and data provided by them or related to their business they conduct with the Firm will be maintained in absolute confidence. For this reason all information concerning the business of the Firm’s clients and their transactions must be treated as absolutely confidential and must be confined, even within the Firm, only to those who must have such information in order for the Firm to carry out its business properly and effectively. The fact that rumours may be circulating, even if they are accurate, does not mean that the Firm’s confidential information has become public information and does not relieve the Firm or its Directors and Employees of the ongoing obligation to treat the information as confidential.
No Partner or Employee is permitted to benefit or allow another person to benefit (directly or indirectly, financially or otherwise) from knowledge of confidential information whether related to financial decisions, investment evaluation systems, strategies or methods, investment decisions, investment positions, in-house research or otherwise. This prohibition extends to the Partners’ and Employees’ relatives, friends and business contacts as well as Relevant Persons as defined in the rules of the Financial Conduct Authority.
The Firm’s Directors and Employees must ensure that they take particular care not to discuss confidential information with, or in the presence of, unauthorised persons, whether from within or outside the Firm.
Each of the Firm’s Directors and Employees shall hold in a fiduciary capacity for the benefit of the Firm all information, knowledge and data relating to or concerned with its operations, business and affairs. He or she shall not, at any time, use, disclose or divulge any such information, knowledge or data to any person or corporate body other than the Firm and authorised persons within the Firm, except as may be legitimately required in connection with the business and affairs of the Firm.
Abundance must be cognisant that where it is carrying on a mandate to raise Debentures or Bonds for an issuer, its duty for that business is to the issuer, but that its responsibilities to provide services to its Customers are unchanged.
Appendix 2: Outsourcing
As required under SYSC 10.1.4R the Firm will consider any Outsourcing Arrangements in respect of conflicts management to assess the interests of service providers and their employees that may be relevant to the Firm’s obligations under Conflicts of Interest and what systems and controls need to be put in place to protect the interests of the Firm’s clients in respect of such conflicts.
As part of this process, the Firm will ensure that the outsource provider has appropriate policies and procedures in place to deal with any conflicts of interest that may arise.
Appendix 3: Service on Boards of Directors and Outside Activities
Service on boards of directors of outside companies, as well as other outside activities generally, could lead to potential conflicts of interest and insider trading problems, and may otherwise interfere with an individuals duties to the Firm and the Firm’s duties to its clients. Accordingly, Directors and Employees may not serve as a director of an outside company (or in a similar role for an unincorporated entity) without prior approval from the Firm’s Senior Management.
If Directors and Employees desiring to serve as a director of an outside company, must notify the Firm’s Compliance Function before accepting the position. In addition, if service as an outside director is approved and unless otherwise agreed in a particular case, Directors and Employees must pay, assign or transfer to the Firm all compensation and other financial benefits related to or arising out of such service in recognition of the reduction of their business and professional time that would otherwise be devoted to the Firm. Any Partner or Employee serving as a director of a public company (or a private company that is about to go public) may be required to resign or comply with other controls to ensure that any Conflicts of Interest are properly managed.
All new hires must (a) promptly disclose any pre-existing board memberships to the Compliance Officer, (b) obtain approval from the Senior Management if they wish to continue such membership, and (c) comply with any conditions placed on them to control or eliminate potential conflicts of interest. The foregoing restrictions do not apply to service on the board of a charitable organization or the board of another group company.
With respect to other outside activities Directors and Employees may not:
- be employed by, or accept any form of compensation from, any other person as a result of any business activity (including consulting engagements, paid positions with governmental or charitable organizations and part-time, at-home ventures such as multi-level marketing programs or freelance software development) outside the scope of your relationship with the Firm, without the prior written approval of the Senior Management.
- raise money or participate in the raising of money for any company, individual or other business venture, except with respect to charitable or educational organizations, without the prior written approval of the Senior Management.
- form or participate in any stockholders’ or creditors’ committee, except as part of your responsibilities to the Firm, without the prior written approval of the Senior Management.
A copy of any such written approval should be forwarded to the Compliance Officer.