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ANNEX A
“Qualified institutional buyer”
means:
(1)
Any of the
following entities, acting for its own account or the accounts of other
qualified institutional buyers, that in the aggregate owns and invests on a
discretionary basis at least $100 million in securities of issuers that are not
affiliated with the entity:
(A) Any
insurance company as defined in Section 2(a)(13) of the Securities Act;
(B) Any
investment company registered under the Investment Company Act of 1940 (as
amended from time to time, the “Investment Company Act”) or any business
development company as defined in Section 2(a)(48) of the Investment Company
Act;
(C) Any
small business investment company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958;
(D) Any
plan established and maintained by a state, its political subdivisions, or any
agency or instrumentality of a state or its political subdivisions, for the
benefit of its employees;
(E) Any
employee benefit plan within the meaning of Title I of the Employee Retirement
Income Security Act of 1974;
(F) Any
trust fund whose trustee is a bank or trust company and whose participants are
exclusively plans of the types identified in subparagraph (1)(D) or (E) above,
except trust funds that include as participants individual retirement accounts
or H.R. 10 plans;
(G) Any
business development company as defined in Section 202(a)(22) of the Investment
Advisers Act of 1940 (as amended from time to time, the “Investment Advisers
Act”);
(H) Any
organization described in Section 501(c)(3) of the Internal Revenue Code,
corporation (other than a bank as defined in Section 3(a)(2) of the Securities
Act or a savings and loan association or other institution referenced in
Section 3(a)(5)(A) of the Securities Act or a foreign bank or savings and loan
association or equivalent institution), partnership, or Massachusetts or
similar business trust; and
(I) Any
investment adviser registered under the Investment Advisers Act.
(2) Any dealer
registered pursuant to Section 15 of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), acting for its own account or the accounts of
other qualified institutional buyers, that in the aggregate owns and invests on
a discretionary basis at least $10 million of securities of issuers that are
not affiliated with the dealer, provided,
that securities constituting the whole or a part of an unsold allotment to or
subscription by a dealer as a participant in a public offering shall not be
deemed to be owned by such dealer;
(3) Any dealer
registered pursuant to Section 15 of the Exchange Act acting in a riskless
principal transaction on behalf of a qualified institutional buyer;
(4) Any
investment company registered under the Investment Company Act, acting for its
own account or for the accounts of other qualified institutional buyers, that
is part of a family of investment companies which own in the aggregate at least
$100 million in securities of issuers, other than issuers that are affiliated
with the investment company or are part of such family of investment companies. “Family of investment companies” means any
two or more investment companies registered under the Investment Company Act,
except for a unit investment trust whose assets consist solely of shares of one
or more registered investment companies, that have the same investment adviser
(or, in the case of unit investment trusts, the same depositor), provided that:
(A) Each
series of a series company (as defined in Rule 18f-2 under the Investment
Company Act) shall be deemed to be a separate investment company; and
(B) Investment
companies shall be deemed to have the same adviser (or depositor) if their
advisers (or depositors) are majority-owned subsidiaries of the same parent, or
if one investment company's adviser (or depositor) is a majority-owned
subsidiary of the other investment company's adviser (or depositor);
(5) Any entity,
all of the equity owners of which are qualified institutional buyers, acting
for its own account or the accounts of other qualified institutional buyers;
and
(6) Any bank as
defined in Section 3(a)(2) of the Securities Act, any savings and loan
association or other institution as referenced in Section 3(a)(5)(A) of the
Securities Act, or any foreign bank or savings and loan association or
equivalent institution, acting for its own account or the accounts of other
qualified institutional buyers, that in the aggregate owns and invests on a
discretionary basis at least $100 million in securities of issuers that are not
affiliated with it and that has an audited net worth of at least $25 million as
demonstrated in its latest annual financial statements, as of a date not more
than 16 months preceding the date of sale under the rule in the case of a U.S.
bank or savings and loan association, and not more than 18 months preceding
such date of sale for a foreign bank or savings and loan association or
equivalent institution.
For purposes of the
foregoing definition:
(1) In
determining the aggregate amount of securities owned and invested on a
discretionary basis by an entity, the following instruments and interests shall
be excluded: bank deposit notes and certificates of deposit; loan
participations; repurchase agreements; securities owned but subject to a
repurchase agreement; and currency, interest rate and commodity swaps.
(2) The aggregate
value of securities owned and invested on a discretionary basis by an entity
shall be the cost of such securities, except where the entity reports its
securities holdings in its financial statements on the basis of their market
value, and no current information with respect to the cost of those securities
has been published. In the latter event,
the securities may be valued at market for purposes of the foregoing
definition.
(3) In
determining the aggregate amount of securities owned by an entity and invested
on a discretionary basis, securities owned by subsidiaries of the entity that
are consolidated with the entity in its financial statements prepared in
accordance with generally accepted accounting principles may be included if the
investments of such subsidiaries are managed under the direction of the entity,
except that, unless the entity is a reporting company under Section 13 or 15(d)
of the Exchange Act, securities owned by such subsidiaries may not be included
if the entity itself is a majority-owned subsidiary that would be included in
the consolidated financial statements of another enterprise.
(4) For purposes
of this section, “riskless principal transaction” means a
transaction in which a dealer buys a security from any person and makes a
simultaneous offsetting sale of such security to a qualified institutional
buyer, including another dealer acting as riskless principal for a qualified
institutional buyer.
(5) For purposes of this section, “effective conversion premium” means the amount, expressed as a percentage of the security’s
conversion value, by which the price at issuance of a convertible security exceeds its conversion value.
(6)
For purposes of this section, “effective exercise premium” means the amount,
expressed as a percentage of the warrant's exercise value, by which the sum of the price at issuance and the exercise price of a warrant exceeds its exercise value.
ANNEX B
“U.S. person” means:
(1) Any
natural person resident in the United States;
(2) Any
partnership or corporation organized or incorporated under the laws of the United
States;
(3) Any
estate of which any executor or administrator is a U.S. person;
(4) Any
trust of which any trustee is a U.S. person;
(5) Any
agency or branch of a foreign entity located in the United States;
(6) Any
non-discretionary account or similar account (other than an estate or trust) held
by a dealer or other fiduciary for the benefit or account of a U.S. person;
(7) Any
discretionary account or similar account (other than an estate or trust) held
by a dealer or other fiduciary organized, incorporated, or (if an individual)
resident in the United States; and
(8) Any
partnership or corporation if:
(a) Organized or incorporated under the laws of any foreign
jurisdiction; and
(b) Formed by a U.S. person principally for the purpose of
investing in securities not registered under the Securities Act, unless it is
organized or incorporated, and owned, by accredited investors (as defined in
Rule 501(a) under the Securities Act) who are not natural persons, estates or
trusts.
The following are not “U.S.
persons”:
(1) Any
discretionary account or similar account (other than an estate or trust) held
for the benefit or account of a non-U.S. person by a dealer or other
professional fiduciary organized, incorporated, or (if an individual) resident
in the United States;
(2) Any
estate of which any professional fiduciary acting as executor or administrator
is a U.S. person if:
(a) An executor or administrator
of the estate who is not a U.S. person has sole or shared investment discretion
with respect to the assets of the estate; and
(b) The estate is governed by
foreign law;
(3) Any
trust of which any professional fiduciary acting as trustee is a U.S. person,
if a trustee who is not a U.S. person has sole or shared investment discretion
with respect to the trust assets, and no beneficiary of the trust (and no
settlor if the trust is revocable) is a U.S. person;
(4) An
employee benefit plan established and administered in accordance with the law
of a country other than the United States and customary practices and
documentation of such country;
(5) Any
agency or branch of a U.S. person located outside the United States if:
(a) The agency or branch operates for valid business reasons; and
(b) The agency or branch is engaged in the business of insurance
or banking and is subject to substantive insurance or banking regulation,
respectively, in the jurisdiction where located; and
(6) The
International Monetary Fund, the International Bank for Reconstruction and
Development, the Inter-American Development Bank, the Asian Development Bank,
the African Development Bank, the United Nations, and their agencies,
affiliates and pension plans, and any other similar international
organizations, their agencies, affiliates and pension plans.
For purposes of this Annex B, “U.S. Person”, “United States” means
the United States of America, its territories and possessions, any State of the
United States, and the District of Columbia.
ANNEX C
“Qualified investors” means:
(1) persons or entities that are described in points (1)
to (4) of Section I of Annex II to Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments, and
(2) persons or entities who are:
-
on request, treated as
professional clients in accordance with Annex II to Directive 2004/39/EC; or
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recognised as eligible
counterparties in accordance with Article 24 of Directive 2004/39/EC unless they
have requested that they be treated as non-professional clients.
Investment firms and credit institutions shall communicate their classification
on request to the issuer without prejudice to the relevant legislation on data
protection. Investment firms authorised to continue considering existing
professional clients as such in accordance with Article 71(6) of Directive
2004/39/EC shall be authorised to treat those clients as qualified investors
under the EU Prospectus Directive.
“EU Prospectus Directive” means the European Union’s Directive 2003/71/EC (as
amended, including pursuant to Directive 2010/73/EU) as implemented in the
relevant member state of the European Economic Area which has implemented
provisions of the EU Prospectus Directive.
Annex II of the Directive 2004/39/EC of the European Parliament and of the
Council of 21 April 2004 on markets in financial instruments amending Council
Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European
Parliament and of the Council and repealing Council Directive 93/22/EEC:
Professional clients for the purpose of
this directive:
Professional client is a client who possesses the experience, knowledge and
expertise to make its own investment decisions and properly assess the risks
that it incurs. In order to be considered a professional client, the client must
comply with the following criteria:
I. Categories of client who are
considered to be professionals
The following should all be regarded as professionals in all investment services
and activities and financial instruments for the purposes of the Directive.
(1) Entities which are required to be authorised or regulated to operate in the
financial markets. The list below should be understood as including all
authorised entities carrying out the characteristic activities of the entities
mentioned: entities authorised by a member state under a directive, entities
authorised or regulated by a member state without reference to a directive, and
entities authorised or regulated by a non- member state:
(a) Credit institutions
(b) Investment firms
(c) Other authorised or regulated financial institutions
(d) Insurance companies
(e) Collective investment schemes and management companies of such schemes
(f) Pension funds and management companies of such funds
(g) Commodity and commodity derivatives dealers
(h) Locals
(i) Other institutional investors
(2) Large undertakings meeting two of the following size requirements on a
company basis:
·
balance sheet total: EUR 20
000 000
·
net turnover: EUR 40 000 000
·
own funds: EUR 2 000 000
(3) National and regional governments, public bodies that manage public debt,
Central Banks, international and supranational institutions such as the World
Bank, the IMF, the ECB, the EIB and other similar international organisations.
(4) Other institutional investors whose main activity is to invest in financial
instruments, including entities dedicated to the securitisation of assets or
other financing transactions.
The entities mentioned above are considered to be professionals. They must
however be allowed to request nonprofessional treatment and investment firms may
agree to provide a higher level of protection. Where the client of an investment
firm is an undertaking referred to above, the investment firm must inform it
prior to any provision of services that, on the basis of the information
available to the firm, the client is deemed to be a professional client, and
will be treated as such unless the firm and the client agree otherwise. The firm
must also inform the customer that he can request a variation of the terms of
the agreement in order to secure a higher degree of protection.
It is the responsibility of the client, considered to be a professional client,
to ask for a higher level of protection when it deems it is unable to properly
assess or manage the risks involved.
This higher level of protection will be provided when a client who is considered
to be a professional enters into a written agreement with the investment firm to
the effect that it shall not be treated as a professional for the purposes of
the applicable conduct of business regime. Such agreement should specify whether
this applies to one or more particular services or transactions, or to one or
more types of product or transaction.
II. Clients who may be treated as
professionals on request
II.1. Identification criteria
Clients other than those mentioned in section I, including public sector bodies
and private individual investors, may also be allowed to waive some of the
protections afforded by the conduct of business rules.
Investment firms should therefore be allowed to treat any of the above clients
as professionals provided the relevant criteria and procedure mentioned below
are fulfilled. These clients should not, however, be presumed to possess market
knowledge and experience comparable to that of the categories listed in section
I.
Any such waiver of the protection afforded by the standard conduct of business
regime shall be considered valid only if an adequate assessment of the
expertise, experience and knowledge of the client, undertaken by the investment
firm, gives reasonable assurance, in light of the nature of the transactions or
services envisaged, that the client is capable of making his own investment
decisions and understanding the risks involved.
The fitness test applied to managers and directors of entities licensed under
Directives in the financial field could be regarded as an example of the
assessment of expertise and knowledge. In the case of small entities, the person
subject to the above assessment should be the person authorised to carry out
transactions on behalf of the entity.
In the course of the above assessment, as a minimum, two of the following
criteria should be satisfied:
·
the client has carried out
transactions, in significant size, on the relevant market at an average
frequency of 10 per quarter over the previous four quarters
·
the size of the client’s
financial instrument portfolio, defined as including cash deposits and financial
instruments exceeds EUR 500 000; and
·
the client works or has
worked in the financial sector for at least one year in a professional position,
which requires knowledge of the transactions or services envisaged.
II.2. Procedure
The clients defined above may waive the benefit of the detailed rules of conduct
only where the following procedure is followed:
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they must state in writing
to the investment firm that they wish to be treated as a professional client,
either generally or in respect of a particular investment service or
transaction, or type of transaction or product;
-
the investment firm must
give them a clear written warning of the protections and investor compensation
rights they may lose; and
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they must state in writing,
in a separate document from the contract, that they are aware of the
consequences of losing such protections.
Before deciding to accept any request for waiver, investment firms must be
required to take all reasonable steps to ensure that the client requesting to be
treated as a professional client meets the relevant requirements stated in
Section II.1 above.
However, if clients have already been categorised as professionals under
parameters and procedures similar to those above, it is not intended that their
relationships with investment firms should be affected by any new rules adopted
pursuant to this Annex.
Firms must implement appropriate written internal policies and procedures to
categorise clients. Professional clients are responsible for keeping the firm
informed about any change, which could affect their current categorisation.
Should the investment firm become aware however that the client no longer
fulfils the initial conditions, which made him eligible for a professional
treatment, the investment firm must take appropriate action.
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