How are the investments structured?
Each investment opportunity you see on the platform is held in a separate limited company. This has been done to ring fence investments and protect investors. Each company has a single shareholder; AE Ownership Company Ltd. which is a company limited by guarantee, established for the sole purpose of owning the shares of each limited company. It has a legally binding obligation to act in the best interests of Assetz Exchange’s clients. The limited companies each have restrictive articles of association that prevent them from carrying on any activity other than owning the property/assets and require its directors to act in the best interests of investors at all times.
Investments are made by way of a loan to the company for a fixed term. All significant decisions must be made by the investors by way of a vote.
Who are the directors of the companies?
Each company has a single director, who is also a director of Assetz Exchange. The director’s duties and powers are clearly defined and restricted by the articles of association. All actions must be in favour of the investors.
What is the duration of the loan?
The end date of each loan is clearly stated in the “At a glance” section on the investment details page. For our supported living loans, each loan runs until the lease on the property is terminated and not extended (with consent of the Lenders).
What happens at the end of the loan?
If the tenant wishes to extend/renew the lease, the loan can continue, subject to an investor vote. If the tenant does not wish to renew an investor vote will be held on how to proceed. Options that will be put forward may include, finding a new tenant or selling the property to repay the loan.
What happens if the property is sold?
If investors vote to sell a property, all proceeds less costs and taxes (including any capital gain below a 3% p.a. cap) will be distributed to investors. This cap is an initial requirement of Assetz Exchange’s authorisation by the FCA; we have been in regular communication with our legal advisors who anticipate being able to raise or remove the cap entirely.
What legal documents govern my investment?
Terms of Business
The Terms of Business govern the obligations between investors and Assetz Exchange Ltd. Critically, they do not permit the transfer of loans between investors outside the legal and operational framework of our platform.
The loan agreement details the financial parameters of the loan, including the interest rate and term of the loan.The Loan Agreement is the agreement governing the terms of the loan and comprises the Loan Conditions and the Terms of Agreement applicable to the relevant loan.
Terms of Agreement
The Terms of Agreement summarise the key commercial terms applicable to a particular loan and Loan Agreement. The Terms of Agreement can be found on the details page of each loan.
The Loan Conditions detail the full terms of each loan. The Loan Conditions can be found on the details page of each loan.
Articles of Association
The articles of association are a legally binding document which form part of the borrowing company’s constitution, defines the responsibilities of the directors, the kind of business to be undertaken and the means by which the shareholders exert control over the board of directors. They have been written to protect investors’ interests at all times.
Who makes the important decisions about investments?
Investors are required to undertake all the significant decisions surrounding their investments. The articles of association of the limited companies prohibit the directors of the companies from taking decisions without investors’ consent.
Do lenders have a charge over the properties?
No. Formally allocating a charge to investors over the properties would make this a mortgage product. Assetz Exchange does not have permissions to issue mortgage loans. However, other than the £1 of equity, the investors are the only other stakeholder in the companies that own the properties. Furthermore, the articles of association of the limited companies prohibit any payout to the equity holder and ensure that all decisions are subject to creditors (investors) approval.