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 the investment details page.
What happens at the end of the loan term?
An investor vote will be held around the loan end date, where investors can decide whether to extend the loan or sell the property/properties and distribute the proceeds.
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 in early 2021.
What legal documents govern my investment?
Terms & Conditions
The terms & conditions 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 conditions can be found on the details page of each of the investments. This document outlines the arrangements of the loan between the investor and the borrowing limited company.
The loan agreement details the financial parameters of the loan, including the interest rate and term of the 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.