BASE LISTING PARTICULARS
relating to
HCM QFII INVESTMENTS DAC
(a private company incorporated in Ireland with limited liability
under company registration number 522075)
USD10,000,000,000 HCM QFII INVESTMENTS DAC
UNSECURED SECURITIES PROGRAMME
THESE BASE LISTING PARTICULARS HAVE BEEN PREPARED SOLELY FOR THE PURPOSES OF ADMITTING THE SECURITIES TO THE OFFICIAL LIST AND TRADING ON THE GLOBAL EXCHANGE MARKET OF EURONEXT DUBLIN
20 MAY 2020
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IMPORTANT NOTICE
You must read the following before continuing. The following applies to the offering circular comprising a base listing particulars following this page (this "Base Listing Particulars") and you are therefore advised to read this carefully before reading, accessing or making any other use of these Base Listing Particulars. In accessing these Base Listing Particulars, you agree to be bound by the following terms and conditions, including any modifications to them at any time you receive any information from us as a result of such access.
NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES DESCRIBED IN THESE BASE LISTING PARTICULARS IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THESE BASE LISTING PARTICULARS IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS.
These Base Listing Particulars is being sent at your request and by accepting the email and accessing these Base Listing Particulars, you shall be deemed to have represented to us that you have understood the agreed terms set out herein and that you consent to delivery of these Base Listing Particulars by electronic transmission. You are reminded that these Base Listing Particulars has been delivered to you on the basis that you are a person into whose possession these Base Listing Particulars may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not, nor are you authorised to, deliver these Base Listing Particulars to any other person.
Prohibition of sales to EEA Retail Investors
The Securities are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area ("EEA"). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, "MiFID II"); or (ii) a customer within the meaning of Directive 2002/92/EC (as amended or superseded, the "Insurance Mediation Directive"), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in EU Prospectus Regulation 2017/1129. Consequently, no key information document required by Regulation (EU) No 1286/2014 (as amended, the "PRIIPs Regulation") for offering or selling the Securities or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the Securities or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.
MIFID II Product Governance
Solely for the purposes of each manufacturer's product approval process, the target market assessment in respect of the Securities has led to the conclusion that: (i) the target market for the Securities is eligible counterparties and professional clients only, each as defined in MiFID II; and (ii) all channels for distribution of the Securities to eligible counterparties and professional clients are appropriate. Any person subsequently offering, selling or recommending the Securities (a "distributor") should take into consideration the manufacturers' target market assessment; however, a distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Securities (by either adopting or refining the manufacturers' target market assessment) and determining appropriate distribution channels.
In the United Kingdom, these Base Listing Particulars is directed only at persons who (i) are investment professionals having professional experience in matters relating to investments, who fall within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (ii) are persons falling within Article 49(2)(a) to (d) ("high net worth companies, unincorporated
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associations etc") of the Order (all such persons together being referred to as "relevant persons"). These Base Listing Particulars must not be acted on or relied on by persons who are not relevant persons.
Any investment or investment activity to which these Base Listing Particulars relates is available only to relevant persons and will be engaged in only with relevant persons.
The materials relating to the offering do not constitute, and may not be used in connection with, an offer or solicitation in any place where offers or solicitations are not permitted by law.
These Base Listing Particulars has been sent to you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission and consequently neither the Issuer nor any person who controls or is appointed as an agent or service provider of the Issuer nor any director, officer, employee, agent or affiliate of any such person accepts any liability or responsibility whatsoever in respect of any difference between these Base Listing Particulars distributed to you in electronic format herewith and the hard copy version available to you on request from the Issuer.
Further important notices for investors in certain jurisdictions are set out in Appendix A (Offering Disclosures).
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It is intended that HCM QFII Investments DAC (the "Issuer") from time to time may issue securities (the "Securities") under the programme for the issue of Securities described herein (the "Programme").
These Base Listing Particulars comprises a base listing particulars for the purposes of giving information with regard to the Issuer which, according to the particular nature of the Issuer and the Securities, is necessary to enable investors to make an informed assessment of the assets and liabilities, financial position, profits and losses and prospects of the Issuer and of the rights attaching to the Securities.
There is currently no public market for the Securities. Application will be made to the Irish Stock Exchange plc, trading as Euronext Dublin ("Euronext Dublin") for the Securities to be admitted to Daily Official List (the "Official List") of Euronext Dublin and to trading on its Global Exchange Market. There can be no assurance that the Securities will be listed and admitted to trading on the Global Exchange Market or that such listing, if approved, will be maintained.
These Base Listing Particulars have been approved by Euronext Dublin as a listing particulars, and constitute a listing particulars, for the purposes of the "Listing and Admission to Trading Rules of the Global Exchange Market" of Euronext Dublin. Such approval relates only to the Securities which are to be admitted to trading on the Global Exchange Market of Euronext Dublin.
In addition, Securities may be issued pursuant to the Programme which are listed on another stock exchange and/or admitted to trading on another market (which may or may not be regulated) and/or unlisted and/or not admitted to trading on any market, in each case as specified in the relevant Constituting Instrument.
For the avoidance of doubt, these Base Listing Particulars do not constitute a prospectus for the purposes of Regulation (EU) 2017/1129 and relevant implementing measures in Ireland the "Prospectus Regulation").
The Securities may be issued on the terms set out in these Base Listing Particulars and in the constituting instrument (the "Constituting Instrument") entered into in connection therewith. Securities may also be issued under the Programme on terms set out in a separate offering and, if applicable, listing memorandum (each a "Series Listing Document") relating to such Securities which incorporates by reference the whole or any part of these Base Listing Particulars. Any reference to the Constituting Instrument of any Series shall, where a Series Listing Document is issued in connection with such Series, be deemed to be a reference to the terms and conditions of such Series as set out in such Series Listing Document.
Copies of each Constituting Instrument will be available at the specified office set out below of the Issuer.
The Securities are issued in fully registered form. A Certificate in the form attached as Schedule 1 to the Conditions will be issued to the holder of the Securities. The Certificate will be numbered serially with an identifying number which will be recorded in the Register which the Registrar (as defined below) will maintain on behalf of the Issuer. Securities may not be transferred without the Issuer’s consent.
These Base Listing Particulars do not constitute an offer of, or an invitation by or on behalf of the Issuer to invest in the Securities. The distribution of these Base Listing Particulars in certain jurisdictions may be restricted by law. Neither these Base Listing Particulars nor any advertisement or any other offering material may be distributed or published in any jurisdiction except under circumstances that will result in compliance with any applicable laws and regulations. Persons into whose possession this document comes should inform themselves about and observe any such restrictions. Any failure to comply with any of those restrictions may constitute a violation of the securities laws of any such jurisdiction.
The Issuer will not be regulated by the Central Bank of Ireland (the "Central Bank") by virtue of issuing the Securities. Any investment in the Securities does not have the status of a bank deposit and is not
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subject to the deposit protection scheme operated by the Central Bank or any other government guarantee scheme.
The Securities are obligations solely of the Issuer and are not obligations of, guaranteed by or the responsibility of any other entity.
Neither the Issuer nor the Securities are rated with any rating service.
Investors in the Securities should conduct such independent investigation and analysis regarding the Issuer as they deem appropriate to evaluate the merits and risks of an investment in the Securities. Investors in the Securities should have sufficient knowledge and experience in financial and business matters, and access to, and knowledge of, appropriate analytical resources, to evaluate the information contained in these Base Listing Particulars and the merits and risks of investing in the Securities in the context of their financial position and circumstances. Any investment considerations identified in these Base Listing Particulars are provided as general information only.
The Securities are only suitable for acquisition by an investor who: (i) has a substantial asset base that would enable such investor to sustain any loss that might be incurred as a result of acquiring the Securities and (ii) is sufficiently financially sophisticated to be reasonably expected to know the risks involved in acquiring the Securities.
If you are in any doubt about the contents of these Base Listing Particulars, or considering an investment in the Securities, you should consult your stockbroker, bank manager, solicitor, accountant or other financial adviser. Prospective investors should read these entire Base Listing Particulars.
Investors in the Securities should be aware that the price and values of Securities and the income derived from them can go down as well as up.
For a summary of certain risk and other factors that should be considered in connection with an investment in the Securities, see "Risk Factors" of these Base Listing Particulars.
The contents of these Base Listing Particulars are not to be construed as legal, business or tax advice. Investors should consult their own lawyer, financial adviser or tax adviser for legal, financial or tax advice in relation to the acceptance of the Securities.
No person has been authorised to give any information or to make any representation other than those contained in these Base Listing Particulars and, if given or made, such information or representation must not be relied upon as having been authorised by the Issuer. Neither the delivery of these Base Listing Particulars nor any sale made in connection herewith shall, under any circumstances, create any implication that there has been no change in the affairs of the Issuer since the date hereof or the date upon which these Base Listing Particulars have been most recently supplemented or that there has been no adverse change in the financial position of the Issuer since the date upon which these Base Listing Particulars have been most recently amended or supplemented or that any other information supplied in connection with the Securities is correct as of any time subsequent to the date on which it is supplied or, if different, the date indicated in the document containing the same.
THE DISTRIBUTION OF THESE BASE LISTING PARTICULARS AND THE OFFERING OF THE SECURITIES MAY BE WHOLLY OR PARTLY RESTRICTED IN CERTAIN JURISDICTIONS. IT IS THE RESPONSIBILITY OF ANY PERSONS IN POSSESSION OF THESE BASE LISTING PARTICULARS AND ANY PERSONS WISHING TO MAKE APPLICATIONS FOR THE SECURITIES PURSUANT TO OR ON THE BASIS OF THESE BASE LISTING PARTICULARS TO INFORM THEMSELVES OF AND TO OBSERVE FULLY THE APPLICABLE LAWS AND REGULATIONS OF ANY RELEVANT JURISDICTION.
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NEITHER THE PROGRAMME NOR THE SECURITIES DESCRIBED IN THESE BASE LISTING PARTICULARS HAVE BEEN OR WILL BE REGISTERED UNDER THE FEDERAL SECURITIES LAWS OF THE UNITED STATES OR THE SECURITIES LAWS OF ANY OF THE STATES OF THE UNITED STATES. THE DIRECT OR INDIRECT OWNERSHIP OF SUCH SECURITIES BY U.S. PERSONS (AS DEFINED HEREIN) IS PERMITTED ONLY WITH THE CONSENT OF THE ISSUER.
THE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY U.S. FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THESE BASE LISTING PARTICULARS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD, EXCEPT AS PERMITTED UNDER U.S. FEDERAL AND STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED, EXCEPT IN ACCORDANCE WITH THE REQUIREMENTS SET FORTH IN THE MASTER AGENCY TERMS AND CONDITIONS (AS SUMMARISED BY THESE BASE LISTING PARTICULARS).
HILLHOUSE CAPITAL ADVISORS, LTD. (THE “PORTFOLIO MANAGER”) IS EXEMPT FROM REGISTRATION WITH THE UNITED STATES COMMODITY FUTURES TRADING COMMISSION (THE “CFTC”) AS A COMMODITY POOL OPERATOR (“CPO”). THEREFORE, UNLIKE A REGISTERED CPO, THE PORTFOLIO MANAGER IS NOT REQUIRED TO DELIVER A DISCLOSURE DOCUMENT (AS DEFINED UNDER CFTC REGULATIONS) TO PARTICIPANTS IN THE POOL DESCRIBED HEREIN ("THIS POOL"). THE PORTFOLIO MANAGER QUALIFIES FOR EXEMPTION FROM REGISTRATION WITH THE CFTC BECAUSE, AMONG OTHER THINGS, EITHER (A) THE AGGREGATE INITIAL MARGIN AND PREMIUMS REQUIRED TO ESTABLISH COMMODITY INTEREST POSITIONS DO NOT EXCEED FIVE PER CENT (5%) OF THE LIQUIDATION VALUE OF THIS POOL’S PORTFOLIO OR (B) THE AGGREGATE NET NOTIONAL VALUE OF THIS POOL’S COMMODITY INTEREST POSITIONS DOES NOT EXCEED ONE HUNDRED PER CENT (100%) OF THE LIQUIDATION VALUE OF THIS POOL’S PORTFOLIO.
PURSUANT TO U.S. TREASURY DEPARTMENT CIRCULAR 230, INVESTORS ARE HEREBY ADVISED THAT: (1) ANY DISCUSSION OF U.S. FEDERAL TAX ISSUES HEREIN IS NOT INTENDED OR WRITTEN TO BE RELIED UPON, AND CANNOT BE RELIED UPON, BY INVESTORS FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON INVESTORS UNDER THE INTERNAL REVENUE CODE; (2) SUCH DISCUSSION IS INCLUDED HEREIN IN CONNECTION WITH THE PROMOTION OR MARKETING OF THE SECURITIES; AND (3) INVESTORS SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.
The date of these Base Listing Particulars is 20 May 2020.
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DEFINITIONS AND INTERPRETATION
All words and expressions used in these Base Listing Particulars and not expressly defined where they first appear shall have the meaning given to them in the section of these Base Listing Particulars entitled "Definitions".
The Paying Agent, the Registrar, the Transfer Agent and the Calculation Agent are sometimes collectively referred to herein as the Agents.
PAYMENTS ON THE SECURITIES
Payments on the Securities will be made on each Payment Date in accordance with the Priority of Payments, subject to the Issuer having available funds to do so. It should be assumed that no interest payments will be made on the Securities until the Securities are redeemed or otherwise discharged. It is expected that all available proceeds arising on the Series Assets will be reinvested until such redemption. The Securities will be subject to voluntary early redemption by the Issuer and voluntary redemption by the Securityholders, as described herein. See “Risks and Information Relating to the Securities.”
Payments of principal or interest due on the Securities will be made in US Dollars. All payments made by the Issuer in respect of the Securities will be made free and clear of, and without deduction or withholding for or on account of any taxes, except as may be required by law. See section in these Base Listing Particulars entitled "Certain Taxation Considerations".
The Securities will be redeemed on the relevant Redemption Date at their Redemption Amount. See section of these Base Listing Particulars entitled "Terms and Conditions of the Securities."
PRIORITIES OF SECURITIES
The Securities will rank pari passu without any preference for all purposes.
LIMITED RECOURSE
The Combined Series Securities are limited recourse obligations of the Issuer which are payable solely out of proceeds received by or on behalf of the Issuer in respect of Combined Series Assets in accordance with the Priority of Payments. Such proceeds may be equal to, greater or lesser than, the principal amount due on the Security. The claims of the holders of Combined Series Securities shall be limited to the value from time to time of relevant Combined Series Assets. The net proceeds of the realisation of the Combined Series Assets or the proceeds of sale of the relevant Combined Series Assets of the Issuer following an Event of Default may be insufficient to pay all amounts due to the holders of the Combined Series Securities after making payments to other creditors of the Issuer ranking prior thereto or pari passu therewith. In the event of any shortfall in such proceeds, the Issuer will not be obliged to pay, and the other assets of the Issuer will not be available for payment of, such shortfall, and all claims in respect of which shall be extinguished.
The Segregated Series Securities are limited recourse obligations of the Issuer which are payable solely out of proceeds received by or on behalf of the Issuer in respect of Segregated Series Assets in accordance with the Priority of Payments. The claims of holder of Segregated Series Securities shall be limited to the value from time to time of the relevant Segregated Series Assets. The net proceeds of the realisation of Segregated Series Assets or the proceeds of sale of relevant Segregated Series Assets of the Issuer following an Event of Default may be insufficient to pay all amounts due to the holders of Segregated Series Securities after making payments to other creditors of the Issuer ranking prior thereto or pari passu therewith. In the event of any shortfall in such proceeds, the Issuer will not be obliged to pay, and the other assets of the Issuer will not be available for payment of, such shortfall, and all claims in respect of which shall be extinguished.
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RESPONSIBILITY
The Issuer accepts responsibility for the information contained in this document, other than the information for which the Trustee, the Portfolio Manager, the Agents and the Corporate Services Provider have specifically accepted responsibility below. To the best knowledge and belief of the Issuer (having taken all reasonable care to ensure that such is the case) the information contained in this document, other than the information for which the Trustee, the Portfolio Manager, the Agents and the Corporate Services Provider have specifically accepted responsibility below, is in accordance with the facts and does not omit anything likely to affect the import of such information. This statement does not prejudice any liability which may arise under Irish law. The Issuer further confirms that these Base Listing Particulars, as supplemented in connection with the offering and sale of any Securities, contains all information which is material in the context of the issue of the Securities, that such information contained in these Base Listing Particulars is true and accurate in all material respects and is not misleading, that the opinions and the intentions expressed in it are honestly held by it and that there are no other facts the omission of which makes these Base Listing Particulars as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect and all proper enquiries have been made to ascertain and to verify the foregoing.
The information in the paragraph entitled "The Custodian" in the section of these Base Listing Particulars entitled "Information about the Transaction Parties" is reproduced from the Custodian Agreement and the English translation of the website of the Custodian. Such information has been accurately reproduced and so far as the Issuer is aware and is able to ascertain from the information published by the Custodian, no facts have been omitted which would render the reproduced information inaccurate or misleading.
The Trustee accepts responsibility for the information contained in these Base Listing Particulars relating to itself in the paragraph entitled "The Trustee" in the section of these Base Listing Particulars entitled "Information about the Transaction Parties". To the best knowledge and belief of the Trustee (having taken all reasonable care to ensure that such is the case) the information set forth under the paragraph entitled "The Trustee" in the section of these Base Listing Particulars entitled "Information About The Transaction Parties" is in accordance with the facts and does not omit anything likely to affect the import of such information.
The Portfolio Manager accepts responsibility for the information contained in these Base Listing Particulars relating to itself in the paragraphs entitled "The Portfolio Manager" and "The Calculation Agent" in the section of these Base Listing Particulars entitled "Information about the Transaction Parties". To the best knowledge and belief of the Portfolio Manager (having taken all reasonable care to ensure that such is the case) the information set forth under the paragraph entitled "The Portfolio Manager" and "The Calculation Agent" in the section of these Base Listing Particulars entitled "Information about the Transaction Parties" is in accordance with the facts and does not omit anything likely to affect the import of such information.
The Registrar accepts responsibility for the information contained in these Base Listing Particulars relating to itself in the paragraph entitled "The Registrar" in the section of these Base Listing Particulars entitled "Information about the Transaction Parties". To the best knowledge and belief of the Registrar (having taken all reasonable care to ensure that such is the case) the information set forth under the paragraph entitled "The Registrar" in the section of these Base Listing Particulars entitled "Information About The Transaction Parties" is in accordance with the facts and does not omit anything likely to affect the import of such information.
The Paying Agent accepts responsibility for the information contained in these Base Listing Particulars relating to itself in the paragraph entitled "The Paying Agent" in the section of these Base Listing Particulars entitled "Information about the Transaction Parties ". To the best knowledge and belief of the Paying Agent (having taken all reasonable care to ensure that such is the case) the information set forth under the paragraph entitled "The Paying Agent" in section of these Base Listing Particulars entitled " Information about the Transaction Parties" is in accordance with the facts and does not omit anything likely to affect the import of such information.
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The Transfer Agent accepts responsibility for the information contained in these Base Listing Particulars relating to itself in the paragraph entitled 'The Transfer Agent' in the section of these Base Listing Particulars entitled "Information about the Transaction Parties ". To the best knowledge and belief of the Transfer Agent (having taken all reasonable care to ensure that such is the case) the information set forth under the paragraph entitled "The Transfer Agent" in the section of these Base Listing Particulars entitled " Information about the Transaction Parties" is in accordance with the facts and does not omit anything likely to affect the import of such information.
The Corporate Services Provider accepts responsibility for the information contained in these Base Listing Particulars relating to itself in the paragraph entitled "The Corporate Services Provider" in the section of these Base Listing Particulars entitled "Information about the Transaction Parties". To the best knowledge and belief of the Corporate Services Provider (having taken all reasonable care to ensure that such is the case) the information set forth under the paragraph entitled "The Corporate Services Provider" in the section of these Base Listing Particulars entitled "Information about the Transaction Parties" is in accordance with the facts and does not omit anything likely to affect the import of such information.
The Securities are obligations solely of the Issuer and are not obligations of, guaranteed by or the responsibility of any other entity.
Except as noted above, none of the Trustee, the Portfolio Manager, Agents, Corporate Services Provider or the Listing Agent, has separately verified the information contained herein or any other information provided by the Issuer in connection with the Securities or their distribution. Accordingly, no representation or warranty is made or implied by the Trustee, Portfolio Manager, Agents, Corporate Services Provider and Listing Agent and none of the aforementioned parties makes any representation or warranty or accepts any responsibility as to the accuracy or completeness of the information contained in these Base Listing Particulars or any other information provided by the Issuer in connection with the Securities or their distribution.
None of the Trustee, Portfolio Manager, Agents, Corporate Services Provider or the Listing Agent represents that these Base Listing Particulars may be lawfully distributed, or that any Securities may be lawfully offered, in compliance with any applicable registration or other requirements in any such jurisdiction, or pursuant to an exemption available thereunder, or assume any responsibility for facilitating any such distribution or offering.
NO ADVERSE CHANGE
Neither the delivery of these Base Listing Particulars nor the offering, sale or delivery of any Security shall in any circumstance create any implication that there has been no adverse change, or any event reasonably likely to involve any adverse change, in the condition (financial or otherwise) of the Issuer since the date of these Base Listing Particulars or, in the context of any offering and sale of any Securities after the date hereof, since the date of the supplement to these Base Listing Particulars (if any) relating to such Securities.
OFFER, SALE AND TRANSFER OF THE SECURITIES
These Base Listing Particulars do not constitute an offer of, or an invitation or recommendation by or on behalf of, the Issuer, the Trustee, the Portfolio Manager, the Agents, the Corporate Services Provider or the Listing Agent for the purchase of any of the Securities. This document may not be used for or in connection with an offer to, or a solicitation by, anyone in any jurisdiction or in any circumstances in which such offer or solicitation is not authorised or is unlawful.
The Securities have not been and will not be registered under the Securities Act or under the securities laws of any state of the United States or any other jurisdiction. The Securities are being offered and sold in the offering (i) outside the United States to non-US persons in reliance on the exemption from registration provided by Regulations S of the Securities Act and (ii) to US persons that are "accredited
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investors" as defined in Regulation D of the Securities Act and "qualified purchasers" as defined in the US Investment Company Act of 1940, as amended (the "Investment Company Act"), such that the offering of the Securities will not constitute a public offering in the U.S. Each Securityholder, by purchasing such Security, agrees that such Security has been purchased for investment only and may not be offered, resold, pledged or otherwise transferred directly or indirectly in the United States or to or for the accounts of US persons other than in accordance with and in reliance on the exemption from the registration requirements of the Securities Act available under Regulation D, and in accordance with any applicable securities laws of any state of the United States or any other applicable jurisdiction and the restrictions imposed in such Security and in accordance with the transfer restrictions specified in the Master Agency Terms and the Conditions (as summarised by these Base Listing Particulars).
The Issuer is not and will not be registered as an Investment Company under the Investment Company Act in reliance upon the exception from the definition of an “investment company” provided by Section 3(c)(7) of the Investment Company Act. The Securities may be purchased only by investors who qualify as “accredited investors” as defined in Regulation 501(a) of Regulation D under the Securities Act, and as “qualified purchasers” as defined under Section 2(a)(51) of the Investment Company Act. In general, natural persons must own at least USD 5,000,000 in investments, and entities must own at least USD 25,000,000 in investments, in each case as defined under the Investment Company Act. Except as otherwise consented to by the Portfolio Manager, investors must meet all of the eligibility criteria set forth above and in Schedule 3 to the Master Conditions. Transfers of the Securities in the United States may only be effected under circumstances that will not require the Issuer to register as an Investment Company under the Investment Company Act. By its acceptance of any Security, the Securityholder makes the representations, warranties and covenants to the Issuer set forth in such Security to ensure that registration under the Investment Company Act is not required (see "Subscription and Sale").
Any United States federal tax advice contained herein is written in connection with the promotion or marketing of the Securities, and is not intended or written to be used, and cannot be used by any person, for the purpose of avoiding US tax penalties. Prospective investors should consult their own tax advisors with respect to their particular circumstances concerning the US federal, state, local and non-US tax consequences of owning the Securities.
Notwithstanding anything herein to the contrary, each investor (and each employee, representative, or other agent of such investor) may disclose to any and all other persons, without limitation of any kind, the tax treatment and tax structure of the transactions described herein and all materials of any kind (including opinions or other tax analyses) that are provided to the investor relating to such tax treatment and tax structure. The terms "tax treatment" and "tax structure" have the meaning given to such terms under United States Treasury Regulation Section 1.6011-4(c).
In connection with any permitted transfer to any transferee of such Security (a "Transferee"), such Transferee will be required to deliver to the Paying Agent and the Issuer such certificates and other information as the Issuer may require to confirm that such transfer is permitted.
The Issuer is a private company with limited liability and, accordingly, its Constitution prohibits any invitation to the public to subscribe for any shares, debentures or other securities of the Issuer. No invitation has been made to the public within the meaning of the Irish Companies Act 2014 (the "Companies Act") to subscribe for any Securities. Each of the Securityholders have agreed, represented and warranted that:
1. it has not offered, sold, placed or underwritten and will not offer, sell, place or underwrite the issue of any Securities otherwise than in conformity with the provisions of the European Union (Markets in Financial Instruments) Regulations 2017 (S.I. No. 375 of 2017)(as amended) and any codes of conduct issued in connection therewith, the provisions of the Investor Compensation Act 1998 (as amended) and the Investment Intermediaries Act 1995 (as amended) and it will conduct itself in accordance with any codes and rules of conduct, conditions, requirements and any other enactment, imposed or approved by the Central Bank with respect to anything done by it in relation to the Securities;
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2. it has not offered, sold, placed or underwritten and will not offer, sell, place or underwrite the issue of any Securities otherwise than in conformity with the provisions of the Central Bank Acts 1942- 2018, as amended, including any codes of conduct rules made under Section 117(1) of the Central Bank Act 1989 (as amended), the Central Bank (Investment Market Conduct) Rules 2019 (S.I. No. 366 of 2019) and any regulations made thereunder and any codes of conduct, guidance and any regulations issued pursuant to Part 8 of the Central Bank (Supervision and Enforcement) Act 2013 (as amended);
3. it has not offered, sold, placed or underwritten and will not offer, sell, place or underwrite the issue of any Securities in Ireland otherwise than in conformity with the provisions of the European Union (Prospectus) Regulations 2019 (S.I. No. 380 of 2019), EU Prospectus Regulation 2017/1129 and any rules issued under Section 1363 of the Companies Act 2014 by the Central Bank;
4. it has not offered, sold, placed or underwritten and will not offer, sell, place or underwrite the issue of any Securities in Ireland otherwise than in conformity with the provisions of (A) the Market Abuse Regulation (Regulation EU 596/2014); (B) the Market Abuse Directive on criminal sanctions for market abuse (Directive 2014/57/EU); (C) the European Union (Market Abuse) Regulations 2016 (S.I. No. 349 of 2016) (as amended); and (D) any rules issued by the Central Bank pursuant thereto and/or under Section 1370 of the Companies Act; and
5. it has not offered, sold, placed or underwritten and will not offer, sell, place or underwrite the issue of any Securities otherwise than in compliance with the provisions of Companies Act, as each of the foregoing may be amended, restated, varied, supplemented and/or otherwise replaced from time to time.
No person has been authorised to give any information or to make any representations, other than those contained in these Base Listing Particulars, in connection with the issue and sale of the Securities and, if given or made, such information or representations must not be relied upon as having been authorised by the Issuer, the Directors of the Issuer, the Trustee, the Portfolio Manager, the Agents, the Corporate Services Provider, the Listing Agent or any other person.
No Securities may be offered or sold, directly or indirectly, and neither these Base Listing Particulars (nor any part hereof) nor any listing particulars, prospectus, form of application, advertisement or other offering materials may be issued, distributed or published in any country or jurisdiction except in circumstances that will result in compliance with applicable laws, orders, rules and regulations, and the Issuer has represented that all offers and sales by it have been made on such terms.
If you are in any doubt about the contents of this document you should consult your stockbroker, bank manager, solicitor, accountant or other financial adviser.
It should be remembered that the price of securities and the income from them can go down as well as up.
The offering, sale and delivery of the Securities in certain jurisdictions are restricted by law. Persons into whose possession these Base Listing Particulars arrives are required by the Issuer to inform themselves about and to observe any such restrictions. For a description of certain restrictions on offers, sales and deliveries of the Securities and on distribution of these Base Listing Particulars and any offering material relating to the Securities, see section of these Base Listing Particulars entitled "Subscription and Sale".
See Appendix A for further foreign offering restrictions.
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GENERAL NOTICE
EACH PURCHASER OF THE SECURITIES (EACH AN "OFFEREE") MUST COMPLY WITH ALL APPLICABLE LAWS AND REGULATIONS IN FORCE IN EACH JURISDICTION AT ANY TIME IN WHICH IT PURCHASES, OFFERS OR SELLS SUCH SECURITIES OR POSSESSES OR DISTRIBUTES THESE BASE LISTING PARTICULARS AND MUST OBTAIN ANY CONSENT, APPROVAL OR PERMISSION REQUIRED FOR THE PURCHASE, OFFER OR SALE BY IT OF SUCH SECURITIES UNDER THE LAWS AND REGULATIONS IN FORCE IN ANY JURISDICTIONS TO WHICH IT IS SUBJECT OR IN WHICH IT MAKES SUCH PURCHASES, OFFERS OR SALES, AND NONE OF THE ISSUER, THE TRUSTEE OR ANY OTHER TRANSACTION PARTY SHALL HAVE ANY RESPONSIBILITY THEREFOR.
THESE BASE LISTING PARTICULARS HAVE BEEN PREPARED BY THE ISSUER SOLELY FOR USE IN CONNECTION WITH THE OFFERING OF THE SECURITIES DESCRIBED HEREIN AND THE ADMISSION TO TRADING OF THE SECURITIES ON THE GLOBAL EXCHANGE MARKET OF EURONEXT DUBLIN (THE "OFFERING"). THE ISSUER RESERVES THE RIGHT TO REJECT ANY OFFER TO PURCHASE SECURITIES IN WHOLE OR IN PART FOR ANY REASON, OR TO SELL LESS THAN THE STATED INITIAL PRINCIPAL AMOUNT OF ANY SECURITIES OFFERED HEREBY. THESE BASE LISTING PARTICULARS ARE PERSONAL TO EACH OFFEREE TO WHOM IT HAS BEEN DELIVERED BY THE ISSUER AND DO NOT CONSTITUTE AN OFFER TO ANY OTHER PERSON OR TO THE PUBLIC GENERALLY TO SUBSCRIBE FOR OR OTHERWISE ACQUIRE THE SECURITIES.
DISTRIBUTION OF THESE BASE LISTING PARTICULARS TO ANY PERSONS OTHER THAN THE OFFEREE AND THOSE PERSONS, IF ANY, RETAINED TO ADVISE SUCH OFFEREE WITH RESPECT THERETO IS UNAUTHORISED AND ANY DISCLOSURE OF ANY OF ITS CONTENTS, WITHOUT THE PRIOR WRITTEN CONSENT OF THE ISSUER, IS PROHIBITED. FOR THE AVOIDANCE OF DOUBT, DISCLOSURE OF THESE BASE LISTING PARTICULARS TO EURONEXT DUBLIN FOR THE PURPOSES OF THE APPLICATION FOR LISTING OF CERTAIN OF THE SECURITIES ON THE OFFICIAL LIST OF EURONEXT DUBLIN AND ADMISSION TO TRADING ON THE GLOBAL EXCHANGE MARKET OF EURONEXT DUBLIN, AND MAKING IT AVAILABLE FOR INSPECTION TO HOLDERS OF THE SECURITIES IN PHYSICAL FORM AT THE REGISTERED OFFICE OF THE ISSUER OR THE SPECIFIED OFFICE OF THE PAYING AGENT, IS NOT PROHIBITED BY THE FOREGOING.
INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF AN INVESTMENT IN THE SECURITIES FOR AN INDEFINITE PERIOD OF TIME.
FOR A DISCUSSION OF CERTAIN FACTORS REGARDING THE ISSUER AND THE SECURITIES THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SECURITIES, SEE "RISK FACTORS".
SEE "SUBSCRIPTION AND SALE" AND APPENDIX A HERETO FOR CERTAIN TERMS AND CONDITIONS OF THE OFFERING OF THE SECURITIES HEREUNDER.
IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER, THE PORTFOLIO MANAGER, THE SECURITIES AND THE OFFERING THEREOF DESCRIBED HEREIN, INCLUDING THE MERITS AND RISKS INVOLVED.
FORWARD-LOOKING STATEMENTS
These Base Listing Particulars contain statements that are not purely historical in nature, but are "forward-looking statements". These include, among other things, future performance targets and specific investment strategies. These forward-looking statements are based upon certain assumptions and involve significant elements of subjective judgment and analysis. No representation is made that any
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returns indicated will be achieved or that all assumptions have been considered or stated. Actual events may differ materially from those assumed. All forward-looking statements included are based on information available on the date hereof and the Issuer assumes no duty to update any forward-looking statement.
DOCUMENTS INCORPORATED BY REFERENCE
The financial statements of the Issuer for the period ended 31 December 2017 and 31 December 2018 have been filed with Euronext Dublin and shall be deemed to be incorporated in, and form part of, these Base Listing Particulars.
xiii 8585369.8H2188.I00488 TABLE OF CONTENTS Page
OVERVIEW ...... 1 TRANSACTION STRUCTURE ...... 16 DIAGRAMMATIC OVERVIEW OF THE OWNERSHIP STRUCTURE OF THE ISSUER ...... 17 THE ASSETS OF THE ISSUER ...... 18 INTRODUCTION ...... 18 ON-GOING MANAGEMENT OF SERIES ASSETS ...... 26 RISK FACTORS ...... 33 CONFLICTS OF INTERESTS...... 77 INFORMATION ABOUT THE TRANSACTION PARTIES ...... 80 THE ISSUER ...... 80 CORPORATE SERVICES PROVIDER ...... 82 PORTFOLIO MANAGER ...... 82 MANAGEMENT TEAM ...... 83 CALCULATION AGENT ...... 84 PAYING AGENT ...... 84 REGISTRAR AND TRANSFER AGENT ...... 84 TRUSTEE...... 84 TERMS AND CONDITIONS OF THE SECURITIES ...... 85 SUMMARY OF THE MASTER DOCUMENTS ...... 114 MASTER TRUST TERMS ...... 114 MASTER AGENCY TERMS ...... 128 PORTFOLIO MANAGEMENT AGREEMENT ...... 134 CUSTODIAN AGREEMENT ...... 138 CORPORATE SERVICES AGREEMENT ...... 138 MASTER DEFINITIONS ...... 140 GOVERNING LAW OF THE MASTER DOCUMENTS ...... 140 ADMISSION TO TRADING ...... 141 USE OF PROCEEDS ...... 142 CERTAIN TAXATION CONSIDERATIONS ...... 143 CERTAIN US FEDERAL INCOME TAX CONSIDERATIONS ...... 143 ERISA CONSIDERATIONS ...... 161 SUBSCRIPTION AND SALE ...... 163 GENERAL INFORMATION ...... 168 DEFINITIONS ...... 170 APPENDIX A: OFFERING DISCLOSURES ...... 181 TRANSACTION PARTIES ...... 191
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OVERVIEW
The following summary of the Programme is qualified in its entirety by the remainder of these Base Listing Particulars and, with respect to each Series, by the relevant Constituting Instrument. The Securities may be issued on such terms as may be agreed between the relevant Securityholder and the Issuer and, unless specified to the contrary in the relevant Constituting Instrument, will be subject to the Terms and Conditions set out below. The relevant Constituting Instrument will contain all relevant information concerning the Issuer and the Series to which it relates which does not appear in these Base Listing Particulars (as it may be supplemented from time to time (see "Supplementary Information" above).
This summary must be read as an introduction to these Base Listing Particulars and any decision to invest in the Securities should be based on a consideration of these Base Listing Particulars as a whole, and also the relevant Constituting Instrument.
The following overview does not purport to be complete and is qualified in its entirety to the detailed information appearing elsewhere in these Base Listing Particulars and the Transaction Documents referred to herein. An index of defined terms appears in the back of these Base Listing Particulars.
Issuer: HCM QFII Investment DAC, a private company with limited liability incorporated under the laws of Ireland and having its registered office at Custom House Plaza, Block 6, I.F.S.C., Dublin 1, Ireland.
The Programme: The Programme creates a framework under which the Issuer may issue one or more series of Securities from time to time (each a "Series"). The proceeds of issue of each Series will be used by or on behalf of the Issuer in acquiring Eligible Assets in accordance with the Eligibility Criteria, which shall be designated as Combined Series Assets or Segregated Series Assets, as described below. See further "Use of Proceeds and Expenses" below.
Account Bank: Citco Nederland Bank N.V., Dublin Branch and such account bank(s) and any successor substitute account bank(s) as may be designated as such by the Issuer and notified to the Trustee from time to time.
Corporate Services Provider: Citco Corporate Services (Ireland) Limited, having its place of business at Custom House Plaza, Block 6, IFSC, Dublin 1, Ireland, acts as the Corporate Services Provider to the Issuer pursuant to the terms of the Corporate Services Agreement (which sets out the terms and conditions under which the Corporate Services Provider has agreed to provide certain corporate administration services to the Issuer).
Calculation Agent: Hillhouse Capital Advisors, Ltd., having its registered office at 190 Elgin Avenue, George Town, Grand Cayman KY1-9001, Cayman Islands, acts as Calculation Agent pursuant to the terms of the Agency Agreement.
Portfolio Manager: Hillhouse Capital Advisors, Ltd., having its registered office at 190 Elgin Avenue, George Town, Grand Cayman KY1-9001, Cayman Islands acts as Portfolio Manager pursuant to the terms of the Portfolio Management Agreement.
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Paying Agent: The Bank of New York Mellon, acting through its London Branch, having its place of business at One Canada Square, London E14 5AL, United Kingdom acts as Paying Agent pursuant to the Master Agency Terms (which establishes the obligations of each of the Agents to the Issuer and the obligations of the Issuer to each of the Agents in connection with the Securities).
Registrar and Transfer Agent: The Bank of New York Mellon SA/NV, Luxembourg Branch, having its place of business at Vertigo Building – Polaris, 2-4 rue Eugène Ruppert, L-2453 Luxembourg, acts as the Registrar and the Transfer Agent pursuant to the Master Agency Terms.
Share Trustee: Walkers Global Shareholding Services Limited, having its place of business at 5th Floor, The Exchange, George's Dock, I.F.S.C., Dublin 1, Ireland, holds one issued share of the Issuer in trust for charitable purposes under the terms of a discretionary charitable trust established pursuant to the Declaration of Trust.
Trustee: BNY Mellon Corporate Trustee Services Limited, having its place of business at One Canada Square, London E14 5AL, United Kingdom, acts as Trustee pursuant to the Master Trust Terms, pursuant to which the Trustee is appointed with respect to the Securities.
Custodian China Construction Bank Corporation, having its place of business at No.25, JinRong Street, Xicheng District, Beijing, China, Postcode 100033 acts as Custodian pursuant to the Custodian Agreement with respect to the Series Assets acquired by the Issuer from time to time and to be held by the Custodian in accordance with the terms of the Custodian Agreement.
Listing Agent: Walkers Listing Services Limited, having its place of business at 5th Floor, The Exchange, George's Dock, I.F.S.C., Dublin 1, Ireland, acts as listing agent of the Securities (the "Listing Agent").
Method of Issue: The Securities will be issued in Series having one or more settlement or issue dates and on terms otherwise identical. The Securities of each Series are intended to be interchangeable with all other Securities of that Series (if applicable).
Each Series may be issued in tranches (each a “Tranche”) and may have different settlement or issue dates. The specific terms of each Tranche (which will be supplemented, where necessary, with supplemental terms and conditions and, save in respect of the settlement or issue date, issue price, first payment of interest and principal amount of the Tranche (if applicable), will be identical to the terms of other Tranches of the same Series) will be set out in the relevant Series Listing Particulars.
All Securities shall be designated as either Segregated Series Securities or Combined Series Securities.
Further Combined Series
The Issuer shall be at liberty from time to time without the consent of the Securityholders of any Combined Series to create and issue further Securities ("Further Securities") which shall be consolidated
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and form a single Series with any existing Combined Series ("Existing Combined Series") provided that:
(a) the Further Securities together with any existing Combined Series Securities issued under the Existing Combined Series are backed by the applicable Combined Series Assets;
(b) the Conditions of the Further Securities as regards payment of interest and principal are identical to the Conditions of the Securities of such Existing Series except in respect of any amount of interest or principal already paid or payable in respect thereof;
(c) the Further Securities are constituted by a constituting instrument supplemental to the Constituting Instrument in respect of the Securities of such Existing Series (the "Further Constituting Instrument"), and so that, upon the execution of the Further Constituting Instrument, all references to the "Constituting Instrument", shall be construed as being to such document as amended and supplemented by the Further Constituting Instrument;
(d) the holders of the Existing Series shall be notified as soon as practicable by the Issuer or its agents of the issuance of Further Securities forming part of the same Series;
(e) the total principal amount of the Securities of the Combined Series shall be limited to the amount specified in the designated title of the Combined Series; and
(f) the Securities may be issued to such persons and on such terms and conditions and at such time or times as the Issuer shall determine, subject to the provisions of the relevant Constituting Instrument, and the Trustee shall not be responsible for the receipt or application of the proceeds of issue thereof by the Issuer.
Upon any issue of Further Securities pursuant to Condition 16 (Further Issues) of the Master Conditions all references in the relevant Conditions to Combined Series Securities shall be deemed (where the context permits) to include the Further Securities.
Further Segregated Series
The Issuer shall be at liberty from time to time without the consent of the then existing holders of any Series to create and issue additional Series that shall be designated as Segregated Series Securities and shall be backed by its own Segregated Series Assets.
Form and Minimum The Securities are issuable in fully registered form, without coupons, Denominations: in minimum denominations of USD 250,000 or such other figure and currency as may be specified in the Constituting Instrument provided always that such figure shall exceed the US Dollar equivalent of EUR 100,000.
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Ownership of a Security will be shown on, and transfers thereof will only be effected through, the Register maintained by the Registrar. The person whose name is entered in the Register as being the holder of a Security shall be treated by the Issuer, the Trustee, the Paying Agent and the Registrar as the beneficial holder of the Security (whether or not the Security is overdue and regardless of any notice of ownership, trust or any interest in it) for all purposes including the making of any payments thereon.
Principal Amounts under the The maximum principal amount of the Securities under the Securities: Programme is USD 10,000,000,000.
The Securities may be issued as partly-paid securities and the issue price shall be payable in one or more instalments by way of Advances. The initial principal amount of each Security is such figure as may be specified in the relevant Constituting Instrument (which may be zero). Because the Redemption Amount is determined pursuant to the Priority of Payments, the Redemption Amount may be equal to, greater or lesser than, the principal amount due on the Security.
The maximum principal amount of each Security is such figure specified in the relevant Constituting Instrument, provided always that such maximum principal amount of the Securities shall not cause the Programme Limit in respect of the Securities to be exceeded.
Each Securityholder may provide further Advances under the Securities as set out below:
(a) The Issuer may deliver an Additional Funding Request to the Securityholder(s), Portfolio Manager, Calculation Agent and Registrar requesting an Advance from such Securityholder(s) under the Securities with at least seven (7) Business Days' notice prior to the due date for payment of such Advance (or such shorter period as may be consented to by the relevant Securityholder);
(b) Each Securityholder shall, as soon as reasonably practicable following receipt of the Additional Funding Request, and no later than five (5) Business Days prior to the due date for payment of such Advance (or such shorter period as may be consented to by the Issuer), confirm to the Issuer, Portfolio Manager, Calculation Agent and Registrar whether it will make the necessary arrangements to fund such Advance;
(c) Where an Advance is made between Payment Dates and prior to the relevant Redemption Date, interest shall be deemed to accrue on such Advance as and from the preceding Redemption Date;
(d) The aggregate amount of all Advances made to the Issuer under the Series shall not exceed the fully paid-up aggregate principal amount of such Series, provided always that such maximum principal amount of the Securities shall not cause the Programme Limit in respect of the Securities to be
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exceeded;
(e) On the receipt by the Issuer of such additional funding in immediately available funds to the Account (or to the Issuer's order), the Issuer (or the Portfolio Manager on its behalf) shall notify the Registrar of receipt of same; and
(f) Following such confirmation of receipt of funds, the Registrar shall amend the Register to reflect the terms of the Advance to increase the paid-up principal amount outstanding of the Securities.
For the avoidance of doubt, where there are multiple Securityholders holding the Securities, there shall be no requirement for any Advances to be funded on a pro rata basis and the Advance funded by each Securityholder may be agreed separately with the Issuer without regard to any Advances funded by any other Securityholder(s).
Maturity Date: The Maturity Date shall be 50 years or such other date as may be specified in the relevant Constituting Instrument, subject to the requirement that the Securities issued pursuant to the Programme shall have a minimum maturity of greater than one year.
Status: The Securities will be constituted by the relevant Constituting Instrument and the Master Trust Terms and will be limited recourse, general, direct, unconditional and unsecured indebtedness of the Issuer.
Payments of principal and interest in respect of the Combined Series Securities will be made solely from the proceeds of the Issuer's interests in the relevant Combined Series Assets.
Payments of principal and interest in respect of the Segregated Series Securities will be made solely from the proceeds of the Issuer's interests in the relevant Segregated Series Assets.
The obligations of the Issuer with respect to the Securities rank pari passu between themselves and are subordinated in payment priority to the prior ranking obligations and indebtedness of the Issuer, due and payable from time to time, as set out in the Priority of Payments. Because the Redemption Amount is determined pursuant to the Priority of Payments, the Redemption Amount may be equal to, greater or lesser than, the principal amount due on the relevant Security.
Rating: Neither the Issuer nor the Securities will be rated.
Security: The Securities are unsecured obligations of the Issuer.
Interest: Unless specified in the relevant Constituting Instrument, no fixed amount of interest is payable with respect to the Securities. Interest shall accrue on each Security on a pro-rata basis on the aggregate outstanding principal amount of the Securities until paid or until the Securities are repaid or otherwise discharged in full in accordance
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with Conditions.
The interest payable on the Combined Series Securities with respect to any Interest Period (the "Combined Series Interest") shall be a pro rata amount equal to one hundred per cent (100%) of the profits of the Issuer for that Interest Period earned on the Combined Series Assets applicable to such Combined Series Securities less all other amounts under the Priority of Payments and any other expenditure of the Issuer which is deductible for tax purposes and not attributable to the Segregated Series Securities (excluding for the avoidance of doubt the Combined Series Interest and the Segregated Series Interest) for that Interest Period and in no case can the interest be less than zero.
The interest payable on a specific Segregated Series Securities with respect to any Interest Period (the "Segregated Series Interest") shall be a pro rata amount equal to one hundred per cent (100%) of the profits of the Issuer for that Interest Period earned on the Segregated Series Assets applicable to such specific Segregated Series Securities less all other amounts under the Priority of Payments and any other expenditure of the Issuer which is deductible for tax purposes and attributable to the Segregated Series Securities (excluding for the avoidance of doubt the Segregated Series Interest) for that Interest Period and in no case can the interest be less than zero.
It is not expected that interest will be paid on the Securities prior to redemption.
Payment Dates: "Payment Date" means the date falling at least five (5) Business Days after each Redemption Date or any other date as determined by the Portfolio Manager or the Issuer in its sole and absolute discretion.
The payment of interest and principal under the Securities rank lowest in the priority of payments.
Interest Periods The length of the interest periods for the Securities may differ from time to time or be constant for any one Series. Such interest periods shall be determined in the sole discretion of the Issuer or the Portfolio Manager on its behalf.
Withholding of Tax on the All payments in respect of the Securities will be made without Securities: deduction or withholding for or on account of Irish taxes unless required by law. If any such deduction or withholding is made the Issuer will not be required to pay additional amounts in respect of the amount so deducted or withheld.
Repayment of Interest and The Securities may be redeemed in the following manner: Redemption: (a) Final Redemption
Unless previously redeemed or purchased and cancelled as provided below, each Security will be redeemed at its
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Scheduled Redemption Amount on the Maturity Date.
(b) Voluntary Early Redemption by the Issuer
The Issuer shall be entitled by at least seven (7) days' notice in writing to the Trustee, the Calculation Agent and the Paying Agent (a "Redemption Notice"), to designate any Business Day as the date on which the Security shall be redeemed in full or in part, in accordance with the terms hereof (the "Early Redemption Date"). The Issuer shall use commercially reasonable endeavours to procure a liquidation of the Combined Series Assets and/or the Segregated Series Assets, as the case may be, acquired through funding received under the applicable Security(s) (or part thereof) that it or its Portfolio Manager deems advisable in such party's sole discretion; provided that any Restricted Asset (as defined below) may be liquidated as provided below. If such liquidation or funding is successful, the Security or Securities shall be redeemed in full or in part at its Redemption Amount on the Early Redemption Date designated in accordance with the Conditions, subject to and in accordance with the Pre-Enforcement Priority of Payments. For the avoidance of doubt, a Security shall be deemed fully paid upon payment to the Securityholder of their pro rata portion of the Combined Series Assets or Series Assets, as applicable, and pursuant to the Priority of Payments.
(c) Securityholder Early Redemption
Subject to the applicable lock-up period, unless waived by the Issuer, each Securityholder may request an early repayment of part or all of interest and principal payable on each Security by delivering written notice to the Issuer. Redemptions shall only be made on June 30th or December 31st of each year unless otherwise agreed to by the Issuer. The applicable lock-up period shall be the first June 30th or December 31st occurring after the 30th month following the date on which the particular investment was made in the relevant Security. For the avoidance of doubt, a Security shall be deemed fully paid upon payment to the Securityholder of their pro rata portion of the Combined Series Assets or Series Assets, as applicable, and pursuant to the Priority of Payments.
(d) Redemption Amount of Securities
The Calculation Agent will, on such date it may be required to calculate any Redemption Amount, cause such Redemption Amount to be notified to the Trustee, Paying Agent and the Registrar and to be notified to the Securityholders in accordance with Condition 14 (Notices) of the Master Conditions as soon as possible after its calculation but in no event later than the first Business Day thereafter. The calculation of the Redemption Amount, if required to be calculated, shall (in the absence of manifest error) be final and binding upon all parties. Because the
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Redemption Amount is determined pursuant to the Priority of Payments, the Redemption Amount may be equal to, greater or lesser than, the principal amount due on the Security.
(e) Cancellation
All Securities (or the Registered Certificates representing same) which are redeemed in full will, unless otherwise permitted by the Conditions, forthwith be cancelled by the Registrar or Transfer Agent to which the relevant Registered Certificate is surrendered and, accordingly, may not be held, reissued or resold. The relevant Agent shall give all relevant details and forward all cancelled Securities, or Registered Certificates, if it is not the Registrar, to the Registrar.
(f) Additional Redemption Provisions
Redemptions shall also be subject to the following additional conditions (unless any such condition is waived by the Portfolio Manager, in its sole and absolute discretion, with respect to any Securityholder):
(i) Redemptions requests must specify which Securities it wishes to redeem. The minimum amount of any redemption request by a Securityholder shall be USD 1,000,000 (or such other amount as from time to time established by the Issuer).
(ii) Requests for redemptions shall be received at least sixty (60) days prior to the desired redemption date unless such period is waived by the Issuer.
(iii) The Issuer reserves the right in its sole and absolute discretion to satisfy a redemption requests (A) in cash, (B) in whole or in part by the distribution in-kind of one or more marketable securities or (C) through a combination of cash and such securities. The Issuer is not required to distribute securities in-kind upon a redemption on a pro rata basis. No Securityholder shall have the right to require any distribution on any assets of the Issuer in-kind upon any redemption or otherwise.
(iv) Notwithstanding the foregoing and subject to the Issuer’s ability to waive application of this provision to any or all of the Securityholders, a Securityholder shall not be entitled to redeem any portion of its Securities in excess of twenty per cent (20%) of the value of the Issuer’s assets, as determined as at the last Business Day of the calendar year immediately preceding such redemption date. In the event that redemptions of multiple Securities will become effective on the same date, the Issuer shall adjust each such permitted redemption amount pro rata in proportion to the aggregate Securities held by
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redeeming Securityholders so that the aggregate redemptions on any date do not exceed twenty per cent (20%) of the assets of the Issuer determined as at the last Business Day of the calendar year immediately preceding such redemption date.
(v) Notwithstanding the foregoing, no Securityholder shall be entitled to receive principal or interest on any Security during any period that the determination of value of a material portion of the Issuer’s assets and liabilities cannot reasonably be determined because of the existence of conditions beyond the reasonable control of the Issuer or because such redemption would materially impair the Issuer’s ability to operate in pursuit of its objective.
(vi) Payment of any amount shall be made within thirty (30) days of the redemption date (each such date, in this section, a “Payment Date”); provided, however, that if a Securityholder elects to redeem more than ninety per cent (90%) of the value of its Securities (excluding its pro rata share in any Restricted Asset), the Issuer shall pay the Securityholder an amount equal to at least ninety per cent (90%) of such Securityholder’s estimated redemption proceeds (excluding its pro rata share in any Restricted Asset and on the basis of unaudited data) within thirty (30) days after the Payment Date. The Issuer shall pay the balance of such Securityholder’s redemption proceeds (excluding its pro rata share in any Restricted Asset and subject to audit adjustments) less any amounts used to pay liabilities, fees or expenses required (as described herein) within thirty (30) days after completion of the audit of the Issuer’s books for the fiscal year in which such Payment Date occurs. The Issuer shall pay interests to each Securityholder on the balance of the redemption proceeds (excluding its pro rata share in any Restricted Asset and less any liabilities, fees or expenses) at a rate per annum equal to the 3-month U.S. Treasury bills for the period beginning on the Payment Date and ending on the date immediately preceding the date of payment. “Restricted Assets” means any asset for which there is, in the Portfolio Manager’s sole and absolute discretion, no readily ascertainable market. Participation in any Restricted Asset investment shall be limited to the Securityholders existing at the time of the Restricted Asset’s acquisition or deemed acquisition.
(vii) Notwithstanding the foregoing, a Securityholder may not redeem any portion of a Security that is attributable to a Restricted Asset, unless otherwise determined by the Issuer in its sole and absolute discretion. If a portion of a fully redeeming Securityholder’s principal is attributable to Restricted
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Assets, then, unless otherwise determined by the Issuer in its sole and absolute discretion, the amount distributed to such Securityholder shall not include any interest in such Restricted Assets. Upon realisation or deemed realisation, the Securityholder’s share of realised amounts shall be paid to a Securityholder who has fully redeemed from the Issuer and such distribution (subject to the Priority of Payments) shall be made within forty-five (45) days of the end of the quarter in which such realisation or deemed realisation occurs.
(viii) The right of any Securityholder to redeem is subject to the provisions by the Issuer for reasonable reserves for contingencies and estimated accrued expenses. If a Securityholder redeems from the Issuer while such Securityholder has an interest in a Restricted Asset, the Issuer may establish a reasonable reserve to pay for future expenses attributable to such Restricted Asset.
(ix) Subject to the provisions relating to Restricted Assets, the applicable lock-up period shall not apply to any redemption of Securities requested by an ERISA Investor, no later than twenty (20) days following notice to such ERISA Investor that there is a reasonable likelihood that the Issuer will be deemed to be holding “plan assets” for purposes of ERISA. “ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as amended. “ERISA Investor” means any Securityholder that is a “benefit plan investor” within the meaning of Section 3(42) of ERISA. “ERISA Plan” means a U.S. employee benefit plan, Keogh plan or other arrangement subject to ERISA or to Section 4975 of the Code (including any entity whose assets are considered under ERISA or the Code to include the assets of such plan or arrangement), or which is treated by the Issuer as if it were subject to ERISA.
(x) Any redemption pursuant section (ix) shall become effective as at the end of the first full calendar month after the event giving rise to a special redemption right.
(xi) Unless the Issuer determines to dissolve the Issuer, a Securityholder requesting a redemption pursuant to section (ix) will be paid ninety per cent (90%) of the relevant Securities (but excluding such Securityholder’s pro rata share of any Restricted Asset) within thirty (30) days following such withdrawal date. The balance of such Security(s) will be paid (subject to audit holdbacks and with interest and excluding such Securityholder’s pro rata share of any Restricted Asset) within thirty (30) days after
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completion of the audit of the Issuer’s books for the fiscal year in which such redemption date occurs. Except as provided in the preceding sentence, special redemptions permitted under this section shall not be subject to the gate or suspension provisions.
(xii) Notwithstanding the requirements of section (vii), in the event of a redemption by an ERISA Investor permitted under this section, such ERISA investor shall be paid the fair market value (as determined at the time of redemption) of its share of all Restricted Assets, which such allocation shall be treated as an investment made proportionately by all participating Securityholders.
(g) Clean Up Call
If the Sub-Advisor has its QFII Licence or Investment Quota withdrawn or cancelled by the CSRC or SAFE, then the Issuer may, subject to the consent of the Portfolio Manager (which consent shall not be unreasonably withheld), realise the applicable Series Assets for the purposes of applying the proceeds to redeem the remaining Securities in issue in full at the applicable Redemption Amount on a Redemption Date to be elected at its discretion.
Events of Default and The following shall constitute Events of Default under the Securities Remedies: in respect of any Combined Series or Segregated Series, unless waived by the Trustee acting in accordance with a Written Direction:
(a) Insolvency Proceedings
(i) if the Issuer, otherwise than for the purposes of such amalgamation or reconstruction as is referred to in sub-Clause (iii) below, ceases or, through an official action of the Directors, threatens to cease to carry on business;
(ii) if the Issuer is unable to pay its debts as and when they fall due;
(iii) if an order is made or an effective resolution is passed for the winding up of the Issuer except a winding up for the purposes of or pursuant to an amalgamation or reconstruction the terms of which have previously been approved by the Trustee in writing;
(iv) if (I) any steps are taken (whether out of court or otherwise) against the Issuer under any applicable liquidation, insolvency, composition, reorganisation or other similar laws (including, but not limited to, application for an administration order or the appointment of an Insolvency Official) and such
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proceedings are not, in the opinion of the Securityholder, being disputed in good faith with a reasonable prospect of success, or (II) an Insolvency Official is appointed in relation to the Issuer or in relation to the whole or any substantial part of the undertaking or assets of the Issuer, or (III) an encumbrancer takes possession of the whole or any substantial part of the undertaking or assets of the Issuer, or (IV) a distress, execution, attachment, sequestration, diligence or other process is levied or enforced upon or sued out against the whole or any substantial part of the undertaking or assets of the Issuer and such possession or process (as the case may be) is not being discharged or does not otherwise cease to apply within fourteen (14) days, or (V) the Issuer initiates or consents to judicial proceedings relating to itself under applicable liquidation, insolvency, composition, reorganisation, examination or other similar laws or makes a conveyance or assignment for the benefit of its creditors, generally or enters into any composition or other arrangement with, its creditors generally (or any class of its creditors) or any meeting is convened to consider a proposal for an arrangement or composition with its creditors generally (or any class of its creditors);
(v) if any decree, resolution, authorisation, approval, consent, filing, registration or exemption necessary for the execution and delivery of the Security on behalf of the Issuer and the performance of the Issuer's obligations under the Security is withdrawn or modified or otherwise ceases to be in full force and effect, or it is unlawful for the Issuer to comply with, or it contests the validity or enforceability of or repudiates, any of its obligations under the Security or the Conditions; or
(vi) any event occurs which under any applicable laws has an analogous effect to any of the events referred to in paragraphs (i), (ii), (iii), (iv) or (v) above.
(b) Illegality
It is or will become unlawful for the Issuer to perform or comply with any one or more of its material obligations under the Conditions, the Constituting Instrument or the Series Documents.
(c) Repudiation
The Issuer repudiates the Conditions, the Constituting Instrument or the Series Documents or does or causes to be done any act or thing evidencing an intention to repudiate the Conditions, the Constituting Instrument or the Series
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Documents.
(d) Moratorium
Any governmental authority or agency condemns, seizes, compulsorily purchases or expropriates all or any material part of the assets of the Issuer.
(e) Removal of Portfolio Manager / Termination of Portfolio Management Agreement
If the Portfolio Manager is removed or the Portfolio Management Agreement is terminated, in each case in accordance with the provisions of the Portfolio Management Agreement, unless waived by the Trustee acting in accordance with a Written Direction.
(f) Acceleration
If an Event of Default occurs and is continuing the Trustee shall, following receipt of a Written Direction (and subject to being indemnified and/or secured and/or prefunded to its satisfaction against all liabilities, proceedings, claims and demands to which it may thereby become liable and all costs, charges, and expenses which may be incurred by it in connection therewith), give an Enforcement Notice to the Issuer that all the amounts outstanding in respect of all Securities of a Series are immediately due and payable. Upon an Enforcement Notice being given to the Issuer, all amounts outstanding under all such Securities shall immediately become due and payable. No acceleration of any Securities shall be permitted by any person other than the Trustee acting in accordance with a Written Direction.
The occurrence of an Event of Default under any Combined Series will not constitute an Event of Default in respect of any other Combined Series or any Segregated Series and the occurrence of an Event of Default in respect of any Segregated Series will not constitute an Event of Default in respect of any other Segregated Series or any Combined Series.
Listing: Securities of any Series may be admitted to the Official List of Euronext Dublin and to trading on the Global Exchange Market of Euronext Dublin or as otherwise specified in the Constituting Instrument.
The Issuer covenants to use its best endeavours to maintain the admission of the Securities of a listed Series to the Official List of Euronext Dublin and to trading on its Global Exchange Market for so long as they are outstanding.
Further, the relevant Constituting Instrument may specify that a Series may not be listed on any stock exchange, or may be listed on one or more stock exchanges other than Euronext Dublin and/or may be admitted to trading on one or more markets other than the Global
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Exchange Market of Euronext Dublin or may not be admitted to trading on any market.
Selling Restrictions There are restrictions on the offer, sale and transfer of the Securities. applicable to the Securities: See "Subscription and Sale" below.
Risk Factors: There are certain risks related to the Issuer, and the Securities which investors should fully understand, a non-exhaustive summary of which is set out under "Risk Factors" below.
Use of Proceeds: All funding received under the Securities of any Series shall be used at the discretion of the Issuer or the Portfolio Manager to:
(a) acquire, manage and service Combined Series Assets or Segregated Series Assets, as applicable, and to meet its obligations thereunder from time to time;
(b) pay the Trustee Fees and/or Agents Fees due and payable or expected to be due and payable in accordance with the terms hereof;
(c) pay the Series Expenses (including the applicable management fee and performance fee) due and payable or expected to be due and payable in accordance with the terms hereof; and
(d) pay the Expenses (including the applicable management fee and performance fee) due and payable or expected to be due and payable in accordance with the terms hereof.
The Issuer shall procure that a sufficient amount of the initial principal amount of funding is retained for the payment of Trustee Fees, Agents Fees, Series Expenses and or Expenses or the pro-rata share of obligations, costs (including organisational costs), fees, liabilities and expenses allocable to the Securities in accordance with the terms hereof.
Portfolio Management The Issuer, the Trustee and the Portfolio Manager have entered into Agreement: the Portfolio Management Agreement pursuant to which the Portfolio Manager has agreed to provide certain management services to the Issuer.
The Portfolio Manager has appointed Hillhouse Capital Management Pte. Ltd. as its non-discretionary sub-advisor (the "Sub-Advisor") with respect to the Issuer and the Series Assets. The Portfolio Manager remains fully liable for the provision of the services under the Portfolio Management Agreement.
Master Trust Terms: Under the Master Trust Terms, the Trustee is appointed with respect to the Securities.
Master Agency Terms: The Issuer has appointed the Paying Agent, Transfer Agent, Registrar, and Calculation Agent pursuant to the Master Agency Terms which sets forth the terms and conditions under which the Securities are issued and establishes the obligations of each of the
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Agents to the Issuer and the obligations of the Issuer to each of the Agents in connection with the Securities.
Custodian Agreement: The Sub-Advisor and the Custodian have entered into the Custodian Agreement pursuant to which the Custodian has agreed to provide certain custodial services to the Sub-Advisor with respect to certain Series Assets.
Corporate Services The Issuer and the Corporate Services Provider have entered into Agreement: the Corporate Services Agreement pursuant to which the Corporate Services Provider has agreed to provide certain administrative services to the Issuer.
Valuation Subject as provided in the Portfolio Management Agreement and the Agency Agreement, the Calculation Agent shall be responsible for the determination of the net asset value of the Issuer and the net asset value of each Series Assets, subject to the overall supervision and direction of Issuer, on such dates as it may deem appropriate and as required for and pursuant to the Transaction Documents.
In determining the net asset value of the Issuer and the net asset value of each Series Assets, the Calculation Agent will follow the following valuation policies and principles adopted by the Issuer (the "Valuation Policy"), as may be amended, varied, supplemented or otherwise modified from time to time with the consent of the Issuer, the Calculation Agent and the Calculation Agent (with notice to the Trustee and Securityholders in accordance with the terms of the Transaction Documents).
Governing Law: The Master Conditions, Master Trust Terms, Master Agency Terms, the Securities, Corporate Services Agreement are governed by the laws of Ireland.
The Custodian Agreement and Brokerage Agreements are governed by the laws of the People's Republic of China (the "PRC").
The Portfolio Management Agreement is governed by the laws of Cayman Islands.
Counsel Walkers Ireland acts as Irish legal counsel to the Issuer. Hogan Lovells serves as United States legal counsel to the Issuer.
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TRANSACTION STRUCTURE
The diagram below is intended to highlight the structure, contractual arrangements and cashflow for this transaction. It is not intended to be an exhaustive description of such matters. Prospective Securityholders should also review the detailed information set out elsewhere in these Base Listing Particulars for a more thorough description of the transaction structure, contractual arrangements and relevant cashflows prior to making any investment decision.
Trust Deed Trustee
Securityholder(s) Securityholder(s) (Combined Series) (Segregated Series)
Interest & Principal Interest &Principal Payments on Payments on Securities Securities (via Paying Agent) (via Paying Agent)
Charity
Paying Agent Initial Subscription Share Trustee Amount
Calculation Issued Declaration Agent Share Agency of Trust (HCA) Agreement Issuer
Management Agreement
Returns Returns Manager Registrar & (HCA) Transfer Agent
Sub-Advisor Corporate Custodian (HCM) Services Provider Agreement (Citco Ireland)
Subscription Custodian Proceeds Corporate to buy (CCB) Services Eligible Assets Brokerage Agreement Agreements
Combined Segregated Execution Series Assets Series Assets Brokers
Indicates payment flows Indicates trust / contractual relationships
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DIAGRAMMATIC OVERVIEW OF THE OWNERSHIP STRUCTURE OF THE ISSUER
Walkers Global Shareholding Services Limited
(Share Trustee)
100 per cent
HCM QFII Investments DAC
(Issuer)
The issued share capital of the Issuer is held by the Share Trustee as trustee, subject to the terms of a charitable trust established pursuant to a declaration of trust dated 8th January 2013 (the "Declaration of Trust").
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THE ASSETS OF THE ISSUER
INTRODUCTION
As more particularly described below, the assets of the Issuer shall comprise the Series Assets, comprised of Combined Series Assets and Segregated Series Assets which, in turn shall each be comprised of Eligible Assets only (or cash) and shall be the sole source of repayment of the Securities.
In that regard, the claims of the holders of Combined Series Securities shall be limited to the value from time to time of relevant Combined Series Assets and the claims of the holders of Segregated Series Securities shall be limited to the value from time to time of the relevant Segregated Series Assets, payable solely out of proceeds received by or on behalf of the Issuer in respect of the relevant Series Assets in accordance with the Priority of Payments. In the event of a shortfall in such proceeds, the Issuer will not be obliged to pay, and the other assets of the Issuer will not be available for payment of, such shortfall, all claims in respect of which shall be extinguished.
The Portfolio Manager shall be responsible for acquiring and managing the Series Assets on behalf of the Issuer in accordance with the provisions of the Portfolio Management Agreement.
At the time of listing the assets of the Issuer comprise QFII Investments and cash received by the Issuer in respect of funding it has received with respect of the Securities in issue as of the date hereof. This cash will be applied to, inter alia, acquire Eligible Assets and pay Trustee Fees, Series Expenses and Expenses (see the section of these Base Listing Particulars entitled "Use of Proceeds").
Acquisition and Investment Criteria
Strategy
The Issuer, in normal circumstances, invests in situations in which the Portfolio Manager has an edge in understanding the long-term risk-reward characteristics of a particular Eligible Asset. The Portfolio Manager identifies opportunities for attractive long-term, risk-adjusted capital appreciation through bottom-up analysis and fundamental proprietary research. The research process encompasses both qualitative and quantitative assessments of potential investments with a particular focus on opportunities upon which we can gain conviction and discover value in an ever-changing world.
The Portfolio Manager may devote several years researching and monitoring an industry, sector, or company before identifying an investable opportunity and generating sufficient conviction to deploy capital. Once an investment theme is identified, the Portfolio Manager may choose to pursue the opportunity through both private and public equity markets, as well as structured deals, on occasion subject to the Eligibility Criteria (as defined below). This flexibility allows the Issuer to hold attractive assets across capital structures and equity stages for multi-year periods and focus on optimizing long- term investment returns. This fundamental research persistence allows the Issuer to be a patient, long- term investor.
The Issuer invests in QFII Investments, assets established in, or having relations with, Greater China but may also invest in other companies or assets that have no relation to Greater China, subject to the Eligibility Criteria. Under normal circumstances, the Issuer invests primarily in assets that the Portfolio Manager believes offer compelling risk/return potential, taking into consideration downside risk, growth characteristics and valuation on a long-term basis, subject to the Eligibility Criteria.
The Portfolio Manager monitors macro-economic factors and market trends for purposes of risk control, but portfolio investments are driven primarily by bottom-up opportunities. The Issuer will have short positions should the Portfolio Manager see fit and may hedge using various instruments from time to time. The Portfolio Manager does not seek to actively manage exposure, which is driven largely by bottom-up investment decisions.
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Investment Research and Due Diligence Process
The Portfolio Manager performs intense fundamental research to form a proprietary view of the evolution of competitive dynamics across industries and securities. The Portfolio Manager spends substantial time identifying investment opportunities through extensive due diligence. Methods of analysis include: fundamental analysis, quantitative analysis, and qualitative analysis including cyclical analysis. The Portfolio Manager will evaluate the upside and downside of the opportunities identified and monitor them closely. The Portfolio Manager will also conduct on-site visits, cross-checks, and detailed financial analysis of investment opportunities. The Portfolio Manager's analysis includes vigilant monitoring that continues the due diligence process after an investment is included in the Issuer's portfolio.
The focus is particularly on industries or opportunities that are in the process of undergoing fundamental changes. The Portfolio Manager believes that such changes provide opportunities to capture value not yet discovered by the market.
The analysts working on behalf of the Portfolio Manager are both generalists and specialists. Although each analyst focuses on a general area, this is done in a much broader industry sense, such as consumer sector and capital goods sector, etc. Coverage often overlaps and multiple team members may collaborate on one idea or potential investment opportunity.
Potential investments are presented to the investment committee of the Portfolio Manager. The committee meets regularly to not only consider the attractiveness of any given opportunity, but also debate and generate multiple perspectives on industries, businesses, competitive dynamics and fundamental changes. Whenever determined appropriate, the Portfolio Manager, on behalf of the Issuer, may short sell securities with the intention of increasing returns, but not necessarily to hedge. Similar to long side trading, shorting is primarily based on the outcomes of bottom-up analysis.
Target reviews are performed regularly, where upside and downside is assessed. These target reviews also permit the Portfolio Manager to flag whether fair value is being approached or remains further away.
Past performance is no guarantee of future results. There can be no assurance that the Issuer's investment objectives will be achieved by the Portfolio Manager, or that a Securityholder will receive a return of its capital. See "Risk Factors" for more information.
General Description of the Eligible Assets
The Issuer intends to use the proceeds from the sale of Securities to acquire securities and other investment instruments that are permitted to be acquired by persons licensed as a Qualified Foreign Institutional Investor ("QFII") by the China Securities Regulatory Commission ("CSRC"), including securities and investment instruments traded on exchanges within the PRC ("QFII Investments"), but may also invest in other companies or assets that have no relation to Greater China subject to the Eligibility Criteria.
It is intended that the Issuer will acquire equity securities in entities and corporates listed on the Shanghai Stock Exchange and the Shenzhen Stock Exchange and other Eligible Assets as set out below.
Eligibility Criteria
Though the Portfolio Manager’s investment decisions will be limited to QFII Investments, the types of securities that fall within permitted QFII Investment transactions may vary and could include:
(a) shares, bonds and warrants traded or transferred listed on the Shenzhen Stock Exchange or the Shanghai Stock Exchange and any other stock exchange which lists securities that may be traded by QFIIs pursuant to PRC Law (the "Stock Exchanges");
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(b) fixed income products traded in the interbank bond market;
(c) securities and investment funds;
(d) stock index futures, and other financial instruments approved by the CSRC
(the "Eligible Assets").
The Portfolio Manager shall make investments, under normal circumstances, primarily in companies that it believes offer compelling risk/return potential, taking into consideration both growth characteristics and their valuation on a long-term basis, primarily employing a bottom-up, fundamental, long-term approach when choosing long or short positions and may hedge using various instruments from time to time.
No security, asset or position may be purchased by the Portfolio Manager, unless each of the following conditions is satisfied as of the date the Portfolio Manager commits to make such purchase, in each case after giving effect to such purchase and all other sales or purchases previously or simultaneously committed to:
(a) such obligation meets all the requirements specified in the definitions of the terms "Eligible Asset" and "Section 110 Asset";
(b) the Eligible Asset is listed on the Shenzhen Stock Exchange or the Shanghai Stock Exchange, or where such Eligible Asset is not listed on such exchanges (e.g. it is listed on an alternative exchange or market or is not listed at all), the Portfolio Manager shall liaise with the Issuer and appropriate legal and tax counsel prior to executing any trade or purchase arrangement to acquire same; and
(c) the Portfolio Manager is reasonably satisfied, in its sole discretion, that such Eligible Asset shall be for the benefit of the business of the Issuer and in accordance with the Investment Objective and Strategy and the provisions of the Eligibility Criteria and the Portfolio Management Agreement.
(collectively, the "Eligibility Criteria").
For so long as any Securities are listed on the Global Exchange Market of Euronext Dublin, in the event that an Eligible Asset is not listed on the Shenzhen Stock Exchange or Shanghai Stock Exchange, the Issuer (with such assistance as may be necessary from the Portfolio Manager) shall disclose relevant details of same to Euronext Dublin pursuant to an announcement (in circumstances where the requirement to file a supplement to the applicable Series Listing Particulars no longer applies and where it would not be suitable or appropriate to supplement the Base Listing Particulars), Series Listing Particulars or supplement to the Base Listing Particulars, in each case in accordance with the rules of the Global Exchange Market of Euronext Dublin.
Further Information in relation to the Shanghai Stock Exchange where Eligible Assets are listed1
Background
Shanghai was the first city in China to see stocks, stock trading and stock exchanges. Stock trading started in Shanghai as early as 1860s. In 1891, the Shanghai Sharebrokers Association was established, which was regarded as the primitive form of stock bourses in China. Later in 1920 and 1921, the
1 The information contained herein is reproduced from Shanghai Stock Exchange Fact Book 2018 and English translation of the website Shanghai Stock Exchange as of the date hereof. Such information has been accurately reproduced and so far as the Issuer is aware and is able to ascertain from the information published by the Shanghai Stock Exchange, no facts have been omitted which would render the reproduced information inaccurate or misleading.
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Shanghai Security Goods Exchange and the Shanghai Chinese Security Exchange commenced operations respectively. By the 1930s, Shanghai had emerged as the financial center of the Far East, where both Chinese and foreign investors could trade stocks, debentures, government bonds and futures. In 1946, Shanghai Securities Exchange Co.,Ltd. was created on the basis of Chinese Security Exchange, but ceased operations three years later in 1949.
Since 1980, China’s securities market has evolved in tandem with the country’s introduction of reform and opening up policy and the development of socialist market economy. In 1981, trading in treasury bonds was resumed. In 1984, stocks and enterprise bonds emerged in Shanghai and a few other cities.
The Shanghai Stock Exchange (“SSE”) was founded on 26 November 1990 and became operational on 19th December of that year. It is a membership institution directly governed by the CSRC. The SSE bases its development on the principle of “legislation, supervision, self-regulation and standardisation” to create a transparent, open, safe and efficient marketplace. The SSE endeavors to realise a variety of functions: providing marketplace and facilities for the securities trading; formulating business rules; accepting and arranging listings; organising and monitoring securities trading; regulating members and listed companies; managing and disseminating market information.
After decades of development, SSE has significantly enhanced its technological advantages. It has put into operation one of the world's most advanced new generation trading system (NGTS), built the global largest stock exchange database, launched a powerful and robust new generation website and established a first-class computer room. In addition, SSE has built a nation-wide securities-specific satellite communication network with complete functions and the largest user base in China. SSE has established a robust and real-time market monitoring system appropriate for market operations. It has put in place a self-regulatory framework that focuses on supervision of listed companies, SSE members and the securities market.
Securities Products
Securities listed on SSE fall into four categories: stocks, bonds, funds and derivatives.
Stocks are further divided into Class A Shares and Class B Shares, with A Shares limited to domestic investors as well as QFIIs only while B Shares available to both domestic and foreign investors. In 1990, the first batch of 8 A Shares was listed. In 1992, the first B Share was listed. With the listing of a large number of large, leading and high-quality enterprises, SSE has begun playing its role as a barometer of the national economy. Bonds traded on SSE include treasury bonds (T-bonds), local government bonds, policy bank-led financial bonds, enterprise bonds, asset-backed securities, corporate bonds, corporate bonds with detachable warrants, convertible corporate bonds, etc. Funds traded on SSE include Exchange Traded Funds (ETFs), Listed Open-Ended Funds (LOFs), closed-end funds and real-time subscription and redemption money market funds. With respect to derivatives, in February 2015, SSE 50ETF option was launched as China’s first exchange-traded option product. By the end of December 2017 there are 12,219 listed securities on SSE.
Information on the Standing of the Market
The following is a summary of the latest official and publically available information relating to the SSE:
After several years’ operation, the SSE has become the most preeminent stock market in China in terms of number of listed companies, number of shares listed, total market value, tradable market value, securities turnover in value, stock turnover in value and the T-bond turnover in value.
As at the end of 2017, there were 1,396 listed companies on SSE, with 214 new listings in 2017. By the end of the year, there were 1,440 listed stocks on SSE. Total amount of capital raised from the stock market hit RMB 757.8 billion, up by 7.7% from 2016. The year-end total share capital of all the listed companies reached 3,528.8 billion shares, of which 3,111.9 billion shares were tradable. In 2017, SSE's
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turnover of equity market, total amount of capital raised from IPOs and total market value ranked No. 5, No. 3 and No. 4 respectively among global major bourses.
Overview
In 2017, the total turnover of SSE was RMB 306.4 trillion. The total stock market capitalization was RMB 33.1 trillion, up by 16.4% from 2016. Stock turnover was RMB 51.1 trillion, or a daily average of RMB 209.53 billion, up by 1.9% from 2016.
10,386 cash bonds and repos were traded, 2,309 more than 2016, up 29%. Outstanding value of bonds was RMB 7.4 trillion, RMB 1.2 trillion more than 2016 or up 19% from the end of 2016. Total bond transactions in the secondary market hit RMB 247.3 trillion, up 10% from 2016, which included RMB 4.4 trillion in cash transactions and RMB 242.9 trillion in repo transactions. The total amount of bond issuance in SSE bond market was RMB 2.97 trillion, up by 8% from 2016.
The total turnover of stock options was 180 million contracts, including 106.3448 million call options contracts and 77.6314 million put options contracts. The average daily turnover was 754,000 contracts, the average daily open interest was 1.6564 million contracts, the average daily nominal trading value was RMB 19.894 billion and the average daily premium value was RMB 366 million, up by 133%, 75%, 175% and 107% from 2016 respectively.
191 funds were traded with a total market value of RMB 339.5 billion. The total fund transactions stood at RMB 7.8 trillion. There were 470 thousand market participants. ETF products dominated the market. There were 114 listed ETFs with a market value of RMB 307.7 billion and annual turnover of RMB 7.78 trillion, accounting for 99.7% of that of the SSE fund market.
In 2017, SSE 50 Index opened the year at 2,285.27 points and surged 25.08% to close the year at 2,860.44 points after touching a yearly high of 3,038.28 points and a yearly low of 2,282.24 points. SSE 180 Index opened the year at 7,225.26 points and jumped 19.69% to close the year at 8,647.03 points after touching a yearly high of 9,133.43 points and a yearly low of 7,192.87 points. SSE Composite Index opened the year at 3,105.31 points and rose 6.56% to finish the year at 3,307.17 points after making a yearly high of 3,450.5 points and a yearly low of 3,016.53 points.
Daily Trading Volumes and Pricing Information
The SSE is open for trading from Monday to Friday. In the morning session, the market opens with a call auction between 9:15 and 9:25 (PRC time), which is followed by a continuous auction between 9:30 and 11:30 (PRC time). The afternoon session begins with a continuous auction between 13:00 to 15:00 (PRC time). Intent orders for block trades are accepted between 9:30 and 11:30 (PRC time) and again between 13:00 and 15:30 (PRC time), while execution orders and fixed-price orders for block trading takes place between 15:00 - 15:30 (PRC time). The market is closed on the weekends and other public holidays as announced by the SSE.
Securities are traded on the SSE on a market-driven and free auction basis. Limit orders and market orders are accepted in line with market conditions. At present, trading in A Shares, B Shares and securities investment funds is subject to a ten per cent (10%) daily price up and down limit, except for the first trading day. Special treatment shares, or ST shares, are subject to a five per cent (5%) daily price up and down limit. The price limits on warrants are based on that of their corresponding underlying securities and are determined by multiplying the conversion ratio by a certain coefficient. The price of a block trade of securities with a price limit is determined by the buyer and seller within the price limit applicable to such securities on the day of trading. The price of a block trade of securities without any price limit is negotiated by the buyer and seller within thirty per cent (30%) of the previous closing price or between the highest and lowest traded prices on the day of trading. In the absence of any transaction for a particular stock, the closing price of the previous trading day will be the execution price.
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SSE has established a Risk Alert Board where stocks under risk alert or to be delisted are traded on a centralized basis and the trading information on such stocks is separately displayed. Stocks under risk alert include: (1) stocks with the risks of being delisted (*ST); (2) stocks that have been resumed from suspension for listing (ST); (3) stocks that have been relisted (ST); (4) stocks that have suffered from other significant risks (ST). Stock to be delisted refers to the stock that has been decided by SSE to be delisted but is still under disposal and yet to be delisted. Stocks under risk alert are subject to a maximum daily price fluctuation limit of plus or minus five per cent (5%). Stocks to be listed are subject to a maximum daily price fluctuation limit of plus or minus ten per cent (10%).
Securities traded on the SSE are conducted through designated brokers. All the investors that trade securities on the SSE must first designate a member of the SSE as an agent and sign a designated transactions agreement with the agent for trading and clearing securities on their behalf. No trading is allowed before the investor’s trading account is registered with the member’s Participant Business Unit (PBU).
Institutional market participants recognised by the SSE may provide daily bilateral quotations for bonds traded on the SSE’s block trading system, with the specific bonds and the spreads to be determined at their discretion to the extent permitted by the SSE rules.
The SSE makes timely releases of trading data and information to members and investors. Daily real- time market quotations, stock indices, clearing data, market reports and daily transaction data are transmitted to member’s counter terminals via satellite communications system or optical fiber communications system. The transaction data is instantaneously transmitted to each member via a two- way satellite system and an optical fiber communications system. Since 22 September 2003, the SSE has started disclosing five best quotations.
Block trade data is published in the SSE-designated media and released simultaneously on the SSE’s website (www.sse.com.cn). Apart from that, the SSE also discloses more detailed information about the daily top gainers and losers on the securities market in line with the trading rules.
Equivalent Market Status
The SSE has been approved as an equivalent market by Euronext Dublin for the purposes of the admission of the Securities to the Global Exchange Market.
Further Information
For further information on the Shanghai Stock Exchange, please see www.sse.com.cn.
Further Information in relation to the Shenzhen Stock Exchange where Eligible Assets are listed2
The following is a summary of the latest official and publically available information relating to the Shenzhen Stock Exchange:
Information on the Standing of the Market
The Shenzhen Stock Exchange (“SZSE”), established on 1st December, 1990, is a self-regulated legal entity under the supervision of CSRC. It provides the venue and facilities for centralised securities trading. It also organises, supervises securities trading and performs duties prescribed by laws, regulations, rules and policies. Its main functions include providing the venue and facilities for securities trading, formulating operational rules, receiving listing applications and arranging securities listing,
2 The information contained herein is reproduced from Shenzhen Stock Exchange Factbook 2017 and the English translation of the website of the Shenzhen Stock Exchange as of the date hereof. Such information has been accurately reproduced and so far as the Issuer is aware and is able to ascertain from the information published by the Shenzhen Stock Exchange, no facts have been omitted which would render the reproduced information inaccurate or misleading.
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organising and supervising securities trading, supervising members; regulating listed companies, managing and disseminating market information, and other functions as approved by the CSRC.
The SZSE is committed to developing China’s multi-tier capital market system, serving national economic development and transformation and supporting the national strategy of independent innovation. The SME Board was launched in May 2004. The non-listed shares quotation and transfer system (OTC market) began its pilot operation in Zhongguancun Science Park in January 2006. The ChiNext market was inaugurated in October 2009. Thus the SZSE has basically put in place a framework of multi-tier capital market comprising the Main Board, SME Board and ChiNext. SZSE’s products cover equities, mutual funds and bonds. The product lines include A-shares, B-shares, indices, mutual funds (including ETFs and LOFs), fixed income products (including SME collective bonds and asset-backed securities), and diversified derivative financial products (including warrants and repurchases). On 28 May 2012, Harvest SSE-SZSE 300 ETF was listed on SZSE as the first cross-market ETF listed in SZSE. SZSE plays an increasingly important role in supporting the real economy and transforming the nation’s economic growth model.
Since 2000, the SZSE has signed MOUs with 30 major stock exchanges and financial institutions in the world and enhanced cross-border cooperation and communications. It has also taken an active part in international securities organisations. The SZSE is a member of both the World Federation of Exchanges (WFE) and the Asian and Oceanian Stock Exchanges Federation (AOSEF). It is also an affiliate member of the International Organisation of Securities Commissions (IOSCO).
Daily Trading Volumes and Pricing Information
Information in relation to trading volume and pricing information is published on the SZSE website:
Statistics: http://www.szse.cn/main/en/MarketStatistics/MarketOverview/ Quotes: http://www.szse.cn/main/en/marketdata/Quotes/
In 2017, the SZSE recorded the total trade value of RMB 81.43 trillion (USD 11.80 trillion). By 31 December 2012, the SZSE had 2,089 listed companies, 2971 funds and 2127 bonds. The total market capitalisation of listed companies was valued at RMB 23.58 trillion (USD 3.42 trillion).
Equivalent Market Status
The SZSE has been approved as an equivalent market by Euronext Dublin for the purposes of the admission of the Securities to the Official List and to trading on the Global Exchange Market of Euronext Dublin.
Further Information
For further information on the Shenzhen Stock Exchange, please see http://www.szse.cn.
Management and Custody of the Portfolio
The Issuer will be required to acquire and custody such securities in accordance with Administration of Securities Investment in the PRC by Qualified Foreign Institutional Investors Procedures ("QFII Procedures"), the Provisions on Relevant Issues concerning the Implementation of Qualified Foreign Institutional Investors Procedures ("QFII Implementing Provisions"), the Detailed Implementing Rules for the Registration and Clearing Business of China Securities Depositary & Clearing Corporation Limited in relation to Securities Investments in the PRC by Qualified Foreign Institutional Investors (the "CSDCC Implementing Rules"), the Detailed Implementing Rules of the Shanghai Stock Exchange on Securities Transactions by Qualified Foreign Institutional Investors and Renminbi Qualified Foreign Institutional Investors (the "SHSE Implementing Rules"), the Detailed Implementing Rules of the Shenzhen Stock Exchange on Securities Transactions by Qualified Foreign Institutional Investors and Renminbi Qualified
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Foreign Institutional Investors (the "SZSE Implementing Rules") and the SAFE “Foreign Exchange Administration of Qualified Foreign Institutional Investors Investing in Securities in China Provisions” (the "Foreign Exchange Regulations"), the Announcement on Relevant Matters concerning Further Improvement in the Investment in the Interbank Bond Market by Foreign Institutional Investors ("Interbank Bond Market Announcement"), the Guidelines for Qualified Foreign Institutional Investors Participating in Stock Index Futures Trading ("Stock Index Futures Guidelines"), amongst others.
The Portfolio Manager has appointed the Sub-Advisor as a non-discretionary advisor with respect to the Series Assets. The Sub-Advisor will appoint China Construction Bank Corporation as custodian to hold the securities comprising Series Assets on its behalf and CITIC Securities Co., Ltd and the Haitong Securities Co., Ltd. to act as local execution brokers.
The portfolio will also be actively managed by the Portfolio Manager pursuant to the Portfolio Management Agreement.
The Portfolio Manager expects to specialise its advisory services in QFII Investments. Such QFII Investments are expected to be made primarily through the Issuer affiliate’s QFII Licence (defined below) to trade QFII Investments. The Portfolio Manager will select QFII Investments most suited to the Issuer’s investment objectives, and then monitor and provide additional investment advice as required in connection with the advisory relationship.
Focus on QFII Investments
The focus on QFII Investments will place unique limits on the Issuer’s investment portfolio. The QFII Investment market possesses substantially different characteristics from other large equity markets. Denominated in renminbi ("RMB"), the QFII Investment market is subject to very limited access by foreign investors. Foreign investors (which includes the Issuer) may participate through two channels: first, investors may apply directly for a "Securities Investment Business Permit" issued by the CSRC ("QFII Licence "), after which they may apply and obtain a quota of RMB from the SAFE with which to trade on the market ("Investment Quota"); second, investors may obtain QFII Investment exposure through derivative products offered by certain investment banks. However, such derivative products may be subject to limited availability and cost. The Issuer will be participating through a QFII Licence. QFII status is only granted to investors who are able to meet stringent asset and strategy requirements, including a minimum Investment Quota of at least USD 20,000,000. Investors in QFII Investments operate under a number of other investment constraints. For example, there is limited opportunity to short equities on the applicable markets, and little ability to engage in derivative transactions. In addition, the QFII program offers limited ability to rebalance and repatriate funds.
Monitoring the Portfolio
Although the Portfolio Manager plans to monitor macro-economic factors and market trends, it plans to avoid market-timing strategies and focus primarily on bottom-up opportunities. The Portfolio Manager performs bottom-up research and portfolio construction. The Portfolio Manager will evaluate the upside and downside of the individual companies and opportunities identified, and monitor them closely. Potential investments are presented to the investment committee of the Portfolio Manager. The committee meets regularly to consider the competitive advantages of the companies, its people, business, industry dynamics and fundamental changes. Target reviews are performed regularly, where upside and downside is compiled based on an earnings forecasts. These target reviews also permit the Portfolio Manager to flag whether fair value is being approached or remains further away.
Management of the Combined Series Assets and Segregated Series Assets
The Combined Series Assets and Segregated Series Assets are actively managed by the Portfolio Manager on behalf of the Issuer pursuant to the Portfolio Management Agreement.
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Authority and Obligations of the Portfolio Manager
Subject to the terms of the Portfolio Management Agreement, the Portfolio Manager agrees that it shall and is thereby authorised and required to manage the Issuer’s acquisition, disposal and replacement of Eligible Assets to be aggregated into a portfolio of Series Assets (with Combined Series Assets being acquired with the proceeds of the Combined Series Securities and Segregated Series Assets being acquired with the proceeds of the applicable Segregated Series Securities)(collectively, the “Portfolio”) consistent with the Issuer’s general investment policy in accordance with the Issuer’s investment objective and strategy (the “Investment Objective and Strategy”) as described these Base Listing Particulars and any Series Listing Particulars (as applicable) as each is amended or supplemented as the case may be.
Acquisition/Disposition of Series Assets
In particular, the Portfolio Manager will:
1. propose, identify, conduct due diligence, evaluate and value the Series Assets which appear to it as being appropriate for the Issuer and are consistent with the Issuer’s Eligibility Criteria as set forth above unless such Eligibility Criteria is revised pursuant to any Series Listing Particulars;
2. invest and re-invest the Issuer’s assets, and in connection therewith, cause part or all of the Issuer’s assets to be held in cash, and purchase or otherwise acquire or sell, assign, negotiate, transfer, exchange or otherwise dispose of or turn to account or realise upon and trade in, on margin or otherwise QFII Investments, including, without limitation, the Eligible Assets;
3. purchase, sell or otherwise dispose of Assets on behalf of the Issuer pursuant to the Eligibility Criteria;
4. perform such other tasks as it is required to perform pursuant to the Portfolio Management Agreement and in furtherance of its duties thereunder.
ON-GOING MANAGEMENT OF SERIES ASSETS
The Portfolio Manager will purchase, sell or otherwise dispose of Series Assets on behalf of the Issuer pursuant to the Eligibility Criteria.
In performing its duties and responsibilities as set forth above:
1. The Portfolio Manager will exercise its powers and perform its duties under the Portfolio Management Agreement with the degree of diligence, prudence and care and in the manner in which a reasonable professional advisor would reasonably use in the conduct of a similar undertaking.
2. The Portfolio Manager will exercise all powers and responsibilities necessary to perform its functions pursuant to the Investment Objective and Strategy (as defined in the Portfolio Management Agreement), subject to the overall supervision and liability of the Issuer. The Issuer may at any time provide Portfolio Manager with guidelines or directions relating to the performance of its responsibilities as Portfolio Manager.
3. The Portfolio Manager will, in its capacity as the Calculation Agent, determine the value of Series Assets owned by the Issuer in the manner described in the Master Agency Terms in accordance with the Valuation Policy and, prior to each Redemption Date relating to any Security issued by the Issuer from time to time, calculate amounts due and
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payable on such Security on the next succeeding Payment Date and provide such details to the Trustee and other Agents in accordance with the relevant Agency Agreement applicable thereto
4. The Portfolio Manager will continually analyze the performance and progress of the Series Assets and provide relevant reports requested by the Issuer from time to time and take all actions which it considers appropriate in order to carry out the Investment Objective and Strategy and make suggestions to the Issuer;
5. The Portfolio Manager will prepare material for inclusion in the periodic reports required of the Issuer by applicable law and the Investment Objective and Strategy; and
6. The Portfolio Manager has represented to the Issuer that it will observe and comply with the Issuer’s Investment Objective and Strategy, the Portfolio Management Agreement and with any law or regulation applicable to the Issuer or its affiliates (including, but not limited to laws, rules and regulations relating to the origination of Eligible Assets) of which in each case of which it is aware, and any instruction which the Issuer may issue to the Portfolio Manager from time to time unless such instruction constitutes a breach of applicable law, the Listing Particulars or any Series Supplement or the Portfolio Management Agreement. The Issuer will provide Portfolio Manager with a copy of each amendment to the Transaction Documents promptly after the amendment is made.
7. The Portfolio Manager may participate on behalf of the Issuer in a committee or group formed by creditors or shareholders of an issuer of, or an obligor under, any Series Asset and participate, on behalf of the Issuer, in any restructuring of any Series Asset (including discussing the acceptance of any security in exchange for or in satisfaction of such Series Asset provided subject to the Eligibility Criteria) and/or the reorganisation of any such issuer or obligor (subject to compliance with the Portfolio Management Agreement)
8. The Portfolio Manager may outsource certain of its duties under the Portfolio Management Agreement to one or more of its affiliates or third-parties, as it considers appropriate, necessary or advisable in order to perform or assist in the performance of all or any of the functions of the Portfolio Manager. Outsourcing to an affiliate will be at no additional cost to the Issuer. Outsourcing to a third-party will be at cost as agreed between the Portfolio Manager and such third party. The Portfolio Manager will at all times remain liable to the Issuer for the performance of any duties so outsourced.
9. No warranty is given by the Portfolio Manager as to the performance or profitability of any Investment.
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CASHFLOW
Diagrammatic Overview of Cashflows
The diagram below is meant to highlight the cashflow for this transaction. It is not intended to be an exhaustive description of such matters.
Securityholder(s) Designated Account(s) Principal & Interest on the Securities
Paying Agent (BNY Account)
Subscription Monies
Principal & Interest Issuer on the Securities Transaction Account(s) Trustee Fees & (Account Bank) Administrative Expenses
Cash
Issuer Expenses
Management & Subscription Performance Fees Management Monies Fees and Custodian Account(s) Expenses (Custodian)
Returns on / Repayments Return on / Repayments of the Series Assets of the Series Assets
Series Assets (Eligible Assets)
Indicates inward payment flows
Indicates outward payment flows Prospective Securityholders should also review the detailed information set out elsewhere in these Base Listing Particulars for a more thorough description of the transaction structure, contractual arrangements and relevant cashflows prior to making any investment decision.
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Funding of the Issuer
The Issuer’s only source of funding is the funds it will receive from the issue of the Securities from time to time. The Issuer shall apply the aggregate amount of such available funds primarily to the acquisition of Combined Series Assets and/or Segregated Series Assets, as applicable, from time to time (see the section of these Base Listing Particulars entitled "The Assets of the Issuer", which contains a description of the Series Assets) but always in accordance with the Priority of Payments.
A certain amount of the funding received under the Securities will be held in the Accounts at the Account Bank in order for the Issuer to pay the Trustee Fees, Series Expenses and Expenses, as applicable, due and owing, or expected to be due and owing, from time to time.
Payments Received in Respect of the Series Assets
The Portfolio Manager, on behalf of the Issuer, shall procure the payment or transfer of all payments of any nature received by the Issuer in respect of the relevant Combined Series Assets in relation to the Combined Series Securities and in respect of the relevant Segregated Series Assets in relation to the Segregated Series Securities, into the relevant Account immediately upon receipt thereof. Such payments shall be applied in accordance with the Priority of Payments.
Payment Obligations of the Issuer
Payments Out of the Accounts Generally
Payments due under the Securities will be made from the Account.
The Paying Agent, at the written request of the Issuer or the Portfolio Manager or the Issuer or the Portfolio Manager, on its behalf or, in the case of point 3 below, the Trustee, shall apply all amounts then standing to credit of the Account as follows:
1. on the Business Day prior to any Payment Date, amounts standing to the credit of the Accounts in accordance with the Pre-Enforcement Priority of Payments;
2. on the Business Day prior to the Maturity Date, all amounts standing to the credit of the Accounts in accordance with the Pre-Enforcement Priority of Payments; and
3. on the occurrence and continuation of an Event of Default, all amounts standing to the credit of the Accounts in accordance with the Post-Enforcement Priority of Payments.
A description of the Pre-Enforcement Priority of Payments and Post-Enforcement Priority of Payments is outlined below.
The Issuer or the Portfolio Manager, on behalf of the Issuer, may procure the payment or transfer of the following amounts out of the Account, or such other account as may be designated by the Issuer and notified to the Trustee and the Agents from time to time, or, where the following payments are to be made by the Paying Agent in accordance with the relevant Agency Agreement, such other account as the Paying Agent designates subject, in each case, to available funds:
(a) from time to time (and in relation to(a)(ii) below, no less than annually on each anniversary of the Issue Date) in between Payment Dates prior to the occurrence of an Event of Default which is continuing:
i. all amounts required to be paid by the Issuer in respect of the acquisition, maintenance or disposition of Series Assets; and
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ii all amounts required to be paid by the Issuer in or towards the discharge of its Trustee Fees, Agents Fees, Series Expenses and/or Expenses which are due and payable on an ad hoc basis subject to the priority of payments set out in the Pre-Enforcement Priority of Payments;
(b) on the Business Day prior to each Payment Date, amounts standing to the credit of the Account in accordance with the Pre-Enforcement Priority of Payments including to transfer such amounts (if any) as are due and payable to the Securityholders to the Paying Agent for onward payment to the Securityholders on the next succeeding Payment Date;
(c) on the Business Day prior to the Maturity Date, amounts standing to the credit of the Account in accordance with the applicable Priority of Payments including to transfer such amounts (if any) as are due and payable to the Securityholders to the Paying Agent for onward payment to the Securityholder; and
(d) following an Event of Default which is continuing, any or all amounts standing to the credit of the Account in accordance with the Post-Enforcement Priority of Payments in accordance with the instructions of the Trustee.
Payment of Expenses
The Issuer or the Portfolio Manager on behalf of the Issuer shall procure the payment of the Expenses, Trustee Fees, Agents Fees and Series Expenses, as applicable, in accordance with the Priority of Payments on the Business Day prior to any Payment Date or on an ad hoc basis in accordance with the waterfall of payments set out in the Priority of Payments on such other date as may be determined by the Issuer or the Portfolio Manager in their sole discretion. Trustee Fees, Agents Fees, Expenses and Series Expenses will be paid using funds standing to the credit of the Accounts. The Issuer and/or the Portfolio Manager may, from time to time, open other Accounts in the name of the Issuer as are required from time to time. The Issuer or Portfolio Manager at its request and on its behalf shall arrange for the conversion of any payment or transfer at the applicable foreign exchange rate and procure the payment or transfer of the relevant amount, once converted into the Accounts.
Payments in Respect of the Securities
Payments in respect of the Securities rank last in the Priority of Payments. The Portfolio Manager will have discretion as to whether to pay all amounts in the Accounts to the Securityholders after all payments ranking higher in the Priority of Payments have been made or to retain some or all of the amounts in the Accounts in or towards reinvesting in Eligible Assets as applicable. It is not expected that any payments will be made on the Securities prior to their redemption or maturity.
Priority of Payments
The Priority of Payments with respect to the Securities is set out in the Conditions and is outlined below.
Pre-Enforcement Priority of Payments
Prior to the occurrence of an Event of Default, (i) the Paying Agent, at the written request of the Issuer or the Portfolio Manager, or (ii) the Issuer or (iii) the Portfolio Manager (on the Issuer's behalf) shall on the Business Day prior to each Payment Date or, as applicable, on the Business Day prior to each Maturity Date, apply the Series Returns as at the Redemption Date in accordance with the order of priority set forth below:
1. firstly, in or towards payment of a pro rata amount of any tax payable by the Issuer to any relevant tax authority;
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2. secondly, in or towards payment or discharge of a pro-rata amount of all Trustee Fees due or expected to be due by the Issuer to the Trustee (including but not limited to any legal or other professional fees and any value added or similar tax thereon and indemnification, security and prefunding obligations of the Issuer);
3. thirdly, in or towards payment or discharge of a pro rata amount of all Agents Fees due or expected to be due to any or all of the Paying Agent, the Transfer Agent or the Registrar (including but not limited to any legal or other professional fees and any value added or similar tax thereon and indemnification, security and prefunding obligations of the Issuer);
4. fourthly, in or towards payment or discharge of a pro rata amount of all fees, costs and expenses to be incurred in the winding up of the Issuer, if applicable;
5. fifthly, in or towards the payment of a pro rata amount of annual profit to the Issuer, which shall be retained by the Issuer and available for distribution to its shareholders. The total annual profit payable to the Issuer shall be no more than USD1,200;
6. sixthly, in or towards payment or discharge of a pro rata amount of all Expenses (other than Series Expenses but including the management fee and performance fee described in the Portfolio Management Agreement) comprising amounts due or expected to be due by the Issuer (including but not limited to any legal or other professional fees and any value added or similar tax thereon and indemnification obligations of the Issuer) in accordance with the Conditions of the relevant Series on a pro rata basis;
7. seventhly, in or towards the payment or discharge of a pro rata amount of any Series Expenses (including the management fee and performance fee described in the Portfolio Management Agreement) then due and owing by the Issuer in accordance with the Conditions of the relevant Series on a pro rata basis; and
8. eighthly, at the discretion of the Issuer or the Portfolio Manager, in payment of any surplus remaining (i) in or towards the payment of some or all interest and/or principal amounts due and payable or expected to be due and payable under the Securities or the Series Documents to the Paying Agent for onward payment to the Securityholders on the next succeeding Payment Date on a pro rata basis; (ii) in or towards reinvesting in the relevant Combined Series Assets or Segregated Series Assets as applicable; (iii) in or towards the redemption of the Securities on the Maturity Date; or (iv) in or towards or held for payment of future Trustees Fees, Agents Fee, Series Expenses and/or Expenses.
Post-Enforcement Priority of Payments
On the occurrence and continuation of an Event of Default, the Trustee or the Issuer, the Portfolio Manager or the Paying Agent, each at the written request of the Trustee, shall apply all amounts then standing to credit of the Account in the order of priority set forth below:
1. firstly, in or towards payment of a pro rata amount of any tax payable by the Issuer to any relevant tax authority;
2. secondly, in or towards payment or discharge of a pro-rata amount of all Trustee Fees due or expected to be due by the Issuer to the Trustee (including but not limited to any legal or other professional fees and any value added or similar tax thereon and indemnification, security and prefunding obligations of the Issuer to the Trustee);
3. thirdly, in or towards payment or discharge of a pro rata amount of all Agents Fees due or expected to be due to any or all of the Paying Agent, the Transfer Agent or the Registrar
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(including but not limited to any legal or other professional fees and any value added or similar tax thereon and indemnification, security and prefunding obligations of the Issuer);
4. fourthly, in or towards payment or discharge of a pro rata amount of all fees, costs and expenses to be incurred in the winding up of the Issuer, if applicable;
5. fifthly, in or towards payment or discharge of a pro-rata amount of all Expenses (other than Series Expenses, but including the management fee and performance fee described in the Portfolio Management Agreement) comprising amounts due or expected to be due by the Issuer (including but not limited to any legal or other professional fees and any value added or similar tax thereon and indemnification obligations of the Issuer) in accordance with the Conditions of the relevant Series on a pro rata basis;
6. sixthly, in or towards the payment or discharge of any Series Expenses (including the management fee and performance fee described in the Portfolio Management Agreement) then due and owing by the Issuer in accordance with the Conditions of the relevant Series on a pro rata basis;
7. seventhly, in payment of any surplus remaining in or towards the payment of some or all amounts of interest and/or principal due and payable or expected to be due and payable under the relevant Series to the Paying Agent for onward payment as soon as reasonably practicable to the Securityholders or otherwise as directed by the Trustee acting pursuant to a Written Direction; and
8. lastly, the remainder (if any) to the Issuer.
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RISK FACTORS
An investment in the Securities involves certain risks, including risks relating to the Series Assets in respect of any Series and risks relating to the structure and rights of Securities in respect of any such Series and the related arrangements. Prospective investors should carefully consider the following factors, in addition to the matters set forth elsewhere in these Base Listing Particulars, prior to investing in any Securities. This summary is not intended to be exhaustive and prospective Securityholders should read the information set out below and elsewhere in these Base Listing Particulars and reach their own views prior to making any investment decision.
The Issuer believes that the following factors may be relevant to it and its business. All of these factors are contingencies which may or may not occur and the Issuer is not in a position to express a view on the likelihood of any such contingency occurring.
The Issuer believes that the factors described below represent the principal risks inherent in investing in Securities, but the inability of the Issuer to pay interest, principal or other amounts on or in connection with any Securities may occur for other reasons which may not be considered significant risks by the Issuer based on information currently available to it or which it may not currently be able to anticipate. Prospective investors should also read the detailed information set out elsewhere in these Base Listing Particulars and any relevant Series Listing Particulars and, in the light of their own financial circumstances and investment objectives, reach their own views prior to making any investment decision.
GENERAL RISKS
General
It is intended that the Issuer will invest in Eligible Assets as described in "The Assets of the Issuer" below. All investments risk the loss of capital. There can be no assurance that the Issuer’s investments will be successful, that its investment objectives will be achieved, that the Securityholders will receive the full amounts payable by the Issuer under the Securities, that they will receive any return on their investment in the Securities or that they will not lose their entire investment in the Securities, including the principal amount. Prospective investors are therefore advised to review this entire Base Listing Particulars carefully and should consider, among other things, the factors set out below before deciding whether to invest in the Securities.
Neither the Trustee, any Agent, the Corporate Services Provider or the Listing Agent undertakes to review the financial condition or affairs of the Issuer at any time during the life of the arrangements contemplated by these Base Listing Particulars nor to advise any investor or potential investor in the Securities of any information coming to the attention of the Trustee, any Agent, the Corporate Services Provider or the Listing Agent which is not included in these Base Listing Particulars.
Suitability
Prospective purchasers of the Securities should ensure that they understand the nature of such Securities and the extent of their exposure to risk, that they have sufficient knowledge, experience and access to professional advisers to make their own legal, tax, accounting, regulatory treatment and financial evaluation of the merits and risks of investment in such Securities and that they consider the suitability of such Securities as an investment in the light of their own circumstances and financial condition.
Each potential investor in the Securities must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should:
1. have sufficient knowledge and experience to make a meaningful evaluation of the Securities, the merits and risks of investing in the Securities and the information contained or
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incorporated by reference in these Base Listing Particulars or any applicable supplement and all the information contained in the applicable Constituting Instrument;
2. have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Securities and the impact the Securities will have on its overall investment portfolio;
3. have sufficient financial resources and liquidity to bear all of the risks of an investment in the Securities, including Securities with principal and/or interest payable in one or more currencies, or where the currency for principal and/or interest payments is different from the potential investor's currency;
4. understand thoroughly the terms of the Securities and be familiar with the behaviour of the Eligible Assets to be acquired by the Issuer from time to time and financial markets generally; and
5. be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks.
Absence of Operating History
The Issuer is has a limited operating history. Accordingly, the Issuer does not have a performance history for a prospective investor to consider in making its decision to invest in the Securities.
There can be no assurance that the Issuer will achieve its investment objective. The success of the Issuer is dependent on the performance of the Portfolio Manager and the performance of the Series Assets. No assurance can be given that the Issuer will succeed in meeting its investment objective. The past investment performance of other accounts managed by the principals of the Portfolio Manager may not be indicative of the future results of an investment in the Securities.
Reliance on Key Persons
The success of the Issuer is substantially dependent on the active participation of Lei Zhang. Should Mr. Zhang become incapacitated or in some other way cease to participate in the Portfolio Manager, the Issuer’s performance could be adversely affected.
Lack of Diversification
The Issuer is not required to diversify its investments. Since the Issuer is intending to make particularised investments only in China, it will not be diversified. Consequently, poor performance by one of the Issuer’s investments may severely affect the total returns to investors. A non-diversified portfolio will also be more significantly affected by industry-specific and geographic-specific conditions than would a diversified portfolio. Finally, there may be a wider range of potential gains and losses from non-diversified portfolios. Since there are no assurances of a positive return or any return at all from a portfolio of non- diversified investments, the investors may lose money, including their entire investment in the Securities.
Limited Sources of Funds to Pay Expenses of the Issuer
The funds available to the Issuer to pay its expenses on any Payment Date are limited as provided in the Priority of Payments. In the event that such funds are not sufficient to pay the expenses incurred by the Issuer, the ability of the Issuer to operate effectively may be impaired, and it may not be able to defend or prosecute legal proceedings brought against it or which it might otherwise bring to protect the interests of the Issuer or be able to pay the expenses of legal proceedings against persons whom the Issuer has indemnified.
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None of the transaction parties or any of their respective affiliates or any other person or entity (other than the Issuer) will be obligated to make payments on the Securities. Consequently, the Securityholders must rely solely on payments received by the Issuer in respect of applicable Series Assets for the payment of principal and interest on the relevant Securities. There can be no assurance that payments on the relevant Series Assets will be sufficient to make payments on any of the Securities and certain other required amounts payable to other creditors ranking senior to or pari passu with the Securities pursuant to the Priority of Payments. If payments on the relevant Series Assets are insufficient to make payments on the Securities, no other assets (and, in particular, no assets of any transaction party) will be available for payment of the deficiency and the obligations of the Issuer to pay such shortfall shall be extinguished.
The Securityholders shall not have any recourse against any shareholder, member, equity holder, officer, agent, employee or director of a party in his capacity as such, by any proceedings or otherwise, in respect of any obligation, covenant, or agreement of a party (acting in any capacity whatsoever) contained in the Conditions or any other Transaction Document.
The funds available to the Issuer to pay its expenses on any Payment Date are limited as provided in the applicable Priority of Payments. In the event that such funds are not sufficient to pay the expenses incurred by the Issuer, the ability of the Issuer to operate effectively may be impaired, and it may not be able to defend or prosecute legal proceedings brought against it or which it might otherwise bring to protect its interests or be able to pay the expenses of legal proceedings against persons whom the Issuer has indemnified.
No Source of Additional Funds
The Issuer may need to raise additional funds in order to meet its obligations under the Transaction Documents and/or operate its business. Other than amounts received under or in connection with the Series Assets, the Issuer currently has no source for such additional funds other than by issuing Further Securities.
No Current Income
There can be no assurance that the Issuer’s assessments of the short-term or long-term prospects of the Issuer’s investment in the Series Assets will generate a profit and therefore an investment in the Issuer is not suitable for investors seeking current income for financial or tax planning purposes.
Net Proceeds Less than Aggregate Amount of the Securities
It is anticipated that the proceeds received by the Issuer on the Effective Date from the issuance of the Securities, net of certain fees and expenses, will be less than the aggregate amount of principal outstanding of the Securities. Consequently, it is anticipated that on the Effective Date the proceeds of the Series Assets will be insufficient to redeem the Securities upon the occurrence of an Event of Default on or about that date.
Credit Risk and Reliance on creditworthiness of other parties
Payments to the Issuer with respect to the Series Assets shall be made to the Account with the Account Bank and such funds shall be held in accordance with the Series Documents. Accordingly, the Securityholders may be exposed, inter alia, to the creditworthiness and solvency risk of the Custodian, the Portfolio Manager and/or its delegates, the account bank of the Custodian, the Portfolio Manager, the Paying Agent and the Account Bank. See "Risks relating to Paying Agent" below for a further discussion with respect to counterparty risk of the Paying Agent.
Risks Relating to the Trustee
In connection with the exercise of its functions, the Trustee shall have regard to the interests of the Securityholders as a class and in particular, but without prejudice to the generality of the foregoing, shall
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not be obliged to have regard to the consequences of such exercise for any individual Securityholder resulting from his or its being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory.
In certain circumstances, the Securityholders may be dependent on the Trustee to take certain action in respect of the Securities. Prior to taking such action, the Trustee may require to be indemnified and/or secured and/or pre-funded to its satisfaction. If the Trustee is not indemnified and/or secured and/or pre- funded to its satisfaction, it may decide in its discretion not to take such action and such inaction will not constitute a breach by it of its obligations under the Master Trust Terms. Consequently, the Securityholders would have to either arrange for such indemnity and/or security and/or pre-funding or accept the consequences of such inaction by the Trustee. Securityholders should be prepared to bear the costs associated with such indemnity and/or security and/or prefunding and/or the consequences of any inaction by the Trustee. Such inaction by the Trustee will not entitle the Securityholders to take action directly against the Issuer to pursue remedies for any breach by the Issuer of the Master Trust Terms, the Securities or the other Master Documents (although the events giving rise to the need for Trustee action might also permit the Securityholders to exercise certain rights directly under the Conditions or other Master Documents to which they are a party).
Risks Relating to the Paying Agent
Any payments made to the Securityholders in accordance with the terms and conditions of the Securities will be made by the Paying Agent on behalf of the Issuer. Pursuant to the Master Agency Terms, the Issuer is to procure the transfer of such amount as may be due under the Securities (if any) at least one Business Day on or before the date on which such payment in respect of the Securities is due and payable. It is not expected that any interest will be paid on the Securities until redemption. If the Paying Agent, while holding funds for payment to the Securityholders in respect of the Securities, is declared insolvent, the Securityholders may not receive all (or any part) of any amounts due to them in respect of the Securities from the Paying Agent. The Issuer will still be liable to the Securityholders in respect of such unpaid amounts but the Issuer will have insufficient assets to make such payments (or any part thereof) and the Securityholders may not receive all, or any part, of any amounts due to them. Consequently, the Securityholders are relying on the creditworthiness of the Paying Agent in respect of the performance of its obligations under the Master Agency Terms to make payments to the Securityholders.
Risks Relating to the Calculation Agent
The Calculation Agent is the agent of the Issuer and not the agent of the Securityholders. The Calculation Agent will make such determinations, calculations, adjustments and notifications as it deems appropriate, in accordance with the terms and conditions of the Securities and the relevant Agency Agreement. In making its determinations, calculations, adjustments and notifications, the Calculation Agent will be entitled to exercise substantial discretion and may be subject to conflicts of interest in exercising this discretion. All determinations, calculations, adjustments and notifications made by the Calculation Agent in accordance with the relevant Agency Agreement shall be conclusive and binding on the Issuer, the Securityholders, the Trustee, the Agents and the Corporate Services Provider in the absence of manifest error.
In order to fulfil its duties under the Transaction Documents and in accordance with applicable laws, the Calculation Agent may from time to time transfer confidential information (including personal data) to certain of its associated persons in countries where the level of data protection may not be as high as in Ireland (but not the United States) if the Associated Person has agreed to comply with Applicable Law and the provisions of the relevant Agency Agreement without further notice to the relevant data subjects, including the Securityholders or any of its directors, employees or officers who have provided personal data to the Issuer and/or the Portfolio Manager and/or the Calculation Agent (if different) and consented to such transfer.
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Exchange Rates and Exchange Controls
The Issuer will pay principal and interest on the Securities in US Dollars. This presents certain risks relating to currency conversions if an investor's financial activities are denominated principally in a currency or currency unit (the "Investor's Currency") other than US Dollars. These include the risk that exchange rates may significantly change (including changes due to devaluation of the specified currency or revaluation of the Investor's Currency) and the risk that authorities with jurisdiction over the Investor's Currency may impose or modify exchange controls. An appreciation in the value of the Investor's Currency relative to the specified currency would decrease:
1. the Investor's Currency-equivalent yield on the Securities;
2. the Investor's Currency equivalent value of the principal payable on the Securities; and
3. the Investor's Currency equivalent market value of the Securities.
Government and monetary authorities may impose (as some have done in the past) exchange controls that could adversely affect an applicable exchange rate. As a result, investors may receive less interest or principal than expected, or no interest or principal.
Market Disruption and Geopolitical Risk
Various social and political tensions around the world may contribute to increased market volatility, may have long-term effects on worldwide financial markets and may cause further economic uncertainties worldwide. The Issuer does not know how long the financial markets will continue to be affected by these events and cannot predict the effects of these or similar events in the future on the worldwide economy and securities markets. Given the risks described above, an investment in the Securities may not be appropriate for all prospective investors. A prospective investor should carefully consider his or her ability to assume these risks before making an investment in the Securities.
Potential effects of any additional regulatory changes and nationalisation
The events since 2007 have seen increased involvement of governmental and regulatory authorities in the financial sector and in the operation of financial institutions. In particular, governmental and regulatory authorities in a number of jurisdictions have imposed stricter regulatory controls around certain financial activities and/or have indicated that they intend to impose such controls in the future. The United States of America, the European Union and other jurisdictions are actively considering various reform measures. In certain jurisdictions (e.g. the United States of America), legislation has come into force in this respect, although the rules and regulations required to implement the particulars of any such legislation have yet to be considered. In other jurisdictions (e.g. the European Union), a number of draft pieces of legislation have been proposed and are currently being considered. Such regulatory changes and the method of their implementation may have a significant impact on the operation of the financial markets. It is uncertain how a changed regulatory environment will affect the Issuer and the treatment of the Securities, the Portfolio Manager, the Trustee, the Custodian, the Agents, the Corporate Services Provider and the other Transaction Parties. In addition, governments have shown an increased willingness wholly or partially to nationalise financial institutions, corporates and other entities in order to support the economy. Such nationalisation may impact adversely on the value of the stock or other obligations of any such entity. In addition, in order to effect such nationalisation, existing obligations or stock might have their terms mandatorily amended or be forcibly redeemed. To the extent that the Transaction Parties or any other person or entity connected with the Securities or the Series Assets is subject to nationalisation or other government intervention, it may have an adverse effect on a holder of the Securities.
Regulatory changes could occur over the course of the life of the Securities that may adversely affect the Issuer. The regulatory environment for entities such as the Issuer is evolving, and changes in the regulation of the Issuer may reduce the return on the Securities. In addition, the securities and futures
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markets are subject to comprehensive statutes, regulations and margin requirements. Certain regulators and self-regulatory organisations and exchanges are authorised to take extraordinary actions if market emergencies occur. The regulation of derivatives transactions and vehicles that engage in such transactions is an evolving area of law and is subject to modification by government and judicial action. The effect of any future regulatory change on the Issuer could be substantial and adverse.
No assurance can be given that action and rules and regulations, additional to those discussed above, from any regulatory authority will not be implemented with regard to the Issuer or the Portfolio Manager in Ireland, the Cayman Islands or any other applicable jurisdiction generally, the particular sector in that market in which the Issuer and the Portfolio Manager operates or specifically in relation to the Portfolio Manager or the Eligible Assets. Any such action or developments, in particular, but not limited to, the cost of compliance, may have a material adverse effect on the Portfolio, the Portfolio Manager (and its sub- servicers or sub-manager), the originators of the Eligible Assets and the Issuer and their respective businesses and operations. This may adversely affect the Issuer's ability to make payments to the Securityholders.
Systemic Risk
Credit risk may also arise through a default by one of several large institutions that are dependent on one another to meet their liquidity or operational needs, so that a default by one institution causes a series of defaults by the other institutions. This is sometimes referred to as a "systemic risk" and may adversely affect financial intermediaries, such as clearing agencies, clearing houses, banks, securities firms and exchanges, with which the Portfolio Manager or the Issuer interact with respect to the Series Assets and the Accounts and/or the Issuer interacts with respect to the Securities and/or the Series Assets.
Force Majeure, Terrorism and Other Acts
In addition to historic market risks, the Issuer's performance and/or the performance of the Transaction Parties and/or their delegates and/or sub-contractors of their obligations under the Transaction Documents, may be adversely affected by market fluctuations resulting from certain risks which are unprecedented in nature or magnitude and therefore not amenable to existing risk management techniques which are based on modelling past events and assigning probabilities to the recurrence of those events. Such events include, without limitation, catastrophic acts of terror resulting in mass casualties and associated destruction and subsequent abandonment of large areas in urban locales; imposition or declaration of martial law in jurisdictions with a long history of civil rule of law; mass disruption of telecommunications facilities due to terrorist acts; pandemics resulting from bio-terror attacks or outbreaks of fatal disease for which there is no cure or treatment; urban terror using nerve gas or other toxins; terrorist use of nuclear weapons, radiation dispersal weapons or other weapons of mass destruction; cyber-terror and terrorist attacks on financial markets, exchanges and payments systems and acts of Providence.
COVID-19
The COVID-19 virus outbreak has had an adverse impact, and if it is prolonged or increases could have a material and adverse impact, on the business of the Issuer.
In December 2019, the COVID-19 virus, commonly known as “coronavirus”, surfaced in Wuhan, China. In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. The COVID-19 disease has spread from China to many other countries including the United States, Canada and the United Kingdom, with the number of reported cases and related deaths increasing daily and, in many countries, at a very rapid pace.
Many governments, including the PRC, have imposed increasingly stringent restrictions to seek to mitigate, or slow down, the spread of COVID-19, including restrictions on international and local travel, public gatherings and participation in business meetings, as well as closures of workplaces, schools, and
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other sites, and are encouraging “social distancing”. The duration of such measures is highly uncertain, but could be prolonged, and even stricter measures may be put in place.
In late February 2020, the COVID-19 outbreak caused financial markets globally to experience significant decline and volatility. In March 2020, the COVID-19 pandemic, coupled with a sharp material decline in the oil price, caused financial markets globally to experience further material declines and very elevated volatility, signaling a likely economic downturn and adverse impact on GDP and broader economic conditions. There is no assurance that the responses from central banks (which include reductions in interest rates and liquidity support) and financial support and fiscal spending by certain governments will be sufficient to support affected economies or that financial markets will return to normal.
The Issuer's performance and/or the performance of the Series Assets, the Transaction Parties and/or their delegates and/or sub-contractors of their obligations under the Transaction Documents, may be adversely affected by such market fluctuations and volatility.
Change of Law
The structure of the transaction and, inter alia, the issuance of the Securities and acquisition of the Series Assets are based on law, tax and administrative practice in effect at the date hereof, and having due regard to the expected tax treatment of all relevant entities under such law and practice. No assurance can be given that law, tax or administration practice will not change after the date hereof or that such change will not adversely impact the structure of the transaction and the treatment of the Securities.
International Investments
The Portfolio Manager expects to only make QFII Investments. International investments involve a broad range of political, economic, legal, tax, and financial risks. Many of these risks are not typically associated with investments in securities of companies in economies that have developed and been regulated over a longer period. These risks include: (i) less publicly available information; (ii) varying levels of governmental regulation and supervision; and (iii) foreign exchange controls. Moreover, non-United States ("U.S.") companies may not be subject to uniform accounting, auditing, and financial reporting standards, practices, and requirements comparable to those applicable to U.S. companies. Further, investing in securities of non-U.S. entities that are generally denominated in non-U.S. currencies and utilisation of options on non-U.S. securities involves certain considerations comprising both risks and opportunities not typically associated with investing in securities of the U.S. government or entities organised or domiciled in the U.S. These considerations include changes in exchange rates and exchange control regulations, political and social instability, expropriation, imposition of foreign taxes, less liquid markets and less available information than is generally the case in the U.S., higher transaction costs, foreign government restrictions, less government supervision of exchanges, brokers and issuers, greater risks associated with counterparties and settlement, difficulty in enforcing contractual obligations, and greater price volatility.
Emerging Markets
Investing in an emerging market involves additional risks and special considerations not typically associated with investing in other more established economies or securities markets. Emerging economies differ from other large economies in many respects, including the level of development, growth rate, and allocation of resources. Such risks may include (i) increased risk of nationalisation or expropriation of assets or confiscatory taxation; (ii) greater social, economic, and political uncertainty, including war; (iii) higher dependence on exports and the corresponding importance of international trade; (iv) greater volatility, less liquidity, and smaller capitalisation of securities markets; (v) greater volatility in currency exchange rates; (vi) greater risk of inflation; (vii) greater controls on foreign investment and limitations on repatriation of invested capital and on the ability to exchange local currencies for U.S. Dollars; (viii) increased likelihood of governmental decisions to cease support of economic reform programs or to impose centrally planned economies; (ix) differences in auditing and financial reporting standards, which may result in the unavailability of material information about issuers; (x) less extensive
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regulation of the securities markets; (xi) longer settlement periods for securities transactions and less reliable clearance and custody arrangements; (xii) less protection through registration of assets; (xiii) less developed corporate laws regarding fiduciary duties of officers and directors and protection of shareholders and other interest holders; (xiv) less developed laws regarding internal controls designed to ensure the accuracy of financial reporting and third party attestation of the effectiveness of those controls; (xv) promulgation of new laws, regulations, and economic policies; (xvi) changes in the interpretation or enforcement of laws or regulations; (xvii) introduction of measures to control inflation or stimulate growth; (d) changes in the rate or method of taxation; and (xviii) the imposition of additional restrictions on currency conversion and remittances abroad.
Availability of Suitable Investment Opportunities and Investment Risk
For the investment strategies to be successful, the Portfolio Manager must be able to identify and select appropriate investment opportunities. Additionally, the Issuer competes for investment opportunities with operating companies, financial institutions, and other institutional investors, which may negatively impact the Issuer’s ability to take advantage of suitable investment opportunities. Successful implementation of the investment strategy adopted by the Issuer requires accurate assessments of general economic conditions, the detailed analysis of individual companies or industries, the relationship between a security and its derivatives, the risk correlation between a wide variety of investments, and the future behavior of other financial market participants. Even with the most careful analysis, the direction of the financial markets is often driven by unforeseeable economic, political, and other events and the reaction of market participants to these events. There can be no assurance that the Issuer’s strategy will be successful and an unsuccessful strategy may result in significant losses to our clients' investments. The investors should be aware that the value of their investments and the return derived from them may fluctuate. There can be no assurance that the investments will achieve investors’ investment objectives. Additionally, though investments will be monitored in accordance with the Portfolio Manager’s policies, as well as restrictions and risk management policies in prospectuses or investment advisory agreements, there can be no guarantee that losses will be avoided at all times. There is a risk that QFII Investments or other investments made will be lost entirely or in part. Past performance may not be construed as an indication of the future results.
Strategy Risks
Fundamental analysis, by itself, does not attempt to anticipate market movements. This presents a potential risk and, although the Portfolio Manager considers overall market conditions in its investment strategies, the price of a security may move up or down along with the overall market regardless of the economic and financial factors considered in evaluating the investment. Likewise, the Portfolio Manager’s long-term growth selections may not take advantage of short-term gains that could be profitable. If Portfolio Manager’s predictions are incorrect, a security may decline sharply in value before the Issuer’s investments are sold.
Equity Risk
Because of the nature of its investment strategies, the Issuer is subject to the risk that prices will fall over short or extended periods of time, and the investors could lose all, or a substantial portion, of the value of their investments.
Business Risk
QFII Investments or other investments that the Portfolio Manager selects may report poor results and industry and/or economic trends and developments could have a greater impact on certain companies in comparison to the market as a whole. The prices of these companies' securities may decline in response.
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Interest Rate Fluctuations
The prices of some of the financial derivative instruments that Portfolio Manager may select may be sensitive to interest rate fluctuations. Unexpected fluctuations in interest rates could cause the corresponding prices of the Issuer’s long and short portions to move in directions that were not initially anticipated. Additionally, interest rate increases generally will increase the costs of borrowing. To the extent that interest rate assumptions underlie the hedge ratios implemented in hedging a particular position, fluctuations in interest rates could invalidate those underlying assumptions and expose the investors to losses.
Market Risk and Disruptions
The price of a security may decline in response to certain tangible and intangible events and conditions, including conditions directly involving the issuers of the securities; general economic conditions; overall market changes; local, regional, or global political, social, or economic stability; governmental responses to economic conditions; and currency, interest rate, and commodity price fluctuations. Such events are beyond our control and may be independent of a security's particular underlying circumstances. Further, the global financial markets have undergone and may further undergo pervasive and fundamental disruptions that have led to extensive and unprecedented governmental intervention. Such intervention has, in certain cases, been implemented on a sudden and "emergency" basis. This has substantially limited the ability of market participants to continue to implement certain strategies or manage the risk of their outstanding positions. In addition, as one would expect given the complexities of the financial markets and the limited time frame within which governments have felt compelled to take action, these interventions may be perceived as unclear in scope and application and such perceptions can contribute to general uncertainty in the markets. Investors may incur major losses in the event of disrupted markets and other extraordinary events in which historical pricing relationships (on which the Portfolio Manager may base its selections) become materially distorted. The risk of loss from pricing distortions is compounded by the fact that in disrupted markets many positions become illiquid, making it difficult or impossible to close out positions against which the markets are moving. Market disruptions may from time to time cause dramatic losses for investors, and such events can result in otherwise historically low-risk strategies performing with unprecedented volatility and risk. It is impossible to predict what additional interim or permanent governmental restrictions may be imposed on the markets and/or the effect of such restrictions on our strategies.
UK’s exit from the European Union
On 23 June 2016, a referendum was held in the UK to decide on the UK’s membership of the European Union (the "Referendum"). The UK vote was to leave the European Union. The UK government gave notice of the UK's intention to withdraw from the EU pursuant to Article 50 of the Treaty of the European Union ("Article 50") on 29 March 2017 and the UK left the European Union on 31 January 2020 at 11pm local time.
At that time, the EU treaties ceased to apply to the UK. However, as part of the withdrawal agreement agreed between the UK and the EU (the "Withdrawal Agreement"), the UK is now in an implementation period (the "Implementation Period") during which EU law continues to apply to the UK, and the UK continues to be part of the EU single market, until the end of 2020 (with a possibility of extension). The terms of the UK's exit from the EU, including the future relationship, are unclear. The Withdrawal Agreement does not in general address the future relationship between the EU and the UK, which will need to be the subject of a separate agreement which has not yet been negotiated.
Whilst continuing to negotiate the Article 50 withdrawal agreement, the Government of the UK has commenced preparations for a "hard" Brexit or "no-deal" Brexit to minimise the risks for firms and businesses associated with an exit with no transitional agreement. This has included publishing draft secondary legislation under powers provided in the EU (Withdrawal) Act 2018 to ensure that the UK has a functioning statute book on 1 November 2019. The European authorities have not provided UK firms and businesses with similar assurances in preparation for a ‘hard’ Brexit.
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There are a number of uncertainties in connection with the future of the UK and its relationship with the European Union and the negotiation of the UK’s exit terms is likely to take a number of years. It is not currently possible to determine the impact that the Referendum, the UK’s departure from the European Union and/or any related matters may have on the business of the parties to the Transaction Documents and their ability to perform their obligations under the Transaction Documents or on macroeconomic conditions across the European Union more generally. Such uncertainty may persist even when the timing and terms of the UK’s exit from the European Union are clearer. As such, notwithstanding the limited connection of the Securities and the Series Assets to the UK, no assurance can be given that such matters would not adversely affect the ability of the Issuer to satisfy its obligations under the Securities and/or the market value and/or the liquidity of the Securities in the secondary market.
Under the EU single market directives, mutual access rights to markets and market infrastructure exist across the EU and the mutual recognition of insolvency, bank recovery and resolution regimes applied. In addition, regulated entities licensed or authorised in one EEA jurisdiction may operate on a cross-border basis in other EEA countries without the need for a separate licence or authorisation. There is uncertainty as to how, following expiry of the Implementation Period), the existing passporting regime will apply (if at all). Depending on the final terms of the UK’s exit and the terms of any replacement relationship, it is possible that, UK regulated entities may lose the right to passport their services to EEA countries, and EEA entities may lose the right to reciprocal passporting into the UK. Also, UK entities may no longer have access rights to market infrastructure across the EU and the recognition of insolvency, bank recovery and resolution regimes across the EU may no longer be mutual.
There can be no assurance that the terms of the UK’s exit from the EU will include arrangements for the continuation of the existing passporting regime or mutual access rights to market infrastructure and recognition of insolvency, bank recovery and resolution regimes. Such uncertainty could adversely impact the Issuer and, in particular, the ability of third parties to provide services to the Issuer, and could be materially detrimental to Securityholders.
REGULATORY RISKS
Changes of Law and Regulation
Legal, tax and regulatory changes could occur over the course of the life of the Securities that may adversely affect the Issuer. The regulatory environment for vehicles of the nature of the Issuer is evolving, and changes in regulation may adversely affect the Issuer, the value of investments held by the Issuer and the ability of the Issuer to obtain the leverage it might otherwise obtain or to pursue its investment and trading strategies. In addition, the securities and derivatives markets are subject to comprehensive statutory, regulatory and margin requirements. Certain regulators and self-regulatory organisations and exchanges are authorised to take extraordinary actions in the event of market emergencies. The regulation of transactions of a type similar to this transaction and derivative transactions and vehicles that engage in such transactions is an evolving area of law and is subject to modification by governmental and judicial action. The effect of any future regulatory change on the Issuer could be substantial and adverse The structure of the issue of the Securities is based on Irish law, and various regulatory, accounting and administrative practices in effect as at the date of these Base Listing Particulars, and also, having due regard to the expected tax treatment of all relevant entities under the tax law and the published practice of the Irish Revenue Commissioners in force or applied in the Republic of Ireland, as at the date of these Base Listing Particulars. No assurance can be given as to the impact of any possible change to Irish law or any other relevant or the regulatory, accounting or administrative practice in any relevant jurisdiction, or the interpretation or administration thereof, or to the published practices of the Irish Revenue Commissioners in the Republic of Ireland or the tax authorities of any other relevant taxing jurisdiction, after the date of these Base Listing Particulars. Any changes to the accounting practices of any person may have an effect on the tax treatment of that person. However, in connection with the Issuer in this regard, see "—Risks Relating to the Introduction of International Financial Reporting Standards" below.
Risks Relating to the Introduction of International Financial Reporting Standards
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The Irish tax position of the Issuer depends, to a significant extent, on the accounting treatments applicable to it. The accounts of the Issuer are required to comply with International Financial Reporting Standards ("IFRS") or with generally accepted accounting principles in Ireland ("Irish GAAP") which has been substantially aligned with IFRS.
Companies such as the Issuer might, under either IFRS or Irish GAAP, be forced to recognise in their accounts movements in the fair value of assets that could result in profits or losses for accounting purposes which bear little relationship to the company's actual cash position. In general, such movements in value would be brought in to charge to tax in Ireland for an Irish tax-resident company (if not specifically relieved) as a company's tax liability on such assets broadly follows the accounting treatment. However, the taxable profits of a qualifying company within the meaning of section 110 of the Taxes Consolidation Act 1997 of Ireland, as amended (and, it is expected that the Issuer will continue to qualify as such a qualifying company) are based on Irish GAAP as it existed at 31 December 2004 unless the qualifying company elects out of this treatment. Such an election, if made, is irrevocable. If such an election is made, then taxable profits or losses could arise in the Issuer as a result of the application of IFRS or current Irish GAAP that are not contemplated in the cashflows for the transaction and as such may have a negative effect on the Issuer and its ability to make payments to Securityholders. The Issuer has covenanted that no such election will be made if its cashflows would be adversely affected thereby.
Legal and regulatory provisions affecting investors
The investment activities of certain investors are subject to legal investment laws and regulations, or review or regulation by certain authorities. Each potential investor in the Securities should consult its legal advisers to determine whether and to what extent (1) it has the legal power, authority and right to purchase such Securities, (2) the Securities can be used as collateral for various types of borrowing and (3) other restrictions apply to its purchase or pledge of any Securities. Financial institutions should consult their legal advisers or the appropriate regulators to determine the appropriate treatment of the Securities under any applicable risk based capital or similar rules. None of the Issuer or any of the Transaction parties or any of its affiliates expresses any view as to any of the foregoing matters.
Each purchaser of the Securities must be able to make (and will be deemed to have made) the representations and warranties set out in the "Subscription and Sale" section of these Base Listing Particulars, including, but not limited to, representing that it has the legal power, authority and right to purchase such Securities.
Regulatory Initiatives and potential effects of any additional regulatory changes or nationalisation
The events since 2007 have seen increased involvement of governmental and regulatory authorities in the financial sector and in the operation of financial institutions. In particular, governmental and regulatory authorities in a number of jurisdictions have imposed stricter regulatory controls around certain financial activities and/or have indicated that they intend to impose such controls in the future. The United States of America, the European Union and other jurisdictions are actively considering various reform measures. In certain jurisdictions (e.g. the United States of America), legislation has come into force in this respect, although the rules and regulations required to implement the particulars of any such legislation have yet to be considered. In other jurisdictions (e.g. the European Union), a number of draft pieces of legislation have been proposed and are currently being considered. Such regulatory changes and the method of their implementation may have a significant impact on the operation of the financial markets. It is uncertain how a changed regulatory environment will affect the Issuer and the treatment of the Securities and the other Transaction Parties. In addition, governments have shown an increased willingness wholly or partially to nationalise financial institutions, corporates and other entities in order to support the economy. Such nationalisation may impact adversely on the value of the stock or other obligations of any such entity. In addition, in order to effect such nationalisation, existing obligations or stock might have their terms mandatorily amended or be forcibly redeemed. To the extent that an obligor or any other person or entity connected with the Securities or the underlying QFII Investments is subject to nationalisation or other government intervention, it may have an adverse effect on a holder of the Securities.
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In addition, in Europe, the U.S. and elsewhere there has been, and there continues to be increased political and regulatory scrutiny of banks, financial institutions, "shadow banking entities" and the asset- backed securities industry. This has resulted in a raft of measures for increased regulation which are currently at various stages of implementation and which may have an adverse impact on the regulatory capital charge to certain investors in securitisation exposures and/or the incentives for certain investors to hold or trade asset-backed securities, and may thereby affect the liquidity of such securities. This uncertainty is further compounded by the numerous regulatory efforts underway in Europe, the U.S. and globally. Certain of these efforts overlap. In addition, even where these regulatory efforts overlap, they generally have not been undertaken on a coordinated basis.
Regulatory changes could occur over the course of the life of the Securities that may adversely affect the Issuer. The regulatory environment for entities such as the Issuer is evolving, and changes in the regulation of the Issuer may reduce the return on the Securities. In addition, the securities and futures markets are subject to comprehensive statutes, regulations and margin requirements. Certain regulators and self-regulatory organisations and exchanges are authorised to take extraordinary actions if market emergencies occur. The regulation of derivatives transactions and vehicles that engage in such transactions is an evolving area of law and is subject to modification by government and judicial action. The effect of any future regulatory change on the Issuer could be substantial and adverse.
Also, the most recent election of the president of the United States and the results of the US congressional elections could lead to substantial changes in US regulations applicable to the Issuer, the Trustee, the Portfolio Manager, Agents, Corporate Services Provider or the Listing Agent, the QFII Investments as well as other changes in US economic and tax policy, laws and regulations. It is unclear what impact these developments may have on the Issuer, the other parties to the Transaction Documents, the Portfolio Manager and the QFII Investments.
No assurance can be given that action and rules and regulations, additional to those discussed above and below, from any regulatory authority will not be implemented with regard to the Issuer in Ireland, the UK, the United States of America or any other applicable jurisdiction generally, the particular sector in that market in which the Issuer operates or specifically in relation to the QFII Investments. Any such action or developments, in particular, but not limited to, the cost of compliance, may have a material adverse effect on the QFII Investments and the Issuer and its business and operations. This may adversely affect the Issuer's ability to make payments to the Securityholders.
None of the Issuer, Trustee, the Portfolio Manager, Agents, Corporate Services Provider or the Listing Agent nor any of their respective affiliates makes any representation as to the proper characterisation of the Securities for legal investment, financial institution regulatory, financial reporting or other purposes, as to the ability of particular investors to invest in the Securities under applicable legal investment or other restrictions or as to the consequences of an investment in the Securities for such purposes or under such restrictions. All prospective investors in the Securities whose investment activities are subject to legal investment laws and regulations, regulatory capital requirements, or review by regulatory authorities should consult with their own legal, accounting and other advisors in determining whether, and to what extent, the Securities will constitute a legal investment for them or are subject to investment or other regulatory restrictions, unfavourable accounting treatment, capital charges, reserve requirements or other consequences.
Dodd-Frank’s Volcker Rule could restrict the ability of certain investors to invest in the Securities
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act") includes the so-called "Volcker Rule," which, subject to certain exceptions, prohibits a "banking entity" (as defined therein) from (i) engaging in proprietary trading, (ii) acquiring or retaining an ownership interest in or sponsoring a covered fund (as defined in the final Volcker Rule regulations), and (iii) entering into certain relationships with covered funds. The Volcker Rule became effective on July 21, 2012, and final regulations implementing the Volcker Rule were adopted on December 10, 2013, and became effective on April 1, 2014.
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The final Volcker Rule regulations define an "ownership interest" to include, among other interests, any note or other interest in a covered fund that has the right to participate in the selection or removal of an investment manager of an investment manager of the covered fund (excluding the rights of a creditor to exercise remedies upon the occurrence of an event of default or an acceleration event). Because the consent in writing of the holders of 75% in principal amount of the Securities is required for certain actions, in including the release of any party to any of the Master Documents, it is possible the Securites would be considered ownership interests within the meaning of the final regulations implementing the Volcker Rule.
For all banking entities subject to the Volcker Rule, a covered fund includes any issuer that would be an investment company under the Investment Company Act but for the exceptions provided in Section 3(c)(1) or 3(c)(7) of the Investment Company Act, as well as certain commodity pools, subject to certain enumerated exclusions.
In addition, for any banking entity that is, or is controlled directly or indirectly by a banking entity that is, located in or organised under the laws of the United States or of any State, a "covered fund" also includes an issuer organised outside the United States that offers its ownership interests solely outside the United States and that is, or holds itself out as being, an entity or arrangement that raises money from investors primarily for the purpose of investing in securities for resale or other disposition or otherwise trading in securities (a "covered foreign fund"), unless an exception applies. Whether the Issuer would be a covered foreign fund depends on, among other things, whether the Issuer’s investments would be considered securities within the meaning of the covered foreign fund definition and whether the Issuer would qualify for any exception from the covered fund or investment company definition.
The general effects of the Volcker Rule remain uncertain. Any prospective investor in the Securities, including a U.S. or non-U.S. bank or a subsidiary or other affiliate thereof, should consult its own legal advisors regarding such matters and other effects of the Volcker Rule.
Implementation of and/or changes to the Basel II and Basel III risk-weighted asset framework may result in changes to the risk-weighting of the Securities.
In Europe, the United States and elsewhere there is increased political and regulatory scrutiny of the asset-backed securities industry. This has resulted in a raft of measures for increased regulation which are currently at various stages of implementation and which may have an adverse impact on the regulatory capital charge to certain investors in securitisation exposures and/or the incentives for certain investors to hold asset-backed securities, and may thereby affect the liquidity of such securities. Investors in the Securities are responsible for analysing their own regulatory position and none of the Issuer, Trustee, the Portfolio Manager, Agents, Corporate Services Provider or the Listing Agent or other transaction parties makes any representation to any prospective investor or purchaser of the Securities regarding the regulatory capital treatment of their investment at the point of issuance or at any time in the future.
Implementation by the United States and other countries of the 2006 regulatory capital framework ("Basel II Framework") established by the Basel Committee on Banking Supervision ("Basel Committee") may affect the regulatory capital treatment of the Securities for investors who are or may become subject to regulatory capital adequacy requirements that are based on the Basel II Framework.
Recently, the Basel Committee made significant changes to the Basel II Framework (such changes being commonly referred to as "Basel III"), including new capital and liquidity requirements intended to increase the quality and quantity of regulatory capital required to be held by institutions that are subject to Basel III and to establish minimum liquidity standards for banking organisations. The changes made by Basel III include, among other things, the introduction of a new tier of regulatory capital (common equity tier 1 capital), higher minimum risk-based capital ratios, new deductions and adjustments from regulatory capital, including deductions for certain investments in the capital of unconsolidated financial institutions that exceed specified thresholds, capital buffers on top of minimum risk-based capital requirements, measures to strengthen the capital requirements for counterparty credit exposures arising from certain
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transactions and the introduction of a leverage ratio as well as short-term and longer-term liquidity standards referred to as the "Liquidity Coverage Ratio" and the "Net Stable Funding Ratio," respectively. Basel Committee member countries originally agreed to implement the new Basel III capital standards beginning in January 2013, the Basel III Liquidity Coverage Ratio beginning in January 2015 and the Basel III Net Stable Funding Ratio beginning in January 2018, subject to certain phase-in arrangements. Implementation of Basel III capital standards has been delayed in certain jurisdictions. The Basel Committee may further calibrate the Liquidity Coverage Ratio and Net Stable Funding Ratio and may make further revisions to Basel III.
On June 27, 2013, the CRR (as defined below) and Capital Requirements Directive adopted by the European Parliament and the Council of the European Union (collectively referred to as "CRD IV") were published in the Official Journal of the European Union. Among other things, CRD IV implements the Basel III standards in the European Economic Area ("EEA") and generally took effect beginning January 1, 2014. In July 2013, the U.S. banking regulators issued a final rule to implement Basel III in the United States (the "U.S. Basel III final rule"). Among other things, the U.S. Basel III final rule contains new capital standards that raise capital requirements, strengthen counterparty credit risk capital requirements and replace the use of externally developed credit ratings with alternatives such as the Organisation for Economic Co-operation and Development’s country risk classifications. The general effective date of the U.S. Basel III final rule is January 1, 2015, although certain large and internationally active U.S. banking organisations became subject to the U.S. Basel III final rule beginning on January 1, 2014.
The Basel II Framework, as revised by Basel III and as implemented by regulators in each jurisdiction, may have an impact on the regulatory capital treatment of the Securities for investors that are subject to regulatory capital requirements that are based on Basel II, Basel III or any successor internationally agreed-upon capital standards.
Investing in the Securities also may have implications under Basel III or other capital and liquidity standards that apply to certain investors. Investors should consult their own advisers as to the regulatory capital and liquidity treatment of the Securities under the regulatory frameworks applicable to them. No representation can be made as to the effects of such regulatory matters on any investor.
EU Securitisation Regulation
On 1 January 2019, Regulation (EU) 2017/2402 (the "Securitisation Regulation") and the associated Regulation (EU) 2017/2401 (the "CRR Amending Regulation", and together with the Securitisation Regulation, the "Securitisation Regulations") began to apply to any securitisations issued from that date, subject to various transitional provisions.
The Securitisation Regulations implement the revised securitisation framework developed by the Basel Committee, as well as revised risk retention and transparency requirements (now imposed variously on the issuer, originator, sponsor and/or original lender of a securitisation) and new due diligence requirements imposed on certain institutional investors in a securitisation. It also introduced a ban on the securitisation of residential mortgage loans made after 20 March 2014 and marketed and underwritten on the premise that the loan applicant or, where applicable, intermediaries were made aware that the information provided by the loan applicant might not be verified by the lender. In general, the requirements imposed under the Securitisation Regulations are more onerous and have a wider scope than those imposed under the previous legislation.
On the basis that it is expected that investors in each Series shall rank pari passu with no subordination of tranches determining the distribution of losses during the ongoing life of the transaction or scheme, the Issuer does not expect the issuance of any Series to be subject to the Securitisation Regulations. However, depending on the structure of each individual Series, the issuance of such Series may constitute a securitisation for the purposes of the Securitisation Regulations. Investors should consult the applicable Series Listing Particulars for further information about the applicability of the Securitisation Regulations to the relevant Series.
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None of the Issuer, the Trustee, the Portfolio Manager, Agents, Corporate Services Provider or the Listing Agent makes any representation as to compliance with Securitisation Regulations or makes any undertaking to comply at any time now or in the future with any of the foregoing, nor is any representation made as to the application of the Securitisation Regulations to individual investors. Investors subject to the Securitisation Regulations may therefore be less likely to purchase the Securities, which may have a negative impact on the ability of investors in the Securities to resell the Securities in the secondary market or a negative impact on the price realised for such Securities.
Investors are themselves responsible for monitoring and assessing any changes to the Securitisation Regulations (together with all implementing regulatory and technical standards) (the "EU Securitisation Laws"). There can be no assurances as to whether the transaction described herein or in a Series Listing Particulars will be affected by a change in law or regulation relation to the EU Securitisation Laws, including as a result of any changes recommended in future reports or reviews. Investors should therefore make themselves aware of the EU Securitisation Laws in addition to any other regulatory requirements that are (or may become) applicable to them and/or with respect to their investment in a particular Series.
Due Diligence obligations under national legislation
National legislation may require certain investors, before becoming exposed to the credit risk of a securitisation and as appropriate thereafter, to demonstrate to the competent authorities for each of its individual securitisation positions that it has a comprehensive and thorough understanding of and has implemented formal policies and procedures commensurate with the risk profile of its investments in securitised positions.
Failure to comply with one or more of the due diligence requirements may result in various penalties including, in the case of those investors subject to regulatory capital requirements, the imposition of a penal capital charge on the securities acquired by the relevant investor. Securityholders should therefore make themselves aware of such requirements (and any corresponding implementing rules of their regulator), where applicable to them, in addition to any other regulatory requirements applicable to them with respect to their investment in the Securities.
The due diligence requirements described above and any other changes in the law or regulation, the interpretation or application of any or regulation or changes in the regulatory capital treatment of the Securities for some or all investors may negatively impact the regulatory position of individual investors and, in addition, may have a negative impact on the price and liquidity of the Securities in the secondary market.
Relevant investors are required to independently assess and determine the sufficiency of the information described above and elsewhere in these Base Listing Particulars for the purposes of complying with any relevant due diligence requirements and none of the Issuer, Trustee, the Portfolio Manager, Agents, Corporate Services Provider or the Listing Agent makes any representation that the information described above is sufficient in all circumstances for such purposes or any other purpose and no such person shall have any liability to any prospective investor or any other person with respect to any deficiency in such information or any failure of the transactions or structure contemplated hereby to comply with or otherwise satisfy such requirements.
No retention for the purposes of the U.S. Risk Retention Rules
No party has retained any minimum economic interest in the Securities or the QFII Investments for the purposes of the final rules implementing the credit risk retention requirements of Section 941 of the Dodd- Frank Act (the "U.S. Risk Retention Rules").
None of the Issuer, Trustee, the Portfolio Manager, Agents, Corporate Services Provider or the Listing Agent makes any representation as to compliance with U.S. Risk Retention Rules or makes any
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undertaking to comply at any time now or in the future with any of the foregoing, including the U.S. Risk Retention Rules requirements, nor is any representation made as to the application of any U.S. Risk Retention Rules to individual investors. Investors subject to U.S. Risk Retention Rules may therefore be less likely to purchase the Securities, which may have a negative impact on the ability of investors in the Securities to resell the Securities in the secondary market or a negative impact on the price realised for such Securities.
Alternative Investment Fund Managers Directive (AIFMD)
AIFMD provides, among other things, that all alternative investment funds ("AIFs") must have a designated alternative investment fund manager ("AIFM") with responsibility for portfolio and risk management. AIFMD is transposed into Irish law by the European Union (Alternative Investment fund Managers) Regulations 2013 (the "AIFMD Regulations").
On 8 November 2013, in order to assist in limiting any uncertainty until definitive positions and practises are finalized at a European level, the Central Bank published a fifth edition of its AIFMD Questions and Answers ("Q&A") pursuant to which it confirmed that, as a transitional arrangement, entities which are either
(a) registered financial vehicle corporations within the meaning of Article 1(1) of Regulation (EU) No. 1075/2013 of the European Central Bank of 18 October 2013 concerning statistics on the assets and liabilities of financial vehicle corporations engaged in securitisation transactions (recast)(ECB/2013/40)(an "FVC"); or
(b) financial vehicles (such as the Issuer) engaged solely in activities where economic participation is by way of debt or other corresponding instruments which do not provide ownership rights in the financial vehicle (as are provided by the sale of its shares), are advised that they do not need to seek authorisation as, or appoint, an AIFM (unless the Central Bank of Ireland advises those entities otherwise in a replacement Q&A, which, according to the most recent edition of the Q&A which was published on 7 March 2019, it does not intend to do, at least for so long as the European Securities and Markets Authority continues its current work on the matter)(the "Transitional Arrangements").
The European Securities and Markets Authority ("ESMA") has not yet given any formal guidance on the application of AIFMD to entities such as the Issuer which issue solely debt securities. If AIFMD were to apply to the Issuer, the Issuer would also be classified as a "financial counterparty" under the European Market Infrastructure Regulation EU 648/2012 and may be required to comply with clearing obligations or other risk mitigation techniques with respect to derivative transactions including obligations to post margin to any central clearing counterparty or market counterparty. In addition, AIFMD would entail several consequences for the Issuer, notably:
(a) the Issuer would have to delegate the management of its assets to a duly licensed AIFM (the "Issuer AIFM");
(b) the Issuer AIFM would have to implement procedures in order to identify, prevent, manage, monitor and disclose conflict of interests;
(c) adequate risk management systems would need to be implemented by the Issuer AIFM to identify, measure, manage and monitor appropriately all risks relevant to the Issuer’s investment strategy and to which the Issuer is or can be exposed (including appropriate stress testing procedures);
(d) valuation procedures would need to be designed at the Issuer level;
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(e) a depositary would have to be appointed in relation to the Issuer’s assets; and
(f) the Issuer and the Issuer AIFM would be subject to certain reporting and disclosure obligations.
From the Issuer’s perspective, if the Issuer were considered to be an AIF and could not benefit from the exemption afforded to special purpose entities ("SSPEs") (as defined in AIFMD) provided in AIFMD or the Transitional Arrangements, AIFMD would require the Issuer to seek authorisation to become an AIFM under AIFMD. In the event that AIFMD becomes applicable to the Issuer, the Issuer's costs and expenses could increase significantly.
The Issuer has registered as an FVC and therefore does not currently expect to fall within the ambit of AIFMD or the AIFMD Regulations in accordance with the Q&A. However, as the AIFMD Regulations are open to interpretation, the Issuer cannot be sure that the Central Bank, ESMA or a court would take the same view, notwithstanding the fact that the Central Bank currently considers entities such as the Issuer to fall outside of the ambit of AIFMD and the AIFMD Regulations.
European Market Infrastructure Regulation
The European Market Infrastructure Regulation EU 648/2012 ("EMIR") and its various delegated regulations and technical standards impose a range of obligations on parties to "over-the-counter" ("OTC") derivative contracts according to whether they are "financial counterparties" such as investment firms, alternative investment funds below, credit institutions and insurance companies, or other entities which are "non-financial counterparties" for third country entities equivalent to "financial counterparties" or "non-financial counterparties".
Financial counterparties (as defined in EMIR) will be subject to a general obligation to clear through a duly authorised or recognised central counterparty (the "clearing obligation") all "eligible" OTC derivative contracts entered into with other counterparties subject to the clearing obligation. They must also report the details of all derivative contracts to a trade repository (the "reporting obligation") (in respect of which the Issuer may appoint one or more reporting delegates) and undertake certain risk-mitigation techniques in respect of OTC derivative contracts which are not cleared by a central counterparty such as timely confirmation of terms, portfolio reconciliation and compression and the implementation of dispute resolution procedures (the "risk mitigation obligations"). Non-cleared OTC derivatives entered into by financial counterparties must also be marked to market and collateral must be exchanged (the "margin requirement").
Non-financial counterparties (as defined in EMIR) are exempted from the clearing obligation and certain additional risk mitigation obligations (such as the posting of collateral) provided the gross notional value of all derivative contracts entered into by the non-financial counterparty and other non-financial entities within its "group" (as defined in EMIR), excluding eligible hedging transactions, does not exceed certain thresholds (set per asset class of OTC derivatives). If the Issuer is considered to be a member of a "group" (which may, for example, potentially be the case if the Issuer is consolidated by a Securityholder as a result of such Securityholder’s holding of a significant proportion of the Securities) and if the aggregate notional value of OTC derivative contracts entered into by the Issuer and any non-financial entities within such group exceeds the applicable thresholds, the Issuer would be subject to the clearing obligation, or if the relevant contract is not a type required to be cleared, to the risk mitigation obligations, including the margin requirement.
Key details in respect of the clearing obligation and the margin requirement and their applicability to certain classes of OTC derivative contracts are to be provided through corresponding regulatory technical standards. Whilst regulatory technical standards have been published in respect of certain classes of OTC derivative contracts, others are yet to be proposed.
Clearing Obligation
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The regulatory technical standards governing the mandatory clearing obligation for certain classes of OTC derivative contracts which entered into force on 21 December 2015 specify that the clearing obligation in respect of interest rate OTC derivative contracts that are (i) basis swaps and fixed-to-floating swaps denominated in euro, GBP, USD and Japanese Yen and (ii) forward rate agreements and overnight swaps denominated in euro, GBP and USD, in each case, would take effect on dates ranging from 21 June 2016 (for major market participants grouped under "Category 1") to 21 December 2018 (for non-financial counterparties that are not AIFs grouped under "Category 4").
Margin Requirements
On 4 October 2016, the European Commission adopted regulatory technical standards on risk-mitigation techniques for OTC derivative contracts not cleared by a central clearing counterparty to the European Commission (the "RTS"). The RTS were published in the Official Journal on 15 December 2016 and entered into force on 4 January 2017.
The RTS detail the risk mitigation obligations and margin requirements in respect of non-cleared OTC derivatives as well as specify the criteria regarding intragroup exemptions and provide that the margin requirement will take effect on dates ranging, originally, from one month after the RTS enter into force (for certain entities with a non-cleared OTC derivative portfolio above €3 trillion) to 1 September 2020 (for certain entities with a non-cleared OTC derivative portfolio above €8 billion). The margin requirements apply to financial counterparties and non-financial counterparties above the clearing threshold and, depending on the counterparty, will require collection and posting of variation margin and, for the largest counterparties/groups, initial margin. The requirement to post margin has applied since 1 March 2017.
If the Issuer enters into an OTC and becomes subject to the clearing obligation or to the margin requirement, it is unlikely that it would be able to comply with such requirements, which would adversely affect the Issuer's ability to enter into Hedge Transactions or significantly increase the cost thereof, negatively affecting the Issuer's ability to acquire Non-Euro Obligations and/or hedge its interest rate risk. As a result of such increased costs, additional regulatory requirements and limitations on ability of the Issuer to hedge interest rate and currency risk, the amounts payable to Securityholders may be negatively affected as the Portfolio Manager may be precluded from executing its investment strategy in full.
Any hedge agreements which the Issuer may enter into from time to time may also contain early termination events which are based on the application of EMIR and which may allow the relevant hedge counterparty to terminate a hedge transaction upon the occurrence of an adverse EMIR-related event. The termination of a hedge transaction in these circumstances may result in a termination payment being payable by the Issuer.
Prospective investors should be aware that the regulatory changes arising from EMIR may in due course significantly increase the cost of entering into derivative contracts (including the potential for non-financial counterparties such as the Issuer to become subject to marking to market and collateral posting requirements in respect of non-cleared OTC derivatives. These changes may adversely affect the Issuer’s ability to enter the currency hedge swaps and therefore the Issuer’s ability to acquire Non-Euro Obligations and/or manage interest rate risk. As a result of such increased costs and/or additional regulatory requirements, investors may receive significantly less or no interest or return, as the case may be as the Portfolio Manager may not be able to execute its investment strategy as anticipated. Investors should consult their own independent advisers and make their own assessment about the potential risks posed by EMIR in making any investment decision in respect of the Securities.
EMIR Refit Regulation
Regulation (EU) 2019/834 of the European Parliament and of the Council of 20 May 2019 (the “EMIR Refit Regulation”) was published in the Official Journal on 28 May 2019 and entered into effect on 17 June 2019. The EMIR Refit Regulation has amended EMIR with respect to the definition of financial counterparties (“FCs”), the clearing obligation, the suspension of the clearing obligation, the reporting
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requirements, the risk-mitigation techniques for OTC derivatives contracts not cleared by a central counterparty, the registration and supervision of trade repositories and the requirements for trade repositories. The EMIR Refit Regulation has also introduced a new concept of a “small financial counterparty” (“SFC”) whereby SFCs shall be exempted from the clearing obligation but are subject to risk mitigation obligations (including collateral exchange). A SFC is a FC whose derivative positions are below the clearing thresholds and therefore will be exempted from the clearing obligation. The EMIR Refit Regulation also includes a material change in the way clearing thresholds are calculated for both FCs and non-financial counterparties (“NFC”). Instead of using the 30-day rolling average calculation, the aggregate month-end notional average amount for each of the previous 12 months must be used. In the event that the relevant clearing threshold has been exceeded, the counterparty must begin clearing for: (a) that class of derivatives, if it is an NFC; or (b) all clearing classes of derivatives, if it is an FC. For such purposes, FCs will be required to include all of their OTC derivative contracts or all OTC derivative contracts entered into by other entities within the group, within such calculation.
Investors should consult their own independent advisers and make their own assessment about the potential risks posed by EMIR, the relevant regulatory technical standards, any other secondary legislation and the EMIR Refit Regulation in making any investment decision in respect of the Securities.
On the basis that as of the date hereof, the Issuer is not expected to enter into any derivatives, it does not expect to be subject to any EMIR obligations. However, the Borrowers and their respective hedge counterparties may be required to comply, inter alia, with certain "risk mitigation" obligations under EMIR which may give rise to additional costs and expenses for the Borrowers, which may in turn reduce the amounts available to make payments on the Series Assets and in turn by the Issuer with respect to the Securities.
European Systemic Risk Board regulatory reforms affecting the Issuer
The European Union has created a European Systemic Risk Board to monitor financial stability and has implemented rules that will increase capital requirements for certain trading instruments or exposures and impose compensation limits on certain employees located in affected countries. In addition, the European Union Commission is considering a wide array of other initiatives, including new legislation that will affect derivatives trading, impose surcharges on "globally" systemically important firms and possibly impose new levies on bank balance sheets. Legal or regulatory changes affecting the Issuer may indirectly affect the investors in the Securities as it may impact the Issuer’s ability to repay its obligations under the Securities in full and/or increase compliance costs.
The Issuer cannot predict what reforms will be implemented in the future. No assurance can be given generally that laws or regulations will be adopted, enforced or interpreted in a manner that will not have material adverse effect on the Issuer’s business and results of operations.
Other unknown US and European potential regulatory changes
As a result of recent highly-publicised financial scandals, investors, regulators and the general public have exhibited concerns over the integrity of both the financial markets around the globe and the regulatory oversight of these markets. As a result, the business environment in which the Issuer operates is subject to heightened regulation. With respect to alternative asset management funds, in recent years, there has been debate in the United States, the European Union and elsewhere about new rules or regulations, including increased oversight or taxation. As calls for additional regulation have increased, there may be a related increase in regulatory oversight of the trading and other investment activities of alternative asset management funds, including the Issuer. Such oversight may cause the Issuer to incur additional expense, may divert the attention of the Portfolio Manager and its senior management and may result in fines if there is a breach of any regulations.
In addition, the financial industry is becoming more and more regulated in response to the events of recent years, including the failure of sophisticated financial institutions to properly assess or effectively mitigate their exposure to market risks. The U.S. government has been studying the impact of investment
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funds such as the Issuer on the economic markets and regulation and taxation of such funds, their managers and investors. As a result, the government has enacted legislation to require additional regulation of fund investors, vehicles and managers, including the Private Fund Investment Advisers Registration Act of 2010 (the "PFIARA"). The PFIARA is part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which represents the most comprehensive reform of the U.S. financial regulatory framework in generations. Compliance with increased regulation, whether in the United States or abroad, could increase the cost of acquiring, holding or divesting portfolio investments or of the Issuer’s operations and therefore diminish returns to investors.
The Issuer may be adversely affected if new or revised legislation or regulations are enacted, or by changes in the interpretation or enforcement of existing rules and regulations imposed by the SEC, other U.S. governmental regulatory authorities, government authorities in the European Union and elsewhere, or self-regulatory organisations that supervise the financial markets and their participants. Such changes could place limitations on the type of investor that can invest in the Issuer or on the conditions under which the Issuer may invest.
It is impossible to determine the extent of the impact of any new laws, regulations or initiatives that may be proposed, or whether any of the proposals will become law. Compliance with any new laws or regulations could be difficult and expensive and affect the manner in which the Issuer conducts business, which could adversely affect the returns on the Issuer’s investments.
Investment Regulations
At present, the securities market and the regulatory framework for the securities industry in the PRC is at an early stage of development. The CSRC is responsible for supervising the national securities markets and producing relevant regulations. Certain investment regulations that regulate repatriation and currency conversion are new and the QFII system was introduced in 2002. Thus, the application and interpretation of such investment regulations are somewhat uncertain. Additionally, such investment regulations give CSRC and the PRC State Administration of Foreign Exchange ("SAFE") discretion, which may result in uncertainty as to how this discretion may be exercised. Such investment regulations may be varied in the future and may negatively impact the Issuer and the Portfolio Manager. Investment Quotas may be subject to review from time to time by CSRC and SAFE.
PRC Laws and Regulations
The Issuer may be subject to various laws and regulations applicable to foreign investment in the PRC. Since 1979 PRC legislation and regulations have significantly enhanced the protections afforded to various forms of foreign investments in the PRC. However, recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in the PRC. In particular, because these laws and regulations are relatively new, the interpretation and enforcement of these laws and regulations involve uncertainties. In addition, the PRC legal system is a civil law system based on written statutes. Unlike common law systems, it is a system in which decided legal cases have little precedential value. Furthermore, the PRC legal system is based in part on government policies and internal rules (some of which may not be published) that may have a retroactive effect. As a result, compliance by the Issuer with any PRC laws applicable to its investments may be difficult.
The Chinese government has enacted laws and regulations dealing with matters such as corporate organisation and governance, foreign investment, commerce, taxation and trade. Nevertheless, the Issuer’s ability to enforce commercial claims or to resolve commercial disputes is unpredictable. The resolution of these matters may be subject to the exercise of considerable discretion by agencies of the Chinese government, and a number of factors may influence final determination. Any rights that the Issuer may have to specific performance, or to seek an injunction under PRC law are limited. Without legal means of recourse, the Issuer may be unable to prevent these situations from occurring. The occurrence of any such event could have a material adverse effect on the Issuer’s investments and assets.
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In addition, it is impossible to predict the effect of future developments in the PRC legal system, including the promulgation of new laws, changes to existing laws, or the interpretation or enforcement thereof or the preemption of local regulations by national laws. These uncertainties could limit the legal protections available to the Issuer. If any promulgated regulations contain clauses that will cause an adverse impact on current and future investments in the PRC, investment returns will be adversely affected.
Contract Risks
The Issuer may enter into contracts governed by PRC law, some of which may be material to the Issuer’s investments and assets. As compared with contracts in other jurisdictions, contracts governed by PRC law may contain less detail or be less comprehensive in defining contracting parties' rights and obligations. In addition, contract interpretation and enforcement in the PRC is difficult to predict, and the result of any contract dispute is subject to significant uncertainties. Therefore, there can be no assurances that the Issuer will not be subject to disputes under its material contracts, and if such disputes arise, there can be no assurances that the Issuer will prevail.
Securities Markets
The PRC securities markets, including the Shanghai Stock Exchange and Shenzhen Stock Exchange, are undergoing a period of growth and change that may lead to difficulties in the settlement and recording of transactions and in interpreting and applying the relevant regulations. In addition, there is regulation and enforcement activity in the PRC securities markets that may not be equivalent to markets in countries that are members of the Organisation for Economic Co-operation and Development ("OECD"), including the U.S. There may not be regulation and monitoring of the PRC security market and activities of investors, brokers, and other participants equivalent to that in certain OECD markets. The QFII Investment market is a developing financial market and, therefore, the Issuer’s investments may be disrupted if changes are adopted in any applicable law or regulations such that it becomes illegal for the issuers to issue certain instruments. As the Portfolio Manager intends to purchase QFII Investments, the Issuer may suffer substantial losses in the event that this is the case.
Liquidity Considerations
Some of the investments will be highly illiquid, and there can be no assurances that the Issuer will be able to realise on such investments in a timely manner. Illiquidity may result from the absence of an established market for the Issuer’s investments, as well as legal or contractual restrictions on their resale by the Issuer. Restricted Assets may be highly illiquid, and investors will be required to hold their positions in such investments indefinitely. Also, the Issuer’s investments made in the form of securities may be difficult or time-consuming to liquidate. For example, buyers for minority interests may be difficult to secure, while transfers of large block positions or non-listed securities may be subject to legal, contractual or market restrictions.
Hedging Policies/Risks
In connection with the consummation of investments, the Issuer may or may not employ hedging techniques designed to protect the Issuer against adverse movements in currency or prices. Although such transactions may reduce certain risks, such transactions themselves may entail certain other risks.
Thus, although the Issuer may benefit from the use or non-use of these hedging mechanisms, unanticipated changes in interest rates, securities prices or currency exchange rates may result in poorer overall performance for the Issuer than if it had entered into or not entered into such hedging transactions.
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Trading Volumes and Volatility
The Shanghai Stock Exchange and Shenzhen Stock Exchange have lower trading volumes than most OECD exchanges and the market capitalisations of listed companies are small compared to those on more developed exchanges. The listed equity securities of many companies in the PRC are accordingly materially less liquid, subject to greater dealing spreads, and experience materially greater volatility than most securities in OECD countries. Government supervision and regulation of the PRC securities market and of quoted companies may be considered less developed than in some OECD countries. The PRC stock market has in the past experienced substantial price volatility and no assurance can be given that such volatility will not occur in the future.
Currency Fluctuations
The Issuer primarily will invest in portfolio companies operating in non-U.S. currencies (such as the renminbi ("RMB")). The value of the RMB against the U.S. Dollar and other currencies may fluctuate and is affected by, among other things, changes in China's political and economic conditions. The conversion of RMB into foreign currencies, including U.S. Dollars, has historically been set by the People's Bank of China. On 21 July 2005, the PRC government changed its policy of pegging the value of the RMB to the U.S. Dollar. Under the new policy, the RMB is permitted to fluctuate within a band against a basket of certain foreign currencies, determined by The Bank of China. Since the adoption of this new policy, the value of RMB against the U.S. dollar has fluctuated on a daily basis within narrow ranges, but overall the RMB has strengthened against the U.S. Dollar. Appreciation or depreciation in the value of the RMB relative to the U.S. Dollar may have an adverse effect on the performance of the Issuer and the value of the Issuer’s investments and assets.
Currency Exchange
The PRC government imposes controls on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of currency out of the PRC. Shortages in the availability of foreign currency may restrict our ability to remit sufficient foreign currency to satisfy foreign currency-denominated obligations. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from the transaction, can be made in foreign currencies without prior approval from the PRC State Administration of Foreign Exchange ("SAFE") by complying with certain procedural requirements. Approval from the appropriate governmental authorities is required, however, when RMB is to be converted into foreign currency and remitted out of the PRC to pay capital expenses, such as the repayment of bank loans denominated in foreign currencies. The PRC government may, at its discretion, restrict access in the future to foreign currencies for current account transactions. The foreign exchange control system could adversely affect the Issuer’s performance and the value of the Issuer’s investments and assets.
RISKS AND INFORMATION RELATING TO THE SECURITIES
Absence of Secondary Market and Limited Liquidity
There is currently no secondary market for the Securities and no such market is expected to be developed. Consequently, a purchaser must be prepared to hold such Securities for an indefinite period of time or until the Maturity Date. In addition, no sale, assignment, participation, pledge or transfer of the Securities may be effected if, among other things, it would require the Issuer or any of its officers or directors to register under, or otherwise be subject to the provisions of, the Investment Company Act or any other similar legislation or regulatory action. Any transfer also requires the Issuer’s consent. Furthermore, the Securities will not be registered under the Securities Act or any US state securities laws and the Issuer has no plans, and is under no obligation, to register the Securities under the Securities Act.
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In addition, prospective Securityholders should be aware of the prevailing and widely reported global credit market conditions (which continue at the date hereof), whereby there is a general lack of liquidity in the secondary market for instruments similar to the Securities.
Moreover, the current liquidity crisis has stalled the primary market for a number of financial products including instruments similar to the Securities. While it is possible that the current liquidity crisis may alleviate for certain sectors of the global credit markets, there can be no assurance that the market for securities similar to the Securities will recover at the same time or to the same degree as such other recovering global credit market sectors.
The significant additional risks for the Issuer and investors as a result of the current global economic situation include, among others:
1. the possibility that the Issuer will find it harder to dispose of the Series Assets;
2. the possibility that, on or after the issue date and/or the Effective Date, the price at which assets can be sold by the Issuer will have deteriorated from their effective purchase price; and
3. the illiquidity of the Securities means that there is currently no secondary trading of such Securities nor is there expected to be any such trading in the future.
These additional risks may affect the returns on the Securities to investors.
The Securities are subject to certain transfer restrictions and can be transferred only to certain transferees. See "Subscription and Sale" and "Restrictions on Transfer". Such restrictions on the transfer of the Securities may further limit their liquidity.
Limited Recourse Obligations; Investors must rely on available receipts from the Series Assets and will have no other source of payment
In respect of the Combined Series Securities, the Trustee and the holders of the Combined Securities shall have recourse only to the Combined Series Assets for satisfaction and discharge of the Issuer's obligations and liabilities arising and/or in connection with the Combined Series Securities.
In respect of the Segregated Series Securities, the Trustee and the holders of the Segregated Securities shall have recourse only to the Segregated Series Assets for satisfaction and discharge of the Issuer's obligations and liabilities arising under or in connection with the Segregated Series Securities.
Payments on the Securities shall be made in accordance with the relevant Priority of Payments. Because the Redemption Amount is determined pursuant to the Priority of Payments, the Redemption Amount may be equal to, greater or lesser than, the principal amount due on the Security. The claims of a Securityholder shall be limited to the value from time to time of the applicable Combined Series Assets or Segregated Series Assets, as applicable.
None of the Transaction Parties or any of their respective affiliates or any other person or entity (other than the Issuer) will be obligated to make payments on the Securities. Consequently, the Securityholders must rely solely on payments received by the Issuer in respect of the relevant Combined Series Assets or Segregated Series Assets, as applicable, for the payment of principal and interest on the Securities. There can be no assurance that payments on the applicable Combined Series Assets or Segregated Series Assets will be sufficient to make payments on any of the Securities and certain other required amounts payable to other creditors ranking senior to or pari passu with the Securities pursuant to the Priority of Payments. If payments on the applicable Combined Series Assets or Segregated Series Assets are insufficient to make payments on the Securities, no other assets (and, in particular, no assets of any Transaction Party) will be available for payment of the deficiency and the obligations of the Issuer
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to pay such shortfall shall be extinguished. Such shortfall will be borne by each Securityholders on a pari passu basis.
The Securityholder shall not have any recourse against any shareholder, member, equity holder, officer, agent, employee or director of a party in his capacity as such, by any proceedings or otherwise, in respect of any obligation, covenant, or agreement of a party (acting in any capacity whatsoever) contained in the Conditions or any other Master Document.
Non-Petition
At any time while the Securities are Outstanding, none of the Securityholders, the Trustee nor any other Transaction Party (nor any other person acting on behalf of any of them) shall be entitled at any time to institute against the Issuer, or join in any institution against the Issuer of, any bankruptcy, reorganisation, arrangement, examinership, insolvency, winding up or liquidation proceedings or any proceedings for the appointment of a liquidator, administrator or examiner or a similar official, or other proceedings under any applicable bankruptcy or similar law in connection with any obligations of the Issuer relating to the Securities, the Master Trust Terms or other Master Document or otherwise owed to the Securityholders, provided that nothing shall prohibit the Trustee from submitting a claim in respect of or proving in any Insolvency Proceedings instituted by any other party against the Issuer.
Only Registered Interests in the Securities will be Recognised
Interests in the Securities will be registered in the Register which shall be presumptively conclusive as to the information contained therein. Accordingly, only the persons which are registered as holders of the Securities in the Register will be able to exercise the rights attaching to the relevant Securities and no other beneficial interest or otherwise shall be recognised by the Transaction Parties.
Application for Listing
While it is intended that application will be made to Euronext Dublin for certain of the Series to be admitted to the Official List and trading on its Global Exchange Market, there can be no assurance that such application will be made or that such listing will be approved or maintained.
The Securities are not rated by any Rating Agency
The Securities are not rated by any rating agency and the Issuer will not request any rating of the Securities. As a result, no external credit monitoring will occur with respect to the Securities and no on- going monitoring of the creditworthiness of the Securities or the Issuer will occur.
Performance and the Return under the Securities is not Guaranteed by the Issuer, the Portfolio Manager, the Custodian, the Agents, the Corporate Services Provider or the Trustee
None of the Issuer, the Agents, the Corporate Services Provider, the Portfolio Manager, the Trustee or any affiliate thereof makes any assurance, guarantee or representation whatsoever as to the expected or projected success, profitability, return, performance result, effect, consequence or benefit (including legal, regulatory, tax, financial, accounting or otherwise) to investors of ownership of the Securities and no purchaser may rely on any such party for a determination of expected or projected success, profitability, return, performance result, effect, consequence or benefit (including legal, regulatory, tax, financial, accounting or otherwise) to such purchaser of ownership of the Securities.
Each purchaser of any Security, by its acceptance thereof, will be deemed or required, as the case may be, to represent to the Issuer, among other things, that such purchaser has consulted with its own legal, regulatory, tax, business, investment, financial, and accounting advisors regarding investment in the Securities as such purchaser has deemed necessary and that the investment by such purchaser is within its powers and authority, is permissible under applicable laws governing such purchase, has been duly
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authorised by it and complies with applicable securities laws and other laws and that it has conducted its own due diligence with respect to the Issuer and the Series Assets.
Profit Participating Nature of the Securities
The Securities are profit participating in nature and, as such, no fixed amount of interest is payable with respect to the Securities. On each Payment Date, the Securityholders will receive by way of interest such amounts (if any) as are available for distribution for such purpose in accordance with the Priority of Payments and the other terms of the Master Documents. The payment of interest under the Securities ranks lowest in the Priority of Payments and shall accrue on the aggregate outstanding principal amount of the Securities until paid or until the Securities are repaid in full in accordance with the terms and conditions thereof.
The Combined Series Interest payable on any Combined Series Securities with respect to any Interest Period shall be a pro rata amount equal to the profits of the Issuer for that Interest Period earned on the relevant Combined Series Assets applicable to such Combined Series Securities less all other amounts under the Priority of Payments and any other expenditure of the Issuer which is deductible for tax purposes and not attributable to the Segregated Series Securities (excluding for the avoidance of doubt the Combined Series Interest and Segregated Series Interest) for that Interest Period and in no case can the interest be less than zero.
The Segregated Series Interest payable on specific Segregated Series Securities with respect to any Interest Period shall be a pro rata amount equal to the profits of the Issuer for that Interest Period earned on the Segregated Series Assets applicable to such Segregated Series Securities less all other amounts under the Priority of Payments and any other expenditure of the Issuer which is deductible for tax purposes and attributable to the Segregated Series Securities (excluding for the avoidance of doubt the Segregated Series Interest and the Combined Series Interest) for that Interest Period and in no case can the interest be less than zero.
The Issuer, or the Portfolio Manager on its behalf, has discretion in payment of any surplus remaining after all expenses ranking higher in the Priority of Payments have been satisfied in or towards the payment of some or all amounts payable under the relevant Series on a pro rata basis or in or towards reinvesting in Combined Series Assets or Segregated Series Assets (as applicable).
Priority of Claims
Any shortfall from the proceeds of realisation of the Series Assets will be borne by the Securityholders in accordance with the relevant Priority of Payments and each party's right to be paid will be subordinated to all higher ranking claims. Prospective investors should be aware that each of the Trustee Fees, Agents Fees, fees costs and expenses incurred in the winding up of the Issuer, payment annual profit of no more than USD1,200 to the Issuer, Expenses (other than Series Expenses) and Series Expenses will rank ahead of the Securityholders.
A Securityholder, by purchasing a Security, will be deemed to accept and acknowledge that it is fully aware that, in the event of a shortfall (a) the Issuer shall be under no obligation to pay, and the other assets (if any) of the Issuer including, in particular, assets attributable to other loans or series of Securities, will not be available for payment of such shortfall; (b) all claims in respect of such shortfall shall be extinguished; and (c) the Trustee, the Securityholders or any other Transaction Party, or any person acting on their behalf, shall have no further claim against the Issuer in respect of such shortfall.
Partly-paid nature of Securities
Where an Advance is made between Payment Dates and prior to the relevant Redemption Date, interest shall be deemed to accrue on such Advance as and from the preceding Redemption Date. Accordingly,
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interest on the Securities shall be paid on a pari passu and pro rata basis on each Payment Date, with reference to the relevant Redemption, irrespective of when an Advance is actually made.
Unsecured and Subordinated Debt
The Securities are general, direct, unconditional and unsecured indebtedness of the Issuer and will rank pari passu between themselves and are subordinated in payment priority to the prior ranking obligations and indebtedness of the Issuer, due and payable from time to time, as set out in the Priority of Payments. Because the Redemption Amount is determined pursuant to the Priority of Payments, prospective investors should be aware that the Redemption Amount may be equal to, greater or lesser than, the principal amount due on the Security.
As no security is being given in respect of the indebtedness of the Issuer under the Securities, neither the Securityholders nor anyone acting on their behalf (such as the Trustee) will have any direct recourse to the relevant Series Assets or other assets of the Issuer. The Securityholders’ claims will rank behind claims they are subordinate to under the terms of the applicable Priority of Payments and otherwise their claims will rank equally with other unsecured creditors of the Issuer. Any security interest, lien or other such interest created over such assets would have priority to the claims of the Securityholders. Given that no security over the relevant Series Assets or other assets of the Issuer is being created in favour of the Securityholders, if amounts owing to them were not paid by the Issuer when due, it is possible that their only remedy may be to obtain a judgment and prove in respect of their claim in the liquidation of the Issuer. In such a case it may not be possible for the Trustee to exercise any of the rights provided for under the Portfolio Management Agreement or other documents with respect to the relevant Series Assets or other assets of the Issuer.
Under Irish law on the winding up or receivership of a company the claims of unsecured creditors, such as the Securityholders, will rank, amongst other things, after the claims of secured creditors (there are intended to be no such creditors of the Issuer), the costs and expenses properly incurred by a liquidator (including his remuneration) in winding up the affairs of the company, super-preferential claims and preferential claims. These super-preferential claims would include capital gains tax payable on the disposition of an asset of the Issuer by a liquidator, receiver or mortgagee in possession and the remuneration, costs and expenses properly incurred by an examiner appointed to the Issuer which had been approved by the Irish courts. These preferred claims would include taxes, including income tax and corporation tax, assessed up to 5 April before the date of appointment of the liquidator or receiver to the Issuer and not exceeding one year’s assessment and arrears of value added tax together with interest for the 12 months immediately preceding the date of liquidation or receivership.
Investors will bear the fees, costs and expenses of the Issuer
Through their investment in the Securities, investors bear the costs of the Issuer and other expenses described in these Base Listing Particulars (including Trustee Fees, Agents Fees, Series Expenses and Expenses). In the aggregate, these fees, costs and expenses may be greater than if an investor were directly to make investments identical to the Series Assets.
Expenses of the Issuer (which rank senior to payments to the Securityholders) may vary and this may impact on the return on the Securityholders. In circumstances where an additional fee, cost or expense becomes payable by the Issuer pursuant to the terms of the Series Documents, such payments (which would rank senior to payments to the Securityholders) would reduce the amounts available to make payments on the Securities.
Payment of (i) any taxes and filing and registration fees; (ii) Trustee Fees due or expected to be due to the Trustee; (iii) Agent Fees due or expected to be due to the relevant Agents; (iv) fees costs and expenses incurred in the winding up of the Issuer, if applicable; (v) annual profit of no more than USD1,200 to the Issuer; (vi) Expenses (other than Series Expenses); and (vii) Series Expenses are required to be payable before any of the other amounts owed by the Issuer. If funds are not sufficient to make such payments, the ability of the Issuer to operate effectively may be impaired, and the Issuer may
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not be able to defend or prosecute legal proceedings brought against it or that it might otherwise bring to protect the interests of the Issuer and, consequently, the Securityholders.
Interest Accruals
The ability and obligation of the Issuer to pay interest accrued under the Securities is subject to the Issuer having sufficient funds available for such purpose, after payments of expenses and other costs and amounts due under the Priority of Payments. Accordingly, the Securityholders may not receive any payment on certain Payment Dates notwithstanding the accrual of interest under the Securities in accordance with the Conditions.
Securities subject to optional Redemption by the Issuer
An optional redemption feature is likely to limit the market value of the Securities. During any period when the Issuer may elect to redeem Securities, the market value of those Securities generally will not rise substantially above the price at which they can be redeemed. This may also be true prior to the commencement of any redemption period. An investor may not be able to reinvest the redemption proceeds at an effective interest rate as high as the interest rate on the Securities being redeemed and may only be able to do so at a significantly lower rate. Prospective investors should consider reinvestment risk in light of other investments available at that time.
Early Redemption by a Securityholder
Subject to the applicable lock-up period, unless waived by the Issuer, each Securityholder may request an early repayment of part or all of interest and principal payable on each Security by delivering written notice to the Issuer. Redemptions shall only be made on June 30th or December 31st of each year unless otherwise agreed to by the Issuer. The applicable lock-up period shall be the first June 30th or December 31st occurring after the 30th month following the date on which the particular investment was made in the relevant Security. For the avoidance of doubt, a Security shall be deemed fully paid upon payment to the Securityholder of their pro rata portion of the final realised proceeds of the relevant Series Assets pursuant to the Priority of Payments. If a Securityholder gives notice to redeem Securities early, there will be a time lag between that notice and the time at which the applicable Redemption Amount is determined in that period. There could be substantial movements in the value of the Series Assets and, therefore in the Redemption Amount.
Principal Losses
The ability of the Issuer to repay principal of the Securities will ultimately be based upon return being generated from the Series Assets.
Amendments, Waiver and Substitution
The Conditions contain provisions for how Securityholders shall consider matters affecting their interests generally. These provisions permit defined majorities to bind all Securityholders including Securityholders who did not attend and vote at the relevant meeting and/or Written Direction and Securityholders who voted in a manner contrary to the majority. See section of these Base Listing Particulars entitled “Prohibited Acts Without Securityholders’ Consent” in the “Summary of the Master Documents” for further description of the voting rights of the Securityholders.
The Trustee shall be entitled to agree to any amendment, modification, substitution or waiver of the terms of any Master Document without the consent of any Securityholder if, in the sole opinion of the Trustee, the proposed amendment, modification, substitution or waiver either (i) is of a formal, minor or technical nature, or (ii) would not result in any material prejudice to the interests of the Securityholders. For the avoidance of doubt, the Trustee shall not, without the consent in writing of the holders of seventy five per cent (75%) in aggregate outstanding principal amount of the Securities, release any party to any Master
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Document from its obligations thereunder or agree to any amendment, modification, substitution or waiver of the terms any Master Document not falling within (i) or (ii) in the preceding sentence. The Trustee may conclusively rely on any confirmation/certification provided by the Issuer or the Portfolio Manager and advice from its external legal, financial and other advisors in this regard. In the event that it incurs any costs or expenses in relation to any proposed amendment, modification substitution or waiver these will be reimbursed or paid to it by the Issuer on demand.
The Master Trust Terms set out provisions relating to the meetings of Securityholders. See Summary of the Master Documents – Master Trust Terms” for a further description.
Anti-Money Laundering, Anti-Terrorism, Anti-Corruption, Bribery and Similar Laws May Require Certain Actions or Disclosures
Many jurisdictions have adopted wide-ranging anti-money laundering, economic and trade sanctions, and anti-corruption and anti-bribery laws, and regulations (collectively, the "AML Requirements"). Any of the Issuer, the Securityholders, the Portfolio Manager, the Trustee or the Agents could be requested or required to obtain certain assurances from prospective investors intending to purchase Securities and to retain such information or to disclose information pertaining to them to governmental, regulatory or other authorities or to financial intermediaries or engage in due diligence or take other related actions in the future. It is expected that the Issuer, the Securityholders, the Portfolio Manager, the Agents, the Trustee will comply with AML Requirements to which they are or may become subject and to interpret such AML Requirements broadly in favour of disclosure.
Failure to honour any request by the Issuer, the Securityholders, the Portfolio Manager, the Agents, the Trustee to provide requested information or take such other actions as may be necessary or advisable for the Issuer, the Securityholders, the Agents, the Portfolio Manager or the Trustee to comply with any AML Requirements, related legal process or appropriate requests (whether formal or informal) may result in, among other things, a forced sale to another investor of such investor’s Securities.
In addition, it is expected that each of the Issuer, the Securityholders, the Agents, the Portfolio Manager, the Corporate Administrator and the Listing Agent intends to comply with applicable anti-money laundering and anti-terrorism, economic and trade sanctions, and anti-corruption or anti-bribery laws, and regulations of the United States and other countries, and will disclose any information required or requested by authorities in connection therewith. A Securityholder may also be obliged to provide information they may have previously identified or regarded as confidential to satisfy the Issuer’s AML Requirements.
If any governmental agency believes that the Issuer has accepted purchases of Securities by, or is otherwise holding assets of, any person or entity that is acting directly or indirectly, in violation of any AML Requirements, international or other anti-money laundering laws, rules, regulations, treaties or other restrictions, or on behalf of any suspected terrorist or terrorist organisation, suspected drug trafficker, or senior foreign political figure(s) suspected of engaging in foreign corruptions, such governmental agency may freeze the assets of such person or entity invested in the Issuer or suspend their redemption rights.
The Issuer may also be required to remit or transfer those assets to a governmental agency.
If the Issuer was determined by the relevant authorities to be in violation of any such AML Requirements, it could be subject to substantial criminal penalties. Any such violation could materially and adversely affect the timing and amount of payment made by the Issuer to the Securityholders in respect of the Securities.
Restrictions on Transfer
The Securities have not been and will not be registered under the Securities Act, or under any US state securities or “Blue Sky” laws or the securities laws of any other jurisdiction and are being issued and sold
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in reliance upon exemption from registration provided by such laws. There is no market for the Securities being offered hereby and, as a result, a purchaser must be prepared to hold the Securities for an indefinite period of time or until the maturity thereof. No Security may be sold or transferred in the United States unless such sale or transfer is made in reliance upon an exemption available under Regulation D under the Securities Act and under applicable state securities laws. The Securities may be purchased only by US investors who qualify as “accredited investors” as defined in Regulation 501(a) of Regulation D under the Securities Act, and as “qualified purchasers” as defined under Section 2(a)(51) of the Investment Company Act. The Issuer will not provide registration rights to any purchaser of the Securities and neither of the Issuer, the Transfer Agent, nor any other person may register the Securities under the Securities Act or any state securities or “Blue Sky” laws nor may the Issuer or the Transfer Agent take such action with respect to the Combined Series Assets or the Segregated Series Assets. See section of these Base Listing Particulars entitled "Terms and Conditions of the Securities". The Securities are expected to be owned by a relatively small number of investors. In addition, no purchaser of a Security may transfer any interest in a Security without the Issuer’s consent and purchasers of Securities may find it difficult or uneconomic to liquidate their investment at any particular time.
The Securityholders undertake to the Issuer that to the extent transferred by it, each Security will not be transferred to any party unless the Transferee provides an equivalent transfer restriction undertaking, agrees to be bound by the restrictions on transfer of the Securities contained therein, and also undertakes that any future Transferees shall be required to give identical undertakings to those it is giving and to be bound by the Restrictions on Transfer.
Eurosystem Eligibility
The Securities are not intended to be Eurosystem-eligible and, at the date of these Base Listing Particulars, are not Eurosystem eligible. This means that the Securities are not expected to be recognised as eligible collateral for Eurosystem monetary policy and intra-day credit operations by the Eurosystem ("Eurosystem eligible collateral") at any or all times during their life.
Legality of Purchase
None of the Issuer, the Trustee, the Agents, the Corporate Services Provider nor any affiliate of such persons has or assumes responsibility for the lawfulness of the acquisition of the relevant Securities by a prospective purchaser of such Securities (whether for its own account or for the account of any third party), whether under the laws of the jurisdiction of its incorporation or the jurisdiction in which it operates (if different), or for compliance by that prospective purchaser (or any such third party) with any law, regulation or regulatory policy applicable to it.
Reliance on the Portfolio Manager
The Issuer relies exclusively on the Portfolio Manager for the purchase and discretionary management of the Series Assets. The success of the Issuer is therefore expected to be significantly dependent upon the expertise and efforts of the Portfolio Manager.
Conflict of Interest
An investment in the Issuer and the activities thereof will be subject to certain potential conflicts of interest. See "Conflicts of Interest" for more information.
RISKS RELATING TO THE SERIES ASSETS
Combined Series Assets
The Combined Series Assets consist of Eligible Assets, consisting of QFII Investments that meet the Eligibility Criteria and cash and other reserves for the payment of other expenses.
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The Combined Series Assets are subject to credit, liquidity and interest rate risks, general economic conditions, operational risks, structural risks, the condition of financial markets, political events, developments or trends in any particular industry, changes in prevailing interest rates and periods of adverse performance.
The market value of the Combined Series Assets generally will fluctuate with, among other things, general economic conditions, the condition of certain financial markets, political events, developments or trends in any particular industry.
Therefore, the decision by any prospective holder of Securities to invest in such Securities should be based, among other things (including, without limitation, the identity of the Portfolio Manager) on the Eligibility Criteria which each Combined Series Asset is required to satisfy, as disclosed in these Base Listing Particulars. These Base Listing Particulars do not contain any information regarding the individual Combined Series Assets or other Eligible Assets. A purchaser of any of the Securities will not have an opportunity to evaluate for themselves the relevant economic, financial and other information regarding the investments to be made by the Issuer and, accordingly, will be dependent upon the judgment and the ability of the Portfolio Manager in acquiring investments on behalf of the Issuer over time. No assurance can be given that the Portfolio Manager will be successful in obtaining suitable investments or that, if such investments are made, the objectives of the Issuer will be achieved.
None of the Issuer, the Trustee, the Portfolio Manager or the Agents have made any investigation into the Combined Series Assets. The value of the Combined Series Assets may fluctuate from time to time (as a result of substitution or otherwise) and none of the Issuer, the Portfolio Manager, the Trustee, any Agent or any of their affiliates are under any obligation to maintain the value of the Combined Series Assets at any particular level. None of the Issuer, the Trustee, the Portfolio Manager or any Agent or any of their affiliates has any liability to the Securityholders as to the amount or value of, the Combined Series Assets from time to time.
Segregated Series Assets
The Segregated Series Assets consist of Eligible Assets, consisting of QFII Investments that meet the Eligibility Criteria and cash and other reserves for the payment of other expenses.
The Segregated Series Assets are subject to credit, liquidity and interest rate risks, general economic conditions, operational risks, structural risks, the condition of financial markets, political events, developments or trends in any particular industry, changes in prevailing interest rates and periods of adverse performance.
The market value of the Segregated Series Assets generally will fluctuate with, among other things, general economic conditions, the condition of certain financial markets, political events, developments or trends in any particular industry.
Therefore, the decision by any prospective holder of Securities to invest in such Securities should be based, among other things (including, without limitation, the identity of the Portfolio Manager) on the Eligibility Criteria which each Segregated Series Asset is required to satisfy, as disclosed in these Base Listing Particulars. These Base Listing Particulars do not contain any information regarding the individual Segregated Series Assets or other Eligible Assets. A purchaser of any of the Securities will not have an opportunity to evaluate for themselves the relevant economic, financial and other information regarding the investments to be made by the Issuer and, accordingly, will be dependent upon the judgment and the ability of the Portfolio Manager in acquiring investments on behalf of the Issuer over time. No assurance can be given that the Issuer will be successful in obtaining suitable investments or that, if such investments are made, the objectives of the Issuer will be achieved.
None of the Issuer, the Trustee, the Securityholders or the Agents have made any investigation into the Segregated Series Assets. The value of the Segregated Series Assets may fluctuate from time to time (as
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a result of substitution or otherwise) and none of the Issuer, the Portfolio Manager, the Trustee, the Securityholders, any Agent or any of their affiliates are under any obligation to maintain the value of the Segregated Series Assets at any particular level. None of the Issuer, the Trustee, the Portfolio Manager or any Agent or any of their affiliates has any liability to the Securityholders as to the amount or value of, the Segregated Series Assets from time to time.
No Independent Investigation in Relation to the Series Assets
None of the Issuer, the legal advisors, the Corporate Services Provider, the Paying Agent, the Trustee, the Registrar, the Transfer Agent, the Calculation Agent or the Listing Agent has undertaken or will undertake any investigations, searches or other actions in respect of the current or prospective Series Assets and prospective purchasers of the Securities should not rely on the Issuer having made any such investigations.
The value of the Series Assets will fluctuate from time to time and none of the Issuer, the Portfolio Manager, the Trustee, the Securityholders, any Agent or any of their affiliates are under any obligation to maintain the value of the Series Assets at any particular level. None of the Issuer, the Trustee, the Portfolio Manager or any Agent or any of their affiliates has any liability to the Securityholders as to the amount or value of, the Series Assets from time to time.
Speculative Investments and exposure to the Series Assets
The Issuer’s investments may be deemed highly speculative. No assurance can be given that the Issuer will successfully achieve its objectives. If the Issuer is unsuccessful, a Securityholder may lose all or a substantial part of his investment.
Securityholders may be exposed to the market price of the Series Assets related to their Securities. The Issuer may have to fund its payments by the sale of such Series Assets at a market value and the nominal amount of the underlying securities will be reduced by the principal amount of the Series Assets sold. The market price of the Series Assets will generally fluctuate with, among other things, the liquidity and volatility of the financial markets, general economic conditions, domestic and international political events, developments or trends in a particular industry and the financial condition of the issuer or obligor of the Series Assets
Market Conditions
Changes in economic conditions, including interest rates, inflation rates, government regulations, overall industry conditions, competition, political conditions and legislation can have a substantial adverse effect on the market value of the Series Assets in which the Issuer acquires an interest which can make it difficult or unprofitable to resell the Series Assets prior to the death of the insured.
Investment Quotas
Investments made by the Issuer will principally be made and held through the Investment Quota. Although the Issuer’s affiliate may have exclusive use of the Investment Quota, this may not continue. Investors should be aware that violations of the relevant regulations relating to the Investment Quota could result in the revocation of or other regulatory action in respect of the Investment Quota as a whole. Hence the ability of the Issuer to make investments and/or repatriate monies from the Investment Quota may be affected adversely.
In addition any repatriation of monies by the Issuer to meet obligations such as the payment of fees may adversely impact the ability of the Issuer to repatriate monies to meet Securityholder redemption requests.
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QFIIs are not allowed to sell or transfer their Investment Quotas to any other institution or individual in any form without prior approval of the SAFE. If a QFII fails to effectively use its Investment Quota within one year from the date of filing or approval of the Investment Quota, the SAFE may take back all or part of the unused Investment Quota.
Investment Restrictions
There are investment thresholds and industry restrictions for QFIIs to make investments through their Investment Quotas. QFIIs are subject to the Special Management Measures for the Market Entry of Foreign Investment (Negative List). Accordingly, QFIIs are permitted to invest in market sectors which are open to foreign investment and shall comply with the limitations on the foreign ownership percentage for the market sectors under the Negative List. Furthermore, no single foreign investor who makes investment through a QFII may acquire more than ten per cent (10%) of the total number of shares of any listed company and the aggregate holdings of all foreign investors in any listed company cannot exceed thirty per cent (30%) of the total number of its shares (however, the strategic investment made by foreign investors pursuant to the Administration Rules on Strategic Investment to Listed Companies by Foreign Investors will not be counted in calculating the above-said percentage).
Use of QFII Brokers
The Issuer anticipates that it will place particular emphasis on the perceived quality of execution and reputation of the QFII brokers, in addition to other factors. In consequence, if a QFII broker offers the Issuer standards of execution which the Issuer reasonably believes to be amongst best practice in the PRC marketplace, the Issuer may determine that it should consistently execute transactions with that QFII broker notwithstanding that it may not be executed at best price and shall have no liability to account to the Issuer in respect of the difference between the price at which the Issuer executes transactions and any other price that may have been available in the market at that relevant time.
At present, the securities market and regulatory framework for the securities industry in China is at an early stage of development. The QFII regulations under which the Issuer will invest in the PRC via the Investment Quota are relatively new and give CSRC and SAFE wide discretion on their interpretation. There are no sufficient precedents on how such discretion might be exercised for issues that have not been clearly provided in the regulations, therefore leaving a considerable amount of uncertainty.
Disclosure of Interests and Short Swing Profit Rule
Under the PRC disclosure of interest requirements, the Issuer may be deemed as concert parties of other funds managed within the Issuer’s group or a substantial shareholder of the Issuer’s group and therefore may be subject to the risk that the Issuer's holdings may have to be reported in aggregate with the holdings of such other funds mentioned above should the aggregated holdings trigger the reporting threshold under the PRC law, currently five per cent (5%) of the total issued shares of the listed company. This may expose the Issuer's holdings to the public with an adverse impact on the performance of the Funds.
In addition, subject to the interpretation of PRC courts and PRC regulators, the operation of the PRC short swing profit rule may be applicable to the trading of the funds with the result that where the holdings of the Issuer (possibly with the holdings of other investors deemed as concert parties of the funds) exceed five per cent (5%) of the total issued shares of a PRC listed company, the Issuer may not reduce its holdings in such company within 6 months of the last purchase of shares of such company. If the Issuer violates the rule, it may be required by the listed company to return any profits realised from such trading to the listed company. Moreover, under PRC civil procedures, the Issuer's assets may be frozen to the extent of the claims made by such company. These risks may greatly impair the performance of the funds.
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RISKS RELATED TO CERTAIN PROVISIONS OF IRISH LAW AND MATTERS RELATING TO THE ISSUER
Limited Business and Assets of the Issuer
The Issuer’s sole business is the raising of money by issuing Securities for the purposes of purchasing Eligible Assets relating to a Series and entering into related contracts. The Issuer has covenanted not to have any subsidiaries or employees, consolidate or merge with any other person or issue any shares (other than such shares as were in issue on the date of its incorporation). As such, the Issuer has, and will have, no assets other than its issued and paid-up share capital, such fees (as agreed) payable to it in connection with the issue of Securities or entry into other obligations from time to time and any Series Assets related to the relevant Securities.
IRISH LAW RISK FACTORS
The Issuer is thinly capitalised
The Issuer is thinly capitalised. The authorised ordinary share capital of the Issuer is EUR1,000,000 and the issued ordinary share capital is EUR1.00, and the authorised and issued share capital will not increase materially. All of the issued and outstanding ordinary shares of the Issuer will be registered in the name of the Share Trustee. The Share Trustee will be under no obligation to, and is not expected to, subscribe for additional shares of the Issuer or otherwise to provide funds or capital to the Issuer.
The income expected to be received by the Issuer from the investment of the Series Assets is expected to be sufficient to make payment of the projected expenses and liabilities of the Issuer. There can be no assurance that the Issuer will not incur expenses or liabilities other than as projected or that payments required to be made to the Issuer will in fact be made, or if made, will be made in a sufficient amount or in a timely manner. In the event of the occurrence of unanticipated expenses or liabilities not otherwise paid or provided for, the Issuer might incur otherwise unfunded expenses. the event that unfunded expenses or liabilities exceed the available funds of the Issuer at any time, the Issuer could be forced to seek the protection of insolvency proceedings.
Preferred creditors under Irish law
Under Irish law, upon the insolvency of an Irish incorporated company (such as the Issuer) the claims of a limited category of preferential creditors will take priority over the claims of unsecured creditors such as the Securityholders. These preferred claims include the remuneration, costs and expenses properly incurred by an examiner of the company (which may include any borrowing made by any examiner to fund the company’s requirements for the duration of his appointment) which have been approved by the Irish courts. See "Examinership" below.
The Irish Revenue Commissioners may attach any debt due to an Irish tax resident company by another person in order to discharge any liabilities of the company in respect of outstanding tax whether the liabilities are due on its own account or as an agent or trustee. The scope of this right of the Irish Revenue Commissioners has not yet been considered by the Irish courts and it may override the priority of unsecured creditors such as the Securityholders.
Examinership
Examination is a court procedure available under the Companies Act 2014 to facilitate the survival of Irish companies in financial difficulties.
The Issuer, its directors, a contingent, prospective or actual creditor of the Issuer, or shareholders of the Issuer holding, at the date of presentation of the petition, not less than one-tenth of the voting share capital of the Issuer are each entitled to petition the court for the appointment of an examiner. The
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examiner, once appointed, has the power to set aside contracts and arrangements entered into by the company after his appointment and, in certain circumstances, can avoid a negative pledge given by the company prior to his appointment.
During the period of protection, the examiner will formulate proposals for a compromise or scheme of arrangement to assist the survival of the company or the whole or any part of its undertaking as a going concern. A scheme of arrangement may be approved by the Irish High Court when at least one class of creditors has voted in favour of the proposals and the Irish High Court is satisfied that such proposals are fair and equitable in relation to any class of members or creditors who have not accepted the proposals and whose interests would be impaired by implementation of the scheme of arrangement.
In considering proposals by the examiner, it is likely that the Trustee would be in a position to reject any proposal not in favour of the Securityholders. The Trustee would also be entitled to argue at the Irish High Court, being the relevant court for the purposes of the Companies Act 2014, hearing at which the proposed scheme of arrangement is considered that the proposals are unfair and inequitable in relation to the creditors of the Issuer, especially if such proposals included a writing down of the value of amounts due from the Issuer to the creditors or resulted in the creditors receiving less than they would have if the Issuer were to be wound up. The primary risks to the holders of the Securities if an examiner were appointed to the Issuer are as follows:
(a) the potential for a compromise or scheme of arrangement being approved involving the writing down or rescheduling of the debt due from the Issuer to the Securityholders;
(b) the potential for the examiner to seek to set aside any negative pledge in the relevant Series Documents prohibiting the creation of security or the incurring of borrowings by the Issuer to enable the examiner to borrow to fund the Issuer during the protection period; and
(c) in the event that a scheme of arrangement is not approved and the Issuer subsequently goes into liquidation, the examiner’s remuneration and expenses (including certain borrowings incurred by the examiner on behalf of the Issuer and approved by the Irish High Court) will take priority over the monies and liabilities which from time to time are or may become due, owing or payable to each of the Securityholders under the Securities or the other Transaction Documents.
Centre of Main Interest
Pursuant to Regulation (EU) 2015/848 on insolvency proceedings (recast) ("Recast Regulation"), which came into force on 26 June 2017, the centre of main interests ("COMI") of a debtor shall be the place where the debtor conducts the administration of its interests on a regular basis and which is ascertainable by third parties. In the case of a company or legal person, the place of the registered office shall be presumed to be the centre of main interests in the absence of proof to the contrary. That presumption shall only apply if the registered office has not been moved to another Member State within the 3-month period prior to the request for the opening of insolvency proceedings. The Issuer has its registered office in Ireland. As a result there is a rebuttable presumption that its COMI is in Ireland and consequently that any main insolvency proceedings applicable to it would be governed by Irish law. In the decision by the European Court of Justice ("ECJ") in relation to Eurofood IFSC Limited, the ECJ restated the presumption in the then applicable Council Regulation (EC) No. 1346/2000 of 29 May 2000 on Insolvency Proceedings, that the place of a company’s registered office is presumed to be the company’s COMI and stated that the presumption can only be rebutted if "factors which are both objective and ascertainable by third parties enable it to be established that an actual situation exists which is different from that which locating it at the registered office is deemed to reflect". As the Issuer has its registered office in Ireland, has Irish directors, is registered for tax in Ireland and has an Irish corporate services provider, the Issuer does not believe that factors exist that would rebut this presumption, although this would ultimately be a matter for the relevant court to decide, based on the circumstances existing at the time when it was asked to make that decision. If the Issuer’s COMI is not located in Ireland, and is held to be in a different jurisdiction within the European Union, main insolvency proceedings may not be opened in Ireland.
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No Regulation of the Issuer by any Regulatory Authority
The Issuer is not licensed or authorised under any current securities, commodities, insurance or banking laws of any jurisdiction and has not applied (and does not expect to apply), for any such licenses or authorisations. There is no assurance, however, that regulatory authorities in one or more jurisdictions would not take a contrary view regarding the applicability of any such laws to the Issuer. The taking of a contrary view by any such regulatory authority could have an adverse impact on the Issuer or the Securityholders.
An investment in any Securities does not have the status of a bank deposit and is not within the scope of the Deposit Protection Scheme operated by the Central Bank nor any other Irish government guarantee scheme.
The Issuer will not be regulated by the Central Bank arising from the issue of any Securities.
No Current Income
There can be no assurance that the Issuer’s assessments of the short-term or long-term prospects of the Issuer’s investment in the Series Assets will generate a profit and therefore an investment in the Issuer is not suitable for investors seeking current income for financial or tax planning purposes.
Investment Company Act
The Issuer has not registered with the US Securities and Exchange Commission (the “SEC”) as an investment company pursuant to the Investment Company Act in reliance on an exception under Section 3(c)(7) of the Investment Company Act for investment companies:
1. whose outstanding securities are beneficially owned only by “qualified purchasers” under the Investment Company Act or non “US persons” within the meaning of Rule 902 of the Securities Act Rules; and
2. which do not make a public offering of their securities in the United States. No opinion or no-action position has been requested of the SEC.
If the SEC or a court of competent jurisdiction were to find that the Issuer is required, but in violation of the Investment Company Act had failed, to register as an investment company, possible consequences include, but are not limited to, the following:
1. the SEC could apply to a district court to enjoin the violation;
2. investors in the Issuer could sue the Issuer and recover any damages caused by the violation; and
3. any contract to which the Issuer is party that is made in, or whose performance involves, a violation of the Investment Company Act would be unenforceable by any party to the contract unless a court were to find that under the circumstances enforcement would produce a more equitable result than non-enforcement and would not be inconsistent with the purposes of the Investment Company Act.
Should the Issuer be subjected to any or all of the foregoing, the financial condition of the Issuer could be materially and adversely affected.
While the Issuer may be considered similar to an investment company, it does not intend to register as such under the Investment Company Act and, accordingly, the provisions of the Investment Company Act (which, among other matters, require investment companies to have disinterested directors, require
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securities held in custody to at all times be individually segregated from the securities of any other person and marked to clearly identify such securities as the property of such investment company and regulate the relationship between the adviser and the investment company) will not be afforded to the Issuer or the Securityholders.
RISKS RELATING TO THE TAXATION OF THE ISSUER
The Issuer intends to conduct its affairs in such a manner as to minimise, so far as it considers reasonably practicable, taxation suffered by it. This will include conducting the affairs of the Issuer so that, to the extent within the capacity of the Directors and the Issuer, the Issuer is at all times resident in Ireland for taxation purposes.
International Financial Reporting Standards
The Issuer's Irish corporation tax position depends to a significant extent on the accounting treatment applicable to the Issuer. The accounts of the Issuer are required to comply with International Financial Reporting Standards ("IFRS") or with generally accepted accounting principles in Ireland ("Irish GAAP") which has been substantially aligned with IFRS. Companies such as the Issuer might, under either IFRS or Irish GAAP, be forced to recognise in their accounts movements in the fair value of assets that could result in profits or losses for accounting purposes which bear little relationship to the company's actual cash position. These movements in value may generally be brought into the charge to tax (if not relieved) as a company's tax liability on such assets broadly follows the accounting treatment. However, the taxable profits of a qualifying company within the meaning of Section 110 of the Taxes Act (it is expected that the Issuer will continue to qualify as such a qualifying company) will be based on the profits that would have arisen to the company had its accounts been prepared under Irish GAAP as it existed at 31st December 2004. It is possible to elect out of such treatment and such election, if made, is irrevocable. If the Issuer makes such an election, then taxable profits or losses could arise to the Issuer as a result of the application of IFRS or current Irish GAAP that are not contemplated in the cash-flows for the transaction and as such may have a negative effect on the Issuer and its ability to make payments to the Securityholders.
Irish Tax Treatment – No Gross-up for Taxes on the Securities
Payments under the Securities shall be made net of any deduction or withholding for taxes required by law. In the event that the Issuer is required to deduct or withhold taxes in respect of any payments under the Securities, it would be required to make such deduction or withholding and remit the amount so deducted or withheld to the appropriate taxing authority. There is no “gross-up” provision in the Securities requiring additional payments to be made in respect thereof in the event that any such deduction or withholding is imposed.
As Irish tax legislation stands at the Effective Date, withholding tax is payable in respect of interest only and not principal. At the time of the listing of the Securities, the Securities are within an exemption from Irish withholding tax pursuant to Section 64 of the Taxes Consolidation Act 1997 (the "Taxes Act"). As the Securities are quoted on a recognised stock exchange and the paying agent by or through whom interest payments are made is not resident in Ireland, there is no obligation to withhold tax on the “quoted Eurobonds”. If the paying agent by or through which interest payments are to be made pursuant to the Securities is located in Ireland and the Securities are not held in a recognised clearing system, the Securityholders will be required to make a declaration in the prescribed form to the Issuer. This declaration requires the Securityholder to declare that at the time of the making of the declaration, the declarer (who must be the person beneficially entitled to the interest) is not resident for tax purposes in Ireland. The declaration also contains an undertaking that if the declarer becomes resident in Ireland that the declarer will notify the Issuer accordingly. Should Irish tax legislation be subject to change, should a declaration be required in order for Section 64 of the Taxes Act to apply and the declarer becomes resident for the purposes of tax in Ireland (or assigns the Securities to persons who are resident in Ireland) or should the Securities no longer be listed, withholding tax on any interest paid may become payable.
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As a general rule Irish source income falls within the charge to Irish income tax regardless of where the recipient is resident. However, Section 198 of the Taxes Act details certain payments which are not within the charge to Irish income tax. Section 198(1)(c)(iv) of the Taxes Act states that a person shall not be chargeable to income tax in respect of interest paid by a qualifying company (within the meaning of Section 110 of the Taxes Act) (it is expected that the Issuer will continue to qualify as such a qualifying company) if the recipient is not a resident of Ireland and is resident in an EU Member State or a double taxation treaty jurisdiction. Interest payments on the Securities to such persons would not give rise to a liability to Irish income tax. There is also an unpublished practice of the Irish Revenue Commissioners not to pursue any recipients of interest who do not fall within Section 198(1)(c) (iv) of the Taxes Act (subject to certain exceptions outlined more fully in the section of these Base Listing Particulars entitled “Certain Taxation Considerations”). It is possible (though unlikely) that Irish tax legislation or the Irish Revenue Commissioners' practice could change in the future.
IF THE ISSUER IS NOT A “QUALIFYING COMPANY” (AS DEFINED WITHIN SECTION 110 OF THE TAXES ACT) AT THE TIME INTEREST ARISES ON CERTAIN TYPES OF NOTES AND INSTRUMENTS (MOST NOTABLY NOTES AND INSTRUMENTS, INCLUDING THE SECURITIES, IN RESPECT OF WHICH THE RETURN ON SUCH SECURITIES IS DEPENDENT ON THE RESULTS OF THE ISSUER’S BUSINESS OR ANY PART OF THE ISSUER’S BUSINESS – COMMONLY REFERRED TO AS “PROFIT PARTICIPATING NOTES”) THEN THAT COULD HAVE SIGNIFICANT IRISH TAX CONSEQUENCES. IN PARTICULAR, NO DEDUCTION FOR PROFIT PARTICIPATING INTEREST WOULD BE AVAILABLE AND THE PAYMENTS WOULD BE TREATED AS DISTRIBUTIONS. IN ADDITION, THE EXEMPTION FROM WITHHOLDING TAX ON INTEREST PAYMENTS (THE “QUOTED EUROBOND” EXEMPTION), AS EXPLAINED IN THE PRECEDING PARAGRAPHS AND IN THE SECTION HEADED “CERTAIN TAXATION CONSIDERATIONS” IN THESE BASE LISTING PARTICULARS, WOULD NOT APPLY. INSTEAD A DIFFERENT AND POSSIBLY LESS FAVOURABLE WITHHOLDING TAX REGIME (DIVIDEND WITHHOLDING TAX) WOULD APPLY WHICH MAY NOT BE IN THE INTERESTS OF THE SECURITYHOLDERS AND MAY AFFECT THE RETURN ON THEIR INVESTMENT IN THE SECURITIES.
See section headed "Certain Taxation Considerations" in these Base Listing Particulars for details on Irish withholding tax and other taxes.
Payments under the Securities may be subject to Withholding Tax under FATCA
The Foreign Account Tax Compliance provisions contained in Sections 1471 to 1474 of the United States Internal Revenue Code of 1986, the intergovernmental agreement entered into between Ireland and the United States (the "IGA") and the Irish regulations promulgated thereunder (together "FATCA") require certain foreign financial institutions (which may include the Issuer) to provide certain specified information in respect of certain U.S. and non-U.S. persons who own a direct or indirect interest in the foreign financial institution, and to withhold 30% on "foreign passthru payments" made to any such persons that do not provide the foreign financial institution with the required information or that themselves are foreign financial institutions that have not entered into their own agreement with the IRS, or otherwise be subject to a 30% withholding tax on certain payments to such entities of income or of proceeds from the sale of property. The IRS has not yet defined the scope of foreign passthru payment withholding.
Pursuant to the IGA, an Irish entity otherwise subject to the requirements of FATCA in Ireland may instead satisfy certain reporting requirements by providing information to the tax authorities in Ireland and not be subject to withholding under FATCA on any payments it receives. Further, such an entity would generally not be required to withhold under FATCA from payments it makes.
The Issuer intends to comply with the requirements imposed on foreign financial institutions under the IGA and the regulations made thereunder. Securityholders may be required to provide any information
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that the Issuer determines is necessary to avoid the imposition of such withholding tax, and may be subject to passthru payment withholding if they fail to provide such information or are themselves foreign financial institutions that have not entered into their own agreement with the IRS. The Issuer’s ability to satisfy its obligations under the U.S.-Ireland IGA and the regulations made thereunder will depend on each Securityholder providing, or causing to be provided, any information, including information concerning the direct or indirect owners of such Securityholder, that the Issuer determines is necessary to satisfy such obligations.
FATCA IS PARTICULARLY COMPLEX AND EACH HOLDER OF SECURITIES SHOULD CONSULT ITS OWN TAX ADVISOR TO OBTAIN A MORE DETAILED EXPLANATION OF FATCA AND TO LEARN HOW THIS LEGISLATION MIGHT AFFECT EACH HOLDER IN ITS PARTICULAR CIRCUMSTANCE.
Common Reporting Standard
On 21 July 2014, the Standard for Automatic Exchange of Financial Account Information in Tax Matters was published by the OECD and this includes the Common Reporting Standard ("CRS"). The CRS provides that certain entities (known as Financial Institutions) shall identify "Accounts" (as defined, broadly equity and debt interests in the Financial Institution) held by persons who are tax resident in another CRS participating jurisdiction. That information is then subject to annual automatic exchange between governments in CRS participating jurisdictions.
Directive 2014/107/EU on Administrative Cooperation in the Field of Taxation ("DAC II") implements CRS in a European context and creates a mandatory obligation for all EU Member States to exchange financial account information in respect of residents in other EU Member States on an annual basis commencing in 2017 in respect of the 2016 calendar year. Ireland has provided for the implementation of CRS through Section 891F of the Taxes Act and the enactment of the Returns of Certain Information by Reporting Financial Institutions Regulations 2015 (the "CRS Regulations"). Irish Financial Institutions are obliged to make a single return in respect of CRS and DAC II.
The Issuer is expected to constitute a Financial Institution for CRS purposes. In order to comply with its obligations under CRS and DAC II, the Issuer shall be entitled to require Securityholders to provide certain information in respect of the Securityholder's and, in certain circumstances, their controlling persons’ tax status, identity or residence. Securityholders will be deemed, by their holding of the Securities, to have authorised the automatic disclosure of such information by the Issuer (or any nominated service provider) to the Irish Revenue Commissioners. The information will be reported by the Issuer to the Irish Revenue Commissioners who will then exchange the information with the tax or governmental authorities of other participating jurisdictions, as applicable. To the extent that the Securities are held within a recognised clearing system, the Issuer should have no reportable accounts in a tax year.
Provided the Issuer complies with these obligations, it should be deemed compliant for CRS and DAC II purposes. Failure by the Issuer to comply with its CRS and DAC II obligations may result in it being deemed to be non-compliant in respect of its CRS obligations and monetary penalties may be imposed pursuant to the Irish implementing legislation.
European financial transactions tax
On 14 February 2013, the European Commission issued proposals, including a draft directive (the Commission's proposal) for a financial transaction tax (FTT) to be adopted in certain participating EU Member States (including Belgium, Germany, Estonia (although Estonia has since stated that it will not participate), Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia). If the Commission's proposal was adopted, the FTT would be a tax primarily on "financial institutions" (which would include the Issuer) in relation to "financial transactions" (which would include the conclusion or modification of derivative contracts and the purchase and sale of financial instruments).
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Under the Commission's proposal, the FTT could apply in certain circumstances to persons both within and outside of the participating Member States. Generally, it would apply where at least one party is a financial institution, and at least one party is established in a participating Member State. A financial institution may be, or be deemed to be, "established" in a participating Member State in a broad range of circumstances, including (a) by transacting with a person established in a participating Member State or (b) where the financial instrument which is subject to the financial transaction is issued in a participating Member State.
The FTT may give rise to tax liabilities for the Issuer with respect to certain transactions if the conditions for a charge to arise are satisfied and the FTT is adopted based on the Commission's proposal. Any such tax liabilities may reduce amounts available to the Issuer to meet its obligations under the Securities and may result in investors receiving less interest and/or principal than expected. To the extent that such liabilities may arise at a time when winding up proceedings have been commenced in respect of the Issuer, such liabilities may be regarded as an expense of the liquidation and, as such, be payable out of the floating charge assets of the Issuer (and its general estate) in priority to the claims of Securityholders and other secured creditors. It should also be noted that the FTT could be payable in relation to relevant transactions by investors in respect of the Securities (including secondary market transactions) if the conditions for a charge to arise are satisfied and the FTT is adopted based on the Commission's proposal. Primary market transactions referred to in Article 5(c) of Regulation (EC) No 1287/2006 are expected to be exempt.
However, the FTT proposal remains subject to negotiation between participating Member States. It may therefore be altered prior to any implementation, the timing of which remains unclear. Additional EU Member States may decide to participate. Prospective holders of the Securities are advised to seek their own professional advice in relation to the FTT.
OECD Action Plan on Base Erosion and Profit Shifting
Fiscal and taxation policy and practice is constantly evolving and recently the pace of change has increased due to a number of developments. In particular a number of changes of law and practice are occurring as a result of the Organisation for Economic Cooperation and Development ("OECD") Base Erosion and Profit Shifting project ("BEPS").
One of the action points from this project ("Action 6") is the prevention of treaty abuse by developing model treaty provisions to prevent the granting of treaty benefits in inappropriate circumstances.
The OECD recommendations on Action 6 are primarily being implemented into double tax treaties through a multilateral convention. The multilateral convention has been signed by over 85 jurisdictions (including Ireland). It entered into force on 1 July 2018 for signatories who deposited their instruments of ratification, acceptance or approval with the OECD on or before 22 March 2018. For signatories who deposited or deposit their instruments of ratification, acceptance or approval with the OECD after 22 March 2018, the multilateral convention comes into force at the start of the month which is three entire calendar months after such deposit takes place. Ireland deposited its instrument of ratification, acceptance or approval with the OECD on 29 January 2019, and the multilateral convention therefore entered into force in Ireland on 1 May 2019.
Upon ratifying the multilateral convention, Ireland deposited a non-provisional list of reservations and notifications to be made pursuant to it. Based on the information contained in these documents and the multilateral convention, Action 6 would be implemented into the double tax treaties Ireland has entered into with other jurisdictions by the inclusion of a principal purpose test ("PPT").
Once in effect, a PPT would deny a treaty benefit where if it is reasonable to conclude, having regard to all relevant facts and circumstances for this purpose, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in those circumstances would be in accordance with the object and
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purpose of the relevant provisions of the treaty. It is currently unclear how a PPT, if adopted, would be applied by the tax authorities of those jurisdictions from which payments are made to the Issuer.
It is also possible that Ireland will negotiate other bespoke amendments to its double tax treaties on a bilateral basis in the future which may affect the ability of the Issuer to obtain the benefit of these treaties.
Risks related to the EU Anti-Tax Avoidance Directive
As part of its anti-tax avoidance package, and to provide a framework for a harmonised implementation of a number of BEPS conclusions across the EU, the EU Council adopted the Anti-Tax Avoidance Directive on 12 July 2016 in Council Directive (EU) 2016/1164 ("ATAD 1"). ATAD 1 had to be implemented by each EU Member State as of 1 January 2019, subject to derogations for EU Member States which have equivalent measures in their domestic law. On 29 May 2017 additional measures were introduced in Council Directive (EU) 2017/952 to neutralize the effects of hybrid mismatches with third countries ("ATAD 2"). The measures introduced in ATAD 2 must be implemented ultimately by 1 January 2020 and 1 January 2022 (to the extent relating to reverse hybrid mismatches). ATAD 1 and ATAD 2 contain various measures that could, depending on their implementation in Ireland, potentially result in certain payments made by the Issuer ceasing to be fully deductible which could increase the Issuer's liability to tax.
There are two measures which are of particular relevance to the Issuer.
Firstly, ATAD 1 provides for an "interest limitation rule" which restricts the deductible interest of an entity to 30 per cent. of its earnings before interest, tax, depreciation and amortisation (there is a de minimis threshold of EUR 3 million). However, the interest limitation only applies to the net borrowing costs of an entity (being the amount by which its borrowing costs exceed its taxable interest revenues and other economically equivalent taxable revenues).
Secondly, ATAD 1 (as amended by the ATAD 2) provides for hybrid mismatch rules. These rules are designed to neutralise arrangements where amounts are deductible from the income of one entity but are not taxable for another, or the same amounts are deductible for two entities. These rules could potentially apply to the Issuer where: (i) the interest that it pays under the Securities, and claims deductions from its taxable income for, is not brought into account as taxable income by the relevant Securityholder, either because of the characterisation of the Securities, or the payments made under them, or because of the nature of the Securityholder itself; and (ii) the mismatch arises between associated enterprises, between the Issuer and an associated enterprise or under a structured arrangement.
The Irish Finance Act 2019 includes legislation dealing with hybrid mismatches which came into effect on 1 January 2020. The implementation date for the interest limitation provision in Ireland is yet to be announced. Accordingly, the final form and impact of the interest limitation rule in Ireland remains uncertain.
Change of Law
The structure of the transaction and, inter alia, the issuance of the Securities are based on law, tax and administrative practice in effect at the date hereof, and having due regard to the expected tax treatment of all relevant entities under such law and practice. No assurance can be given that law, tax or administration practice will not change after the date hereof or that such change will not adversely impact the structure of the transaction and the treatment of the Securities.
Changes in Irish and US tax laws may adversely impact the business of the Issuer and the value of the Securityholders' investment.
The Issuer is treated as a securitisation vehicle which is taxed pursuant to Section 110 of the Taxes Act. There is no guarantee that the tax treatment of an Irish securitisation company will not change in the
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future. The tax deductibility of the Issuer's interest costs will depend on the applicability of Section 110 of the Taxes Act and the current practice of the Irish Revenue Commissioners in relation to same. Any change to these rules may have an impact on Securityholders.
The Finance Act 2019 (effective from 1 January 2020) introduces a number of anti-avoidance provisions to Section 110 of the TCA in order to strengthen the existing protections against abuse of the regime and which, in certain circumstances, can deny a deduction for profit participating interest or interest in excess of a reasonable commercial return. These amendments are taken into account in the section entitled "Error! Reference source not found.".
Interest payment on the Securities may be subject to Irish withholding tax if there is a change in Irish tax law or if the various exemption conditions set forth under "Irish Taxation – Withholding tax" are not fulfilled. The Issuer is not obliged to gross up or otherwise compensate Securityholders for withholding taxes incurred. This may, therefore, affect the return that Securityholders receive on the Securities.
General Tax Considerations
The tax consequences of an investment in Securities are complex and uncertain. The taxation of the Issuer and the Securityholders will depend upon a number of factors, including the nature of any investments the Issuer makes, the jurisdiction in which the income from such investments may be subject to tax, the jurisdiction in which Securityholders are subject to tax and the laws then applicable in any relevant jurisdictions.
In judging whether to invest in Securities, a prospective holder should consider the tax consequences thereof which include, among others, (a) the possibility that certain Securityholders may be required to take into account their allocable shares of the Issuer’s items of income, gain, loss, deduction and credit, without regard to whether they have received or will receive any distributions with respect to their Securities, and that a Securityholder’s tax liability with respect to such amounts may exceed the amount of cash available for distribution; (b) the income and gains of the Issuer may be subject to withholding or other taxes in various jurisdictions; and (c) the possibility of adverse changes in the income tax laws in the Securityholders’ home jurisdictions or the jurisdiction of the Issuer’s investments. Prospective holders should carefully consider the tax aspects of this investment. See “Certain Taxation Considerations” below. Prospective Securityholders should also note that the tax treatment of Securityholders and of the Issuer depends on individual circumstances and may be subject to change in the future.
Annual Tax Information
The Issuer’s ability to provide timely tax information with respect to its investments is dependent on the timely provision of relevant information by portfolio companies. If such companies do not provide such information in a timely manner, certain Securityholders may be required to file extensions with respect to, or otherwise delay the filing of, their tax returns.
Possible Application of PFIC and/or CFC Rules
The Issuer may acquire an equity interest in a non-US entity that is treated as a PFIC or a CFC for US federal income tax purposes. US Holders (as that term is defined below) generally face unique US tax issues from indirectly holding an interest in a PFIC or CFC. Please see the discussion of PFIC and CFC considerations in the section headed “Certain US Federal Income Tax Considerations” below.
Unrelated Business Taxable Income
While the Issuer will endeavour to structure its investments to avoid generating unrelated business taxable income (“UBTI”) with respect to the tax-exempt US Holders, there can be no assurance that the Issuer’s investments will not generate UBTI. Furthermore, the actions the Issuer might take to minimise
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the incurrence of UBTI by UBTI-sensitive holders could have adverse tax, economic, or other consequences for other holders.
Uncertain Status of QFII Tax Consequences
China began granting Investment Quotas in 2003. The following is a general summary of the PRC taxes that may be imposed on the Issuer either directly or indirectly. The PRC tax authorities may issue guidance on the tax consequences of QFII transactions at any time, possibly with retroactive effect. Therefore, the PRC tax consequences of QFII transactions may differ materially from those discussed below. In addition, before published guidance is issued and is well established in the administrative practice of the PRC tax authorities, the practices of the PRC tax authorities that collect PRC taxes with respect to QFII transactions may differ from, or be applied in a manner inconsistent with, the practices with respect to the analogous investments described herein or any new guidance which may be issued.
There can be no assurance that the tax treatment described herein will be applied by the applicable PRC tax authorities to QFII transactions and forthcoming guidance may be applied with retroactive effect.
PRC Tax Ownership of QFII Investments
China has not issued guidance with respect to the tax ownership of securities and debt instruments held through a QFII Investment Quota for PRC tax purposes. In addition, there is a general lack of guidance in the PRC tax law with respect to the application of PRC taxes in situations where legal title to assets are held by an intermediary on behalf of the beneficial owners of such assets. Based on current PRC tax administrative practice, the Issuer will be treated as the taxpayer for PRC tax purpose. In the event the PRC tax authorities issue guidance with respect to the application of PRC taxes in situations where legal title to assets are held by an intermediary on behalf of the beneficial owners of such assets, the expected treatment described above could change, possibly with retroactive effect. PRC Corporate Income Tax
Under the Corporate Income Tax (“CIT”) Law of the PRC and its Implementing Rules, which took effect in the PRC on 1 January 2008, PRC tax resident enterprises will normally be subject to CIT at the rate of 25% on income derived from sources inside and outside of China. Enterprises established under the laws of foreign countries or regions whose “place of effective management” is located within the PRC are also considered as “PRC tax resident enterprises” for PRC taxation purpose. The “place of effective management” refers to the place where in substance the material and overall management and control over the business, personnel, accounts and assets of the enterprise are exercised. The CIT Law and its implementation rule did not provide further guidance on the determination of the “place of effective management”.
For non-tax resident enterprises with “establishments or places of business” in the PRC, CIT at the rate of 25% applies on taxable income derived by such “establishments or places of business” in the PRC, as well as on taxable income earned outside the PRC that is effectively connected with such “establishments or places of business" in the PRC. An “establishment or place of business” is broadly defined under the PRC domestic tax law to include a place of management, operation or administration; a farm, factory or place of extraction of natural resources; a place where services are rendered; a place of construction, installation, assembly, repair, and exploitation etc.; and other establishments engaged in manufacturing and business operating activities. The domestic tax law definition of establishment or place of business also includes “business agents” that conduct certain activities on behalf of a principal.
The directors of the Issuer intend to manage, control and operate the Issuer in such a manner that the Issuer should not be treated as a tax resident enterprise of the PRC or non-tax resident enterprises with an establishment or places of business in the PRC for CIT purposes, although this cannot be guaranteed.
As such if the Issuer is not deemed as PRC tax resident enterprise or not having a taxable presence in the PRC, it will not be subject to CIT on an assessment basis and would only be subject to CIT on a
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withholding basis to the extent that the Issuer directly derives PRC sourced income in respect of its investment in PRC domestic securities.
In the event the Issuer is subject to CIT on an assessment basis, 25% of the taxable income of the Issuer will be payable to the PRC tax authority.
Under the CIT Law of the PRC, interests, dividends, royalties, rents and other income derived from PRC resident companies by foreign enterprises, including those received by QFII on behalf of the Issuer, is generally subject to PRC withholding income tax (“WHT”) at a rate of 10%. The PRC companies making the payment have the obligation to withhold the WHT. To the extent that WHT is not withheld at source by the relevant withholding agents, the recipient of such income remains liable for WHT. Nonetheless, the CIT law has exempted income tax on interest from government bonds. At present, a 10% WHT is withheld at source in respect of dividend income on H-shares, A-shares and B-shares for non-resident enterprises by the entity distributing such dividend income. The WHT rate may be reduced or waived by the relevant double tax agreements/arrangements, if applicable, subject to the equity holding ratio and the tax residency status of the relevant holding company, whether it is the beneficial owner of the income in the case of interest and dividend income and the approval from the PRC tax authorities.
According to the Caishui [2018] No. 108 (“Circular No. 108”), non-PRC tax residents without an “establishment or place of business” in the PRC (or having an “establishment or place of business” in the PRC but the income so derived in the PRC is not effectively connected with such “establishment or place of business”), bond interest income received from 7 November 2018 to 6 November 2021 will be temporarily exempt from CIT. Circular No. 108 did not specify the CIT treatments on income received by non-PRC tax residents from investment in other fixed income securities (such as asset-backed securities, certificates of deposits, etc.). It is currently uncertain as to whether such interest income is also exempt from CIT based on Circular No. 108.
The “Notice on temporary exemption of CIT on capital gains derived from the transfer of PRC equity investment assets such as PRC domestic stocks by QFII and RQFII” (Caishui [2014] No.79) promulgated by the Ministry of Finance (“MOF”), the State Taxation Administration (“STA”) and the China Securities Regulatory Commission on 14 November 2014 (“Notice No. 79”) states that (among other things) QFIIs and RQFII will be temporarily exempt from CIT on gains derived from the transfer of PRC equity investment assets (including A-shares) effective from 17 November 2014. The above treatment applies to QFIIs without an establishment or place of business in the PRC or having an establishment in the PRC but the income so derived in the PRC is not effectively connected with such establishment. Please note that the tax exemption granted under Notice No. 79 is temporary.
On the basis of Notice No. 79, no provision in respect of WHT on the gross realised and unrealised capital gains derived by the Issuer on the trading of A-shares through the QFII Investment Quota will be made by the Issuer. However, as the tax exemption granted under Notice No. 79 is temporary, as and when the PRC authorities announce the expiration of such exemption, any tax levied on and payable by the relevant QFII will be passed on to the Issuer to the extent such tax is indirectly attributable to the Issuer.
Notice No. 79 does not cover the tax treatment on capital gains derived by QFIIs from the trading of fixed income instruments (or securities other than equity investment assets). According to prevailing PRC CIT laws, non-tax resident enterprise with no establishment or place in the PRC shall pay CIT on income derived sourced in the PRC. However, the tax regulation is silent on the sourcing rule of trading debt asset. Given the above, the capital gains derived by QFIIs from the debt investments may not be regarded as PRC sourced income and thus are technically not subject to WIT, unless the PRC tax authorities would issue further guidance stating otherwise.
In light of the uncertainty on the income tax treatment on capital gains derived by QFIIs from the trading of PRC fixed income instruments and in order to meet this potential tax liability for capital gains, the Issuer reserves the right to make provision for the WHT on such gains or income and withhold the tax.
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Any actual provision will be disclosed in the accounts of the Issuer. Investors should note that any such provision may be excessive or inadequate to meet actual PRC tax liabilities on investments made by the Issuer. Upon any future resolution of the above mentioned uncertainty or further changes to tax law or policies, the Issuer will, as soon as practicable, make relevant provisions or make relevant adjustments to the amount of tax provision as it considers necessary. Investors should note that if provision for taxation is made, in view of the uncertainties under the applicable PRC tax laws and the possibilities of such laws being changed and taxes being applied retrospectively, such provision may be excessive or inadequate to meet actual PRC tax liabilities on investments made by the Issuer. As a result, investors may be advantaged or disadvantaged depending on the final outcome of how such gains will be taxed, the level of provision and when they subscribed and/or redeemed their Shares. If no provision for potential withholding income tax is made and in the event that the PRC tax authorities enforce the imposition of such withholding income tax in respect of the Issuer’s investments, the net asset value of the Issuer may be adversely affected. As a result, redemption proceeds or distributions may be paid to the relevant shareholders without taking full account of tax that may be suffered by the Issuer.
PRC Stamp Tax
Stamp duty under the PRC laws is generally levied on certain taxable documents executed or used in the PRC, such as documentation effecting the transfer of equity interests in PRC companies, including the contracts for the purchase and sale of A-shares and B-shares traded on the PRC stock exchanges and other documents that are listed in the PRC’s Provisional Rules on Stamp Duty. In the case of contracts for sale of A-shares and B-shares, such stamp duty is currently imposed on the seller but not on the purchaser, at the rate of 0.1% of the total proceeds. The Issuer will be subject to this tax on each trade it makes in a PRC listed security.
PRC Value-added Tax and Other Surtaxes
The MOF and the STA jointly released the Caishui [2016] No. 36 (“Circular No. 36”) which specifies that business tax to value-added tax (“VAT”) reform is rolled out starting from 1 May 2016.
According to Circular No. 36, capital gains derived by QFIIs from the transfer of PRC securities will be exempt from VAT since 1 May 2016.
As the full roll-out of VAT reform is still new, it is not clear whether and how the collection of VAT on capital gains derived by the Issuer from the direct trading of China B-Shares would be enforced. As such, the Portfolio Manager reserves the right to make provisions for potential VAT liability in respect of the Issuer.
According to the Circular No. 36 and Caishui [2016] No. 46, deposit interest income is not subject to VAT and interest income earned on government bonds is exempted from VAT. Meanwhile, Caishui [2016] No. 70 provides that certain inter-bank financial transactions (including the holding of financial bonds issued by financial institutions via the inter-bank bond market between prescribed financial institutions are eligible for VAT exemption.
According to Circular No.108, non-PRC tax residents without an “establishment or place of business” in the PRC (or having an “establishment or place of business” in the PRC but the income so derived in the PRC is not effectively connected with such “establishment or place of business”), bond interest income received from 7 November 2018 to 6 November 2021 will be temporarily exempt from VAT. Circular No. 108 did not specify the VAT treatments on income received by non-PRC tax residents from investment in other fixed income securities (such as asset-backed securities, certificates of deposits, etc.). It is currently uncertain as to whether such interest income is also exempt from VAT based on Circular No. 108.
The aforesaid VAT exemption is technically not applicable to interest income derived from bonds other than the aforementioned which may be subject to 6% VAT. However, since the actual enforcement of the new VAT rules is currently uncertain, the Portfolio Manager will review the tax provisioning policy from
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time to time and reserves the right to provide for VAT for the account of the Fund as it considers appropriate.
Dividend income and profit distributions on equity investment derived from China are not included in the taxable scope of VAT.
In the event if the proceeds are subject to VAT, additional Urban Maintenance and Construction Tax (currently at the rate ranging from 1% to 7%), Educational Surcharge (currently at the rate of 3%) and Local Educational Surcharge (currently at the rate of 2%) will be imposed on the VAT liability.
Application of PRC Tax Treaties
Foreign non-PRC resident enterprises with no permanent establishment in China who are qualified residents in countries which have entered into double taxation treaties with China may be entitled to a reduction or exemption of PRC taxes imposed on the payment of dividends, interest, and the recognition of gains with respect to various PRC investments. China currently has a double taxation treaty with the Ireland, the United States, and large number of other countries and territories. Whether and which of these treaties might be applicable to reduce or exempt the PRC taxes described above will depend in part on forthcoming guidance regarding the application of PRC taxes in the specific QFII context. For example, if the double taxation treaty between China and Ireland could be successfully applied, its current version would allow for the same if not better treatment for certain dividends and an exemption from withholding tax for certain types of income properly characterised as capital gains as defined by that treaty and applicable PRC law.
However, whether this treaty might be applicable to reduce the PRC taxes described above shall qualify for certain criterion such as the beneficial owners of such dividend and interest shall be the tax residents of the country or jurisdiction with double tax treaty with the PRC. If the tax treaty benefit and relief is available under the relevant treaty, the Portfolio Manager (if being requested) will coordinate the third party QFII to apply for the treaty benefit / relief. However, there is no guarantee that this can be accepted by the PRC tax authorities.
The tax law and regulations of the PRC are subject to change, and may be changed with retrospective effect. The interpretation and applicability of tax law and regulations by tax authorities are not as consistent and transparent as those of more developed nations, and may vary from region to region. Accordingly, PRC taxes and duties payable by the third party QFII, which are to be reimbursed by the Issuer to the extent attributable to the assets held through the QFII Investment Quota, may change at any time.
CONFLICTS OF INTERESTS
Hillhouse Capital Advisors, Ltd. and Affiliates
The Issuer has appointed the Portfolio Manager as its discretionary portfolio manager. The Portfolio Manager and its affiliates may engage in and provide a broad range of banking, advisory and investment services to their customers. The Issuer will generally benefit from the relationships and activities resulting from these services, which are expected to generate attractive investment opportunities and analytics. Nevertheless, situations will arise in which the interests of the Portfolio Manager and its affiliates will conflict with the interests of the Issuer and its investors. Each investor will be deemed to have acknowledged the existence of such conflicts, whether or not identified herein, and to have waived any claim with respect to such conflicts.
Effect of Performance Fee
The existence of performance fee forming part of the Portfolio Manager's remuneration may create an incentive for the Portfolio Manager to make more speculative investments on behalf of the Issuer than it would otherwise make in the absence of such performance-based compensation.
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Conflicting Investment Interests
The Portfolio Manager, its affiliates and investment funds under their management or control (the "Other Hillhouse Investors") may hold investments similar to or the same as those made or proposed to be made by the Issuer. Those investments may be in the same or similar securities as held by the Issuer, but acquired at different times, at lower or higher prices or valuations and on different terms than those upon which the Issuer acquires an investment. The different prices paid for, or terms of, securities held by Other Hillhouse Investors may create conflicts of interest. The Other Hillhouse Investors will be acting in their own interests and may take actions that are adverse to the interests of the Issuer.
In addition, a conflict of interest may arise in connection with the allocation of investment opportunities among the Issuer and other funds or entities under the management of the Portfolio Manager and its affiliates (the “Other Accounts”). The Portfolio Manager will act in a manner that it considers fair and equitable in allocating investment opportunities among the Issuer and the Other Accounts, taking into account all factors relevant to an investment by the Issuer and the Other Accounts in a particular investment. There can be no assurances that investment allocations will be proportionately allocated among the Issuer and the Other Accounts or that the Issuer will be allocated the best investment opportunities and the Portfolio Manager assumes no responsibility for equality among the Issuer and the Other Accounts.
Client Relationships
In the course of its advisory business, the Portfolio Manager or its affiliates may represent potential purchasers, sellers, investors, lenders and other involved parties with respect to businesses which may be suitable for investment by the Issuer. The Portfolio Manager and its affiliates, acting on behalf of those clients, may recommend or take actions for such clients that are not in the best interest of the Issuer. The Portfolio Manager or its affiliates will be under no obligation to decline such engagements in order to make investment opportunities available to the Issuer. In addition, the Portfolio Manager and its affiliates have long-standing relationships with companies and investment funds with investment objectives similar to or the same as those of the Issuer and which may be in a position to compete with the Issuer for investment opportunities. In determining whether to pursue a particular transaction in which the Issuer might invest, the Portfolio Manager and its affiliates will consider these relationships, and there may be certain potential transactions which will not be available for investment by the Issuer in view of such relationships.
Cross and Other Securities Transactions
Sales of securities for the account of the Issuer may be bunched or aggregated with orders for other accounts of the Portfolio Manager and its affiliates (including accounts in which the Portfolio Manager and its affiliates or their employees have a beneficial interest). Because of prevailing trading activity, it is frequently not possible to receive the same price or execution on the entire volume of securities sold. When this occurs, the various prices may be averaged, which may be disadvantageous to the Issuer. In addition, the Portfolio Manager may, in limited circumstances, cross positions from one account or investment vehicle managed by the Portfolio Manager to another account or investment vehicle managed by the Portfolio Manager.
By executing a subscription agreement, an investor consents to all such transactions in which the Portfolio Manager and its affiliates act as a broker for the Issuer, act for both the Issuer and the other party to the transaction (including circumstances where the Portfolio Manager and its affiliates act as a broker for both parties to the transaction) or bunch or aggregate transactions with others.
Additional Investors
Additional Investors may be admitted to the Issuer upon such terms and conditions as are permitted by the Issuer (without the consent of any other investors), which terms and conditions may differ from those
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applicable to other investors on matters relating to, without limitation, lock-up periods, withdrawal limitations, notice periods, management fees, incentive fees and information rights. New series of Securities may be issued by the Issuer, without the approval of the existing Securityholders. Conflicts of interest may arise between the interests of existing Securityholders and those of prospective Securityholders. The Issuer will consider the investment objectives and capabilities of the Issuer as a whole, not the investment, tax or other objectives of any prospective or existing Securityholder individually.
Management Time
The Issuer’s success is largely dependent on the efforts of investment professionals of the Portfolio Manager to source, analyse and negotiate potential investments. The interests of these professionals in the Portfolio Manager should tend to discourage them from withdrawing from participation in the Issuer’s investment activities. There can be no assurances, however, that such professionals will continue to be associated with the Portfolio Manager or its affiliates throughout the life of the Issuer. Conflicts of interest may arise in allocating management time, services or functions. Other employees assigned to the Portfolio Manager may work on projects for affiliates, and conflicts of interest may arise in allocating management time, services or functions among such affiliates.
Diverse Investor Group
The investors in the Issuer may have conflicting investment, tax and other interests with respect to their investments in the Issuer. The conflicting interests of individual investor may relate to or arise from, among other things, the nature of investments made by the Issuer, the structuring or the acquisition of investments and the timing of dispositions of investments. As a consequence, conflicts of interest may arise in connection with decisions made by the Issuer, including with respect to the nature or structuring of investments that may be more beneficial for one investor in the Issuer than for another investor in the Issuer, especially with respect to the investor's individual tax situations.
Other Risks
The Issuer believes that the risks described above are the principal risks inherent in the transaction for the Securityholder, but the inability of the Issuer to pay interest, principal or other amounts on or in connection with the Securities may occur for other reasons and the Issuer does not represent that the above statements regarding the risk of holding the Securities are exhaustive. Although the Issuer believes that the various structural elements described in these Base Listing Particulars lessen some of these risks for the Securityholders, there can be no assurance that these measures will be sufficient to ensure payment to the Securityholders of interest, principal or any other amounts on or in connection with the Securities on a timely basis or at all.
THE FOREGOING RISK FACTORS ARE NOT EXHAUSTIVE AND DO NOT PURPORT TO BE A COMPLETE EXAMINATION OF ALL THE RISKS AND CONSIDERATIONS INVOLVED IN INVESTING IN THE ISSUER AND/OR THE SECURITIES. IN PARTICULAR, THE ISSUER’S PERFORMANCE MAY BE AFFECTED BY CHANGES IN MARKET OR ECONOMIC CONDITIONS AND LEGAL, REGULATORY AND TAX REQUIREMENTS.
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INFORMATION ABOUT THE TRANSACTION PARTIES
THE ISSUER
Incorporation and Registered Office
The Issuer has been established as a special purpose vehicle or entity for the purpose of issuing the Securities and acquiring the Eligible Assets. The full legal name of the Issuer is HCM QFII Investments DAC. The Issuer is a private company with limited liability of unlimited duration registered and incorporated in Ireland on 7th January 2013 (registered number 522075) under the Companies Act and having its registered office at Custom House Plaza, Block 6, I.F.S.C, Dublin 1, Ireland. The Issuer’s phone number is +353 1 636 7800.
Business Overview
The Issuer has not engaged, since its incorporation, in any activities or commenced operations other than those incidental to its incorporation under the Companies Act, the authorisation and issue of the Securities including the Combined Series No.1 Securities issued on 15 February 2013 and Further Securities of the same Series issued on the same terms as a fungible issuance on 10 February 2014, 12 February 2015, 25 March 2015 and 10 April 2015 (together, the "Combined Series No.1 Securities") and acquisition of Eligible Assets with the proceeds of the Combined Series No.1 Securities in issue including all transactions incidental thereto and the matters referred to or contemplated in these Base Listing Particulars, the Series Listing Particulars dated 15 February 2013 and each Series Listing Particulars dated 10 February 2014, 12 February 2015, 25 March 2015 and 10 April 2015, respectively, and the authorisation, execution, delivery and performance of the other documents to which it is or will be a party and matters which are incidental or ancillary to the foregoing.
Financial History
The Issuer has produced audited financial statements for the periods ended 31 December 2013, 31 December 2014, 31 December 2015, 31 December 2016, 31 December 2017 and 31 December 2018.
Main Principal Objects
The principal objects of the Issuer are set out in its Constitution and permit, inter alia, to acquire, hold, manage, finance, refinance and/or dispose of QFII Investments.
Administrative, Management and Supervisory Bodies
Directors
The directors of the Issuer and their respective business addresses and their principal occupations are:
Name Business Address Principal activities outside the Issuer
Niall Gallagher Custom House Plaza, Block 6, I.F.S.C., Director Dublin 1, Ireland
Kate Phelan Custom House Plaza, Block 6, I.F.S.C., Director Dublin 1, Ireland
Colm O'Connell Custom House Plaza, Block 6, I.F.S.C., Director Dublin 1, Ireland
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Corporate Administration
The Issuer has appointed Citco Corporate Services (Ireland) Limited as Corporate Services Provider to provide certain corporate administration services pursuant to a Corporate Services Agreement dated 15 February 2013 between the Issuer and the Corporate Services Provider. The register of members is maintained by the company secretary at its registered office.
Share Capital
The authorised share capital of the Issuer is EUR 1,000,000 divided into 1,000,000 ordinary shares of EUR 1.00 each.
Shareholders
The issued share capital of the Issuer is EUR 1.00. Walkers Global Shareholding Services Limited (the "Share Trustee"), holds 1 share of EUR 1.00 each on trust for Irish charitable purposes pursuant to the Declaration of Trust. The Share Trustee has no beneficial interest in and derives no benefit from its holding of the shares.
Auditors
Audited financial statements will be published on an annual basis. The independent auditors of the Issuer are Ernst & Young, who are chartered accountants and are members of the Institute of Chartered Accountants in Ireland and are qualified to practice as auditors in Ireland.
Financial Information
The financial year-end of the Issuer is 31st December of each year.
The Issuer has prepared audited financial statements for the periods ended 31 December 2013, 31 December 2014, 31 December 2015, 31 December 2016, 31 December 2017 and 31 December 2018 and has not declared or paid any dividends as of the date of these Base Listing Particulars. Such financial statements have been filed with Euronext Dublin and are incorporated herein by reference. So long as any Securities remain outstanding, any future published financial statements prepared by the Issuer (which will, in each case, be in respect of the period ending on 31 December) will be available from the registered office of the Issuer or the specified office of the Paying Agent during normal business hours once filed with the Registrar of Companies.
The Issuer has not and will not prepare interim financial statements.
Material Contracts
Apart from the Master Documents to which it is a party, the Issuer has not entered into any material contracts other than in the ordinary course of its business.
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Legal and Arbitration Proceedings
There are no governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Issuer is aware) within the previous twelve months from the date hereof which may have or have had in the recent past, a significant effect on the Issuer’s financial position and profitability
No Material Adverse Change
Since 31 December 2018, being the date of its last audited financial statements, other than the matters specifically disclosed in these Base Listing Particulars and the issuance of the Securities by the Issuer and acquisition of Eligible Assets with the proceeds of same, there has been no material adverse change, or any, development reasonably likely to involve any material adverse change, in the financial position or prospects of the Issuer.
CORPORATE SERVICES PROVIDER
Citco Corporate Services (Ireland) Limited acts as Corporate Services Provider and has its office at Custom House Plaza, Block 6, I.F.S.C., Dublin 1, Ireland.
The Corporate Services Agreement is more fully described under section "Summary of Master Documents - Corporate Services Agreement".
PORTFOLIO MANAGER
The information appearing in this section has been prepared by the Portfolio Manager and has not been independently verified by the Issuer or any other party. None of the Issuer or any other party other than the Portfolio Manager assume any responsibility for the accuracy or completeness of such information.
Overview
Hillhouse Capital Advisors, Ltd., a company limited by shares incorporated under the laws of the Cayman Islands, acts as Portfolio Manager pursuant to the terms of the Portfolio Management Agreement as further described below.
The Portfolio Manager is a wholly owned subsidiary of Hillhouse Capital Group Limited, which is a wholly owned subsidiary of Hillhouse Capital Group Holdings Limited.
The Portfolio Manager's registered office is 190 Elgin Avenue, George Town, Grand Cayman KY1-9001, Cayman Islands (Phone: (852) 2179-1977)
The Portfolio Manager is a registered investment adviser with the Securities Exchange Commission in the US (SEC file: 801-77363; CRD #: 166112).
Additional information about Hillhouse Capital Advisors, Ltd. also is available on the SEC's website at www.adviserinfo.sec.gov. Registration of an investment adviser does not imply any level of skill or training.
Investment Philosophy
The Portfolio Manager's investment philosophy is to seek long-term, risk-adjusted returns through bottom- up analysis and fundamental proprietary research. As part of its bottom-up analysis, the Portfolio Manager plans to perform both qualitative and quantitative assessments of potential investments with a particular focus on opportunities upon which it can gain insights and discover value in an ever-changing world.
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Portfolio Management Services
The Portfolio Manager intends to make investments that are permitted to be acquired by persons licensed as a Qualified Foreign Institutional Investor ("QFII") by the China Securities Regulatory Commission ("CSRC"), including securities and investment instruments traded on exchanges within the People's Republic of China ("QFII Investments").
The Portfolio Manager plans to manage the Issuer's assets on a discretionary basis.
A description of the specific advisory services to be provided to the Issuer is more fully described under sections "Summary of Master Documents - Portfolio Management Agreement" and "The Assets of the Issuer".
MANAGEMENT TEAM
Biographical information regarding the Portfolio Manager's management, investment and operations teams is set forth below:
Lei Zhang (张磊), President and CIO
Mr. Zhang is the founder and President of Hillhouse Capital Advisors, Ltd. ("HCA"). Mr. Zhang also serves as the President of Hillhouse Capital Management, Ltd. ("HCM"), an affiliated SEC-registered investment adviser. Prior to founding HCM in June 2005, he served as the chief representative to China for the New York Stock Exchange. Prior to that, Mr. Zhang was an investment analyst for a global emerging markets fund. Mr. Zhang earned his M.B.A. and M.A. in International Relations from Yale University and a B.A. in Economics from Renmin University of China. Mr. Zhang also serves on the board of directors of various investments and investment vehicles relating to the business activities of HCA or its affiliates.
Vincent Gao, Partner
Mr. Gao is a partner of HCA. Before joining HCA, Mr. Gao was a partner at Chinarock Capital in Hong Kong, a division of Farallon Capital Management in the United States. Mr. Gao has been in the investment industry since 1996 and was also a portfolio manager and analyst at Salomon Brothers Asset Management in New York, and an analyst at Bankers Trust Funds Management in Sydney, Australia. He holds a Bachelor of Commerce/Economics Degree from the University of New South Wales in Australia and has a Graduate Diploma in Finance and Applied Investment from the Securities Institute of Australia. Mr. Gao also serves on the board of directors of various investments and investment vehicles relating to the business activities of HCA or its affiliates.
Qingqing (Michael) Yi, Partner
Mr. Yi is a partner of HCA. Previously, he worked for China International Capital Corporation as an equity research analyst covering ports, toll roads, and shipping companies listed in both domestic and Hong Kong markets. Mr. Yi graduated from the Marshall School of Business at the University of Southern California with an M.B.A. degree and he also holds a B.S. in Engineering from Shanghai Maritime University. Mr. Yi has worked with HCA and its affiliates since the firm's inception in 2005. Mr. Yi also serves on the board of directors of various investments and investment vehicles relating to the business activities of HCA or its affiliates.
Vivien Xu, Managing Director
Ms. Xu is a managing director of HCA. Ms. Xu has worked with HCA and its affiliates since 2007. Previously, Ms. Xu was an analyst at China International Capital Corporate research team. Prior to that, Ms. Xu was an auditor at KPMG. Ms. Xu received a B.S. in Accounting from Peking University. Ms. Xu
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may serve on the board of directors of various investments and investment vehicles relating to the business activities of HCA or its affiliates.
Outsourcing
The Portfolio Manager has appointed an affiliate, the Sub-Advisor, as its non-discretionary sub-advisor with respect to the Issuer and the Series Assets. The Portfolio Manager remains fully liable for the provision of the services under the Portfolio Management Agreement.
The Sub-Advisor has entered into the Custodian Agreement with the Custodian to provide custodial services, with respect to the Series Assets and the Brokerage Agreements with the Brokers with respect to same.
The Portfolio Management Agreement is more fully described under sections "Summary of Master Documents - Portfolio Management Agreement" and "The Assets of the Issuer".
CALCULATION AGENT
Hillhouse Capital Advisors, Ltd. having its registered office at 190 Elgin Avenue, George Town, Grand Cayman KY1-9001, Cayman Islands (Phone: (852) 2179-1977) acts as Calculation Agent pursuant to the Master Agency Terms and the Portfolio Management Agreement.
Pursuant to the Master Agency Terms, the Calculation Agent shall notify the Paying Agent at least five (5) Business Days prior to the Payment Date of the amount of interest and/or principal to be paid on each Security on the next succeeding Payment Date.
The Master Agency Terms are more fully described under section "Summary of Master Documents – Master Agency Terms".
PAYING AGENT
The Bank of New York Mellon, acting through its London Branch at its office at One Canada Square, London E14 5AL, United Kingdom, acts as Paying Agent pursuant to the Master Agency Terms, which are more fully described under the section "Summary of Master Documents – Master Agency Terms".
REGISTRAR AND TRANSFER AGENT
The Bank of New York Mellon SA/NV, Luxembourg Branch, having its place of business at Vertigo Building – Polaris, 2-4 rue Eugène Ruppert, L-2453 Luxembourg acts as Registrar and as Transfer Agent pursuant to the Master Agency Terms, which are more fully described under the section "Summary of Master Documents – Master Agency Terms".
TRUSTEE
BNY Mellon Corporate Trustee Services Limited acts as Trustee and has its office at One Canada Square, London E14 5AL, United Kingdom.
The Master Trust Terms are more fully described under section "Summary of Master Documents – Master Trust Terms".
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TERMS AND CONDITIONS OF THE SECURITIES
The following is the text of the terms and conditions which will be applied to each Series by the relevant Constituting Instrument (as defined below), subject to completion and amendment and as supplemented or varied in accordance with the provisions of the relevant Constituting Instrument. References in the Conditions to "Securities" are to the Securities of one Series (as defined below) only, not to all Securities which may be issued under the Programme.
The Securities of the Series of which this Security forms a part (in these terms and conditions, the "Securities") are constituted and governed by or pursuant to a constituting instrument relating to the Securities (the "Constituting Instrument") dated the Issue Date (as defined in the Master Definitions) among the Issuer (as defined in the Constituting Instrument), the persons, if any, named therein as a trustee (the "Trustee") which expression shall include all persons for the time being the trustee or trustees under the Master Trust Terms referred to below), a paying agent (the "Paying Agent"), a registrar (the "Registrar"), a transfer agent (the "Transfer Agent"), a calculation agent (the "Calculation Agent") and other parties (if any) named therein. The Constituting Instrument constitutes the Securities by the creation of a trust deed (the "Trust Deed") on the terms (as amended, modified and/or supplemented by the Constituting Instrument) set out in the master trust terms (the "Master Trust Terms") as specified in the Constituting Instrument. By executing the Constituting Instrument, the Issuer has entered into an agency agreement (the "Agency Agreement") with one or more of the parties defined in the Constituting Instrument as the "Paying Agent", the "Calculation Agent", the "Registrar", the "Transfer Agent" and the "Trustee", on the terms (save as amended, modified and/or supplemented by the relevant Constituting Instrument) set out in the master agency terms (the "Master Agency Terms") as specified in the Constituting Instrument.
The Securities may be issued as Combined Series Securities or as Segregated Series Securities. The applicable Constituting Instrument and the Registered Certificate (as defined below) shall designate the Securities constituted and represented thereby, as applicable, as forming part of a Combined Series or Segregated Series.
Any Security issued on or after the date hereof will be issued with the benefit of these Master Conditions, other than Securities issued so as to be consolidated and form a single Series with any Security issued prior to the date hereof (the "Existing Security"), in which case the master definitions, master conditions, master trust terms, master agency terms, portfolio management agreement and corporate services agreement applicable to the Existing Security (together, the "Existing Master Documents") will apply. These Master Conditions do not affect any Existing Security, in relation to which the Existing Master Documents will apply.
References in these terms and conditions to:
(a) "principal" shall be deemed to include any premium payable in respect of the Securities, all Redemption Amounts and all other amounts in the nature of principal payable pursuant to Condition 7 (Redemption, Purchase, Exchange) or any amendment or supplement to it;
(b) "interest" shall be deemed to include all Interest Amounts and all other amounts in the nature of interest payable pursuant to Condition 6 (Interest) or any amendment or supplement to it;
(c) unless the relevant Constituting Instrument provides otherwise, a "Series" shall be construed as a reference to Securities which, have the same issue date, the same maturity date and bear interest (if any) on the same basis or at the same rate (except in respect of the first payment of interest) and on terms otherwise identical and are ring- fenced from all other Series;
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(d) references to the "Constituting Instrument" include a reference to the "Terms" that may be set out therein or scheduled thereto, which terms may complete, amend, supplement or vary these terms and conditions.
The Master Definitions specified in the Constituting Instrument will apply for the purposes of interpretation of these terms and conditions and the Conditions except as expressly provided therein or the context otherwise requires.
By acquiring the Securities, the acquirer shall also be deemed to represent, warrant and agree that:
1. it has not offered, sold, placed or underwritten and will not offer, sell, place or underwrite the issue of any Securities otherwise than in conformity with the provisions of the European Union (Markets in Financial Instruments) Regulations 2017 (S.I. No. 375 of 2017)(as amended) and any codes of conduct issued in connection therewith, the provisions of the Investor Compensation Act 1998 (as amended) and the Investment Intermediaries Act 1995 (as amended) and it will conduct itself in accordance with any codes and rules of conduct, conditions, requirements and any other enactment, imposed or approved by the Central Bank with respect to anything done by it in relation to the Securities;
2. it has not offered, sold, placed or underwritten and will not offer, sell, place or underwrite the issue of any Securities otherwise than in conformity with the provisions of the Central Bank Acts 1942- 2018, as amended, including any codes of conduct rules made under Section 117(1) of the Central Bank Act 1989 (as amended), the Central Bank (Investment Market Conduct) Rules 2019 (S.I. No. 366 of 2019) and any regulations made thereunder and any codes of conduct, guidance and any regulations issued pursuant to Part 8 of the Central Bank (Supervision and Enforcement) Act 2013 (as amended);
3. it has not offered, sold, placed or underwritten and will not offer, sell, place or underwrite the issue of any Securities in Ireland otherwise than in conformity with the provisions of the European Union (Prospectus) Regulations 2019 (S.I. No. 380 of 2019), EU Prospectus Regulation 2017/1129 and any rules issued under Section 1363 of the Companies Act 2014 by the Central Bank;
4. it has not offered, sold, placed or underwritten and will not offer, sell, place or underwrite the issue of any Securities in Ireland otherwise than in conformity with the provisions of (A) the Market Abuse Regulation (Regulation EU 596/2014); (B) the Market Abuse Directive on criminal sanctions for market abuse (Directive 2014/57/EU); (C) the European Union (Market Abuse) Regulations 2016 (S.I. No. 349 of 2016) (as amended); and (D) any rules issued by the Central Bank pursuant thereto and/or under Section 1370 of the Companies Act; and
5. it has not offered, sold, placed or underwritten and will not offer, sell, place or underwrite the issue of any Securities otherwise than in compliance with the provisions of Companies Act, as each of the foregoing may be amended, restated, varied, supplemented and/or otherwise replaced from time to time.
THE DISTRIBUTION OF THIS DOCUMENT AND THE OFFERING OF THE SECURITIES MAY BE WHOLLY OR PARTLY RESTRICTED IN CERTAIN JURISDICTIONS. IT IS THE RESPONSIBILITY OF ANY PERSONS IN POSSESSION OF THIS DOCUMENT AND ANY PERSONS WISHING TO MAKE APPLICATIONS FOR THE SECURITIES PURSUANT TO OR ON THE BASIS OF THIS DOCUMENT TO INFORM THEMSELVES OF AND TO OBSERVE FULLY THE APPLICABLE LAWS AND REGULATIONS OF ANY RELEVANT JURISDICTION.
THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS UNLAWFUL. AN INVESTMENT IN THE SECURITIES INVOLVES THE RISK OF LOSS OF ALL OR SOME OF AN INVESTOR’S INVESTMENT.
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NEITHER THE DELIVERY OF THIS DOCUMENT NOR THE OFFER OR ISSUE OF THE SECURITIES SHALL UNDER ANY CIRCUMSTANCES CONSTITUTE A REPRESENTATION THAT THE INFORMATION CONTAINED IN THIS DOCUMENT IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE PUBLICATION DATE. THIS DOCUMENT MAY BE UPDATED FROM TIME TO TIME. PROSPECTIVE INVESTORS SHOULD ASK IF ANY SUPPLEMENTS TO THIS DOCUMENT HAVE BEEN ISSUED.
THE PURCHASE OF SECURITIES IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK. THERE IS NO ASSURANCE THAT THE ISSUER WILL BE PROFITABLE.
THE SECURITIES ARE OFFERED SOLELY ON THE BASIS OF THE INFORMATION AND REPRESENTATIONS CONTAINED IN THIS DOCUMENT AND THE DOCUMENTS SPECIFIED HEREIN. NO PERSON HAS BEEN AUTHORISED TO MAKE ANY REPRESENTATIONS CONCERNING THE ISSUER OR THE SECURITIES WHICH ARE INCONSISTENT WITH THOSE CONTAINED IN THIS DOCUMENT.
THE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY U.S. FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES (“US”) SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY US STATE OR OTHER US SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD EXCEPT (A) (I) TO INVESTORS THAT QUALIFY AS “ACCREDITED INVESTORS” WITHIN THE MEANING OF RULE 501(A) OF THE SECURITIES ACT PURCHASING FOR THEIR OWN ACCOUNTS FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (II) IN OTHER TRANSACTIONS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT, AND (B) IN COMPLIANCE WITH ANY APPLICABLE US OR STATE SECURITIES LAWS. IT IS ANTICIPATED THAT THE OFFERING AND SALE OF THE SECURITIES WILL BE MADE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT. THEREFORE, THE SECURITIES OFFERED HEREBY ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. SECURITIES MAY NOT BE TRANSFERRED WITHOUT THE ISSUER’S CONSENT.
HILLHOUSE CAPITAL ADVISORS, LTD. (THE “PORTFOLIO MANAGER”) IS EXEMPT FROM REGISTRATION WITH THE UNITED STATES COMMODITY FUTURES TRADING COMMISSION (THE “CFTC”) AS A COMMODITY POOL OPERATOR (“CPO”). THEREFORE, UNLIKE A REGISTERED CPO, THE PORTFOLIO MANAGER IS NOT REQUIRED TO DELIVER A DISCLOSURE DOCUMENT (AS DEFINED UNDER CFTC REGULATIONS) TO PARTICIPANTS IN THIS POOL. THE PORTFOLIO MANAGER QUALIFIES FOR EXEMPTION FROM REGISTRATION WITH THE CFTC BECAUSE, AMONG OTHER THINGS, EITHER (A) THE AGGREGATE INITIAL MARGIN AND PREMIUMS REQUIRED TO ESTABLISH COMMODITY INTEREST POSITIONS DO NOT EXCEED 5% OF THE LIQUIDATION VALUE OF THIS POOL’S PORTFOLIO OR (B) THE AGGREGATE NET NOTIONAL VALUE OF THIS POOL’S COMMODITY INTEREST POSITIONS DOES NOT EXCEED 100% OF THE LIQUIDATION VALUE OF THIS POOL’S PORTFOLIO.
PURSUANT TO US TREASURY DEPARTMENT CIRCULAR 230, INVESTORS ARE HEREBY ADVISED THAT: (1) ANY DISCUSSION OF US FEDERAL TAX ISSUES HEREIN IS NOT INTENDED OR WRITTEN TO BE RELIED UPON, AND CANNOT BE RELIED UPON, BY INVESTORS FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON INVESTORS UNDER THE INTERNAL REVENUE CODE; (2) SUCH DISCUSSION IS INCLUDED HEREIN IN CONNECTION WITH THE PROMOTION OR MARKETING OF INTERESTS IN THE SECURITIES; AND (3) INVESTORS
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SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.
1. FORM, DENOMINATION AND TYPE OF SECURITY
1.1 Form
The Securities shall be issued in definitive fully registered form and in an Authorised Denomination or an integral multiple thereof as specified in the Constituting Instrument. The principal amount of each Security will be specified on the face of the definitive registered certificate representing the Securities in the form set out at Schedule 1 hereto ("Registered Certificate"). Subject to the procedures discussed below, title to the Securities passes by registration in the register which the Issuer shall procure to be kept by the Registrar (the "Register"). In these conditions, subject as provided below, "Securityholder" and "holder" means the registered holder of any Securities.
Subject to the restrictions referred to in the Constituting Instrument, Securities may be transferred in whole or in part in an Authorised Denomination or an integral multiple thereof upon the surrender of the Registered Certificate representing such Securities, together with the form of transfer endorsed on it duly completed and executed, at the specified office of the Registrar or Transfer Agent (as set out in Schedule 1 hereto). No purported transfer of Securities shall be effective until approved by the Issuer and registered by the Registrar. In the case of such a transfer, or a transfer of part only of a Registered Certificate, new Registered Certificates in the relevant amounts will be issued to the transferor and the transferee.
Exchange of Registered Certificates on transfer will (subject as provided in the Constituting Instrument) be effected without charge by or on behalf of the Issuer, the Registrar or the Transfer Agent, but upon payment (or the giving of such indemnity as the Registrar or the relevant Transfer Agent may require in respect thereof) of any tax or other governmental charges which may be imposed in relation to it.
1.2 Authorised Denomination
The Security will be issued in the Authorised Denomination, meaning USD250,000 or such other figure and currency as may be specified in the Constituting Instrument provided always that such figure shall exceed the US Dollar equivalent of EUR100,000.
1.3 Type of Security
The Securities shall be profit participating with respect to the return earned on Combined Series Assets or Segregated Series Assets, as applicable. All payments in respect of the Securities shall be made in US Dollars or the relevant currency of the Securities specified in the Constituting Instrument.
1.4 Initial Principal Amount
The Securities may be issued as partly-paid securities and the issue price shall be payable in one or more instalments by way of Advances. The initial principal amount of each Security is such figure as may be specified in the relevant Constituting Instrument (which may be zero). Because the Redemption Amount is determined pursuant to the Priority of Payments, the Redemption Amount may be equal to, greater or lesser than, the principal amount due on the Security.
1.5 Principal Amount Outstanding
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(a) The maximum principal amount of each Security is such figure specified in the relevant Constituting Instrument, provided always that such maximum principal amount of the Securities shall not cause the Programme Limit in respect of the Securities to be exceeded.
(b) Voluntary Funding by Securityholders and Increase of Principal Amount Outstanding
Each Securityholder may provide further Advances under the Securities as set out below:
(i) The Issuer may deliver an Additional Funding Request to the Securityholder(s), Portfolio Manager, Calculation Agent and Registrar requesting an Advance from such Securityholder(s) under the Securities with at least seven (7) Business Days' notice prior to the due date for payment of such Advance (or such shorter period as may be consented to by the relevant Securityholder);
(ii) Each Securityholder shall, as soon as reasonably practicable following receipt of the Additional Funding Request, and no later than five (5) Business Days prior to the due date for payment of such Advance (or such shorter period as may be consented to by the Issuer), confirm to the Issuer, Portfolio Manager, Calculation Agent and Registrar whether it will make the necessary arrangements to fund such Advance;
(iii) Where an Advance is made between Payment Dates and prior to the relevant Redemption Date, interest shall be deemed to accrue on such Advance as and from the preceding Redemption Date;
(iv) The aggregate amount of all Advances made to the Issuer under the Series shall not exceed the fully paid-up aggregate principal amount of such Series, provided always that such maximum principal amount of the Securities shall not cause the Programme Limit in respect of the Securities to be exceeded;
(v) On the receipt by the Issuer of such additional funding in immediately available funds to the Account (or to the Issuer's order), the Issuer (or the Portfolio Manager on its behalf) shall notify the Registrar of receipt of same; and
(vi) Following such confirmation of receipt of funds, the Registrar shall amend the Register to reflect the terms of the Advance to increase the paid-up principal amount outstanding of the Securities.
(c) For the avoidance of doubt, where there are multiple Securityholders holding the Securities, there shall be no requirement for any Advances to be funded on a pro rata basis and the Advance funded by each Securityholder may be agreed separately with the Issuer without regard to any Advances funded by any other Securityholder(s).
1.6 Qualifying Securityholder Certificate and Representations
The holder of any Security and any transferee of such Security shall execute and deliver the Representations Certificate in the form set out at Schedule 2 hereto.
1.7 Combined Series or Segregated Series; Ring-Fencing
(a) Each Series shall be designated at the time of issuance to be part of a Combined Series or designated as a Segregated Series.
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(b) Each Security constituting a Segregated Series shall be identified on the face of the applicable Registered Certificate by a unique Segregated Series number. Each Combined Series shall have a unique Combined Series number and each Security forming part of a particular Combined Series shall be identified on the face of the applicable Registered Certificate by a unique alpha-numeric code.
(c) The failure of the Issuer to perform its obligations in respect of any Series shall not release the Issuer from its obligations under, or constitute a breach in respect of any other Series.
(d) The obligations of the Issuer with respect to a Combined Series is several and separate from its obligations with respect to all Segregated Series and any other Combined Series and a default with respect to one Combined Series shall not cause a default with respect to all Segregated Series or any other Combined Series. The obligations of the Issuer with respect to each Segregated Series is several and separate from its obligations with respect to any Combined Series and all other Segregated Series and a default with respect to one Segregated Series shall not cause a default with respect to any Combined Series or any other Segregated Series.
2. STATUS
The Securities of any Series constitute a direct, general, unsecured, unconditional obligation of the Issuer, recourse in respect of which is limited in the manner described in Condition Error! Reference source not found. (Enforcement and Limited Recourse) and will rank pari passu without any preference among themselves. The Securities rank subordinate to all other claims against the Issuer having priority under the Priority of Payments.
3. USE OF PROCEEDS
3.1 All funding received under the Securities of any Series shall be used at the discretion of the Issuer or the Portfolio Manager to:
(a) acquire, manage and service Combined Series Assets or Segregated Series Assets, as applicable, and to meet its obligations thereunder from time to time;
(b) pay the Trustee Fees due and payable or expected to be due and payable in accordance with the terms hereof;
(c) pay the Agents Fees due and payable or expected to be due and payable in accordance with the terms hereof;
(d) pay the Series Expenses (including the applicable management fee and performance fee) due and payable or expected to be due and payable in accordance with the terms hereof; and
(e) pay the Expenses (including the applicable management fee and performance fee) due and payable or expected to be due and payable in accordance with the terms hereof.
The Issuer shall procure that a sufficient amount of the initial principal amount of funding is retained for the payment of Trustee Fees, the Agents Fees, the Series Expenses and or Expenses or the pro-rata share of obligations, costs (including organisational costs), fees, liabilities and expenses allocable to the Securities in accordance with the terms hereof.
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4. PRE-ENFORCEMENT PRIORITY OF PAYMENTS
4.1 Prior to the occurrence of an Event of Default, (i) the Paying Agent, at the written request of the Issuer or the Portfolio Manager, or (ii) the Issuer or (iii) Portfolio Manager (on behalf of the Issuer) shall on or, in the case of the Issuer or the Portfolio Manager, the Business Day prior to each Payment Date or, as applicable, on each Maturity Date, apply the Series Returns as at the Redemption Date in accordance with the order of priority set forth below:
(a) firstly, in or towards payment of a pro rata amount of any tax payable by the Issuer to any relevant tax authority;
(b) secondly, in or towards payment or discharge of a pro-rata amount of all Trustee Fees due or expected to be due by the Issuer to the Trustee (including but not limited to any legal or other professional fees and any value added or similar tax thereon and indemnification, security and prefunding obligations of the Issuer);
(c) thirdly, in or towards payment or discharge of a pro rata amount of all Agents Fees due or expected to be due to any or all of the Paying Agent, the Transfer Agent or the Registrar (including but not limited to any legal or other professional fees and any value added or similar tax thereon and indemnification, security and prefunding obligations of the Issuer);
(d) fourthly, in or towards payment or discharge of a pro rata amount of all fees, costs and expenses to be incurred in the winding up of the Issuer, if applicable;
(e) fifthly, in or towards the payment of a pro rata amount of annual profit to the Issuer, which shall be retained by the Issuer and available for distribution to its shareholders. The total annual profit payable to the Issuer shall be no more than USD1,200;
(f) sixthly, in or towards payment or discharge of a pro rata amount of all Expenses (other than Series Expenses but including the management fee and performance fee described in the Portfolio Management Agreement) comprising amounts due or expected to be due by the Issuer (including but not limited to any legal or other professional fees and any value added or similar tax thereon and indemnification obligations of the Issuer) in accordance with the Conditions of the relevant Series on a pro rata basis;
(g) seventhly, in or towards the payment or discharge of a pro rata amount of any Series Expenses (including the management fee and performance fee described in the Portfolio Management Agreement) then due and owing by the Issuer in accordance with the Conditions of the relevant Series on a pro rata basis; and
(h) eighthly, at the discretion of the Issuer or the Portfolio Manager, in payment of any surplus remaining (i) in or towards the payment of some or all interest and/or principal amounts due and payable or expected to be due and payable under the Securities or the Series Documents to the Paying Agent for onward payment to the Securityholders on the relevant Payment Date on a pro rata basis; (ii) in or towards reinvesting in the relevant Combined Series Assets or Segregated Series Assets as applicable; (iii) in or towards the redemption of the Securities on the Maturity Date; or (iv) in or towards or held for payment of future Trustees Fees, Agents Fees, Series Expenses and/or Expenses.
5. POST-ENFORCEMENT PRIORITY OF PAYMENTS
5.1 On the occurrence and continuation of an Event of Default, the Trustee, the Issuer, the Portfolio Manager or the Paying Agent, each at the written request of the Trustee, shall apply all amounts then standing to credit of the Account in the order of priority set forth below:
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(a) firstly, in or towards payment of a pro rata amount of any tax payable by the Issuer to any relevant tax authority;
(b) secondly, in or towards payment or discharge of a pro-rata amount of all Trustee Fees due or expected to be due by the Issuer to the Trustee (including but not limited to any legal or other professional fees and any value added or similar tax thereon and indemnification, security and prefunding obligations of the Issuer to the Trustee);
(c) thirdly, in or towards payment or discharge of a pro rata amount of all Agents Fees due or expected to be due to any or all of the Paying Agent, the Transfer Agent or the Registrar (including but not limited to any legal or other professional fees and any value added or similar tax thereon and indemnification, security and prefunding obligations of the Issuer);
(d) fourthly, in or towards payment or discharge of a pro rata amount of all fees, costs and expenses to be incurred in the winding up of the Issuer, if applicable;
(e) fifthly, in or towards payment or discharge of a pro-rata amount of all Expenses (other than Series Expenses, but including the management fee and performance fee described in the Portfolio Management Agreement) comprising amounts due or expected to be due by the Issuer (including but not limited to any legal or other professional fees and any value added or similar tax thereon and indemnification obligations of the Issuer) in accordance with the Conditions of the relevant Series on a pro rata basis;
(f) sixthly, in or towards the payment or discharge of any Series Expenses (including the management fee and performance fee described in the Portfolio Management Agreement) then due and owing by the Issuer in accordance with the Conditions of the relevant Series on a pro rata basis;
(g) seventhly, in payment of any surplus remaining in or towards the payment of some or all amounts of interest and/or principal due and payable or expected to be due and payable under the relevant Series to the Paying Agent for onward payment as soon as reasonably practicable to the Securityholders or otherwise as directed by the Trustee acting pursuant to a Written Direction; and
(h) lastly, the remainder (if any) to the Issuer.
6. INTEREST
6.1 No fixed amount of interest is payable with respect to the Securities. Interest shall accrue on each Security on a pro-rata basis on the aggregate outstanding principal amount of the Securities until paid or until the Securities are repaid or otherwise discharged in full in accordance with the terms and conditions hereof.
6.2 Subject to Condition Error! Reference source not found. (Enforcement and Limited Recourse), each Security shall accrue and bear interest at a rate per annum for each calendar year, up to (and including) the Maturity Date, as follows:
(i) The interest payable on a specific Combined Series Securities with respect to any Interest Period (the "Combined Series Interest") shall be a pro rata amount equal to one hundred per cent (100%) of the profits of the Issuer for that Interest Period earned on the Combined Series Assets applicable to such Combined Series Securities less all other amounts under the Priority of Payments and any other expenditure of the Issuer which is deductible for tax purposes and attributable to the such Combined Series Securities (excluding for the avoidance of doubt the Combined Series Interest) for that Interest Period and in no case can the interest be less than zero.
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(ii) The interest payable on specific Segregated Series Securities with respect to any Interest Period (the "Segregated Series Interest") shall be a pro rata amount equal to one hundred per cent (100%) of the profits of the Issuer for that Interest Period earned on the Segregated Series Assets applicable to such Segregated Series Securities less all other amounts under the Priority of Payments and any other expenditure of the Issuer which is deductible for tax purposes and attributable to the Segregated Series Securities (excluding for the avoidance of doubt the Segregated Series Interest) for that Interest Period and in no case can the interest be less than zero.
6.3 Such interest shall be payable as set out in the relevant Agency Agreement on each Payment Date if the Issuer or the Portfolio Manager, on its behalf, elects to pay same in accordance with the Priority of Payments and subject to Condition 6.4 below.
6.4 Interest on the Securities shall only become payable by the Issuer to the extent that the Issuer has funds available to make such payment in accordance with the Priority of Payments on the relevant Payment Date. The failure on the part of the Issuer to pay any of the amounts due in respect of the Securities, by reason of the fact that there are insufficient funds available to the Issuer shall not constitute an Event of Default under such Securities.
7. REDEMPTION, PURCHASE AND EXCHANGE
7.1 Final Redemption
Unless previously redeemed or purchased and cancelled as provided below, each Security will be redeemed at its Scheduled Redemption Amount on the Maturity Date. For the avoidance of doubt, a Security shall be deemed fully paid upon payment to the Securityholders of their pro rata portion of the final realisation proceeds of the relevant Series Assets pursuant to the Priority of Payments.
7.2 Voluntary Early Redemption by the Issuer
The Issuer shall be entitled by at least 7 days' notice in writing to the Trustee, the Calculation Agent and the Paying Agent (a "Redemption Notice"), to designate any Business Day as the date on which the Security shall be redeemed in full or in part, in accordance with the terms hereof (the "Early Redemption Date"). The Issuer shall use commercially reasonable endeavours to procure a liquidation of the Combined Series Assets and/or the Segregated Series Assets, as the case may be, acquired through funding received under the applicable Security(s) (or part thereof) that it or its Portfolio Manager deems advisable in such party's sole discretion; provided that any Restricted Asset may be liquidated as provided below. If such liquidation or funding is successful, the Security or Securities shall be redeemed in full or in part at its Redemption Amount on the Early Redemption Date designated in accordance with the Conditions, subject to and in accordance with the Pre-Enforcement Priority of Payments. For the avoidance of doubt, a Security shall be deemed fully paid upon payment to the Securityholder of their pro rata portion of the final realised proceeds of the relevant Series Assets pursuant to the Priority of Payments.
“Restricted Assets” means any asset for which there is, in the Portfolio Manager’s sole and absolute discretion, no readily ascertainable market. Participation in any Restricted Asset investment shall be limited to the Securityholders existing at the time of the Restricted Asset’s acquisition or deemed acquisition.
7.3 Securityholder Early Redemption
Subject to the applicable lock-up period, unless waived by the Issuer, each Securityholder may request an early repayment of part or all of interest and principal payable on each Security by
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delivering written notice to the Issuer. Redemptions shall only be made on June 30th or December 31st of each year unless otherwise agreed to by the Issuer. The applicable lock-up period shall be the first June 30th or December 31st occurring after the 30th month following the date on which the particular investment was made in the relevant Security. For the avoidance of doubt, a Security shall be deemed fully paid upon payment to the Securityholder of their pro rata portion of the final realised proceeds of the relevant Series Assets pursuant to the Priority of Payments.
7.4 Redemption Amount of Securities
The Calculation Agent will, on such date as the Calculation Agent may be required to calculate any Redemption Amount, cause such Redemption Amount to be notified to the Trustee, the Paying Agent and the Registrar and the Transfer Agent and to be notified to the Securityholders in accordance with Condition Error! Reference source not found. (Notices) as soon as possible after its calculation but in no event later than the first Business Day thereafter. The calculation of the Redemption Amount, if required to be calculated, shall (in the absence of manifest error) be final and binding upon all parties.
7.5 Cancellation
All Securities (or the Registered Certificates representing same) which are redeemed in full will, unless otherwise permitted by the Conditions, forthwith be cancelled by the Registrar or Transfer Agent to which the relevant Registered Certificate is surrendered and, accordingly, may not be held, reissued or resold. The relevant Agent shall give all relevant details and forward all cancelled Securities, or Registered Certificates, if it is not the Registrar, to the Registrar.
7.6 Additional Redemption Conditions
Redemptions shall also be subject to the following additional conditions (unless waived by the Portfolio Manager, in its sole and absolute discretion, with respect to any Securityholder):
(a) Redemptions requests must specify which Securities the Securityholder wishes to redeem. The minimum amount of any redemption request by a Securityholder shall be USD1,000,000 (or such other amount as from time to time established by the Issuer).
(b) Requests for redemptions shall be received at least sixty (60) days prior to the desired redemption date unless such period is waived by the Issuer.
(c) The Issuer reserves the right in its sole and absolute discretion to satisfy a redemption requests (A) in cash, (B) in whole or in part by the distribution in-kind of one or more marketable securities or (C) through a combination of cash and such securities. The Issuer is not required to distribute securities in-kind upon a redemption on a pro rata basis. No Securityholder shall have the right to require any distribution on any assets of the Issuer in-kind upon any redemption or otherwise.
(d) Notwithstanding the foregoing and subject to the Issuer’s ability to waive application of this provision to any or all of the Securityholders, a Securityholder shall not be entitled to redeem any portion of its Securities in excess of twenty per cent (20%) of the value of the Issuer’s assets, as determined as at the last Business Day of the calendar year immediately preceding the applicable Redemption Date. In the event that redemptions of multiple Securities will become effective on the same date, the Issuer shall adjust each such permitted redemption amount pro rata in proportion to the aggregate Securities held by redeeming Securityholders so that the aggregate redemptions on any date do not exceed twenty per cent (20%) of the assets of the Issuer as at the last Business Day of the calendar year immediately preceding the applicable Redemption Date.
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(e) Notwithstanding the foregoing, no Securityholder shall be entitled to receive principal or interest on any Security during any period that the determination of value of a material portion of the Issuer’s assets and liabilities cannot reasonably be determined because of the existence of conditions beyond the reasonable control of the Issuer or because such redemption would materially impair the Issuer’s ability to operate in pursuit of its objective.
(f) Payment of any amount shall be made within thirty (30) days of the redemption date (each such date, in this section, a “Payment Date”); provided, however, that if a Securityholder elects to redeem more than ninety per cent (90%) of the value of its Securities (excluding its pro rata share in any Restricted Asset), the Issuer shall pay the Securityholder an amount equal to at least ninety percent (90%) of such Securityholder’s estimated redemption proceeds (excluding its pro rata share in any Restricted Asset and on the basis of unaudited data) within thirty (30) days after the Payment Date. The Issuer shall pay the balance of such Securityholder’s redemption proceeds (excluding its pro rata share in any Restricted Asset and subject to audit adjustments) less any amounts used to pay liabilities, fees or expenses required (as described herein) within thirty (30) days after completion of the audit of the Issuer’s books for the fiscal year in which such Payment Date occurs. The Issuer shall pay interests to each Securityholder on the balance of the redemption proceeds (excluding its pro rata share in any Restricted Asset and less any liabilities, fees or expenses) at a rate per annum equal to the 3-month U.S. Treasury bills for the period beginning on the Payment Date and ending on the date immediately preceding the date of payment.
(g) Notwithstanding the foregoing, a Securityholder may not redeem any portion of a Security that is attributable to a Restricted Asset, unless otherwise determined by the Issuer in its sole and absolute discretion. If a portion of a fully redeeming Securityholder’s principal is attributable to Restricted Assets, then, unless otherwise determined by the Issuer in its sole and absolute discretion, the amount distributed to such Securityholder shall not include any interest in such Restricted Assets. Upon realisation or deemed realisation, the Securityholder’s share of realised amounts shall be paid to a Securityholder who has fully redeemed from the Issuer and such distribution (subject to the Priority of Payments) shall be made within forty-five (45) days of the end of the quarter in which such realisation or deemed realisation occurs.
(h) The right of any Securityholder to redeem is subject to the provisions by the Issuer for reasonable reserves for contingencies and estimated accrued expenses. If a Securityholder redeems from the Issuer while such Securityholder has an interest in a Restricted Asset, the Issuer may establish a reasonable reserve to pay for future expenses attributable to such Restricted Asset.
(i) Subject to the provisions relating to Restricted Assets, the applicable lock-up period shall not apply to any redemption of Securities requested by an ERISA Investor, no later than twenty (20) days following notice to such ERISA Investor that there is a reasonable likelihood that the Issuer will be deemed to be holding “plan assets” for purposes of ERISA. “ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as amended. “ERISA Investor” means any Securityholder that is a “benefit plan investor” within the meaning of Section 3(42) of ERISA. “ERISA Plan” means a U.S. employee benefit plan, Keogh plan or other arrangement subject to ERISA or to Section 4975 of the Code (including any entity whose assets are considered under ERISA or the Code to include the assets of such plan or arrangement), or which is treated by the Issuer as if it were subject to ERISA.
(j) Any redemption pursuant to section (i) above shall become effective as at the end of the first full calendar month after the event giving rise to a special redemption right.
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(k) Unless the Issuer determines to dissolve the Issuer, a Securityholder requesting a redemption pursuant to section (i) above will be paid 90% of the relevant Securities (but excluding such Securityholder’s pro rata share of any Restricted Asset) within thirty (30) days following such withdrawal date. The balance of such Security(s) will be paid (subject to audit holdbacks and with interest and excluding such Securityholder’s pro rata share of any Restricted Asset) within thirty (30) days after completion of the audit of the Issuer’s books for the fiscal year in which such redemption date occurs. Except as provided in the preceding sentence, special redemptions permitted under this section shall not be subject to the gate or suspension provisions.
(l) Notwithstanding the requirements of section (g) above, in the event of a redemption by an ERISA Investor permitted under this section, such ERISA investor shall be paid the fair market value (as determined at the time of redemption) of its share of all Restricted Assets, which such allocation shall be treated as an investment made proportionately by all participating Securityholders.
7.7 Issuer Clean-Up Call
If the Sub-Advisor has its QFII Licence or Investment Quota withdrawn or cancelled by the CSRC or SAFE, then the Issuer may, subject to the consent of the Portfolio Manager (which consent shall not be unreasonably withheld), realise the applicable Series Assets for the purposes of applying the proceeds to redeem the remaining Securities in issue in full at the applicable Redemption Amount on a Redemption Date to be elected at its discretion.
8. PAYMENTS
8.1 The registered owner of a Registered Certificate shall be the only person entitled to receive payments of principal and interest on such Registered Certificate and the Issuer and Paying Agent will be discharged by payment to the registered owner of such Registered Certificate in respect of each amount paid. No person other than the registered owner of the Registered Certificate shall be entitled to payments due by the Issuer on the relevant Security.
8.2 Subject to the provisions of Condition Error! Reference source not found. (Pre-Enforcement Priority of Payments) or Condition Error! Reference source not found. (Post-Enforcement Priority of Payments) and Condition Error! Reference source not found. (Enforcement and Limited Recourse), payment of any amount to a Securityholder in respect of a Security will be made, subject to applicable fiscal or other laws and regulations to the account or address of the Securityholder appearing in the Register PROVIDED THAT the Issuer may in its sole discretion choose to make such payments in whole or in part by way of an in specie transfer of some or all of its assets.
8.3 Non-Business Days
Subject as provided in the Constituting Instrument, if any date for payment in respect of any Security is not a Business Day, the holder shall not be entitled to payment until the next following Business Day nor to any interest or other sum in respect of such postponed payment. In this paragraph, “Business Day” means any day on which the major financial exchanges are open for business in Dublin, London, Hong Kong, Luxembourg and Sydney or such other day as the Issuer may from time to time determine (with notice to the Trustee and the Agents). The Issuer or the Portfolio Manager on its behalf shall confirm in writing to the Trustee and the Agents that any given day constitutes a Business Day for the purposes of any Payment Date as part of the instructions relating to any payments to be made by the Paying Agent on such date or for any other action to be taken by the Agents and/or the Trustee on a Business Day.
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9. EVENTS OF DEFAULT
The holders of Registered Certificates representing at least 75% in principal amount of Securities of any Series or the Trustee at its discretion may (and if so requested by Written Direction from the holders of any Series shall), subject to its being indemnified, secured and/or prefunded to its satisfaction, give notice to the Issuer that the Securities of such Series are, and they shall accordingly immediately become, due and repayable at their Early Redemption Amount, and the proceeds of realisation of the sale of such Combined Series Assets or Segregated Series Assets, as applicable to the relevant Securities, shall be applied as specified in the Priority of Payments, if any of the following events ("Event(s) of Default") occur:
9.1 Insolvency Proceedings
(a) if the Issuer, otherwise than for the purposes of such amalgamation or reconstruction as is referred to in sub-Clause (c) below, ceases or, through an official action of the Directors, threatens to cease to carry on business;
(b) if the Issuer is unable to pay its debts as and when they fall due;
(c) if an order is made or an effective resolution is passed for the winding up of the Issuer except a winding up for the purposes of or pursuant to an amalgamation or reconstruction the terms of which have previously been approved by the Trustee in writing;
(d) if (I) any steps are taken (whether out of court or otherwise) against the Issuer under any applicable liquidation, insolvency, composition, reorganisation or other similar laws (including, but not limited to, application for an administration order or the appointment of an Insolvency Official) and such proceedings are not, in the opinion of the Securityholder, being disputed in good faith with a reasonable prospect of success, or (II) an Insolvency Official is appointed in relation to the Issuer or in relation to the whole or any substantial part of the undertaking or assets of the Issuer, or (III) an encumbrancer takes possession of the whole or any substantial part of the undertaking or assets of the Issuer, or (IV) a distress, execution, attachment, sequestration, diligence or other process is levied or enforced upon or sued out against the whole or any substantial part of the undertaking or assets of the Issuer and such possession or process (as the case may be) is not being discharged or does not otherwise cease to apply within fourteen (14) days, or (V) the Issuer initiates or consents to judicial proceedings relating to itself under applicable liquidation, insolvency, composition, reorganisation, examination or other similar laws or makes a conveyance or assignment for the benefit of its creditors, generally or enters into any composition or other arrangement with, its creditors generally (or any class of its creditors) or any meeting is convened to consider a proposal for an arrangement or composition with its creditors generally (or any class of its creditors);
(e) if any decree, resolution, authorisation, approval, consent, filing, registration or exemption necessary for the execution and delivery of the Security on behalf of the Issuer and the performance of the Issuer's obligations under the Security is withdrawn or modified or otherwise ceases to be in full force and effect, or it is unlawful for the Issuer to comply with, or it contests the validity or enforceability of or repudiates, any of its obligations under the Security or these Conditions; or
(f) any event occurs which under any applicable laws has an analogous effect to any of the events referred to in paragraphs (a), (b), (c), (d) or (e) above
9.2 Illegality
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It is or will become unlawful for the Issuer to perform or comply with any one or more of its material obligations under these Conditions, the Constituting Instrument or the Series Documents.
9.3 Repudiation
The Issuer repudiates these Conditions, the Constituting Instrument or any of the Series Documents or does or causes to be done any act or thing evidencing an intention to repudiate these Conditions, the Constituting Instrument or any of the Series Documents.
9.4 Moratorium
Any governmental authority or agency condemns, seizes, compulsorily purchases or expropriates all or any material part of the assets of the Issuer.
9.5 Removal of the Portfolio Manager or Termination of the Portfolio Management Agreement
If the Portfolio Manager is removed, or the Portfolio Management Agreement, is terminated in each case in accordance with the provisions of the Portfolio Management Agreement.
9.6 Acceleration
If an Event of Default occurs and is continuing the Trustee may, and shall, following receipt of a Written Direction (and subject to being indemnified and/or secured and/or prefunded to its satisfaction against all liabilities, proceedings, claims and demands to which it may thereby become liable and all costs, charges, and expenses which may be incurred by it in connection therewith), give an Enforcement Notice to the Issuer that all the amounts outstanding in respect of all Securities of a Series are immediately due and payable. For the avoidance of doubt, all such amounts becoming due and payable shall be deemed fully paid upon payment to the relevant Securityholders of their respective pro rata shares of the realisation proceeds of the Combined Series Assets or Series Assets, as applicable. Upon an Enforcement Notice being given to the Issuer, all amounts outstanding under all such Securities shall immediately become due and payable. No acceleration of any Securities shall be permitted by any person other than the Trustee acting in accordance with a Written Direction.
9.7 The occurrence of an Event of Default under any Combined Series will not constitute an Event of Default in respect of any other Combined Series or any Segregated Series and the occurrence of an Event of Default in respect of any Segregated Series will not constitute an Event of Default in respect of any other Segregated Series or any Combined Series.
9.8 The provisions of the Master Trust Terms are expressed to apply separately to each Series.
10. ENFORCEMENT AND LIMITED RECOURSE
10.1 Non Petition
Notwithstanding any other provision of these Conditions or any other Series Document, the Trustee and/or any party shall not (and no person acting on its or their behalf shall) initiate or join any person in initiating any Insolvency Proceedings in relation to the Issuer (save for lodging a claim in the liquidation of the Issuer initiated by another person or taking proceedings to obtain a declaration or judgment as to the obligations of the Issuer) and, until the date falling at least two (2) years and a day after the Maturity Date:
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(a) no party (other than the Trustee) shall have the right to take or join any person in taking any steps against the Issuer for the purpose of obtaining payment of any amount due from the Issuer to a Securityholder; and
(b) no party shall be entitled to take any steps or proceedings which would result in the Priority of Payments not being observed,
provided that nothing in this Condition prohibits the Trustee from submitting a claim in respect of or proving in any Insolvency Proceedings instituted by any other party.
10.2 Permitted Steps
Only the Trustee may pursue the remedies available under the Constituting Instrument, the relevant Trust Deed applicable to the Series, the Master Trust Terms and the Conditions to enforce the rights of the Securityholders in the order of priority specified in the Constituting Instrument. The holders of any Security of any Series shall not be entitled to proceed directly against the Issuer or any assets of the Issuer unless the Trustee, having become bound to proceed in accordance with the terms of the relevant Trust Deed or the Conditions as completed, amended, supplemented or varied by the Constituting Instrument fails or neglects to do so within a reasonable period and such failure or neglect is continuing.
Condition 10.1 (Non-Petition) shall not prevent the Trustee or the holders of any Security of any Series (where applicable) from pursuing any remedies available under the Constituting Instrument, the relevant Trust Deed applicable to the Series and the Conditions to enforce the rights of the Securityholders so long as such steps do not amount to the initiation or the threat of initiation of an Insolvency Proceeding.
10.3 Limited Recourse
(a) Notwithstanding any other provision of any Master Document or Series Document, all obligations of the Issuer to the Securityholders are limited in recourse as set out below (for the avoidance of doubt, a Security shall be deemed fully paid upon payment to the Securityholders of their pro rata portion of the final realised proceeds of the relevant Series Assets pursuant to the Priority of Payments;
(b) In respect of any Combined Series Securities, the Trustee and the holders of such Combined Series Securities shall have recourse only to the corresponding Combined Series Assets for satisfaction and discharge of the Issuer’s obligations and liabilities arising under or in connection with that Combined Series Security(s) and, the Trustee or the holders of such Combined Series Securities having realised the same and distributed the net proceeds in accordance with Condition Error! Reference source not found. (Pre-Enforcement Priority of Payments) or Condition Error! Reference source not found. (Post-Enforcement Priority of Payments), as applicable, shall not be entitled to take any further steps against the Issuer to recover any further sum (save for lodging a claim in the liquidation of the Issuer initiated by another party or taking proceedings to obtain a declaration or judgment as to the obligations of the Issuer) and the right to receive any such sum shall be extinguished. In particular, none of the Trustee or the holders of such Combined Series Securities shall be entitled to petition or take any other step for the winding-up of, or take any steps to institute insolvency proceedings in relation to, the Issuer, nor shall any of them have any claim to, or in respect of any sum arising in respect of any other Combined Series Assets or any Segregated Series Assets;
(c) In respect of any Segregated Series, the Trustee and the holders of Segregated Series Securities shall have recourse only to the corresponding Segregated Series Assets for satisfaction and discharge of the Issuer’s obligations and liabilities arising under or in connection with the relevant Segregated Series Securities and, the Trustee or the holders
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of such Segregated Series Securities having realised the same and distributed the net proceeds in accordance with Condition Error! Reference source not found. (Pre- Enforcement Priority of Payments) or Condition Error! Reference source not found. (Post-Enforcement Priority of Payments) shall not be entitled to take any further steps against the Issuer to recover any further sum (save for lodging a claim in the liquidation of the Issuer initiated by another party or taking proceedings to obtain a declaration or judgment as to the obligations of the Issuer) and the right to receive any such sum shall be extinguished. In particular, none of the Trustee or the holders of Segregated Series Securities shall be entitled to petition or take any other step for the winding-up of, or take any steps to institute insolvency proceedings in relation to, the Issuer, nor shall any of them have any claim to, or in respect of any sum arising in respect of Combined Series Assets or any other Segregated Series Assets;
(d) Sums payable to each Securityholder in respect of the Issuer’s obligations to that Securityholder shall be limited to the lesser of (i) the aggregate amount of all sums due and payable to the Securityholder and (ii) the aggregate amounts received, realised or otherwise recovered by or for the account of the Issuer in respect of the relevant Series Assets, net of any sums which are payable by the Issuer in accordance with the applicable Priority of Payments in priority to or pari passu with sums payable to such party; and
(e) On the Maturity Date or if following final distribution of the relevant Series Assets, the Trustee (or an agent on its behalf) certifies, in its sole discretion, that the Issuer has insufficient funds to pay in full all of the Issuer’s obligations to the Securityholders, then the Securityholders shall have no further claim against the Issuer in respect of any such unpaid amounts and such unpaid amounts shall be deemed discharged in full and extinguished.
10.4 No Recourse Against Shareholders and Others
Each Securityholder shall not have any recourse against any shareholder, member, equity holder, officer, employee or director of a party in his capacity as such, by any proceedings or otherwise, in respect of any obligation, covenant, or agreement of a party (acting in any capacity whatsoever) contained in the Conditions, the Securities or any other Series Document.
10.5 Corporate Obligations
It is expressly agreed and understood that the Securities are a corporate obligation of the Issuer.
10.6 No Personal Liability
No personal liability shall attach to or be incurred by any shareholder, member, equity holder, officer, employee or director of the Issuer in his capacity as such, under or by reason of any of the obligations, covenants or agreements of such party contained in these Conditions or the Securities or implied from these Conditions or the Securities and any and all personal liability of every such shareholder, member, equity holder, officer, employee or director for breaches by such party of any such obligations, covenants or agreements, either at law or by statute or constitution, is hereby expressly waived by each Securityholder as a condition of and consideration for the execution of the relevant Security.
10.7 Survival of This Condition
The terms of this Condition Error! Reference source not found. (Enforcement and Limited Recourse) shall survive any cancellation or redemption of the Securities.
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11. PRESCRIPTION
Claims against the Issuer for payment in respect of the Securities, shall be prescribed and become void unless made within 10 years (in the case of principal) or five years (in the case of interest) from the relevant due date for payment.
12. REPLACEMENT OF SECURITIES
If any Registered Certificate is lost, stolen, mutilated, defaced or destroyed it may be replaced, subject to all applicable laws and stock exchange requirements, at the specified office of the Registrar or any Transfer Agent, upon payment by the claimant of the out-of-pocket expenses incurred in connection with such replacement and on such terms as to evidence, security, indemnity and otherwise as the Issuer may require (provided that the requirement is reasonable in light of market practice). Mutilated or defaced Securities, must be surrendered before replacements will be issued.
13. WRITTEN DIRECTIONS, MODIFICATIONS, WAIVER AND SUBSTITUTION
13.1 Any instructions, consent, approval or agreement of the Securityholders shall be valid if set out in a Written Direction.
13.2 Except as otherwise provided, the Trustee, subject to being indemnified, secured and/or prefunded to its satisfaction against all Liabilities to which it may become liable or which it may incur shall act solely in accordance with any instructions pursuant to a Written Direction and shall assume that (i) any instructions received by it pursuant to a Written Direction are duly given by or on behalf of all the Securityholders, and (ii) unless it has received actual written notice of revocation, that any instructions or directions given pursuant to a Written Direction have not been revoked and no revocation of any such instructions by the Securityholders shall affect any action taken by the Trustee in reliance upon such instruction or direction prior to actual receipt of the notice of revocation.
13.3 The Trustee shall, acting in good faith, rely conclusively upon any instructions given pursuant to a Written Direction without making any further enquires or incurring any liability for so doing. In no circumstances shall the Trustee be obliged to verify the contents or authenticity of any instruction received pursuant to a Written Direction.
13.4 The Trustee shall not be responsible for any Liability that may result from it acting or refraining from acting, in good faith, pursuant to a Written Direction.
13.5 The Trustee shall be entitled to request clarification of any instruction or direction received by it pursuant to a Written Direction as to whether, and in what manner, it should exercise or refrain from exercising any rights, powers and discretions and the Trustee shall refrain from acting unless and until those instructions or clarifications are received by it in a form satisfactory to it and shall have no liability for the consequences thereof.
13.6 The Trustee shall not be obliged to take any action or proceedings or refrain from taking any action or proceedings under or in relation to any Securities, Master Documents or Series Documents unless it has received a request or instruction pursuant to a Written Direction and has firstly been indemnified, secured and/or prefunded to its satisfaction and the Trustee shall not be responsible for any delay or failure to take any such action or proceedings if the Trustee has not received such request or instruction and has firstly been indemnified, secured and/or prefunded to its satisfaction.
13.7 Without prejudice to anything contained in the Trust Deed, the Trustee is entitled at all times to act without having been instructed pursuant to a Written Direction in relation to matters for the
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purpose of enabling the Trustee to protect its own position and interests in its personal capacity (including its own personal financial interest) or which the Trustee determines to be necessary or appropriate to exercise for the protection of its position and interests in its personal capacity.
13.8 The Trustee shall be entitled to agree to any amendment, modification, substitution or waiver of the terms of any Master Document without the consent of any Securityholder if, in the sole opinion of the Trustee, the proposed amendment, modification, substitution or waiver either (i) is of a formal, minor or technical nature, or (ii) would not result in any material prejudice to the interests of the Securityholders. For the avoidance of doubt, the Trustee shall not, without the consent in writing of the holders of 75% in aggregate outstanding principal amount of the Securities, release any party to any Master Document from its obligations thereunder or agree to any amendment, modification, substitution or waiver of the terms any Master Document not falling within (i) or (ii) in the preceding sentence. The Trustee may conclusively rely on any confirmation/certification provided by the Issuer or the Portfolio Manager and advice from its external legal, financial and other advisors in this regard. In the event that it incurs any costs or expenses in relation to any proposed amendment, modification substitution or waiver these will be reimbursed or paid to it by the Issuer on demand.
13.9 The Trustee shall, if so instructed pursuant to a Written Direction, concur with the Issuer and any other relevant parties in making any other modification and any waiver or authorisation of any breach or proposed breach of any of the provisions of the Master Documents. Any such modification, authorisation or waiver shall be binding on the relevant Securityholders and, unless the Trustee agrees otherwise, such modification shall be notified to the relevant Securityholders of that Series in accordance with Condition Error! Reference source not found. (Notices) and Euronext Dublin (for so long as the Securities are admitted to trading thereon and Euronext Dublin so requires) as soon as practicable thereafter in accordance with the Conditions by the Issuer. Any such modification, authorisation or waiver shall be binding on the Securityholders of that Series and, unless the Trustee agrees otherwise with the Issuer. In the event that it incurs any costs or expenses in relation to such modification, waiver or authorisation, these will be reimbursed or paid to it by the Issuer on demand.
13.10 Entitlement of the Trustee
In connection with the exercise of its powers, trusts, authorities or discretions (including but not limited to those in relation to any proposed modification, waiver, authorisation or substitution as aforesaid) the Trustee shall not have regard to the consequences of such exercise for individual Securityholders (whatever their number) or of holders of any other notes or bonds, resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory and the Trustee shall not be entitled to require, nor shall any Securityholder be entitled to claim, from the Issuer any indemnification or payment in respect of any tax consequence of any such exercise upon individual Securityholders.
13.11 The Trustee need not notify anyone of the execution of the Constituting Instrument constituting the Trust Deed or do anything to establish if an Event of Default or potential Event of Default has occurred in relation to any Series or if the issuer or obligor of any Series Assets or any party to any agreement comprised in the Series Assets are performing their respective obligations. Until it has actual knowledge or express notice to the contrary, the Trustee may assume that no such event has occurred and that the Issuer is performing all its obligations under the Master Documents and Series Documents and the Securities and that the issuer and obligor of all Series Assets and each party to each agreement comprised therein are performing their respective obligations.
13.12 Expenditure by the Trustee
Nothing contained in these Conditions, Series Documents and/or Master Documents shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the
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performance of its duties or the exercise of any right, power, authority or discretion hereunder if it has grounds for believing the repayment of such funds or adequate indemnity against, or security for, such risk or liability is not reasonably assured to it.
13.13 No Consequential Loss
Notwithstanding any provision in these Conditions, the Master Trust Terms, the other Master Documents, the Constituting Instrument and/or the Series Documents, the Trustee shall not be liable to any other party (on the basis of breach of contract, indemnity, warranty or tort, including negligence and strict or absolute liability, or breach of statutory duty or otherwise) for any matter arising out of or in connection with any Trust Deed in respect of any Consequential Loss suffered by such other party, where “Consequential Loss” means in relation to a breach of the relevant Trust Deed(s) or a claim under an indemnity contained in the relevant Trust Deed(s), any indirect or consequential loss (including, but not limited to, loss of production, loss of profit, loss of revenue, loss of contract, loss of goodwill, liability under other agreements or liability to third parties) resulting from such breach or action which has led to a claim under an indemnity (the “Action”), whether or not the party committing the breach or Action knew (or ought to have known) that such indirect or consequential loss would be likely to be suffered as a result of such breach or Action.
13.14 Determination of Matters
As between itself and the Securityholders, the Trustee may determine all questions and doubts arising in relation to any of the provisions of these Conditions and any other Master Document or Series Document. Such determinations, whether made upon such a question actually raised or implied in the acts or proceedings of the Trustee, shall be conclusive and shall, in the absence of manifest error, bind the Trustee, the Securityholders.
13.15 lllegality and Expenditure of Trustee Funds
No provision of these Conditions or any Master Document, Series Document or Written Direction shall require the Trustee to do anything which may:
(i) be illegal or contrary to applicable law or regulation; or
(ii) cause it to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or the liability is not assured to it.
13.16 Provision of Consent
Any consent or approval given by the Trustee for the purposes of these Conditions or any other Master Document or Series Document may be given on such terms and subject to such conditions (if any) as the Trustee thinks fit.
13.17 The Trustee may (but is not obliged to), subject to the terms and conditions of the Master Trust Terms and in a manner consistent with the Master Documents, carry out what in its discretion it considers to be administrative acts, or acts which are incidental to any Written Direction, without any instructions (though not contrary to any such instruction), but so that no such instruction shall have any effect in relation to any administrative or incidental act performed prior to actual receipt of such Written Direction by the Trustee.
13.18 Without prejudice to anything contained in the Master Trust Terms, the Trustee is entitled at all times to act without having been instructed pursuant to a Written Direction in relation to matters
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for the purpose of enabling the Trustee to protect its own position and interests in its personal capacity (including its own personal financial interest) or which the Trustee determines to be necessary or appropriate to exercise for the protection of its position and interests in its personal capacity
14. NOTICES
14.1 Notices to Securityholders will be posted to them at their respective addresses in the Register and deemed to have been given on the seventh day after the date of posting. For so long as any Securities are listed on Euronext Dublin, notices to holders of listed Securities shall also be published on the Companies Announcement Office of Euronext Dublin or as otherwise of published so required by the guidelines of that stock exchange. Any such notice shall be deemed to have been given on the date of such publication.
15. INDEMNIFICATION OF THE TRUSTEE
15.1 The Master Trust Terms contain provisions for indemnification of the Trustee and for its relief from responsibility for the validity, sufficiency and enforceability (which the Trustee has not investigated) of the Master Documents and the Series Documents including provisions relieving it from taking proceedings to enforce repayment or from taking any action in accordance with the Constituting Instrument without being first indemnified, secured and/or prefunded to its satisfaction. The Trustee is entitled to enter into business transactions with the Issuer, any issuer or guarantor of or other obligor or any of their respective subsidiaries or associated companies in respect of the assets, rights and/or benefits comprising the relevant Series Assets without accounting to the holders of Securities, for any profit resulting therefrom.
15.2 The Master Trust Terms provide that the Trustee is exempted from any liability in respect of any loss, diminution in value or theft of all or any part of each relevant Series Assets from any obligation to insure all or any part of each relevant Series Assets (including, in either such case, any documents evidencing, constituting or representing the same or transferring any rights, benefits and/or obligations there under) or to procure the same to be insured.
15.3 Unless otherwise specifically stated in any discharge of the trusts created by or pursuant to the Constituting Instrument in respect of any Combined Series Securities or any Segregated Series Securities, as applicable, the provisions of this Condition Error! Reference source not found. (Indemnification of the Trustee) shall continue in full force and affect despite such discharge.
16. FURTHER ISSUES
16.1 Combined Issuances
The Issuer shall be at liberty from time to time without the consent of the Securityholders of any Combined Series to create and issue additional further Securities ("Further Securities") which shall be consolidated and form a single Series with the Securities of any existing Combined Series Securities (an "Existing Series") provided that:
(a) the Further Securities together with the Securities of the Existing Series are backed by the Combined Series Assets;
(b) the Conditions of the Further Securities as regards payment of interest and principal are identical to the Conditions of the Securities of such Existing Series except in respect of the any amount of interest or principal already paid or payable in respect thereof;
(c) the Further Securities are constituted by a constituting instrument supplemental to the Constituting Instrument in respect of the Securities of such Existing Series (the "Further
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Constituting Instrument"), and so that, upon the execution of the Further Constituting Instrument, all references to the "Constituting Instrument", shall be construed as being to such document as amended and supplemented by the Further Constituting Instrument;
(d) the holders of the Existing Series shall be notified as soon as practicable by the Issuer or its agents of the issuance of Further Securities forming part of the same Series;
(e) the total principal amount of the Securities of the Combined Series shall be limited to the amount specified in the designated title of the Combined Series, as amended; and
(f) the Securities may be issued to such persons and on such terms and conditions and at such time or times as the Issuer shall determine, subject to the provisions of the relevant Constituting Instrument, and the Trustee shall not be responsible for the receipt or application of the proceeds of issue thereof by the Issuer.
Upon any issue of Further Securities all reference in these Conditions, the Master Documents and the applicable Series Documents to Combined Series Securities shall be deemed (where the context permits) to include the relevant Further Securities.
16.2 Segregated Series
The Issuer shall be at liberty from time to time without the consent of the then existing holders of any Series to create further ring-fenced Series that shall be designated as Segregated Series on the conditions applicable thereto and shall be backed by its own Segregated Series Assets.
16.3 Programme Limit
The aggregate principal amount of all Combined Series Securities and Segregated Series Securities issued by the Issuer which are outstanding at any one time shall not exceed the Programme Limit.
17. TAXATION
All payments in respect of the Securities, will be made without withholding or deduction for, or on account of, any present or future taxes, duties or charges of whatsoever nature unless the Issuer or Paying Agent is required by applicable law to make any such payment in respect of the Securities subject to any withholding or deduction for, or on account of, any present or future taxes, duties or charges of whatsoever nature. In that event, the Issuer or such Paying Agent (as the case may be) shall make such payment after such withholding or deduction has been made and shall account to the relevant authorities for the amount so required to be withheld or deducted. Neither the Issuer nor the Paying Agent will be obliged to make any additional payments to the Securityholders, in respect of such withholding or deduction.
18. PROVISIONS RELATING TO MEETINGS OF THE SECURITYHOLDERS
18.1 Provisions relating to meetings of the Securityholders shall be determined in accordance with the provisions of the Trust Deed relating to the applicable Series.
19. US TAX MATTERS
(a) The Issuer shall treat the Securities issued by the Issuer from time to time as equity of the Issuer for United States federal income tax purposes.
(b) The Issuer shall take the position that it is a partnership for United States federal income tax purposes and shall take such actions as are necessary to be so treated including,
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without limitation, filing any returns, elections or statements with the applicable United States tax authorities.
(c) The General Partner or its designee will be the “partnership representative” of the Issuer within the meaning of Section 6223 of the Code (the “Partnership Representative”). With respect to any period in which any non-individual is the Partnership Representative, the General Partner shall cause the Issuer to appoint an individual eligible to be a “designated individual” under the Audit Rules (the “Designated Individual”) through whom the Partnership Representative will act for all purposes of the Audit Rules. The General Partner is hereby authorized to take any actions necessary under the Audit Rules or other guidance to designate the Partnership Representative and appoint the Designated Individual with respect to each taxable year of the Issuer (and the Partnership Representative and the Designated Individual are authorized to take any actions specified under the Audit Rules or any applicable state statute or local law), and the Issuer shall comply with any requirements necessary to effect such designations and appointments.
1) The Partnership Representative and the Designated Individual (collectively, the “Tax Representative”), along with the General Partner, shall use their commercially reasonable efforts to minimize the likelihood that any Securityholder would bear any material tax, interest or penalties as a result of any audit or proceeding that is attributable to another Securityholder (other than a predecessor in interest). In furtherance thereof, the General Partner and Tax Representative are hereby authorized to take any action required to cause the financial burden of any “imputed underpayment” (as determined under Section 6225 of the Code) and associated interest, adjustments to tax and penalties arising from a partnership-level adjustment that are imposed on the Issuer (an “Imputed Underpayment”) to be borne by the Securityholders to whom such Imputed Underpayment relates as determined by the Tax Representative after consulting with the Issuer’s accountants or other advisers, taking into account any differences in the amount of taxes attributable to each Securityholder because of such Securityholder’s status, nationality or other characteristics. By executing this Agreement or a counterpart hereof, each Securityholder (A) expressly authorizes the Tax Representative and the Issuer to take any and all action that is reasonably necessary under applicable federal income tax law (as such law may be revised from time to time) to cause the Issuer to make the election set forth in Section 6226(a) of the Code if the Tax Representative decides to make such election, and (B) expressly agrees to take any action, and furnish the Tax Representative with any information necessary, to give effect to such election. Each Securityholder hereby severally indemnifies and holds the Issuer, the General Partner and the Tax Representative harmless for such Securityholder’s respective portion of the financial burden of an Imputed Underpayment and in furtherance thereof, each Securityholder agrees (i) to pay such amount to the Issuer within fifteen (15) days following the General Partner’s request for payment (and any failure to pay such amount shall result in interest on such amount calculated at the prime rate plus two percent (2%)) and (ii) that any amounts otherwise distributable to such Securityholder may be applied in satisfaction of such obligations. Except with the express written consent of the General Partner, each Securityholder shall be jointly and severally liable with their predecessors in interest, if any, for amounts owed hereunder in respect of any predecessor in interest to such Securityholder. Each Securityholder shall file all tax returns with respect to such Issuer's distributive share of any Issuer-related item in a manner consistent with the Issuer's tax treatment of such item, and no Securityholder shall (i) file a notice with the IRS under Section 6222(c)(1)(B) of the Code in connection with such Securityholder’s intention to treat an item on such Securityholder’s Federal income tax return in a manner that is inconsistent with the treatment of such item on the Issuer’s Federal income tax return, (ii) file a request for administrative adjustment of Issuer items, (iii) file a
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petition with respect to any Issuer item or other tax matters involving the Issuer or (iv) enter into a settlement agreement with any taxing authority with respect to any Issuer items, unless such Securityholder has, not less than thirty (30) days prior to the taking of such action, provided the Issuer with a copy of the filing or agreement, obtained the advanced written consent of the tax representative and thereafter in a timely manner provides such other information related thereto as the Tax Representative shall reasonably request.
2) The Tax Representative shall employ experienced tax counsel to represent the Issuer in connection with any audit or investigation of the Issuer by the IRS and in connection with all subsequent administrative and judicial proceedings arising out of such audit. The fees and expenses of such, and all expenses incurred by the Tax Representative in serving as such, shall be the Issuer expenses and shall be paid by the Issuer. Notwithstanding the foregoing, it shall be the responsibility of the General Partner and of each Securityholder, at their expense, to employ tax counsel to represent their respective separate interests.
3) If the Tax Representative incurs fees and expenses in connection with tax matters not affecting each of the Securityholders, then the Tax Representative may, in its reasonable discretion, seek reimbursement from or charge such fees and expenses to those Securityholders on whose behalf such fees and expenses were incurred.
4) The Securityholders hereby acknowledge and agree that, in light of the enactment of the Audit Rules, amendments may be required or advisable to this Agreement in order to (i) address the Audit Rules and any regulations and other administrative pronouncements of the IRS interpreting and applying the Audit Rules and (ii) ensure that, in the event of a tax audit of the Issuer, the Securityholders of the Issuer during the Issuer’s tax year being audited (which may include former Securityholders) bear the economic burden and benefit of any adjustments to the Issuer-related items for such tax year being audited and the cost of contesting the Issuer adjustments, and the Portfolio Manager shall have the authority to effect any such amendments it reasonably deems to be necessary or advisable.
(d) Notwithstanding any other provision of these Conditions, each item of income, gain, loss, deduction or credit of the Issuer (in each case as determined for U.S. federal income tax purposes (e.g., if such treatment differs from the treatment of such items otherwise provided for in these articles)) shall be allocated for U.S. federal income tax purposes among the persons treated as equity owners of the Issuer for U.S. federal, state and local income tax purposes (including, without limitation, the members and the holders of Securities) with respect to each relevant accounting period in a manner that tracks as closely as possible the economic entitlement of the members, holders of Securities and any other persons treated as equity owners of the Issuer for U.S. federal income tax purposes to participate in operating and liquidating distributions pursuant the articles of Association of the Issuer, these Conditions and any other documents governing the terms of such operating and liquidating distributions, provided that the Issuer (acting through its directors) may adjust such allocations as may be necessary or desirable to ensure that such allocations are in accordance with the “partners’ interest in the partnership,” in each case within the meaning of the Code and U.S. Treasury Regulations promulgated thereunder (the “Regulations”), and shall otherwise ensure that such allocations are in compliance with the requirements of Section 704 of the Code. All matters concerning allocations for U.S. federal, state and local income tax purposes (including accounting procedures) not expressly provided for by the terms of these articles shall be determined in good faith by the directors in a manner intended to satisfy the requirements of the Code, Regulations and applicable provisions of U.S. state or local tax law.
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(e) Within 120 days after the end of each taxable year of the Issuer or as soon thereafter as is reasonably possible, the Issuer shall upon the reasonable request and at the cost of any member or Securityholder furnish, or cause to be furnished, to each such person that is a tax resident of the United States (or has otherwise agreed with the directors) any information in their possession as is reasonably necessary in order for such person to prepare a U.S. Internal Revenue Service Schedule K-1 or the equivalent thereof for such taxable year with respect to the Issuer.
(f) Notwithstanding any other provision of these Conditions, the Articles of Association of the Issuer and any other documents governing the transfer of shares, Securities or any other equity interest in the Issuer, the Issuer shall not approve any transfer of shares, Securities or other equity interests in the Issuer if such transfer would constitute a transaction effected through an “established securities market” within the meaning of the Regulations promulgated under Section 7704 of the Code or otherwise would cause the Issuer to be a “publicly traded partnership” within the meaning of Section 7704 of the Code.
(g) Each Securityholder agrees to provide to the Issuer on a timely basis (i) any information that the Issuer may reasonably request in order for the Issuer to comply with its obligations under, and avoid becoming subject to, withholding pursuant to, FATCA or any similar legislation in any other jurisdiction; or (ii) any other information required for the Issuer to comply with its obligations in connection with taxation or to answer any inquiries from any tax authority. Each Securityholder further agrees to indemnify the Issuer, its directors and member and any of their affiliates against the amount of any costs incurred by the Issuer (including, without limitation, the withholding of any tax on payments to the Issuer pursuant to FATCA) as a result of such party’s failure to timely comply with any of the above requirements. For purposes of this Condition, "FATCA" means the Foreign Account Tax Compliance provisions of the Hiring Incentives to Restore Employment Act, as enacted in Sections 1471-1474 of the Code, any rules, regulations or other guidance issued thereunder, and any information exchange agreement, treaty or other agreement between the United States and one or more other governmental authorities that is entered into in order to facilitate compliance with, or otherwise relates to, any of the preceding including, in particular, the intergovernmental agreement between Ireland and the United States of America (the "U.S. – Ireland IGA") and the Irish regulations made thereunder.
(h) Each Securityholder agrees or is deemed to agree that the Issuer and any other relevant party to the Transaction Documents may (i) provide information or documentation collected from an investor and any other information concerning any investments in the Securities to the IRS and any other relevant tax authority; and (ii) take such other steps as they may deem necessary or helpful to comply with FATCA, including withholding on "passthru payments" (as defined in the Code). The Issuer shall be permitted to withhold or deduct any amounts required by the rules of Sections 1471 through 1474 (or any amended or successor provisions), pursuant to the U.S. – Ireland IGA and the Irish regulations made thereunder or other inter-governmental agreement, or implementing legislation adopted by another jurisdiction in connection with these provisions, or pursuant to any agreement with the US Internal Revenue Service ("FATCA Withholding"). The Issuer will have no obligation to pay additional amounts or otherwise indemnify a Securityholder for any FATCA withholding deducted or withheld by the Issuer or any other party as a result of any person (other than an agent of the Issuer) not being entitled to receive payments free of FATCA withholding.
(i) Notwithstanding any other provision of the Master Documents, the Paying Agent shall be entitled to make a deduction or withholding from any payment which it makes under the Master Documents, a Constituting Instrument and/or Series Document for or on account of any present or future taxes, duties or charges if and to the extent so required by any
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applicable law and any current or future regulations or agreements thereunder or official interpretations thereof or any law implementing an intergovernmental approach thereto or by virtue of the relevant holder failing to satisfy any certification or other requirements in respect of the Securities (the "Applicable Law"), in which event the Paying Agent shall make such payment after such withholding or deduction has been made and shall account to the relevant authorities for the amount so withheld or deducted.
(j) The provisions of Condition 19(a)-(j) (inclusive) of these Conditions are intended to be included in, and to form a part of, the “partnership agreement” of the “partnership” for purposes of Section 704 of the Code and the U.S. Treasury Regulations promulgated thereunder.
20. GOVERNING LAW AND SUBMISSION TO JURISDICTION
The Master Trust Terms, the relevant Constituting Instrument, the Master Agency Terms, the Securities and all other documents to which, by execution of the Constituting Instrument, the Issuer becomes a party in respect of a Series, and all non-contractual obligations arising out of or in connection with such documents (other than the Portfolio Management Agreement), are governed by and shall be construed in accordance with the laws of Ireland. The Issuer has submitted to the jurisdiction of the courts of Ireland for all purposes in connection with the Securities, the Constituting Instrument, the Master Trust Terms and the Master Agency Terms.
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Annex A
Additional Funding Request
To: [Securityholder] cc. [Portfolio Manager, Calculation Agent and Registrar]
Date: [●]
Re: Advance under the USD[●] Series No. [●] Securities issued under the USD10,000,000,000 HCM QFII Investments DAC Unsecured Securities Programme (the "Securities")
Dear Sirs
We hereby request an Advance under the Securities in the amount of USD[●] for the purposes of [acquiring further interests in the Series Assets].
Please confirm to us that you have made arrangements to fund the Advance by [insert the cut off for notification – notice to be at least seven (7) Business Days unless waived / shorter period consented to by the relevant Securityholder].
If accepted, monies should be paid directly to the following account by 1pm Dublin time on [date]:
[Account Details]
Upon receipt of the Advance, the Registrar shall amend the Register and the Securities accordingly to increase the paid up amount of the Securities.
Yours faithfully
______For and on behalf of HCM QFII INVESTMENTS DAC
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OVERVIEW OF REPAYMENT OF INTEREST AND REDEMPTIONS
Final Redemption
Unless previously redeemed or purchased and cancelled as provided below, each Security will be redeemed at its Scheduled Redemption Amount on the Maturity Date. For the avoidance of doubt, a Security shall be deemed fully paid upon payment to the Securityholder of their pro rata portion of the Combined Series Assets or Series Assets, as applicable, and pursuant to the Priority of Payments.
Voluntary Early Redemption by the Issuer
The Issuer shall be entitled by at least seven (7) days' notice in writing to the Trustee, the Calculation Agent and the Paying Agent (a "Redemption Notice"), to designate any Business Day as the date on which the Security shall be redeemed in full or in part, in accordance with the terms hereof (the "Early Redemption Date"). The Issuer shall use commercially reasonable endeavours to procure a liquidation of the Combined Series Assets and/or the Segregated Series Assets, as the case may be, acquired through funding received under the applicable Security(s) (or part thereof) that it or its Portfolio Manager deems advisable in such party's sole discretion; provided that any Restricted Asset may be liquidated as provided below. If such liquidation or funding is successful, the Security or Securities shall be redeemed in full or in part at its Redemption Amount on the Early Redemption Date designated in accordance with the Conditions, subject to and in accordance with the Pre-Enforcement Priority of Payments. For the avoidance of doubt, a Security shall be deemed fully paid upon payment to the Securityholder of their pro rata portion of the Combined Series Assets or Series Assets, as applicable, and pursuant to the Priority of Payments.
Issuer Clean-Up Call
If the Sub-Advisor has its QFII Licence or Investment Quota withdrawn or cancelled by the CSRC or SAFE, then the Issuer may, subject to the consent of the Portfolio Manager (which consent shall not be unreasonably withheld), realise the applicable Series Assets for the purposes of applying the proceeds to redeem the remaining Securities in issue in full at the applicable Redemption Amount on a Redemption Date to be elected at its discretion.
Securityholder Early Redemption
Subject to the applicable lock-up period, unless waived by the Issuer, each Securityholder may request an early repayment of part or all of interest and principal payable on each Security by delivering written notice to the Issuer. Redemptions shall only be made on June 30th or December 31st of each year unless otherwise agreed to by the Issuer. The applicable lock-up period shall be the first June 30th or December 31st occurring after the 30th month following the date on which the particular investment was made in the relevant Security. For the avoidance of doubt, a Security shall be deemed fully paid upon payment to the Securityholder of their pro rata portion of the Combined Series Assets or Series Assets, as applicable, and pursuant to the Priority of Payments.
Redemption Amount of Securities
The Calculation Agent will, on such date it may be required to calculate any Redemption Amount, cause such Redemption Amount to be notified to the Trustee, the Paying Agent, the Registrar and the Transfer Agent and to be notified to the Securityholders in accordance with Condition Error! Reference source not found. (Notices) of the Master Conditions as soon as possible after its calculation but in no event later than the first Business Day thereafter. The calculation of the Redemption Amount, if required to be calculated, shall (in the absence of manifest error) be final and binding upon all parties. Because the Redemption Amount is determined pursuant to the Priority of Payments, the Redemption Amount may be equal to, greater or lesser than, the principal amount due on the Security.
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Additional Redemption Conditions
Redemptions shall also be subject to the following additional conditions:
1. Redemptions requests must specify which Securities it wishes to redeem. The minimum amount of any redemption request by a Securityholder shall be USD1,000,000 (or such other amount as from time to time established by the Issuer).
2. Requests for redemptions shall be received at least sixty (60) days prior to the desired redemption date unless such period is waived by the Issuer.
3. The Issuer reserves the right in its sole and absolute discretion to satisfy a redemption requests (A) in cash, (B) in whole or in part by the distribution in-kind of one or more marketable securities or (C) through a combination of cash and such securities. The Issuer is not required to distribute securities in-kind upon a redemption on a pro rata basis. No Securityholder shall have the right to require any distribution on any assets of the Issuer in-kind upon any redemption or otherwise.
4. Notwithstanding the foregoing and subject to the Issuer’s ability to waive application of this provision to any or all of the Securityholders, a Securityholder shall not be entitled to redeem any portion of its Securities in excess of twenty per cent (20%) of the value of the Issuer’s assets, as determined as at the last Business Day of the calendar year immediately preceding the applicable Redemption Date. In the event that redemptions of multiple Securities will become effective on the same date, the Issuer shall adjust each such permitted redemption amount pro rata in proportion to the aggregate Securities held by redeeming Securityholders so that the aggregate redemptions on any date do not exceed twenty per cent (20%) of the assets of the Issuer as determined as at the last Business Day of the calendar year immediately preceding the applicable Redemption Date.
5. Notwithstanding the foregoing, no Securityholder shall be entitled to receive principal or interest on any Security during any period that the determination of value of a material portion of the Issuer’s assets and liabilities cannot reasonably be determined because of the existence of conditions beyond the reasonable control of the Issuer or because such redemption would materially impair the Issuer’s ability to operate in pursuit of its objective.
6. Payment of any amount shall be made within thirty (30) days of the redemption date (each such date a “Payment Date”); provided, however, that if a Securityholder elects to redeem more than ninety per cent (90%) of the value of its Securities (excluding its pro rata share in any Restricted Asset), the Issuer shall pay the Securityholder an amount equal to at least ninety per cent (90%) of such Securityholder’s estimated redemption proceeds (excluding its pro rata share in any Restricted Asset and on the basis of unaudited data) within thirty (30) days after the Payment Date. The Issuer shall pay the balance of such Securityholder’s redemption proceeds (excluding its pro rata share in any Restricted Asset and subject to audit adjustments) less any amounts used to pay liabilities, fees or expenses required (as described herein) within thirty (30) days after completion of the audit of the Issuer’s books for the fiscal year in which such Payment Date occurs. The Issuer shall pay interests to each Securityholder on the balance of the redemption proceeds (excluding its pro rata share in any Restricted Asset and less any liabilities, fees or expenses) at a rate per annum equal to the 3-month U.S. Treasury bills for the period beginning on the Payment Date and ending on the date immediately preceding the date of payment.
7. Notwithstanding the foregoing, a Securityholder may not redeem any portion of a Security that is attributable to a Restricted Asset, unless otherwise determined by the Issuer in its
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sole and absolute discretion. If a portion of a fully redeeming Securityholder’s principal is attributable to Restricted Assets, then, unless otherwise determined by the Issuer in its sole and absolute discretion, the amount distributed to such Securityholder shall not include any interest in such Restricted Assets. Upon realisation or deemed realisation, the Securityholder’s share of realised amounts shall be paid to a Securityholder who has fully redeemed from the Issuer and such distribution (subject to the Priority of Payments) shall be made within forty-five (45) days of the end of the quarter in which such realisation or deemed realisation occurs.
8. The right of any Securityholder to redeem is subject to the provisions by the Issuer for reasonable reserves for contingencies and estimated accrued expenses. If a Securityholder redeems from the Issuer while such Securityholder has an interest in a Restricted Asset, the Issuer may establish a reasonable reserve to pay for future expenses attributable to such Restricted Asset.
9. Subject to the provisions relating to Restricted Assets, the applicable lock-up period shall not apply to any redemption of Securities requested by an ERISA Investor, no later than twenty (20) days following notice to such ERISA Investor that there is a reasonable likelihood that the Issuer will be deemed to be holding “plan assets” for purposes of ERISA. “ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as amended. “ERISA Investor” means any Securityholder that is a “benefit plan investor” within the meaning of Section 3(42) of ERISA. “ERISA Plan” means a U.S. employee benefit plan, Keogh plan or other arrangement subject to ERISA or to Section 4975 of the Code (including any entity whose assets are considered under ERISA or the Code to include the assets of such plan or arrangement), or which is treated by the Issuer as if it were subject to ERISA.
10. Any redemption pursuant to section (9) shall become effective as at the end of the first full calendar month after the event giving rise to a special redemption right.
11. Unless the Issuer determines to dissolve the Issuer, a Securityholder requesting a redemption pursuant to section (9) will be paid ninety per cent (90%) of the relevant Securities but excluding such Securityholder’s pro rata share of any Restricted Asset) within thirty (30) days following such withdrawal date. The balance of such Security(s) will be paid (subject to audit holdbacks and with interest and excluding such Securityholder’s pro rata share of any Restricted Asset) within thirty (30) days after completion of the audit of the Issuer’s books for the fiscal year in which such redemption date occurs. Except as provided in the preceding sentence, special redemptions permitted under this section shall not be subject to the gate or suspension provisions.
12. Notwithstanding the requirements of section (7), in the event of a redemption by an ERISA Investor permitted under this section, such ERISA investor shall be paid the fair market value (as determined at the time of redemption) of its share of all Restricted Assets, which such allocation shall be treated as an investment made proportionately by all participating Securityholders.
Cancellation
All Securities (or the Registered Certificates representing same) which are redeemed in full will, unless otherwise permitted by the Conditions, forthwith be cancelled by the Registrar or Transfer Agent to which the relevant Registered Certificate is surrendered and, accordingly, may not be held, reissued or resold. The relevant Agent shall give all relevant details and forward all cancelled Securities, or Registered Certificates, if it is not the Registrar, to the Registrar.
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SUMMARY OF THE MASTER DOCUMENTS
The description of the principal Master Documents set forth below is a summary of certain features of such documents and is qualified by reference to the detailed provisions thereof.
MASTER TRUST TERMS
The Issuer entered into the Master Trust Terms pursuant to which the Issuer appointed BNY Mellon Corporate Trustee Services Limited to act as trustee with respect to the Securities.
Covenant to Repay
The Issuer covenants with the Trustee that it will, as and when the Securities under the Combined Series or Segregated Series, as applicable, or any of them, become due to be redeemed or any principal, interest and any other amounts owed under such Securities become due to be repaid in accordance with the Conditions, unconditionally pay or procure to be paid to or to the order of the Trustee and, unless and until otherwise instructed in writing by the Trustee, the Issuer shall make such payment of principal, interest and any other amounts becoming due for redemption, payment or repayment, together with any applicable premium and any interest payable thereon, to the Paying Agent on that date in accordance with the Agency Agreement in immediately available freely transferable funds in US dollars, or such other currency of the relevant Securities as specified in the relevant Constituting Instrument, provided that:
(a) every payment of any principal, interest and any other amounts in respect of the Securities or any of them made to the Paying Agent in the manner provided in the Agency Agreement shall satisfy, to the extent of such payment, the relevant covenant by the Issuer contained in Clause 5 (Covenant to Repay) of the Master Trust Terms except to the extent that there is default in the subsequent payment thereof to the Securityholder in accordance with the Conditions; and
(b) unless provided otherwise in the Conditions, if any payment of any principal, interest and any other amounts in respect of the Security is made after the due date or subsequent to an Event of Default, payment shall be deemed not to have been made until the full amount has been received by the Paying Agent or the Trustee, except to the extent that there is failure in its subsequent payment to the relevant Securityholders.
The Trustee will hold the benefit of the above covenant and the covenant in Clause 5 (Covenant to Repay) of the Master Trust Terms for itself and on trust for the Securityholder. Because the Redemption Amount is determined pursuant to the Priority of Payments, the Redemption Amount may be equal to, greater or lesser than, the principal amount due on the Security.
Following an Event of Default:
At any time after an Event of Default and acceleration of the Securities with respect to a particular Series has occurred and is continuing the Trustee shall, if so instructed pursuant to a Written Direction:
(a) by notice in writing to the Issuer, the Agents, the Corporate Services Provider and/or the Portfolio Manager require the Agents, the Corporate Services Provider and/or the Portfolio Manager (or such of them as are specified in such notice) until notified by the Trustee to the contrary, so far as permitted by any applicable law :
(i) to act thereafter, until otherwise instructed by the Trustee (acting pursuant to a Written Direction), as Agents, Portfolio Manager and/or Corporate Services Provider, as applicable, of the Trustee under the Master Trust Terms and the Securities of a Combined Series (in the case of an Event of Default in respect of any Combined Series) or the Securities of a Segregated Series (in the case of an
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Event of Default in respect of any Segregated Series) on the terms provided in the applicable Agency Agreement, Corporate Services Agreement and/or the Portfolio Management Agreement, as applicable, or with consequential amendments as necessary and save that the Trustee shall not have any liability whether under any provisions thereof or otherwise for the indemnification, remuneration and payment of out of pocket expenses of the Agents, the Corporate Services Provider and the Portfolio Manager and any such liability shall be retained by the Issuer and thereafter to hold the Securities, and all sums, documents and records held by it in respect of the Securities on behalf of the Trustee or as the Trustee directs in such demand;
(ii) to deliver up all relevant Securities and/or Certificates, sums, documents and records held by it in respect of any relevant Securities or Certificates to the Trustee or as the Trustee shall direct (acting pursuant to a Written Direction) in such notice provided that such notice shall be deemed not to apply to any document or record which the Agents, the Custodian, the Corporate Services Provider and/or the Portfolio Manager, or any of them, is obliged not to release by any law or regulation; and/or
(iii) instruct the Portfolio Manager to (A) sell, transfer, realise or otherwise dispose of the relevant Series Assets and procure the transfer of such realisation proceeds to the Account, or such other account as may be designated by the Trustee or the Paying Agent, without delay for application by, or at the direction of, the Trustee in accordance with the Post-Enforcement Priority of Payments or as may otherwise be directed by the Trustee acting pursuant to a Written Direction or (B) transfer, assign or otherwise convey some or all of the Series Assets by way of an in specie transfer to the Securityholders in or towards satisfaction of amounts owing to them under the Securities as may be directed by the Trustee acting pursuant to a Written Direction;
(b) by notice in writing to the Issuer require the Issuer to make all subsequent payments in respect of the relevant Securities to, or to the order of, the Trustee and not to the Paying Agent and, with effect from the issue of any such notice and until such notice is withdrawn, sub-clause 5.1(a) (Covenant to Repay) and Clause 9.3 of the Master Trust Terms and (so far as it concerns payments by the Issuer) shall cease to have effect.
Representations Warranties and Covenants of the Issuer
The Issuer represents, warrants, covenants and agrees with the Trustee (for itself and for the benefit of the Securityholders) that, as of the date hereof (unless specified otherwise below):
1. Organisation and Good Standing: it is duly incorporated and validly existing under the laws of Ireland. It has full corporate power, authority and legal right:
(a) to own its properties and conduct its business, as presently owned and conducted; and
(b) to execute, deliver and perform its obligations under the Master Documents and Series Documents;
2. No Violation: the execution and delivery of the Master Documents, the Constituting Instrument and the relevant Series Documents, undertaking and performance of the obligations expressed to be assumed by it therein does not conflict with, or result in a breach of or default under, the laws of the jurisdiction of its incorporation or in any respect
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of any agreement or interest to which it is a party or by which it is bound or in respect of indebtedness in relation to which it is a surety;
3. Binding Obligation: the Master Documents, the Constituting Instrument and the relevant Series Documents constitute legal, valid and binding obligations of the Issuer enforceable against it in accordance with their terms except as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer and similar laws of general applicability relating to or affecting creditors' rights and to general principles of equity;
4. No Proceedings: there is no, to the Issuer's knowledge, action, suit, injunction, writ, restraining orders or proceedings of any kind against or affecting the Issuer, or any of its assets or rights, current, pending and, to the best of its knowledge, no action, suit or proceeding threatened or investigation pending or threatened, which, in any case, if decided adversely to it, would have a material adverse effect on the Issuer or any of its assets or rights;
5. No Immunity: neither the Issuer nor any of its property or assets enjoys any right of immunity from set-off, suit, attachment or execution in respect of it for or in connection with the Master Documents, the Constituting Instrument and the relevant Series Documents;
6. Consents: all authorisations, consents, licences, orders, approvals, filings, registrations, declarations and notices required in respect of it for or in connection with the Constituting Instrument and the relevant Series Documents have been made or obtained;
7. Withholding Tax: under the laws of Ireland:
(a) save as described in the applicable Listing Particulars under the heading "Certain Irish Taxation Considerations ", it is not required to make any deduction for or on account of any tax from any payment it may make under the Master Documents, the Constituting Instrument and the relevant Series Documents;
(b) it is not necessary that the Master Documents, the Constituting Instrument and the relevant Series Documents be filed, recorded or enrolled with any court or other authority in any jurisdiction or that any stamp duty, registration, notarisation or similar tax be paid on or in relation to the Master Documents, the Constituting Instrument and the relevant Series Documents or the transactions contemplated thereby;
8. No Adverse Change: it is not aware of any adverse change, or any development reasonably likely to involve an adverse change in its condition (financial or otherwise) or general affairs that is material in the context of the Master Documents, the Constituting Instrument and the relevant Series Documents;
9. Solvency: it is solvent and will not become insolvent after giving effect to the transactions contemplated by the Master Documents and, after giving effect to the transactions contemplated by the Securities, it will have sufficient funds to conduct its business as currently conducted and as contemplated by the Master Documents, the Constituting Instrument and the relevant Series Documents; and
10. Listing Particulars: as of the date hereof only, to the best knowledge and belief of the Issuer (having taken all reasonable care to ensure that such is the case) all of the statements and information contained in the applicable Listing Particulars (including any supplemental listing particulars relating thereto) relating to the Securities are true, correct
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and accurate as at the date of such Listing Particulars or, if such Listing Particulars specifies an alternative date with respect to any such statement or information, such other date as set out in the Listing Particulars.
The Issuer hereby covenants with the Trustee, for the benefit of the Securityholders, that, so long as any Security remains outstanding, it shall:
1. Books of Account: at all times keep such books of account as may be necessary to comply with all applicable laws and so as to enable the financial statements of the Issuer to be prepared and allow the Trustee (if so directed pursuant to a Written Direction) or any Securityholder and any person appointed by them free access to the same at all reasonable times during normal business hours and to discuss the same with responsible officers of the Issuer;
2. Event of Default: give notice in writing to the Trustee and the Securityholders forthwith upon becoming aware of any Event of Default and without waiting for the Trustee to take any further action. For the avoidance of doubt, the Trustee shall not be deemed to be on notice of any Event of Default or any matters which may give rise to an Event of Default prior to the actual receipt of such notification by the Trustee;
3. Certificate of Compliance: provide to the Trustee within fourteen (14) days of the Issuer filing its annual accounts with the Irish Companies Registration Office and, where applicable, within fourteen (14) days of any request by the Trustee, a certificate signed by two directors of the Issuer certifying that up to a specified date not earlier than seven days prior to the date of such certificate (the ''Certified Date'') the Issuer has complied with its obligations under the Master Documents, the Constituting Instrument and the relevant Series Documents (or, if such is not the case, giving details of the circumstances of such non compliance) and that as at such date there did not exist nor had there existed at any time prior thereto since the Certified Date in respect of the previous such certificate (or, in the case of the first such certificate, since the date of the Master Trust Terms) any Event of Default or other matter which could affect the Issuer’s ability to perform its obligations under the Master Documents, the Constituting Instrument and the relevant Series Documents or if such is not the case specifying the same;
4. Financial Statements: send to the Securityholders as soon as practicable after their date of publication, two copies of the Issuer’s annual balance sheet and profit and loss account and of every balance sheet, profit and loss account, report or other notice, statement or circular issued (or which under any legal or contractual obligation should be issued) to the members or holders of debentures or creditors (or any class of them) of the Issuer in their capacity as such at the time of the actual (or legally or contractually required) issue or publication thereof and procure that same are made available for inspection by the Securityholders and at the specified offices of the Paying Agent as soon as practicable thereafter;
5. Information: so far as permitted by applicable law, at all times give to the Trustee such information as it reasonably requires for the performance of its functions;
6. Notification of Non Payment: use all reasonable endeavours to procure that the Paying Agent notifies the Trustee forthwith in the event that it does not, on or before the due date for payment to the Securityholders in respect of the Securities, receive unconditionally the full amount in the relevant currency of the moneys payable on such due date on all such Securities;
7. Notification of Late Payment: in the event of the unconditional payment to the Paying Agent or the Trustee of any sum due in respect of the Securities being made after the
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due date for payment thereof, forthwith give notice to the Securityholders that such payment has been made;
8. Optional Redemption: if the Issuer gives notice in writing to the Trustee that it intends to redeem the Securities pursuant to Condition 7 (Redemption, Purchase and Exercise), the Issuer shall, prior to giving such notice to the Securityholders, provide such information to the Trustee as the Trustee requires in order to satisfy itself of the matters referred to in such Conditions;
9. Obligations of Agents: observe and comply with its obligations and use all reasonable endeavours to procure that the Agents observe and comply with all their obligations under the Master Documents, the Constituting Instrument and the relevant Series Documents and notify the Trustee promptly upon becoming aware of any material breach of such obligations, or failure by an Agent to comply with such obligations, in relation to the Securities;
10. Liability to Tax: Upon becoming aware, promptly give notice to the Trustee if the Issuer is required by law to withhold or account for tax in respect of any payment due in respect of the Securities, but for the avoidance of doubt, unless otherwise compelled by law, the Issuer or the Paying Agent, on behalf of and at the request of the Issuer, (or, in a default scenario, the Paying Agent, at the request of the Trustee under Clause 7 of the Agency Agreement), shall make such withholding or deduction by retaining the relevant amounts in accordance with Clause 5 or 6, as applicable, of the Agency Agreement and, unless otherwise compelled by law, the Trustee shall have no responsibility to make, or procure the making of such deductions;
11. Listing:
(a) at all times use all its reasonable endeavours to maintain the listing of the Securities on Euronext Dublin or, if it is unable to do so having used all reasonable endeavours or if the maintenance of such listing is agreed by the Trustee to be unduly burdensome or impractical, use its best endeavours to obtain and maintain a quotation or listing of the Securities on such other Stock Exchange or exchanges or securities market or markets, recognised for the purposes of Section 64 of the Taxes Act that would enable the Issuer to pay interest on the Securities on a gross basis and give notice of the identity of such other Stock Exchange or exchanges or securities market or markets to the Securityholders;
(b) to procure that there will, at all times, be furnished to any Stock Exchange on which the Securities are for the time being quoted or listed on the application of the Issuer such information and/or documentation as such Stock Exchange may require in accordance with its normal requirements or in accordance with any arrangements for the time being made with any such Stock Exchange;
12. Authorised Signatories: upon the execution hereof and thereafter forthwith upon any change of the same, deliver to the Trustee (with a copy to the Paying Agent) a list of the authorised signatories of the Issuer, together with certified specimen signatories;
13. Payments: pay moneys payable by it to the Trustee hereunder without set off, counterclaim, deduction or withholding, unless otherwise compelled by law and in the event of any deduction or withholding compelled by law pay such additional amount as will result in the payment to the Trustee of the amount which would otherwise have been payable by it to the Trustee hereunder;
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14. Change of Paying Agents: give not less than fourteen (14) days’ prior notice to the Securityholders in accordance with the Conditions of any future appointment or any resignation or removal of any Paying Agent or of any change by any Paying Agent of its specified office;
15. Compliance with the Master Documents and Series Documents:
(a) comply with its obligations under the Master Documents, the Constituting Instrument and the relevant Series Documents and, without prejudice to the generality of the foregoing, at all times maintain any agents required by the Conditions; and
(b) use its reasonable endeavours to procure that the other parties to the Master Documents, the Constituting Instrument and the relevant Series Documents comply with and perform all their respective obligations under the Master Documents, the Constituting Instrument and the relevant Series Documents and, as soon as practicable, notify the Trustee upon becoming aware of any breach by such party of their obligations under the Master Documents, the Constituting Instrument and/or the relevant Series Documents;
16. Validity: not permit the validity or effectiveness of the Master Documents, the Constituting Instrument and the relevant Series Documents to be impaired or permit any person to be released from any covenants or obligations with respect to the Master Documents, the Constituting Instrument and the relevant Series Documents except as may be expressly permitted hereby or by the other Master Documents or Series Documents;
17. Execution of Further Documents: so far as permitted by applicable law, at all times execute all such further documents and do all such further acts and things as may be necessary at any time or times in the opinion of the Trustee (acting pursuant to a Written Direction) to give effect to the provisions of this Trust Deed;
18. Prohibited Acts Without Securityholders' Consent: not, without consent in writing of the holders of seventy five per cent (75%) in principal amount of the Securities:
(a) have any employees;
(b) enter into any sale, reconstruction, amalgamation, merger consolidation or liquidation;
(c) issue any shares in the Issuer (other than such shares as are in issue as at the date hereof);
(d) release any party to any of the Master Documents, the Constituting Instrument and the relevant Series Documents from any of its obligations thereunder or agree to any material amendment to any the Master Documents, the Constituting Instrument and the relevant Series Documents or grant any waiver or consent thereunder; and
(e) modify any term of (I) the Issuer’s Constitution, (II) the Deed of Covenant or (III) any Master Document, which such modification to (I), (II) or (III) is materially adverse to the Securityholders unless Securityholders are given an opportunity to redeem their Securities.
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19. Enforce its Rights: take all reasonable steps to enforce its rights under the Master Documents, the Constituting Instrument and the relevant Series Documents;
20. No Prejudice to Securityholders: not take any action which would prejudice the interests of the Securityholders and/or the Trustee, solely in its capacity as trustee under these presents;
21. Pay its Debts: pay its debts as they fall due;
22. Tax Status: not prejudice its status as a qualifying company within the meaning of Section 110 of the Taxes Act;
23. Listing and Trading: use all reasonable endeavours to maintain the listing on Euronext Dublin and/or the admission of the Listed Securities to trading on the Global Exchange Market of Euronext Dublin. If, however, it is unable to do so having used such endeavours, or if the maintenance of such listing and/or admission to trading is agreed by the Trustee to be unduly onerous and the Trustee is satisfied that the interests of the Securityholders would not be thereby materially prejudiced, it will instead use all reasonable endeavours to obtain and maintain a listing of the Securities on such stock exchanges and/or admission of the Securities to trading on such other market as it may (with the consent in writing of the Trustee) decide. In addition, the Issuer shall comply with all applicable rules of any Stock Exchange;
24. Notices, Statements, Circulars or Other Documents to be sent to Securityholders: send, or procure to be sent, to the Trustee copies of all notices, statements, circulars or other documents to be given or delivered to the Securityholders in advance of publishing, serving, distributing or otherwise delivering same and, in the case of any such documents which reference the Trustee, The Bank of New York Mellon and/or any affiliate (save for any financial or related information or reports relating to the Issuer, the Securities and/or the Series Assets which include non-material references to the Trustee, the Registrar, the Paying Agent and/or the Transfer Agent), not to publish, serve, distribute or otherwise deliver such documents without the prior consent of the Trustee (not to be unreasonably withheld or delayed) provided that, where the Trustee fails to respond or engage with the Issuer in a reasonable manner within three (3) Business Days of receipt of such draft documentation, the Issuer shall be permitted to publish such notices, statements, circulars or other documents and shall deliver a copy of same to the Trustee;
25. Procuring Information from the Auditors: to procure information relating to the Issuer from the auditors for the time being of the Issuer (and if the Issuer does not have auditors at the relevant time, such firm of chartered accountants in Ireland as may be nominated in writing by the Trustee) including to furnish the Trustee with such opinions, certificates or other information as the Trustee may from time to time require in connection with any calculation or matter arising under the Master Trust Terms, the other Master Documents, Constituting Instrument and/or Series Documents;
26. Registered Office, head office and centre of main interests: The Issuer will at all times maintain its registered office, its head office and its "centre of main interests", as that term is used in Article 3(1) of the Regulation (EU) 2015/848 on insolvency proceedings (recast) (the "EU Recast Insolvency Regulation") in Ireland and will not have any "establishment" (as defined in Article 2(10) of that EU Recast Insolvency Regulation) outside of Ireland; and
27. Separateness Covenants:
The Issuer shall:
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(i) prepare and maintain its own full and complete books, records and financial statements separately from those of any other entity;
(ii) in all dealings with third parties and the public, identify itself by its own name as a separate and distinct entity and not identify itself as being a division or part of any other entity whatsoever;
(iii) ensure that all decisions with respect to its business and daily operations are and will be independently made by it and will not be directed or dictated by any other entity and shall maintain an arm's-length relationship with all other entities;
(iv) act solely in its own name and through its own authorised officers and agents and shall ensure that all communications including invoices, purchase orders, contracts, statements, stationery, cheques and applications will be made solely in its name;
(v) ensure that its assets are and will remain separate from those of any other entity and are and will be maintained in a manner which facilitates the identification and segregation of those assets from those of any other entity whatsoever;
(vi) observe all corporate formalities and governmental requirements and make all required filings to all applicable authorities;
(vii) discharge all expenses incurred and liabilities incurred by it only out of its own funds;
(viii) enter into all transactions to be entered into by it on arm's-length terms;
(ix) ensure that its bank accounts or other accounts are kept separate from the accounts of any other person or entity;
(x) not guarantee or become obligated for the debts of any other entity or hold out its credit as being available to satisfy the obligations of any other entity;
(xi) not pledge its assets for the benefit of any other entity or make any loans or advances to any entity (except as provided for in the Master Documents, the Constituting Instrument and relevant Series Documents);
(xii) not acquire obligations or securities of its shareholders;
(xiii) not issue any shares in the Issuer (other than such shares as are in issue as at the date hereof);
(xiv) correct any known misunderstanding regarding its separate identity;
(xv) maintain adequate capital in light of its contemplated business;
(xvi) not have any subsidiaries or hold any ownership interest in any other entity;
(xvii) engage only in any business or activity in relation to or contemplated in the Master Documents, the Constituting Instrument and relevant Series Documents and not engage in any other business or activity whatsoever; and
(xviii) send to the Trustee, the Registrar and the Paying Agent, as soon as practicable after being so requested by the Trustee and/or the Registrar and/or the Paying
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Agent, a certificate issued by two directors of the Issuer stating that the aggregate principal amount of Securities (if any) or any other assets of any Series held at the date of such certificate by or on behalf of the Issuer.
In giving any consent pursuant to sub-Clause 11.2 of the Master Trust Terms, the Trustee may require the Issuer to agree to such modifications or additions to the provisions of the Master Trust Terms and the Constituting Instrument in respect of any Series as the Trustee may reasonably require.
Provisions relating to meetings of the Securityholders
The Master Trust terms contain provisions relating to convening meetings of the Securityholders which can be summarised as follows:
1. Convening a meeting
(a) The Issuer, the Portfolio Manager or Trustee may convene separate or combined meetings of the Securityholders of any Series or class to consider any matter relating to the Securities.
(b) Subject to the Trustee having been indemnified, secured and/or prefunded to its satisfaction against all costs (including, without limitation, legal fees and expenses, liabilities and expenses thereby occasioned) the Trustee shall convene a meeting of the Securityholders of any given Series or class upon the request in writing of the Securityholders holding not less than one-tenth of the outstanding principal amount of the Securities of such Series or class and shall convene a meeting of Securityholders of all Series upon the request in writing of the Securityholders holding not less than one-tenth of the outstanding principal amount of Securities of any Series.
(c) Every meeting shall be held at a time and place approved by the Trustee.
(d) At least twenty-one (21) days’ notice (exclusive of the day on which the notice is given and of the day of the meeting) shall be given to the relevant Securityholders affected by the proposed meeting (unless waived by such Securityholders).
(e) A copy of the notice shall be given by the party convening the meeting to the other parties.
(f) The notice shall specify the day, time and place of meeting and, unless the Trustee otherwise agrees, the nature of the resolutions to be proposed and shall explain verification requirements, how Securityholders may appoint proxies or representatives, the form of proxy and the details of the time limits applicable. A proxy need not be a Securityholder.
(g) The Issuer is entitled to receive notice of and attend meetings of Securityholders but is not entitled to vote
2. Chairman
The chairman of a meeting shall be such person as the Trustee may nominate in writing, but if no such nomination is made or if the person nominated is not present within 15 minutes after the time fixed for the meeting, the Securityholders or agents present shall choose one of their number to be chairman, failing which the Issuer may appoint a chairman. The chairman need not be a Securityholder or agent. The chairman of an
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adjourned meeting need not be the same person as the chairman of the original meeting. The costs (if any) of appointing a chairman shall be paid by the Issuer as a Series Expense.
3. Attendance
The following may attend and speak at a meeting:
(a) Securityholders, proxies, representatives and agents
(b) the chairman
(c) the Issuer, the Portfolio Manager and the Trustee (through their respective representatives, directors, employees or officers) and their respective financial and legal advisers
(d) and any other person authorised to do so by the Trustee
No-one else may attend or speak at the meeting.
4. Quorum
(a) No business (except choosing a chairman) shall be transacted at a meeting unless a quorum is present at the commencement of business. If a quorum is not present within 15 minutes from the time initially fixed for the meeting, it shall, if convened on the requisition of Securityholder or if the Issuer and the Trustee agree, be dissolved.
(b) In any other case it shall be adjourned until such date, not less than fourteen (14) nor more than forty-two (42) days later, and time and place as the chairman may decide.
(c) If a quorum is not present within fifteen (15) minutes from the time fixed for a meeting so adjourned, the meeting shall be dissolved.
(d) The quorum at any meeting of the Securityholders of a Series convened to vote on an Extraordinary Resolution relating to a Basic Terms Modification shall be one or more persons holding not less than two-thirds of the outstanding principal amount of such Series.
(e) The quorum at any meeting of the Securityholders of a Series convened to vote on an Extraordinary Resolution not relating to a Basic Terms Modification shall be one or more persons holding or representing a majority of outstanding principal amount of such Series.
(f) The chairman may with the consent of (and shall if directed by) a meeting adjourn the meeting from time to time and from place to place. Only business which could have been transacted at the original meeting may be transacted at a meeting adjourned in accordance with this paragraph.
(g) At least ten (10) days’ notice of a meeting adjourned through want of a quorum shall be given in the same manner as for an original meeting and that notice shall state the quorum required at the adjourned meeting. No notice need, however, otherwise be given of an adjourned meeting.
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For the purposes of the above
“Basic Terms Modification” shall mean any modification of the Conditions or the terms of any Transaction Document which (A) changes any date fixed for payment of principal or interest in respect of the Securities of any Series; (B) reduces the amount of principal or interest which become due and payable with respect to any Securities of any Series save as expressly permitted pursuant to and in accordance with the Conditions and the Transaction Documents; (C) alters the method of calculating the amount of any payment in respect of the Securities of any Series or the priority of any such payment; (D) changes the quorum requirements relating to meetings or the majority required to pass an Extraordinary Resolution; or (E) has a material adverse effect on the Securities of any Series.
“Extraordinary Resolution” means a resolution passed at a meeting duly convened and held in accordance with the Trust Deed by a majority of at least 75 per cent of the votes cast.
5. Voting
(a) Each question submitted to a meeting shall be decided by a show of hands unless a poll is (before, or on the declaration of the result of, the show of hands) demanded by the chairman, the Issuer, the Trustee or one or more persons representing two (2) per cent. of the outstanding principal Amount of the Securities.
(b) Unless a poll is demanded a declaration by the chairman that a resolution has or has not been passed shall be conclusive evidence of the fact without proof of the number or proportion of the votes cast in favour of or against it.
(c) If a poll is demanded, it shall be taken in such manner and (subject as provided below) either at once or after such adjournment as the chairman directs. The result of the poll shall be deemed to be the resolution of the meeting at which it was demanded as at the date it was taken. A demand for a poll shall not prevent the meeting continuing for the transaction of business other than the question on which it has been demanded.
(d) A poll demanded on the election of a chairman or on a question of adjournment shall be taken at once.
(e) On a show of hands every person who is present in person and who produces a Certificate of which he is the registered holder or a voting certificate or is a proxy or representative has one vote. On a poll every such person has one vote in respect of each integral currency unit of the Specified Currency for each Security so produced or represented by the voting certificate so produced or for which he is a proxy or representative. Without prejudice to the obligations of proxies, a person entitled to more than one vote need not use them all or cast them all in the same way.
(f) In case of equality of votes the chairman shall both on a show of hands and on a poll have a casting vote in addition to any other votes which he may have.
6. Effect and Publication of an Extraordinary Resolution
(a) Any resolution passed at a meeting of any class or classes of Securityholders duly convened and held in accordance with the Trust Deed shall be binding upon
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all the Securityholders of such class or classes whether present or not present or whether represented or not represented at such meeting and whether or not voting and they shall be bound to give effect thereto accordingly and the passing of any such resolution shall be conclusive evidence that the circumstances justify the passing thereof.
(b) Notice of the result of the voting on, or signing of, any resolution duly considered by the Secutityholders shall be published in accordance with Conditions by the Issuer within fourteen (14) days of such result being known provided that the non publication of such notice shall not invalidate such result.
7. Trustee’s Power to Prescribe Regulations
(a) Subject to all other provisions in the applicable Trust Deed, the Trustee may without the consent of the Securityholders prescribe such further regulations regarding the holding of meetings and attendance and voting at them as it in its sole discretion determines including (without limitation) such requirements as the Trustee thinks reasonable to satisfy itself that the persons who purport to make any requisition in accordance with the Trust Deed are entitled to do so and as to the form of proxies, representation and verification requirements, voting certificates (if applicable) or block voting instructions (if applicable) so as to satisfy itself that persons who purport to attend or vote at a meeting are entitled to do so.
(b) The foregoing provisions of this Schedule shall have effect subject to the following provisions:
i. meetings of Securityholders of separate Series and classes will normally be held separately. However, the Trustee may from time to time determine that meetings of Securityholders of separate Series shall be held together;
ii. a resolution or request that in the opinion of the Trustee affects one Series, or class, alone shall be deemed to have been duly passed if passed at a separate meeting of the Securityholders of the Series or class concerned and, in the case of a request, be deemed to have been duly made if made by the requisite percentage of the Securityholders;
iii. a resolution or request that in the opinion of the Trustee affects the Securityholders of more than one Series or class but does not give rise to a conflict of interest between the Securityholders of the different Series or classes concerned shall be deemed to have been duly passed if passed at a single meeting of such Securityholders of the relevant Series or classes if and, in the case of a request, be deemed to have been duly made if made by the requisite percentage of the Securityholders of such two or more Series or classes;
iv. a resolution or request that in the opinion of the Trustee affects the Securityholders of more than one Series or class and gives or may give rise to a conflict of interest between the Securityholders of the different Series or class concerned shall be deemed to have been duly passed only if it shall be duly passed at separate meetings of the Securityholders of the relevant Series or classes and, in the case of a request, be deemed to have been duly made if made by the requisite percentage of the Securityholders of such two or more Series or classes
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v. to all such meetings as aforesaid all the preceding provisions of this Schedule shall apply mutatis mutandis as though references therein to Securities and to the Securityholders were references to the Securities and Securityholders of the Series concerned.
8. Written Resolutions
(a) A Written Resolution may be contained in one document or in several documents in like form each signed by or on behalf of one or more of the Securityholders, shall be as valid, effective and binding as a resolution duly passed at such a meeting.
(b) A Witten Resolution shall take effect as an Extraordinary Resolution if signed by the appropriate majority.
For the purposes of the foregoing
“Written Resolution” means a resolution in writing signed by or on behalf of all holders of Securities who for the time being are entitled to receive notice of a Meeting in accordance with the Provisions for Meetings of Securityholders, whether contained in one document or several documents in the same form, each signed by or on behalf of one or more such holders of the Securities.
Appointment, Retirement and Removal of Trustee
The power of appointing a new Trustee in respect of the Securities shall be vested in the Issuer but no person shall be so appointed who shall not have previously been approved by a Written Direction. A trust corporation shall at all times be Trustee in respect of the Securities and may be sole Trustee. Any appointment of a new Trustee shall as soon as practicable thereafter be notified by the Issuer to the Securityholders in accordance with the Conditions.
The Trustee may retire at any time upon giving not less than sixty (60) days' notice in writing to the Issuer without assigning any reason and without being responsible for any costs losses or liabilities occasioned by such retirement and the relevant Securityholders shall have power (exercisable in the case of the Securityholders by Written Direction) to remove the Trustee provided that the retirement or removal of any sole Trustee or sole trust corporation shall not become effective until a trust corporation is appointed as successor Trustee. The Issuer undertakes that if a sole Trustee or sole trust corporation gives notice of retirement or a Written Direction is passed for its removal under Clause 18 (Appointment, Retirement and Removal of the Trustee) of the Master Trust Terms it shall use all reasonable endeavours to procure that another trust corporation be appointed as Trustee. If no Trustee is so appointed within fifty (50) days of the date the Trustee gave notice to retire, the Trustee may appoint such other trust corporation as the Trustee may select having consulted with the Issuer and the Securityholders (and any costs associated with such appointment shall be for the account of the Issuer and shall be paid or reimbursed to the Trustee on demand).
If the Trustee is removed or retires in accordance with Clause 18 (Appointment, Retirement and Removal of the Trustee) of the Master Trust Terms it shall thereupon forthwith refund to the Issuer such part of any fee, remuneration, cost or expense which it may then have received but which is referable solely to any actions, liabilities, costs or expense commencing or arising after a date or period falling or commencing after the date of such removal or retirement, or if in any other way the Trustee shall not have performed the obligations or services to which such fee, remuneration, cost or expense or part thereof is referable.
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The Trustee shall, notwithstanding the provisions of sub-clause 18.1 of the Master Trust Terms have power by notice in writing to the Issuer to appoint any person to act as co-trustee jointly with the Trustee:
1. if the Trustee considers such appointment to be in the interests of the Securityholders;
2. for the purpose of conforming with any legal requirement, restriction or condition in any jurisdiction in which any particular act is to be performed; or
3. for the purpose of obtaining a judgment in any jurisdiction, or the enforcement in any jurisdiction against the Issuer of either a judgment already obtained or any of the provisions of the Constituting Instrument or any documents incorporated therein in respect of any Series.
Any person so appointed shall (subject to the provisions of the Constituting Instrument in respect of any Series) have such rights (including as to reasonable remuneration), powers, duties and obligations as shall be conferred or imposed by the instrument of appointment. The Trustee shall have power to remove any person so appointed. At the request of the Trustee, the Issuer shall forthwith execute all such documents and do all such things as may be required to perfect such appointment or removal and hereby irrevocably appoints the Trustee to be its attorney in its name and on its behalf to do the same. Such a person shall (subject always to the provisions hereof) have such trusts, powers, authorities and discretions (not exceeding those conferred on the Trustee by the Constituting Instrument in respect of any Series) and such duties and obligations as shall be conferred or imposed by the instrument of appointment. Before appointing such person to act as separate Trustee or co-trustee, the Trustee shall (unless it is not, in the opinion of the Trustee, reasonably practicable to do so) give notice to the Issuer of its intention to make such appointment (and the reason therefor).
Overview of terms relating to Fees
The Issuer shall pay to the Trustee remuneration for its services as trustee as from the date of the Master Trust Terms, such remuneration at such rate and at such times as agreed in such fee letters as may be agreed between the Trustee and the Issuer from time to time. Such remuneration shall accrue from day to day and be payable (in priority to payments to the Securityholders of that Series) up to and including the date when, all the Securities of that Series having become due for redemption, the redemption moneys and interest thereon (if any) to the date of redemption have been paid to the Paying Agent of that Series or the Trustee PROVIDED THAT if upon due presentation of any Security of that Series or any cheque in relation to that Series payment of the moneys due in respect thereof is improperly withheld or refused, remuneration will commence again to accrue.
All amounts payable to the Trustee shall be payable by the Issuer on the date specified in the Conditions, the Master Trust Terms, the Agency Agreement or in any demand by the Trustee, delivered in accordance with same. Any such amounts due to the Trustee (solely in its capacity as Trustee and not with respect to any amounts that may become due and payable under the Securities), until paid in full by or on behalf of the Issuer, shall carry interest at the rate of two (2) per cent per annum over the base lending rate from time to time of The Bank of New York Mellon (which includes any successor thereof) as and from the due date specified in the Conditions, the Master Trust Terms, the Agency Agreement or the date specified in such demand delivered in accordance with same, as applicable.
In the event of the occurrence of an Event of Default or the Trustee considering it expedient or necessary or being requested by the Issuer to undertake duties which the Trustee believes to be of an exceptional nature or otherwise outside the scope of the normal duties of the Trustee under those presents, the Issuer shall pay to the Trustee such additional remuneration as shall be properly incurred.
Without prejudice to any right of indemnity given to trustees by law, the Issuer shall indemnify, hold harmless, secure and/or prefund the Trustee, to its satisfaction, in respect of all losses, liabilities and expenses incurred by it or by any person appointed by it or to whom any duties, powers, trusts,
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authorities or discretions may be delegated by it in the execution or purported execution of any duties, powers, trusts, authorities or discretions vested in it by the Master Trust Terms, the Constituting Instrument and Series Documents in respect of any Series and against all liabilities, actions, proceedings, costs, claims, expenses and demands in respect of any matter or thing properly done or omitted in any way relating to the Master Trust Terms, the Constituting Instrument and Series Documents in respect of any Series, as applicable in each case unless caused by or arising as a result of the gross negligence, wilful default/misconduct and/or fraud of the Trustee
MASTER AGENCY TERMS
The Issuer entered into the Master Agency Terms pursuant to which the Issuer appointed the Portfolio Manager as Calculation Agent, The Bank of New York Mellon, London Branch acting through its office at One Canada Square, London E14 5AL, United Kingdom as Paying Agent and The Bank of New York Mellon SA/NV, Luxembourg Branch, acting through its office at Vertigo Building – Polaris, 2-4 rue Eugène Ruppert, L-2453 Luxembourg, as Registrar and as Transfer Agent.
Duties of the Registrar
An up-to-date copy of the Register and all entries made therein shall from time to time be delivered by the Registrar to the Issuer as required by the Issuer to be kept at its registered office.
The Registrar shall:
1. maintain at its specified office the Register of the holders of the Securities which Register shall, subject to the Registrar being provided with all necessary information and documentation required by it, show:
(a) the principal amounts, and the certificate numbers of the Registered Certificates representing Securities;
(b) the dates of issue of all Securities;
(c) all subsequent transfers and changes of ownership thereof;
(d) the names, addresses and account details of the holders of the Securities;
(e) all Advances received under and all redemptions of Securities;
(f) all cancellations of Securities, whether by reason of their replacement, exchange or otherwise; and
(g) all replacements of Registered Certificates issued in substitution for lost, stolen, mutilated, defaced or destroyed Registered Certificates;
2. receive all forms of request for consent to transfer, forms of transfer, forms of exchange, and where same have not been countersigned in advance by the Issuer for the purposes of evidencing its consent, inform the Issuer promptly of details of all such documents for the purposes of the Issuer providing its consent to the transfer;
3. receive and examine forms of request for consent to transfer (in any case where the same are required to be provided in accordance with the Conditions), upon finding the same satisfactory and in accordance with the requirements applicable thereto, and provided the Issuer has consented to the transfer by signing the relevant transfer form, enter the transferee(s) in the Register and deliver or procure the delivery of new Securities to the registered holder(s) thereof;
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4. maintain proper records of the details of all documents as aforesaid received by the Registrar and issue, authenticate and effect (with such assistance from the Transfer Agent, as appropriate) the Securities and transfers relating thereto;
5. at all reasonable times during office hours upon reasonable advance notice make the Register available to the Issuer, or the Paying Agent and the Trustee or any person authorised by any of them or any Securityholder (upon offering proof of holding) for inspection and for the taking of copies thereof or extracts therefrom;
6. notify the Calculation Agent and Paying Agent (i) upon request or (ii) on each Redemption Date, of the total amount of the holdings of all registered holders of the relevant Securities as at such date(s) (as defined in the relevant Conditions) in order to enable the Calculation Agent to calculate, and the Paying Agent to make or arrange for due payment to such holders of the amounts of principal and interest payable in respect of the Securities;
7. comply with the proper and reasonable requests of the Issuer with respect to the maintenance of the Register in respect of the Securities and give to the Paying Agent, the Transfer Agent and the Trustee such information with respect thereto as may be reasonably required by them for the proper performance of their respective duties;
8. upon request, insert in each Registered Certificate issued the name and address of the registered holder thereof and the principal amount thereof;
9. provide the Issuer, the Paying Agent and the Trustee or any person authorised by any of them with a copy of the Register, and any Securityholder (upon offering proof of holding) with an extract of the Register evidencing their holding, on request.
Duties of the Transfer Agent
If and to the extent specified by the Conditions and in accordance therewith and the terms of the Master Agency Terms or if otherwise requested by the Issuer, the Transfer Agent will:
1. receive requests for the transfer of the Securities and inform the Registrar and Issuer (where the relevant transfer certificate has not been countersigned by the Issuer for the purposes of evidencing its consent) of such receipt, forward the deposited Security(s) and any other relevant document to the Registrar and assist the Registrar in the issue of new Securities in accordance with the Conditions and the Regulations referred to in Clause 14 (Regulations concerning Exchanges and Transfers) of the Master Agency Terms and in particular forthwith notify the Registrar of:
(a) the name and address of the holder of the relevant Security;
(b) the certificate number and nominal amount of such Security;
(c) (in the case of a transfer of part only) the nominal amount of the Security to be transferred; and
(d) the name and address of the transferee to be entered on the Register;
2. keep the Registrar informed of all transfers and exchanges; and
3. carry out such other acts as may be necessary to give effect to the Conditions.
The Transfer Agent also reserves the right under the Agency Agreement to request such "Know Your Client" or analogous documents as it deems necessary to comply with any applicable anti-money
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laundering or counter-terrorist financing law, rule, regulation or other requirements (including any policy of the Transfer Agent).
Duties of the Calculation Agent
1. The Calculation Agent shall, at all times, act in good faith and in a commercially reasonable manner in the performance of the duties expressed to be performed by it herein and in the Conditions in respect of each of the Securities;
2. Upon receipt of the details of each holder of each Security and the principal amount of Securities held by each such holder(s) in accordance with the Agency Agreement, and such other information as the Calculation Agent may require from the Issuer, the Portfolio Manager and/or the Corporate Administrator from time to time, the Calculation Agent shall calculate the amount of interest and principal to be paid on each Security on the next succeeding Payment Date five (5) Business Days in advance of the Payment Date and will use reasonable efforts to notify the Issuer, the Trustee and the Paying Agent (or such other person as the Paying Agent shall nominate) of the amounts becoming due from the Issuer pursuant the Conditions at least three (3) Business Days prior to the day on which the relevant payment is due to be made by the Issuer to the Paying Agent (or such other period as may be agreed between such parties from time to time);
3. The Calculation Agent shall maintain records of any determinations made by it for the purposes of Clause 12.4 of the Master Agency Terms and shall make such records available for inspection at all reasonable times by the Issuer, the Corporate Services Provider, the Trustee and/or the holders of the relevant Securities (or its agents, nominees or designees as notified to the Calculation Agent by such party or parties);
4. The Calculation Agent shall make available to the Issuer, the Trustee, the Portfolio Manager, the Corporate Services Provider, and/or Paying Agent such records and information as is reasonable necessary for the maintenance of their records; and
5. The Calculation Agent shall, in conjunction with the Issuer, advise the Paying Agent of any payments which have become void under the Conditions.
Subject as provided in the Conditions, on each date on which any amount applicable to the Securities is to be determined and/or calculated in accordance with the Conditions and the Master Agency Terms, the Calculation Agent shall at or as soon as practicable after the specified time on such date establish such matter or amount as is specified in the Conditions in the manner set out in the Conditions and the Master Agency Terms, and shall as soon as practicable thereafter notify the same to the Paying Agent, the Registrar, the Trustee, Transfer Agent and any other person as may be specified by the Conditions and the Master Agency Terms.
Subject as provided in the Portfolio Management Agreement and the Agency Agreement, the Calculation Agent shall be responsible for the determination of the net asset value of the Issuer and the net asset value of each Series Assets, subject to the overall supervision and direction of Issuer, on such dates as it may deem appropriate and as required for and pursuant to the Transaction Documents.
In determining the net asset value of the Issuer and the net asset value of each Series Assets, the Calculation Agent will follow the following valuation policies and principles adopted by the Issuer (the "Valuation Policy"), as may be amended, varied, supplemented or otherwise modified from time to time with the consent of the Issuer, the Calculation Agent and the Portfolio Manager (with notice to the Trustee and Securityholders) in accordance with the terms of the Transaction Documents, which, as of the date hereof provides:
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(i) any security which is listed or quoted on any securities exchange or similar electronic system and regularly traded thereon will be valued at its last traded price on the relevant valuation day or, if no trades occurred on such day, at the closing bid price if held long by the Issuer and at the closing offer price if sold short by the Issuer, as at the relevant valuation day, and as adjusted in such manner as the Calculation Agent, in its sole and absolute discretion, thinks fit, having regard to the size of the holding, and where prices are available on more than one exchange or system for a particular security the price will be the last traded price or closing bid or offer price, as the case may be, on the exchange which constitutes the main market for such security or the one which the Calculation Agent in its sole and absolute discretion determines provides the fairest criteria in ascribing a value to such security;
(ii) investments, other than securities, which are dealt in or traded through a clearing firm or an exchange or through a financial institution, will be valued by reference to the most recent official settlement price quoted by that clearing house, exchange or financial institution. If there is no such price, then the average will be taken between the lowest offer price and the highest bid price at the close of business on any market on which such investments are or can be dealt in or traded, provided that where such investments are dealt in or traded on more than one market, the Calculation Agent may determine at its discretion which market shall prevail;
(iii) deposits will be valued at their cost plus accrued interest;
(iv) unless otherwise reasonably determined by the Calculation Agent in good faith, Restricted Assets will be valued at their cost until realisation, deemed realisation, or other valuation-generating event occurs. Upon such realisation, deemed realisation, or other valuation-generating event, such Restricted Asset (or realised or deemed realised asset or security) will then be valued in accordance with this section;
(v) any other investments, assets, properties, debts, obligations or liabilities shall be valued as reasonably determined by the Calculation Agent in good faith; and
(vi) any value (whether of an investment or cash) otherwise than in US Dollars will be converted into US Dollars at the rate (whether official or otherwise) which the Calculation Agent in its absolute discretion deems applicable as at close of business on the relevant valuation day, having regard, among other things, to any premium or discount which they consider may be relevant and to costs of exchange
If the Calculation Agent determines that the valuation of any security held by the Issuer in accordance with the foregoing valuation principles does not represent fairly the market value, the Calculation Agent shall value such security as it reasonably determines and shall set forth the basis of such valuation in the Calculation Agent’s records. All values assigned to securities by the Calculation Agent shall be final and conclusive as to all of Series Assets.
For the purpose of calculating the net asset value of the Issuer, the Calculation Agent shall, and shall be entitled to, rely upon, and will not be responsible for the accuracy of, financial data furnished to it by the Issuer's and/or the Sub-Advisor's prime brokers, custodians, market makers, independent third party pricing services or other third parties. The Calculation Agent may also use and rely on industry standard financial models in pricing any of the Issuer's securities or other assets.
Maintenance
The Issuer undertakes that, unless otherwise provided by the Conditions:
1. there shall at all times be a Paying Agent, a Calculation Agent, a Registrar and the Transfer Agent; and
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2. so long as the Securities are admitted to trading on a Stock Exchange, there shall at all times be (if and for so long as the rules of such Stock Exchange so require) a Paying Agent and a Transfer Agent whose appointment complies with the requirements of such Stock Exchange.
Each such Paying Agent and Registrar and the Transfer Agent shall be a reputable financial institution with a place of business in Dublin or London or Luxembourg or such other financial centre as may be specified in the Conditions. In the case of the Paying Agent such place of business shall be outside of Ireland.
Resignation and removal
Subject to sub-clause 19.6 of the Master Agency Terms, any Agent may at any time resign its appointment, subject to such Agent giving to the Issuer, the Paying Agent, the Registrar, the Transfer Agent, and the Trustee not less than thirty (30) days' prior written notice (or such period of notice as the Issuer and the Trustee may agree) to that effect and the Issuer may at any time terminate the appointment of any Agent, subject to the Issuer giving to such Agent, to the Paying Agent, to the Registrar, to the Transfer Agent, and to the Trustee not less than thirty (30) days' written notice to that effect provided that no such notice shall expire:
1. in the case of the Paying Agent, less than thirty (30) days before or thirty (30) days after the due date for any payment in respect of the Securities; or
2. in any other case relating to any other Agent, less than thirty (30) days before or seven (7) days after any date upon which such Agent is required to take any positive action under the Master Agency Terms or the Conditions.
In the event that the Issuer has not appointed a successor Agent after the expiration of the thirty (30) days' written notice period, any Agent, with the consent of the Trustee, may appoint its own successor Agent at any time not less than ten (10) days after the expiration of the thirty (30) days' written notice period.
Termination on bankruptcy
Subject to sub-clause 19.6 of the Master Agency Terms the appointment of any Agent hereunder shall forthwith terminate if at any time such Agent becomes incapable of acting, or is adjudged bankrupt or insolvent, or files a voluntary petition in bankruptcy or makes an assignment for the benefit of its creditors or consents to the appointment of a liquidator or receiver of all or any substantial part of its property or admits in writing its inability to pay or meet its debts as they mature or suspends payment thereof, or if a resolution is passed or an order made for the winding up or dissolution of such Agent, or if a liquidator, examiner, administrator or receiver of such Agent or of all or any substantial part of its property is appointed, or if any order of any court is entered approving any petition filed by or against it under the provisions of any applicable bankruptcy or insolvency law, or if any public officer takes charge or control of such Agent or its property or affairs for the purpose of rehabilitation, conservation or liquidation.
Merger
Any corporation into which any Agent may be merged or converted or any corporation with which such Agent may be consolidated or any corporation resulting from any merger, conversion or consolidation to which such Agent shall be a party shall, to the extent permitted by applicable law and/or regulations and provided that:
1. it shall be qualified to act; and
2. no additional cost shall arise to the Issuer from such merger;
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be the successor to such Agent in relation to the Securities without the execution or delivery of any paper or any further act on the part of the parties hereto. Notice of any such merger conversion or consolidation shall forthwith be given to the Issuer, the Paying Agent, the Registrar, the Transfer Agent and the Trustee (on such of them not subject to such merger, conversion or consolidation).
Paying and Transfer Agent
Subject to sub-clause 19.6 of the Master Agency Terms, the Issuer may at any time, with the prior written approval (and upon notice thereto) of the Paying Agent, the Transfer Agent, the Registrar and the Trustee (such approval not to be unreasonably withheld) appoint additional Paying Agents and Transfer Agents in relation to the Securities.
Appointment of new Agents, limitation on removal
Upon the resignation by or termination of the appointment of the Paying Agent, the Transfer Agent or the Registrar, so long as any Securities remain outstanding, the Issuer will forthwith appoint a new Paying Agent, Transfer Agent or Registrar approved by the Trustee and notwithstanding the foregoing:
1. no such resignation or termination of the appointment of the Paying Agent, the Transfer Agent or the Registrar shall take effect until a new Paying Agent, Transfer Agent or Registrar has been so appointed, such appointment being on terms previously approved in writing by the Trustee which accord with the terms of the Constituting Instrument;
2. no resignation by or termination of the appointment of any Paying Agent or Transfer Agent shall take effect if as a result of such resignation or termination there would cease to be a Paying Agent or Transfer Agent in any place as may be specified in the Conditions as being a place where the Issuer will maintain a Paying Agent or Transfer Agent so long as any Securities remain outstanding.
Change of address
Any Agent may (subject to the provisions of the Constituting Instrument) change the address of its specified office within a particular city, in which event it shall give the Issuer and the Paying Agent, the Transfer Agent and/or the Registrar and the Trustee not less than forty (40) days' (or such shorter period as may be agreed between the parties) prior written notice to that effect, giving the address of the new office and the date upon which such change is to take effect.
Notice
The Paying Agent, the Transfer Agent and/or the Registrar shall give to the Securityholders (if required by the Conditions) and to the Trustee not less than thirty (30) days' notice of any proposed appointment, termination, resignation or change in specified office of which it is aware.
Payment/delivery to successor
lf the appointment of the Paying Agent terminates it shall, on the date on which such termination takes effect, pay to the successor Paying Agent any amount held by it for payment in respect of the Securities less any amount due and payable to the Paying Agent in respect of the Agent's Fee and shall deliver to the successor Paying Agent all records maintained by it pursuant to the Master Agency Terms and all Securities held by it as such Paying Agent.
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Commissions, Fees and Expenses
Payment
1. The Issuer shall, in respect of the services to be performed and expenses to be incurred by the Agents pursuant to the Agency Agreement in relation to the Securities, procure to be paid to the Agents the commissions, fees (if any) and expenses (including without limitation all reasonable out-of-pocket expenses such as legal, advertising, cable and postage expenses) (together with value added tax thereon, if applicable) in accordance with such fee letters as may be agreed with such Agent(s) from time to time on the dates and in the amounts set out in such fee letter(s) for the services to be rendered by the relevant Agent under the Agency Agreement.
2. The Issuer will pay all transaction and other documentary taxes, fees or duties (if any) in connection with the execution and delivery of the Constituting Instrument.
Payment to other Agents
The Paying Agent, shall, subject to receipt of the same from the Issuer, arrange for payment of the commissions (if any) due to the Paying Agent, the Calculation Agent, the Registrar and the Transfer Agent in relation to any Series and arrange for the reimbursement of their expenses promptly upon receipt by it of a demand therefor, supported by evidence of such expenditure.
PORTFOLIO MANAGEMENT AGREEMENT
The Portfolio Manager performs its services for the Issuer pursuant to a portfolio management agreement with the Issuer and the Trustee (the “Portfolio Management Agreement”). Pursuant to the Portfolio Management Agreement, the Portfolio Manager is empowered to exercise full discretion in the management of the investment transactions of the Issuer, subject only to any investment and borrowing restrictions in effect from time to time. The Portfolio Management Agreement has a term expiring on 31 December 2014, and thereafter will be automatically renewed for successive one-year periods, subject to termination by either party at the end of any fiscal year upon not less than ninety (90) days’ prior written notice.
The Portfolio Management Agreement does not impose any specific obligations or requirements concerning the allocation of time, effort or investment opportunities to the Issuer or any restrictions on the nature or timing of investments for the account of the Issuer and for the Portfolio Manager’s own account or other accounts which the Portfolio Manager may manage.
Pursuant to the terms of the Portfolio Management Agreement, the Portfolio Manager and its affiliates generally will not be liable to the Issuer or its investors for the consequences of their conduct, and will be indemnified by the Issuer against any losses they may incur, in the absence of fraud, intentional misconduct or reckless disregard by the Portfolio Manager or its affiliates of their duties under the Portfolio Management Agreement (in each case as determined under the laws of the Cayman Islands). As a result of these provisions, the Issuer (and not the Portfolio Manager) will ordinarily be responsible for any losses from trading errors and similar human errors, absent fraud, intentional misconduct or reckless disregard by the Portfolio Manager or its affiliates of their duties under the Portfolio Management Agreement (in each case as determined under the laws of the Cayman Islands).
Management Fee
For its management and administrative services to the Issuer, the Portfolio Manager receives a fee, payable quarterly in advance (the "Management Fee").
The Management Fee is equal to the sum of 0.375% of the value of each Security based on its pro rata ownership of the underlying Series Assets (which shall include any asset for which there is, in the
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Portfolio Manager’s sole and absolute discretion, no readily ascertainable market (the "Restricted Assets"). For purposes of determining the Management Fee, net asset value will be determined as provided in the relevant Listing Particulars. A pro rata Management Fee shall be assessed on Securities sold on any date other than the first day of any calendar quarter, and a pro rata share of the Management Fee shall be reimbursed to the Issuer with respect to amounts redeemed on any date prior to the end of a calendar quarter.
If the Portfolio Management Agreement is terminated at any time other than at the beginning of a fiscal quarter, the Management Fee shall be pro rated and paid for the period from the end of the preceding quarter to the termination of the Agreement, and if the Management Fee has already been paid for such partial quarter, the Portfolio Manager shall refund a pro rata portion of the Management Fee for such quarter based on the portion of the quarter during which the Portfolio Management Agreement is in effect.
The Portfolio Manager may, in its sole and absolute discretion, waive all or part of its Management Fee relating to a Security or, with the consent of the affected Securityholder, charge a Management Fee on a different basis or at a different rate.
Performance Fee
At the end of certain accounting periods, including upon redemptions and at the end of each calendar year, an amount equal to twenty per cent (20%) of the net income (net profits and unrealised gains less net losses and unrealised losses) allocated to each Security in excess of the “Loss Carryforward” described below (the "Performance Fee") will be paid to the Portfolio Manager subject to the Priority of Payments. Realised and deemed realised Restricted Assets will also be included in such Performance Fee calculation.
The Performance Fee deducted from the Series Assets underlying a Security upon any related redemption will equal twenty per cent (20%) of the cumulative net profit allocated to such Securities (including net realised and unrealised gains, losses and income) minus any Loss Carryforward, to the extent not previously paid as part of a Performance Fee.
The Portfolio Manager may waive all or any portion of the Performance Fee with respect to any Securityholder in any fiscal period.
Loss Carryforward
The Performance Fee is subject to what is commonly known as a loss carryforward or “high water mark.” If the Issuer has a net loss in any calendar year, this loss will be carried forward as to each the Series Assets underlying each Security, to future years. “Loss Carryforward” is defined as the amount of net loss allocated to the Series Assets underlying each Security and incurred in one or more prior years that has not been made up by subsequent allocations of net profit. If a Securityholder affects a partial redemption, any Loss Carryforward that has not been eliminated will be proportionately reduced based upon the amount redeemed. Thus, only net profits that constitute new net profits in excess of the highest cumulative level of net profits as of the preceding date on which the Portfolio Manager last received a Performance Fee will be subject to a further Performance Fee.
The Loss Carryforward for each Securityholder will be calculated separately in order to account for all partial redemptions and complete redemptions of each Securityholder. As such, the Portfolio Manager may earn a Performance Fee on certain Securities while simultaneously recouping Loss Carryforwards on other Securities for losses incurred in previous periods attributable to such Securities.
The Performance Fee may create an incentive for the Portfolio Manager to make investments that are more risky or speculative than would be the case in the absence of the Performance Fee.
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With respect to the Management Fee or Performance Fee earned by the Portfolio Manager in a calendar year and amounts senior to such fees in the Priority of Payments in respect of such calendar year (collectively, the "Senior Amounts"), the Portfolio Manager shall manage the relevant Series Assets in a commercially reasonable manner so that the Issuer shall have sufficient funds to pay such Senior Amounts, subject to the provisions of the Issuer Documents and the Issuer having available funds to make such payments.
Issuer Indemnity
To the fullest extent permitted by law, the Portfolio Manager, any of its affiliates and any officer, director, manager, member, partner, shareholder, employee, legal representative or agent of any of any such affiliate (each, an "Indemnified Party") shall, in accordance with Section 11(b) of the Portfolio Management Agreement, be indemnified and held harmless by the Issuer from and against any and all loss, claims, damages, liabilities joint and several, expenses, judgments, fines, settlements and other amounts arising from any and all claims (including reasonable legal expenses), demands, actions, suits or proceedings (civil, criminal, administrative or investigative) in which they may be involved, as a party or otherwise, by reason of: (i) any acts or omissions arising out of, related to or in connection with the Portfolio Management Agreement, the Issuer Documents (as defined in the Portfolio Management Agreement), and the Issuer’s business and affairs, except when such act or omission constituted fraud, intentional misconduct or reckless disregard by the Portfolio Manager or its affiliates of their duties hereunder (in each case as determined under the laws of the Cayman Islands or other relevant jurisdiction), or (ii) any acts or omissions of any broker or agent of the Issuer arising out of, related to or in connection with the Portfolio Management Agreement, the Issuer Documents or the Issuer’s business and affairs. The termination of a proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere, or its equivalent, shall not, of itself, create a presumption that the Indemnified Party is not entitled to indemnification hereunder (unless there has been a final adjudication in the proceeding that the Indemnified Party’s act or omission constituted fraud, intentional misconduct or reckless disregard by the Portfolio Manager or its affiliates of their duties hereunder). Without limiting the generality of the foregoing, the Issuer shall also indemnify any Indemnified Party who was or is a party or is threatened to be made a party to any threatened, pending or completed action by or in the right of the Issuer to procure a judgment in its favor by reason of the fact that such Indemnified Party is or was an agent of the Issuer against expenses incurred by such Indemnified Party in connection with the defense or settlement of such action. Expenses (including attorneys’ fees) incurred in defending any proceeding shall be paid fully by the Issuer in advance of the final disposition of such proceeding upon receipt of an undertaking by or on behalf of the Indemnified Party to repay such amount if it shall ultimately be determined that the Indemnified Party is not entitled to be indemnified by the Issuer as authorised thereunder
Duration and Termination
The Portfolio Management Agreement shall remain in effect through 31 December 2014, and shall be automatically extended for additional one-year terms thereafter, except that it may be terminated in writing by the Portfolio Manager or the Issuer without cause upon at least ninety (90) days’ written notice to the Issuer or the Portfolio Manager and the Trustee, respectively, prior to the end of any Fiscal Year of the Issuer.
The Portfolio Management Agreement will automatically terminate upon commencement of the dissolution of the Issuer.
Removal of Portfolio Manager by Trustee
Subject to Section 13(d) (Appointment of Successor Portfolio Manager) of the Portfolio Management Agreement, the appointment of the Portfolio Manager may be terminated without cause by the Trustee, acting pursuant to a Written Direction, upon ninety (90) days' prior written notice to the Portfolio Manager prior to the end of any Fiscal Year of the Issuer. The Trustee shall have no responsibility for determining whether any cause for termination exists, or whether the appointment of the Portfolio Manager under the Portfolio Management Agreement is to be terminated.
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Appointment of Successor Portfolio Manager
Unless otherwise agreed by the Issuer, or, following the occurrence of an Event of Default and acceleration of the Securities, the Trustee (acting pursuant to a Written Direction), no termination, resignation or removal of the Portfolio Manager shall be effective until the date on which:
(a) a successor Portfolio Manager acceptable to the Issuer or the Trustee (as the case may be) and selected by the majority in interest of the Securityholders:
i. which in the opinion of the Issuer or the Trustee (as the case may be) has demonstrated an ability to professionally and competently perform duties similar to those imposed upon the Portfolio Manager under the Portfolio Management Agreement;
ii. which is legally qualified and has the capacity to act as Portfolio Manager under the Portfolio Management Agreement, as successor to the Portfolio Manager in the assumption of all of the responsibilities, duties and obligations of the Portfolio Manager hereunder;
iii. which shall not cause or result in the Issuer or the Series Assets being required to register under the provisions of the Investment Company Act or other applicable law, regulations or practices which otherwise would not apply;
iv. which shall not, using commercially reasonable efforts, cause the Issuer to be, or deemed to be, resident for tax purposes or be engaged or deemed to be engaged, in the conduct of a trade or business in any jurisdiction other than in Ireland; and
v. which is not an affiliate of the Portfolio Manager agrees in writing to assume all of the Portfolio Manager's duties and obligations pursuant to the Portfolio Management Agreement; and
(b) the Securityholders have been notified of such appointment in accordance with the Conditions. save that, if no successor is appointed within ninety (90) days of the notice of resignation or removal of the Portfolio Manager, the Portfolio Manager shall be entitled to resign and shall not be required to partake in the court proceedings referred to below.
Upon the resignation or removal of the Portfolio Manager pursuant to this Section 13 (Change of the Portfolio Manager) of the Portfolio Management Agreement, the Issuer (with the consent of the majority in interest of the Securityholders), or the Trustee acting pursuant to a Written Direction, shall use its reasonable efforts to appoint a successor Portfolio Manager within ninety (90) days after the date of notice of resignation or removal of the Portfolio Manager and, failing which, a court of competent jurisdiction shall be entitled (but not obliged) to appoint a successor Portfolio Manager on behalf of the Issuer in each case, subject to the requirements relating to any successor Portfolio Manager above.
Upon the appointment of a successor Portfolio Manager, the rights, duties and obligations of such Portfolio Manager pursuant to the Portfolio Management Agreement may be amended subject to the prior consent of the Issuer and a Written Direction, or the Trustee.
In connection with any appointment of a successor Portfolio Manager, the Issuer or, following the occurrence of an Event of Default and acceleration of the Securities, the Trustee (acting pursuant to a Written Direction) may make such arrangements for the compensation of such successor as the Issuer or, following the occurrence of an Event of Default and acceleration of the Securities, the Trustee (acting pursuant to a Written Direction) and such successor shall agree. Provided that, no compensation payable to a successor Portfolio Manager shall be greater than that paid to the original Portfolio Manager without the prior consent of the majority in interest of the Securityholders.
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For the avoidance of doubt, any beneficial owner of the Securities, or any affiliate thereof, meeting the above requirements set forth in Section 13 of the Portfolio Management Agreement may be appointed as a successor Portfolio Manager.
CUSTODIAN AGREEMENT
The Sub-Advisor has entered into the Custodian Agreement with the Custodian pursuant to which the Custodian has agreed to provide custodial services to the Sub-Advisor with respect to the Series Assets.
Fees
The custody fees shall be calculated and paid in accordance with the agreed fee schedule which may be amended from time to time following the agreement of both parties
Term and Termination
Under any of the following circumstances, either Party shall have the right to terminate the Custodian Agreement by giving thirty (30) days’ prior written notice to the other Party:
(a) The other Party is revoked or is declared bankrupt in accordance with law, or enters into bankruptcy, dissolution or liquidation procedures, or becomes unable to pay its debts as they become due.
(b) The other Party materially breaches the Custodian Agreement, and such breach is not rectified within thirty (30) days of written notice given by the non-breaching Party.
(c) Any of the termination event(s) stipulated in the relevant laws, regulations, orders, guidelines, policies and any governmental, regulatory, exchange, clearing system or other authority directives or requests occurs.
(d) Any of the termination event(s) stipulated in the Custodian Agreement occurs.
All disputes arising from or in connection with shall be settled through consultation or mediation between the Parties. In case no agreement can be reached through consultation or mediation, the disputes shall be submitted to China International Economic & Trade Arbitration Commission (CIETAC), Beijing for arbitration in accordance with CIETAC arbitration rules in effect at the time of the application for arbitration. The tribunal shall consist of three (3) arbitrators. The arbitral award shall be final and binding on both Parties.
When any dispute is under arbitration, except for the provisions in dispute, the remaining provisions of the Custodian Agreement shall remain effective. The Parties shall continue to faithfully, diligently and responsibly fulfil their respective obligations under the Custodian Agreement
CORPORATE SERVICES AGREEMENT
The Issuer has entered into the Corporate Services Agreement with the Corporate Services Provider pursuant to which the Corporate Services Provider has agreed to provide certain corporate administration services to the Issuer.
Duration and Termination
Except as otherwise provided, the Corporate Services Agreement to provide Services may be terminated by either Party upon giving ninety (90) days prior written notice to the other Party to that effect. Such termination shall take effect on the date of expiry of the notice or such longer period as the parties may agree.
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The Corporate Services Agreement shall terminate automatically upon the winding up of the Issuer.
Notwithstanding the forgoing, the Corporate Services Agreement may be terminated by the Corporate Services Provider forthwith if the Issuer fails to observe any of the covenants, undertakings and agreement to be observed by the Issuer as set out in these general terms and conditions herein to be observed and fails to remedy the same within thirty (30) days (or such other period as shall be agreed between the parties) upon being notified of such breach and being requested to do so.
Notwithstanding the forgoing, the Agreement may be terminated by the Issuer if Corporate Services Provider:
(a) commits a material breach of any of the terms or conditions of the Corporate Services Agreement and fails to remedy the same within thirty (30) days (or such other period as shall be agreed between the parties) of being required so to do;
(b) enters into liquidation whether compulsorily or voluntarily (other than for the purpose of amalgamation or reconstruction) or compounds with any of its creditors or has a receiver, administrative receiver, examiner or administrator appointed over all or any part of its assets or takes or suffers any similar action in consequence of its debt;
(c) ceases or threatens to cease to carry on its business or a substantial part of its business;
(d) is unable to pay its debts as they fall due or otherwise becomes insolvent or enters into any composition or arrangement with or for the benefit of its creditors or any class thereof;
(e) has a receiver appointed over all or any substantial part of its undertaking, assets or revenues;
(f) is the subject of any effective resolution for the winding-up except in relation to a voluntary winding up for the purposes of reconstruction or amalgamation upon terms previously approved in writing by the other party;
(g) is the subject of a court order for its winding-up;
(h) purports to assign the Corporate Services Agreement or any rights under the Corporate Services Agreement without the express written consent of the Issuer; and/or
(i) consolidates or amalgamates with, or merges with or into, or transfers all or substantially all of its assets to, another entity or if control of Corporate Services Agreement changes
Upon termination all and any obligation arising hereunder or by law to provide the Services (as defined therein) shall cease provided that in the event Corporate Services Agreement shall be required by law to provide notice to a competent authority in Ireland or publish a notice of the termination of the Corporate Services Agreement, the obligation to provide the Services shall cease upon Corporate Services Agreement providing such notice.
Subject to clause 6.8 of the Corporate Services Agreement (as set out below), upon termination, Corporate Services Agreement shall at the request of the Issuer return to the Issuer, or as it may direct, the corporate records of the Issuer. For the purposes of the forgoing, the corporate records of the Issuer shall include all such records or documents which the Issuer shall be legally required to hold at its registered office as well as all correspondence (including electronic mail) received and documents prepared on behalf of the Issuer in connection with the performance of the Services. All other records or
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documentation (including, but not limited to, electronic mail and all Confidential Information) received or prepared by Corporate Services Agreement shall be the exclusive property of Corporate Services Agreement and shall be retained by Corporate Services Agreement.
Any obligation (including Corporate Services Agreement fees) outstanding at the time of termination of the Corporate Services Agreement (other than in the case of where a reasonable objection shall have been made pursuant to clause 2.3 of the Corporate Services Agreement, outlined above) shall be promptly paid by the Issuer or caused to be paid by the Issuer, without deduction or set off in respect of any claim the Issuer may have, and until adequate security for any obligation has been provided, Corporate Services Agreement shall have the right to retain any and all corporate records of the Issuer.
Any corporate records held by Corporate Services Agreement following the termination of the Corporate Services Agreement, for whatever reason, shall be held subject to Corporate Services Agreement’s document retention policy or as required by law, including the right to destroy such corporate documents after the expiry of the applicable document retention period. Any termination of the Corporate Services Agreement pursuant:
(a) shall be without prejudice to any claim by a party against another party for any breach of the terms hereof committed prior to such termination and the obligations of the parties; and
(b) shall not take effect until:
I. a successor corporate services provider has been appointed (and approved by the Board); and
II. such of the Directors and/or Secretary (as the case may be) nominated pursuant to the Corporate Services Agreement and then in office, as the Issuer requires, tender their resignation provided that such resignations are not effective until after the appointment of the successor corporate services provider.
Fees
The Issuer shall pay to the Corporate Services Provider such up-front fee, plus any value added tax properly chargeable thereon, as may be agreed in writing between the Issuer and the Corporate Services Provider, in accordance with the Priority of Payments and the other Transaction Documents.
MASTER DEFINITIONS
The Issuer and the Trustee have signed the Master Definitions for the purposes of identification only.
GOVERNING LAW OF THE MASTER DOCUMENTS
The Constituting Instrument, Master Agency Terms, Master Trust Terms, the Securities, Trust Deeds, Agency Agreements, Corporate Services Agreement and any dispute, controversy, proceedings or claim of whatsoever nature and all non-contractual obligations arising out of or in connection with them, shall be governed by and construed in accordance with the laws of Ireland.
The Portfolio Management Agreement and any dispute, controversy, proceedings or claim of whatsoever nature and all non-contractual obligations arising out of or in connection with them, shall be governed by and construed in accordance with the laws of shall be governed by the laws of the Cayman Islands.
The Custodian Agreement and Brokerage Agreements shall be governed by and construed in accordance with the laws of shall be governed by the law of the People's Republic of China.
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ADMISSION TO TRADING
Listing
It is expected that each Series which is to be listed on the Official list and admitted to trading on the Global Exchange Market of Euronext Dublin will be admitted separately as and when issued. The listing of the Programme is expected to be granted on or before 20 May 2020. The Programme provides that Securities may be listed on such further or other stock exchange or admitted to trading on such further or other markets as the Issuer may decide.
The Issuer may also issue unlisted Securities and Securities which are not admitted to trading on any market.
Notices
So long as the Securities of any Series are listed on Euronext Dublin, and its guidelines so require, notices will also be notified to Euronext Dublin.
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USE OF PROCEEDS
Use of Proceeds
All funding received under the Securities of any Series shall be used at the discretion of the Issuer or the Portfolio Manager to:
1. acquire, manage and service Combined Series Assets or Segregated Series Assets, as applicable, and to meet its obligations thereunder from time to time;
2. pay the Trustee Fees due and payable or expected to be due and payable in accordance with the terms of the Master Conditions;
3. pay the Agents Fees due and payable or expected to be due and payable in accordance with the terms of the Master Conditions;
4. pay the Series Expenses (including the applicable management fee and performance fee) due and payable or expected to be due and payable in accordance with the terms of the Master Conditions; and
5. pay the Expenses (including the applicable management fee and performance fee) due and payable or expected to be due and payable in accordance with the terms of the Master Conditions.
The Issuer shall procure that a sufficient amount of the initial principal amount of funding is retained for the payment of the Trustee Fees, Agents Fees, Series Expenses and or Expenses or the pro-rata share of obligations, costs (including organisational costs), fees, liabilities and expenses allocable to the Securities in accordance with the terms hereof.
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CERTAIN TAXATION CONSIDERATIONS
IRELAND TAXATION
The following is a summary based on the laws and practices currently in force in Ireland regarding the tax position of investors beneficially owning their Securities and should be treated with appropriate caution. Particular rules may apply to certain classes of taxpayers holding Securities. The summary does not constitute tax or legal advice and the comments below are of a general nature only. Prospective investors in the Securities should consult their professional advisors on the tax implications of the purchase, holding, redemption or sale of the Securities and the receipt of interest thereon under the laws of their country of residence, citizenship or domicile. Prospective investors should be aware that the anticipated tax treatment in Ireland summarised below may change.
Taxation of the Issuer
Corporation Tax
The Issuer will be taxable as a "qualifying company" pursuant to Section 110 of the Taxes Act. Profits arising to the Issuer shall be taxable at a rate of 25 per cent. The rules applicable in order to calculate this tax are generally the same as those applicable to a regular trading company. A "qualifying company" means a company:
(a) which is resident in Ireland;
(b) which either acquires "qualifying assets" (as defined) from a person, holds or manages qualifying assets as a result of an arrangement with another person, or has entered into a legally enforceable arrangement with another person which itself constitutes a qualifying asset;
(c) which carries on in Ireland a business of holding qualifying assets or managing qualifying assets or both, including in the case of plant and machinery acquired by the qualifying company, a business of leasing that plant and machinery;
(d) which, apart from activities ancillary to that business, carries on no other activities;
(e) which has notified an authorised officer of the Irish Revenue Commissioners in the prescribed format and within the required timeframe that it is or intends to be such a qualifying company; and
(f) the market value of qualifying assets held or managed by the company, or the market value of qualifying assets in respect of which the company has entered into legally enforceable arrangements, is not less than Euro 10,000,000 on the day on which the qualifying assets are first acquired, first held, or a legally enforceable arrangement with another person which itself constitutes a qualifying asset is first entered into, by the company, but a company will not be a qualifying company if any transaction is carried out by it otherwise than by way of a bargain made at arm's length apart from where that transaction is the payment of consideration for the use of principal in certain circumstances.
For these purposes, "qualifying asset" means an asset which consists of, or of an interest (including a partnership interest) in, a financial asset, certain commodities or plant and machinery.
Where the interest on the Securities does not represent more than a reasonable commercial return on the principal outstanding and it is not dependant on the results of the company's business, the interest in respect of the Securities issued will be deductible in determining the taxable profits of the Issuer.
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However, where the interest on a Security represents more than a reasonable commercial return on the principal outstanding or is dependent on the results of the company's business, the interest payable by the Issuer will not be deductible if:
(a) it is reasonable to consider that the payment is not made, or the security to which the payment relates was not entered into, for bona fide commercial purposes and forms part of any arrangement or scheme of which the main purpose or one of the main purposes, is the avoidance of tax; or
(b) the interest is paid to a person that:
(A) is not resident in Ireland or is not otherwise within the charge to corporation tax in Ireland in respect of that interest; and
(B) is not a pension fund, government body or other person resident in a "relevant territory" (as defined below) who, under the laws of that relevant territory, is exempted from tax which generally applies to profits, income or gains in that territory (or, if such a person, where the person is a specified person); and
(C) that interest is not subject (A) to a tax under the laws of a relevant territory, without any reduction computed by reference to the amount of such interest, which generally applies to profits, income or gains received in the relevant territory by persons from outside the relevant territory, or (B) to Irish withholding tax at the standard rate of income tax (currently 20 per cent.).
The provisions at (b) above, will not apply in respect of an interest payment in respect of a quoted Eurobond or a wholesale debt instrument (see "Withholding Taxes" below), except where the interest is paid to a specified person and at the time the quoted Eurobond or wholesale debt instrument was issued, the Issuer was in possession, or aware, of information, including information about any arrangement or understanding in relation to ownership of the quoted Eurobond or the wholesale debt instrument after that time, which could reasonably be taken to indicate that interest which would be payable in respect of that quoted Eurobond or wholesale debt instrument would not be subject, without any reduction computed by reference to the amount of such interest, to a tax in a relevant territory which generally applies to profits, income or gains received in that territory, by persons, from sources outside that territory.
Where a payment is made out of the assets of the Issuer under a "return agreement" (as defined below) that is dependent on the results of the Issuer's business or any part of its business and that payment would not be deductible in computing the profits or gains of the Issuer if the payment was to be treated for the purposes of the Taxes Act (other than Section 246 thereof) as a payment of interest in respect of securities of the Issuer other than a quoted Eurobond or a wholesale debt instrument that was dependent on the results of the Issuer's business, that payment will not be deductible.
For the purposes of this "Ireland Taxation" section, terms have the meanings as set out below:
A “specified person” means:
(a) a company which directly or indirectly controls the Issuer, is controlled by the Issuer, or is controlled by a third company which also directly or indirectly controls the Issuer; or
(b) a person, or persons who are connected with each other, from whom assets were acquired, or to whom the Issuer has made loans or advances, or to whom loans or advances held by the Issuer were made, or with whom the Issuer has entered into a specified agreement, where the aggregate value of such assets, loans, advances or agreements represents not less than 75% of the aggregate value of the assets of the Issuer;
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and for these purposes, a person has control of a company where that person has:
(i) the power to secure-
(A) by means of the holding of shares or the possession of voting power in or in relation to that or any other company, or
(B) by virtue of any powers conferred by the constitution, articles of association or other document regulating that or any other company, that the affairs of the first-mentioned company are conducted in accordance with the wishes of that person, or
(ii) significant influence over the first-mentioned company and holds, directly or indirectly, more than-
(A) 20 per cent of the issued share capital of the company,
(B) 20 per cent of (i) the principal value of any securities under which the consideration given by the company for the use of the principal secured is to any extent dependent on the results of the company's business or any part of the company's business, or the consideration so given represents more than a reasonable commercial return for the use of that principal by that company, or (ii) any such securities where those securities have no principal value, or
(C) the right to 20 per cent of the interest or other distribution payable in respect of any securities issued by the company under which the consideration given by the company for the use of the principal secured is to any extent dependent on the results of the company's business or any part of the company's business, or the consideration so given represents more than a reasonable commercial return for the use of that principal by that company,
and where significant influence means a person with the ability to participate in the financial and operating decisions of a company.
A "specified agreement" includes any agreement, arrangement or understanding that (a) provides for the exchange, on a fixed or contingent basis, of one or more payments based on the value, rate or amount of one or more interest or other rates, currencies, commodities, securities, instruments of indebtedness, indices, quantitative measures, or other financial or economic interests or property of any kind, or any interest therein or based on the value thereof, and (b) transfers to a person who is a party to the agreement, arrangement or understanding or to a person connected with that person, in whole or in part, the financial risk associated with a future change in any such value, rate or amount without also conveying a current or future direct or indirect ownership interest in an asset (including any enterprise or investment pool) or liability that incorporates the financial risk so transferred.
A "relevant territory" is:
(a) a Member State of the European Union other than Ireland;
(b) not being such a Member State, a territory with which Ireland has a signed a double taxation agreement that is in effect; or
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(c) a territory with the government of which arrangements have been made which on completion of the procedures set out in Section 826(1) of the Taxes Act will have the force of law.
A "return agreement" is a specified agreement whereby payments due under the specified agreement are dependent on the results of the Issuer's business or any part of the Issuer's business.
Deductibility of Interest by Qualifying Companies Holding Specified Mortgages
As a result of changes to Section 110 of the Taxes Act introduced in Finance Act 2016 a restriction on the deductibility of interest which represents more than a reasonable commercial return on the principal outstanding or is dependent on the results of the business of the "qualifying company" can apply from 6 September 2016 to the extent that the "qualifying company" holds and/or manages one or more "specified mortgages" (as defined below), being, inter alia, a loan which is secured on, and which derives its value from, or the greater part of its value from, directly or indirectly, Irish land.
Finance Act 2017 extended the interest restriction introduced in Finance Act 2016 to profit participating or excessive interest payable on or after 19 October 2017 by a "qualifying company" which holds and/or manages shares that derive their value, or the greater part of their value, directly or indirectly from Irish land. Shares that derive their value from, or the greater part of their value from, directly or indirectly, land in Ireland are to be included in the definition of "specified property business" (defined below) to which the interest restriction can apply.
On the basis that the Issuer does not and will not carry on a "specified property business" for the purposes of Section 110 of the Taxes Act, this interest restriction should not apply to the transactions contemplated in these Base Listing Particulars to be undertaken by the Issuer.
For the purpose of the above, the following terms have the following meanings:
"specified mortgage" means:
(a) a loan which is secured on, and which derives its value from, or the greater part of its value from, directly or indirectly, land in Ireland,
(b) a "specified agreement" (as defined above) which derives all of its value, or the greater part of its value, directly or indirectly, from land in Ireland or a loan to which paragraph (a) applies other than a loan or specified agreement which derives its value or the greater part of its value from a CLO transaction, a CMBS/RMBS transaction, a loan origination business or a sub-participation transaction (in each case as defined in Section 110(5A)(a) of the Taxes Act), or
(c) the portion of a specified security issued by a "qualifying company" and treated as attributable to the specified property business of the qualifying company in accordance with subsection (5A)(c)(ii) of Section 110 of the Taxes Act;
"specified security" means a security where Section 110(4) of the Taxes Act would, or would but for subsection (5A) of Section 110 of the Taxes Act, apply to any interest or other distribution payable thereon;
"specified property business" in relation to a "qualifying company" means the whole, or part, of the business of the company that involves the holding, managing or both the holding and managing of (a) specified mortgages (as defined above), (b) units in an IREF (within the meaning of Chapter 1B of Part 27, of the Taxes Act), or (c) shares that derive their value from or the greater part of their value from, directly or indirectly, land in Ireland, and shall not include, (i) a CLO transaction, (ii) a CMBS/RMBS transaction, (iii) a loan origination business, (iv) a sub-participation transaction (in each case, as defined in Section 110(5A) of the Taxes Act), or (v) activities which are preparatory to (i), (ii), (iii) or (iv) where the
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qualifying company, in respect of (i) or (ii), apart from activities incidental or preparatory to that transaction or business, carries on no other activities, and where the terms used and not otherwise defined above shall have the meanings set forth in subsection (5A) of Section 110 of the Taxes Act.
Taxation of Securityholders - Income Tax
In general, persons who are resident in Ireland are liable to Irish taxation on their world-wide income whereas persons who are not resident in Ireland are only liable to Irish taxation on their Irish source income. All persons are under a statutory obligation to account for Irish tax on a self-assessment basis and there is no requirement for the Irish Revenue Commissioners to issue or raise an assessment.
Interest paid and discounts realised on the Securities have an Irish source and therefore interest earned and discounts realised on such Securities will be regarded as Irish source income. Accordingly, pursuant to general Irish tax rules, a non-Irish resident person in receipt of such income would be technically liable to Irish income tax (and the universal social charge if received by an individual) subject to the provisions of any applicable double tax treaty. Ireland has currently 74 double tax treaties of which 73 are in effect and the majority of them exempt interest (which can include discounts) from Irish tax when received by a resident of the other jurisdiction. Credit is available for any Irish tax withheld from income on account of the related income tax liability. Non-Irish resident companies, where the income is not attributable to a branch or agency of the company in Ireland, are subject to income tax at the standard rate. Therefore any withholding tax suffered should be equal to and in satisfaction of the full income tax liability. (Non- Irish resident companies operating in Ireland through a branch or agency of the company in Ireland to which the income is attributable would be subject to Irish corporation tax).
There is an exemption from Irish income tax under Section 198 of the Taxes Act in certain circumstances. These circumstances include:
(a) where the interest is paid by a company in the ordinary course of a trade or business carried on by it to a company (i) which is not resident in Ireland and which, by virtue of the law of a relevant territory, is resident in the relevant territory for the purposes of tax, and that relevant territory imposes a tax that generally applies to interest receivable in that territory by companies from sources outside that territory, or (ii) where the interest is either (A) exempted from the charge to income tax under arrangements made with the government of a territory outside Ireland having the force of law under procedures set out in Section 826(1) of the Taxes Act, or (B) would be exempted from the charge to income tax if arrangements made, on or before the date of payment of the interest with the government of a territory outside Ireland that do not have force of law under procedures set out in Section 826(1) of the Taxes Act, had the force of law when the interest was paid;
(b) where the interest is paid by a qualifying company within the meaning of Section 110 of the Taxes Act out of the assets of that qualifying company to a person who is not resident in Ireland and is resident in a relevant territory (residence to be determined under the laws of that relevant territory);
(c) where the interest is payable on a quoted Eurobond or a wholesale debt instrument (see "— Withholding Taxes" below) and is paid by a company to a person who is not resident in Ireland and is resident in a relevant territory (residence to be determined under the laws of that relevant territory) or to a company which is under the control, whether directly or indirectly, of a person/persons who by virtue of the law of a relevant territory is/are resident in a relevant territory (residence to be determined under the laws of that relevant territory) and is/are not under the control of person(s) who are not so resident, or to a company where the principal class of shares of the company or its 75 per cent. parent is substantially and regularly traded on a recognised stock exchange; or
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(d) where discounts arise to a person in respect of securities issued by a company in the ordinary course of a trade or business, where that person is not resident in Ireland and is resident in a relevant territory (residence to be determined under the laws of that relevant territory).
Interest on the Securities and discounts realised which do not fall within the above exemptions are within the charge to Irish income tax to the extent that a double tax treaty does not exempt the interest or discount as the case may be. However, it is understood that the Irish Revenue Commissioners have, in the past, operated a practice (as a consequence of the absence of a collection mechanism rather than adopted policy) whereby no action will be taken to pursue any liability to such Irish tax in respect of persons who are regarded as not being resident in Ireland except where such persons:
(a) are chargeable in the name of a person (including a trustee) or in the name of an agent or branch in Ireland having the management or control of the interest; or
(b) seek to claim relief and/or repayment of tax deducted at source in respect of taxed income from Irish sources; or
(c) are chargeable to Irish corporation tax on the income of an Irish branch or agency or to income tax on the profits of a trade carried on in Ireland to which the interest is attributable.
There can be no assurance that the Irish Revenue Commissioners will apply this practice in the case of the holders of Securities and, as mentioned above, there is a statutory obligation to account for Irish tax on a self-assessment basis and there is no requirement for the Irish Revenue Commissioners to issue or raise an assessment.
Withholding Taxes
In general, withholding tax at the rate of 20 per cent. must be deducted from payments of yearly interest that are within the charge to Irish tax, which would include those made by an Irish resident company. The Issuer will not be obliged to make a withholding or deduction for or on account of Irish income tax from a payment of interest on a Security so long as the interest paid on the relevant Security is deductible (see above) and falls within one of the following categories.
(a) Interest paid on a quoted Eurobond
Section 64 of the Taxes Act provides for the payment of interest in respect of quoted Eurobonds without deduction of tax in certain circumstances. A "quoted Eurobond" is defined in Section 64 of the Taxes Act as a security which:
(i) is issued by a company;
(ii) is quoted on a recognised stock exchange (Euronext Dublin is a recognised stock exchange for this purpose); and
(iii) carries a right to interest.
There is no obligation to withhold tax on quoted Eurobonds where:
(i) the person by or through whom the payment is made is not in Ireland; or
(ii) the payment is made by or through a person in Ireland, and
(a) the quoted Eurobond is held in a recognised clearing system (Euroclear and Clearstream, Luxembourg are recognised clearing systems); or
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(b) the person who is the beneficial owner of the quoted Eurobond and who is beneficially entitled to the interest is not resident in Ireland and has made an appropriate written declaration to this effect to a relevant person (such as a paying agent located in Ireland).
If the Securities to be issued by the Issuer qualify as quoted Eurobonds and are held in a recognised clearing system, the payment of interest in respect of such Securities should be capable of being made without withholding tax, regardless of where the Securityholder is resident.
(b) Interest paid by a qualifying company in the ordinary course of business to certain non-residents
Section 246 of the Taxes Act provides an exemption in respect of interest payments made by a qualifying company to a person which, by virtue of the law of a relevant territory, is resident in the relevant territory for the purposes of tax except where that person is a company and the interest is paid to the company in connection with a trade or business carried on in Ireland by that company through a branch or agency. Section 246 of the Taxes Act also provides an exemption in respect of interest payments made by a company in the ordinary course of a trade or business carried on by it to a company (i) which, by virtue of the law of a relevant territory, is resident in the relevant territory for the purposes of tax, and that relevant territory imposes a tax that generally applies to interest receivable in that territory by companies from sources outside that territory, or (ii) where the interest is either (A) exempted from the charge to income tax under arrangements made with the government of a territory outside Ireland having the force of law under procedures set out in Section 826(1) of the Taxes Act, or (B) would be exempted from the charge to income tax if arrangements made, on or before the date of payment of the interest with the government of a territory outside Ireland that do not have force of law under procedures set out in Section 826(1) of the Taxes Act, had the force of law when the interest was paid, except in each case at (i) or (ii) where the interest is paid to the company in connection with a trade or business carried on in Ireland by that company through a branch or agency.
Discounts realised on the Securities will not be subject to Irish withholding tax.
Encashment Tax
In certain circumstances (e.g. in the case of quoted Eurobonds), Irish tax will be required to be withheld at the standard rate of income tax (currently 20 per cent.) from interest on any Security, where such interest is collected or realised by a bank or encashment agent in Ireland on behalf of any Securityholder. There is an exemption from encashment tax where the beneficial owner of the interest is not resident in Ireland and has made a declaration to this effect in the prescribed form to the encashment agent or bank.
Capital Gains Tax
A holder of a Security will not be subject to Irish taxes on capital gains (at a current rate of 33 per cent.) provided that: (i) such holder is neither resident nor ordinarily resident in Ireland; (ii) in the case of a company, such company does not carry on a trade in Ireland through a branch or agency to which the Securities are attributable; or (iii) the Securities do not cease to be listed on a stock exchange in circumstances where the Securities derive their value or the greater part of their value from Irish real estate, mineral rights or exploration rights.
Capital Acquisitions Tax
If the Securities are comprised in a gift or inheritance taken from an Irish resident or ordinarily resident disponer or if the disponer's successor is resident or ordinarily resident in Ireland, or if any of the Securities are regarded as property situate in Ireland, the disponer's successor (primarily), or the disponer, may be liable to Irish Capital Acquisitions Tax (at a current rate of 33 per cent.). The Securities, if in registered definitive form, would be regarded as property situate in Ireland if the principal register of the Securities is maintained in Ireland.
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For the purposes of capital acquisitions tax, under current legislation a non-Irish domiciled person will not be treated as resident or ordinarily resident in Ireland for the purposes of the applicable legislation except where that person has been resident in Ireland for the purposes of Irish tax for the 5 consecutive years of assessment immediately preceding the year of assessment in which the date of the gift or inheritance falls.
Stamp Duty
For so long as the Issuer is a qualifying company within the meaning of Section 110 of the Taxes Act, Irish stamp duty will not be imposed on either the issue or transfer of the Securities, provided that the money raised by the issue of the Securities is used in the course of the Issuer's business.
Value Added Tax
The provision of financial services is an exempt transaction for Irish Value Added Tax ("Irish VAT") purposes. Accordingly, under general principles the Issuer should not be entitled to recover Irish VAT suffered.
FATCA Implementation in Ireland
On 21 December 2012, the Governments of Ireland and the United States signed the IGA. In July 2014, Ireland enacted the Financial Accounts Reporting (United States of America) Regulations 2014 (the "Irish FATCA Regulations").
The IGA and the Irish FATCA Regulations increased the amount of tax information automatically exchanged between Ireland and the United States. They provide for the automatic reporting and exchange of information in relation to accounts held in Irish "financial institutions" by U.S. persons and the reciprocal exchange of information regarding U.S. financial accounts held by Irish residents.
The Issuer intends to carry on its business in such a way as to ensure that it is treated as complying with FATCA pursuant to the terms of the IGA and the Irish FATCA Regulations. The Issuer expects to be treated as a "financial institution". The Issuer is required to register with the US Internal Revenue Service as a "reporting financial institution" for FATCA purposes. In order for the Issuer to comply with its FATCA obligations it is required to report certain information to the Irish Revenue Commissioners relating to Securityholders who, for FATCA purposes, are specified US persons, non-participating financial institutions or passive non-financial foreign entities ("NFFEs") that are controlled by specified US persons. Any information reported by the Issuer to the Irish Revenue Commissioners will be communicated to the US Internal Revenue Service pursuant to the IGA. It is possible that the Irish Revenue Commissioners may also communicate this information to other tax authorities pursuant to the terms of any applicable double tax treaty, intergovernmental agreement or exchange of information regime.
The Issuer shall be entitled to require Securityholders to provide any information regarding their FATCA status, identity or residency required by the Issuer to satisfy its FATCA obligations. Securityholders will be deemed, by their subscription for or holding of the Securities to have authorised the automatic disclosure of such information by the Issuer or any other authorised person to the relevant tax authorities.
The Issuer should not generally be subject to FATCA withholding tax in respect of its US source income for so long as it complies with its FATCA obligations. However, FATCA withholding tax may arise on US source payments to the Issuer if the Issuer does not comply with its FATCA registration and reporting obligations and the US Internal Revenue Service has specifically identified the Issuer as being a ‘non- participating financial institution’ for FATCA purposes. In addition, the Issuer may be unable to comply with its FATCA obligations if Securityholders do not provide the required certifications or information. Securityholders should consult their own tax advisors as to the potential implication of the reporting requirements imposed on the Issuer by FATCA before investing.
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The Common Reporting Standard in Ireland
On 21 July 2014, the Standard for Automatic Exchange of Financial Account Information in Tax Matters was published by the OECD and this includes the Common Reporting Standard ("CRS"). The CRS provides that certain entities (known as Financial Institutions) shall identify "Accounts" (as defined, broadly equity and debt interests in the Financial Institution) held by persons who are tax resident in another CRS participating jurisdiction. That information is then subject to annual automatic exchange between governments in CRS participating jurisdictions.
Directive 2014/107/EU on Administrative Cooperation in the Field of Taxation ("DAC II") implements CRS in a European context and creates a mandatory obligation for all EU Member States to exchange financial account information in respect of residents in other EU Member States on an annual basis. Ireland has provided for the implementation of CRS through Section 891F of the Taxes Act and the enactment of the Returns of Certain Information by Reporting Financial Institutions Regulations 2015 (the "CRS Regulations"). Irish Financial Institutions are obliged to make a single return in respect of CRS and DAC II. CRS has applied in Ireland since 1 January 2016.
The Issuer is expected to constitute a Financial Institution for CRS purposes. In order to comply with its obligations under CRS and DAC II, the Issuer shall be entitled to require Securityholders to provide certain information in respect of the Securityholder's and, in certain circumstances, their controlling persons’ tax status, identity or residence. Securityholders will be deemed, by their holding of the Securities, to have authorised the automatic disclosure of such information by the Issuer (or any nominated service provider) to the Irish Revenue Commissioners. The information will be reported by the Issuer to the Irish Revenue Commissioners who will then exchange the information with the tax or governmental authorities of other participating jurisdictions, as applicable. To the extent that the Securities are held within a recognised clearing system, the Issuer should have no reportable accounts in a tax year.
Provided the Issuer complies with these obligations, it should be deemed compliant for CRS and DAC II purposes. Failure by the Issuer to comply with its CRS and DAC II obligations may result in it being deemed to be non-compliant in respect of its CRS obligations and monetary penalties may be imposed pursuant to the Irish implementing legislation.
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CERTAIN US FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain US federal income tax considerations relating to an investment in the Securities. The discussion is based on provisions of the US Internal Revenue Code of 1986, as amended (the “Code”) and the regulations promulgated thereunder and on published administrative rulings and judicial decisions, all as in effect on the date of these Base Listing Particulars and which are subject to change at any time, possibly with retroactive effect. This discussion is necessarily general and may not apply to all categories of prospective Securityholders, some of which, such as, without limitation, banks, thrifts, insurance companies, persons liable for the alternative minimum tax, charitable remainder trusts and persons holding interests in the Fund as beneficiaries of charitable remainder trusts, non-US tax-exempt organisations, dual residents, expatriates, former long-term US residents, dealers and other investors that do not own their interests in the Fund as capital assets, may be subject to special rules. In addition, this summary does not address: (i) non-US, or US state and local tax considerations; or (ii) the tax considerations of partnerships or other entities classified as partnerships for US federal income tax purposes that own Securities or of persons that own Securities through any such entities. The Issuer has not requested, and does not plan to request, a ruling from the US Internal Revenue Service (the “IRS”) on any matter affecting the Securities, or any holders thereof. The actual tax consequences of the purchase and ownership of Securities will vary depending on each prospective holder’s circumstances. This discussion does not constitute tax advice, and is not intended to be a substitute for tax planning.
Prospective holders should consult their own tax advisors concerning the United States federal, state and local income tax consequences in their particular situations of an investment in the Securities, as well as any consequences under the laws of any other taxing jurisdiction.
TO ENSURE COMPLIANCE WITH US INTERNAL REVENUE SERVICE CIRCULAR 230, PROSPECTIVE HOLDERS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF US FEDERAL TAX ISSUES CONTAINED OR REFERRED TO IN THESE BASE LISTING PARTICULARS IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY PROSPECTIVE HOLDERS FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON THEM UNDER THE US FEDERAL TAX LAWS; (B) SUCH DISCUSSION IS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING BY THE ISSUER OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (C) PROSPECTIVE HOLDERS SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.
For purposes of this discussion, a “US Holder” is a beneficial owner of Securities that is for US federal income tax purposes: (1) an individual citizen or resident of the United States; (2) a corporation (or other entity treated as a corporation for US federal income tax purposes) created or organised in or under the laws of the United States, any state thereof or the District of Columbia; (3) an estate the income of which is subject to US federal income taxation regardless of its source; or (4) a trust if either (i) the trust is subject to the primary supervision of a court within the United States and one or more US persons (as that term is defined in Section 7701(a)(30) of the Code) have the authority to control all substantial decisions of the trust, or (ii) the trust has a valid election in effect under applicable US Treasury regulations to be treated as a US person. A “Non-US Holder” is any beneficial owner (other than a partnership or an entity treated as a partnership for US federal income tax purposes) of Securities that is not a US Holder. If a partnership (including an entity treated as a partnership for US federal income tax purposes) holds Securities, the tax treatment of a partner in such partnership will generally depend upon both the status of the partner and the activities of the partnership. If you are a partner in a partnership that holds Securities, you should consult your tax advisor. This discussion does not constitute tax advice and is not intended to be a substitute for tax planning.
Tax Treatment of the Issuer
It is expected that the Issuer will be classified as a partnership for US federal income tax purposes. An entity that would otherwise be classified as a partnership for US federal income tax purposes may
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nonetheless be taxable as a corporation if it is a “publicly traded partnership”. It is intended that the Issuer will be operated in a manner such that it will not be treated as a publicly traded partnership. Unless otherwise indicated, the remainder of this summary assumes that the Issuer will at all times be classified as a partnership for US federal income tax purposes.
Tax Treatment of US Holders
US Tax Classification of the Securities
Although the matter is not free from doubt, the Issuer intends to treat the Securities as equity of the Issuer for US federal income tax purposes. The Issuer’s treatment of the Securities will generally be binding on holders and, by acquiring a Security, each holder of a Security agrees to treat the Securities as equity of the Issuer for US federal income tax purposes.
The IRS may take contrary positions and, accordingly, no assurance can be given that the IRS or a court will agree with the tax characterisations and tax consequences described below. If the Securities were classified as debt for US federal income tax purposes, each Security would be treated as having been issued with Original Issuance Discount (“OID”) in an amount generally equal to the amount by which the stated redemption price at maturity of that Security exceeds its issue price. A portion of that OID would be includible in the taxable income of a US Holder of such Security ratably each taxable year on a constant yield to maturity basis, in advance of the receipt of any payments on the Security, regardless of such US Holder’s regular method of accounting. In such case, such US Holders may need to fund their tax liability resulting from their investment in Securities from other sources.
The following discussion of US federal income tax treatment of US Holders of Securities assumes that the Securities will be treated as equity of the Issuer for US federal income tax purposes.
General US Tax Treatment of Partnerships
An entity that is treated as a partnership for US federal income tax purposes is not a taxable entity. Instead, each partner is required to take into account its allocable share of items of income, gain, loss, deduction and credit of the partnership in computing its US federal income tax liability, regardless of whether cash distributions are made. Distributions of cash by a partnership to a partner generally are not taxable unless the amount of cash distributed to a partner is in excess of the partner’s adjusted basis in its partnership interest. Thus, each US Holder will take into account its allocable share of the items of income, gain, loss, deduction, or credit of the Issuer in its taxable year in which or with which the taxable year of the Issuer ends, whether or not cash distributions with respect to such items are made with respect to the Securities. These tax items generally will have the same character (ordinary or capital, short-term or long-term) in the hands of each US Holder as they have in the hands of the Issuer.
Although a US Holder is required to include in income its allocable share of the Issuer’s items of income, gain, loss, deduction, and credit for each of the Issuer’s taxable years ending with or within such US Holder’s taxable years, such US Holder may not receive cash distributions from the Issuer sufficient to fund the tax liability resulting from its investment in the Securities. Therefore, US Holders should ensure that they have sufficient funds from other sources to pay all tax liabilities resulting from their investment in the Securities.
Allocations
Under Section 704(b) of the Code, if the allocations under the limited partnership agreement lack “substantial economic effect”, a partner’s allocable share of an item of partnership income, gain, loss, deduction, or credit is determined in accordance with the partner’s “interest in the partnership”. The US Treasury regulations contain intricate and detailed tests for determining whether allocations have “substantial economic effect”. The allocations of income, gain, loss, deduction, and credit in the Issuer’s Constitution are intended to meet these tests and, accordingly, the Portfolio Manager believes that they have “substantial economic effect”. Even if the IRS were to take the position that these allocations do not have “substantial economic effect”, the General Partner believes that they correspond to the US Holders’
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respective economic interests in the Issuer. As a consequence, the Portfolio Manager believes that the allocations in the Issuer’s Constitution would not be substantially modified if challenged by the IRS.
Capital Gains and Losses
It is anticipated that the Issuer will generally make investments for its own account and not as a dealer with a view to resale. Where that is the case, investments made by the Issuer should constitute capital assets in the hands of the Issuer.
Gains and losses realised by the Issuer on the sale or exchange of investments that are held as capital assets are generally expected, subject to the application of the passive foreign investment company and controlled foreign corporation rules discussed below, to be treated as long-term or short-term capital gains and losses, depending on whether the particular capital asset has been held for more than one year. Gain recognised on the disposition of a capital asset that has been subject to depreciation or amortisation may be treated as ordinary income under the recapture provisions of the Code (including for the purpose of applying the limitations on the use of capital losses to offset ordinary income, described below).
Up to USD3,000 of the excess of capital losses over capital gains in any year may be used to offset the ordinary income of non-corporate US Holders, with any balance carried over indefinitely for use in subsequent years, subject to the same limitations. A corporate US Holder can utilise capital losses only to offset capital gains, with unused capital losses carried back three years and carried forward five years.
Tax Basis and Distributions
A US Holder’s tax basis in its Securities will generally be equal to the amount paid for such Securities, increased by its allocable share of income and liabilities (if any) of the Issuer, and decreased, but not below zero, by its allocable share of distributions, losses, and reductions in such liabilities.
Cash distributions (including deemed cash distributions arising from reductions in a US Holder’s share of liabilities (if any) of the Issuer) from the Issuer will generally not be taxable to US Holders. However, to the extent such distributions exceed a US Holder’s adjusted tax basis in its Securities, the US Holder will recognise gain. Any gain recognised by a US Holder on the receipt of a distribution from the Issuer generally will be capital gain, but may be taxable as ordinary income, either in whole or in part, under certain circumstances.
The Portfolio Manager generally does not intend for the Issuer to make distributions in-kind, but reserves the right for it to do so in certain limited circumstances. Distributions in specie from the Issuer generally will not be taxable to US Holders. However, in some circumstances, a distribution of certain marketable securities by the Issuer will be treated as a distribution of cash rather than as a distribution of property and may, therefore, be taxable to a distributee US Holder as described above. In the case of a distribution other than in redemption of all of a US Holder’s Securities, such US Holder would hold the property received with a basis generally equal to the lesser of its basis in its Securities or the Issuer’s basis in the property. As a result of any such distribution, the US Holder’s basis in its Securities would be reduced by the US Holder’s basis in the property received.
If the Issuer makes a distribution in specie to a US Holder in redemption of all of a US Holder’s Securities, the US Holder’s basis in its interest will generally carry over to the property received.
Asset Basis Adjustments
For US federal income tax purposes, under Section 754 of the Code, the Issuer generally may elect to adjust the basis of its assets in the event of a distribution of partnership property, or a transfer of an interest in Securities or other equity interests therein (such election a “754 Election”). A 754 Election, if made, could either increase or decrease the value of an interest to a transferee, because the election would increase or decrease the basis of the Issuer’s assets for purposes of computing the transferee’s distributive share of the Issuer’s income, gains, losses, and deductions. Additionally, unless the Issuer is
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able to and makes a special election, the Issuer generally will be required to make these basis adjustments, even if the 754 Election is not made, in connection with any transfer of an interest in Securities or other equity interests in the Issuer with respect to which there is a “substantial built-in loss” (as defined in Section 743 of the Code) or any distribution of Issuer property with respect to which there is “substantial basis reduction” (as defined in Section 734 of the Code).
Provision of US Tax Information
The General Partner, at the expense and reasonable request of a US Holder, will furnish such US Holder with the information concerning the Issuer necessary for the preparation of such US Holder’s US federal income tax returns. However, the Issuer may be unable to provide relevant tax information to such holders for any given tax year until after 15 April of the following tax year. As a result, US Holders may be required to obtain extensions of the filing date of their US income tax returns at the federal, state and local levels.
Passive Foreign Investment Companies
The Issuer may invest in non-US corporations treated as passive foreign investment companies (“PFICs”). A US Holders’ share of certain distributions from a PFIC and gain from the disposition by the Issuer of an interest in a PFIC could be subject to a substantial interest charge and could be characterised as ordinary income rather than capital gain. If a US Holder makes a “qualified electing fund” (“QEF”) election with respect to a PFIC, in lieu of the foregoing treatment, such US Holder would generally be required to include in income each year its share of the ordinary earnings and net capital gains of the QEF, even if not distributed to the Issuer or the US Holder. To make and maintain such election, a US Holder would, among other things, be required to supply the IRS with an information statement based on information provided by the PFIC. There can be no assurance that a company in which the Issuer invests will not qualify as a PFIC or that a PFIC in which the Issuer invests will provide the information necessary to enable a US Holder to make or maintain a QEF election.
Alternatively, US Holders may sometimes be able to avoid the adverse impact of the PFIC rules by making an election to include gain on the stock of a PFIC as ordinary income under a mark-to-market method, provided that such stock is treated regularly traded under the applicable U.S. Treasury Regulations. If a US Holder makes an effective mark-to-market election with respect to PFIC stock held by the Issuer, such US Holder will include in each year that such company is a PFIC as ordinary income the excess of the fair market value of the shares that such US Holder is deemed to own at the end of the taxable year over such US Holder’s adjusted tax basis in such shares. Such US Holder will be entitled to deduct as an ordinary loss in each such year the excess of such US Holder’s adjusted tax basis in such shares over their fair market value at the end of the year, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. Any gain recognised upon the sale or other disposition (or deemed disposition) of PFIC shares will be treated as ordinary income. Any loss will be treated as ordinary loss, but only to the extent of the net amount of previously included income as a result of the mark-to-market election. A US Holder’s adjusted tax basis in its interest in such shares will be increased by the amount of any income inclusion and decreased by the amount of any deductions under the mark-to-market rules.
Prospective US Holders are urged to consult with their own tax advisors about the potentially adverse effect of the application of the PFIC rules (as well as how those rules overlap with the controlled foreign corporation rules discussed below) if the Issuer were to own an equity interest in a foreign entity treated as a corporation for US federal income tax purposes that is or becomes a PFIC.
Controlled Foreign Corporations
The Issuer may invest in non-US corporations treated as controlled foreign corporations (“CFCs”). Special rules apply to US Holders who own, directly or indirectly (including through a non-US entity such as the Issuer that is treated as a partnership for US federal income tax purposes) and applying certain ownership attribution rules, ten per cent (10%) or more of the total combined voting power of all classes of stock entitled to vote of a non-US corporation, or ten per cent (10%) or more of the total value of
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shares of all classes of stock of such foreign corporation (each such owner, a “US Shareholder”) that is a CFC. A non-US corporation generally will be a CFC for a taxable year if US Shareholders collectively own or are deemed to own more than fifty per cent (50%) of the total combined voting power or total value of the corporation’s stock on any day during such taxable year. If a foreign corporation is a CFC at any time during any taxable year, the US Shareholders who own stock in such CFC on the last day of such taxable year generally must include in their gross income for US federal income tax purposes their proportionate shares of certain earnings and profits of the CFC even if they do not receive any distribution from the CFC. Deemed distributions can also occur if the CFC holds investments in US property. In addition, if the stock of a current or past CFC is sold or if a US Holder that is or was a US Shareholder sells Interests in its Securities at a time when the Issuer owns stock of a current or past CFC, a portion of the gain, if any, from such sale may be characterised as ordinary income rather than capital gain. In general, a non-US corporation that is both a PFIC and a CFC will be treated as CFC (and not as a PFIC) with respect to US Shareholders. Prospective US Holders are urged to consult with their own tax advisors about the potentially adverse effect of the application of the CFC rules (as well as how those rules overlap with the PFIC rules) if the Issuer were to own an equity interest in a foreign entity treated as a corporation for US federal income tax purposes that is or becomes a CFC.
Other Non-Cash Income
The Issuer may participate in loan modifications, reorganisations, restructurings, and other transactions in which it may receive securities or other property in exchange for securities held by it, or in which indebtedness may be restructured, exchanged or discharged. To the extent these transactions do not qualify as non-taxable reorganisations under the Code or are otherwise subject to tax and to the extent the Issuer earns other forms of non-cash income (e.g., “original issue discount” with respect to certain debt instruments), US Holders may be required to recognise income without the receipt of cash in connection with their investment in Securities.
Deductibility of Losses and Expenses
It is possible that the Issuer’s losses and expenses could exceed its income and gain in a given year. The ability of US Holders to deduct such a net loss, and certain other Issuer items, from their taxable income from other sources may be subject to a number of limitations under the Code. For example, a US Holder will not be entitled to deduct its share of the Issuer’s losses in excess of its tax basis in its Securities at the end of the year of the Issuer in which such losses are recognised. Other limitations include, for certain holders, such as individuals, the “at-risk” rules, limitations on interest deductions and limitations on passive activity losses.
Additionally, subject to certain exceptions, all miscellaneous itemised deductions of an individual taxpayer, and certain of such deductions of an estate or trust, are deductible only to the extent that such deductions exceed two per cent (2%) of such taxpayer’s adjusted gross income. Moreover, the otherwise allowable itemised deductions of individuals whose gross income exceeds certain thresholds may be subject to additional limitations. For taxable years beginning January 1, 2018 and ending December 31, 2025, miscellaneous itemized deductions are disallowed. Disallowed miscellaneous itemized deductions may not be capitalized, with the result that a non-corporate U.S. Shareholder will not receive any tax benefit in respect of such expenses. The operating expenses of the Issuer, including the Management Fee, may be treated as miscellaneous itemised deductions subject to the foregoing rules. Alternatively, it is possible that the Issuer will be required to capitalise payments of the Management Fee. Non-corporate US Holders should consult their own tax advisors with respect to the application of these limitations to them.
Syndication and Organisational Expenditures
Expenditures for the organisation and syndication of partnerships are not deductible in the year in which they are paid or accrued. The amount of such expenditures that constitutes syndication expenditures is not deductible at all. With regards to the organisational expenditures with the meaning of Section 709 of the Code, a partnership may elect to deduct up to $5,000 of expenditures, reduced by the amount by which the expenditures exceed $50,000, with the remaining amount amortized over 180 months/15 years.
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There can be no assurance that the IRS will not successfully assert that a portion of the Management Fee paid by the Issuer to the Portfolio Advisor constitutes a reimbursement for organisational or non- deductible syndication expenses.
Foreign Currency Gain/Loss
A US Holder generally will be required to include as ordinary income its allocable share of any gains from certain transactions that are attributable to changes in foreign currency exchange rates. Such transactions include dispositions of foreign currency and debt instruments denominated in a foreign currency. US Holders should consult with their individual tax advisors with respect to the tax treatment of foreign currency gain or loss.
Foreign Tax Credit Limitations
US Holders generally will be entitled to claim foreign tax credits with respect to their allocable share of creditable foreign taxes paid with respect to the Issuer’s income and gains. Complex rules may, depending on the particular circumstances of a US Holder, limit the availability or use of foreign tax credits. Certain losses that the Issuer incurs may be treated as foreign source losses, which could reduce the amount of foreign tax credits otherwise available.
Gain or Loss on Sale of Securities
A US Holder will recognise gain or loss on a sale or exchange of an interest in its Securities equal to the difference, if any, between the amount realised and such US Holder’s adjusted tax basis in the Securities sold. In addition to adjustments made in prior years, such US Holder’s tax basis in the Securities sold will be adjusted for this purpose by the income or loss for the year of such sale or exchange allocated to such US Holder under the Issuer’s Constitution. The amount realised will be measured by the sum of the cash or the fair market value of other property received plus such US Holder’s allocable share of the Issuer’s liabilities, if any. Subject to the PFIC and CFC rules discussed above, gain or loss recognised on the sale or exchange of a US Holder’s Securities generally will be taxable to such US Holder as capital gain or loss and will be long-term capital gain or loss if such Securities were held for more than one year on the date of such sale or exchange. However, certain gains attributable to “unrealised receivables” or “inventory items” of the Issuer could be characterised as ordinary income rather than capital gain.
Tax-Exempt US Holders
Income recognised by a tax-exempt entity is exempt from US federal income tax except to the extent of the entity’s UBTI. In addition to including income from a trade or business regularly carried on directly by a tax-exempt entity, UBTI also includes income from an unrelated trade or business regularly carried on by a partnership of which the entity is a partner. Accordingly, the amount of UBTI, if any, that will be realised by tax-exempt US Holders in connection with their ownership of Securities will depend in part on the nature of the Issuer’s operations and investments. UBTI generally does not include passive income such as dividends, interest, rents and gains from the sale of property that is neither inventory nor held for sale to customers in the ordinary course of business. However, if a tax-exempt entity’s acquisition of an interest in a partnership is debt financed, or a partnership incurs debt that is allocated to the acquisition of an investment by such partnership, all or a portion of the income attributed to the debt-financed property would be included in UBTI regardless of whether such income would otherwise be excluded as dividends, interest, rents, gain or loss from the sale of eligible property or similar income. In a case where such debt is incurred by a partnership, such treatment would apply, in the case of ordinary income, only in tax years in which the partnership has indebtedness outstanding or, in the case of a sale, if the partnership had indebtedness outstanding at any time during the 12-month period prior to the sale.
The Issuer has the ability to borrow funds subject to an in accordance with the provisions of the Transaction Documents. Accordingly, the Issuer may hold debt-financed property that may produce UBTI. Additionally, if the Issuer invests in a flow-through entity that is directly engaged in a business, income derived by the Issuer with respect thereto will generally be treated as UBTI.
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The TJCA provided new guidance (Notice 2018-67) on Section 512(a)(6), which includes, but is not limited to, the requirement that a tax-exempt entity calculate UBTI separately with respect to each unrelated trade or business in which it has an interest. Thus, a U.S. tax-exempt Holder will not be entitled to use deductions generated from one trade or business after December 31, 2017 to offset UBTI from another trade or business. Any net operating losses from a trade or business generated after December 31, 2017 will be carried forward to offset net income generated by the same trade or business in subsequent years. However, a net operating loss arising in a taxable year beginning before January 1, 2018 may still be carried over to subsequent years and used to offset UBTI from any trade or business.
Tax-exempt organisations considering an investment in Securities are urged to consult their own tax advisors, prior to acquiring Securities, regarding the consequences to them of such investment and corresponding US tax law changes.
Net Investment Income Tax
A US Holder that is an individual or estate, or trust that does not fall into a special class of trusts that is exempt from such tax, will be subject to a 3.8% tax on the lesser of (1) the US Holder’s “net investment income” for the relevant taxable year and (2) the excess of the US Holder’s adjusted gross income (increased by certain amounts of excluded foreign income) for the taxable year over a certain threshold (which in the case of individuals will be between USD125,000 and USD250,000, depending on the individual’s circumstances). A US Holder’s net investment income is generally expected to include such US Holder’s allocable share of any income or gain realised by the Issuer, as well as net gain from a disposition of such US Holder’s Securities, unless such income is derived in the ordinary course of the conduct of such US Holder’s trade or business (other than a trade or business that consists of certain passive or trading activities). Net investment income may, however, be reduced by properly allocable deductions to such income. US Holders that are individuals, estates or trusts are urged to consult their tax advisors regarding the applicability of the Net Investment Income Tax to their investment in the Securities.
Certain Reporting Requirements
Certain US Holders will be required to file IRS Form 8865, Return of US Persons With Respect to Certain Foreign Partnerships, to report the amount paid for their Securities and any other transfers of cash to the Issuer and information relating to the Issuer, including information relating to the US Holder’s ownership interest in its Securities and allocations of the items of the Issuer’s income, gains, losses, deductions and credits to the such US Holders. Additionally, subject to specified exceptions and future guidance, US federal income tax legislation generally requires any US Holder who is an individual to report to the IRS any interest owned by such US Holder in any entity that is a non-US person (such as the Issuer) for any year in which the aggregate value of such interests owned by such person exceeds USD 50,000. US Holders may be subject to substantial penalties if they fail to comply with these or any other applicable information reporting requirements with respect to an investment in Securities (including reporting requirements applicable to transactions classified as “reportable transactions”). US Holders should consult their own tax advisors regarding the reporting requirements related to their subscription for, and ownership of, Securities.
Tax Treatment of Non-US Holders
The Portfolio Manager intends to organise and conduct the affairs of the Issuer such that no income or gains realised by the Issuer will be effectively connected with the conduct of a US trade or business ("ECI") or otherwise subject to regular US federal income taxation on a net basis. On that basis, Non-US Holders that are not themselves otherwise engaged in a US trade or business are generally not expected to be subject to US federal income or withholding tax with respect to their interests in Securities. In addition, Non-US Holders should generally not be subject to US federal income tax on a sale of their Securities.
If, contrary to the intent of the Portfolio Manager, the Issuer is considered to be engaged in a US trade or business, the Issuer would be required to withhold and pay over to the US tax authorities a percentage
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equal to the highest applicable US tax rate of each Non-US Holder’s distributive share of the Issuer’s income that is effectively connected with such trade or business, and each Non-US Holder would be required to file US federal income tax returns and pay US federal income tax on its share of the Issuer’s net effectively connected income. In addition, in that event, a Non-US Holder that is a corporation would generally also be subject to an additional branch profits tax of thirty per cent (30%) of its share of the Issuer’s effectively connected earnings and profits, adjusted as provided by law. In such case, all or a portion of the gain on the disposition (including by redemption) by a Non-US Holder of its interest in its Securities may be taxed as effectively connected income to the extent such gain is attributable to assets of the Issuer that generate effectively connected income. In addition, the transferee of such Non-US Holder’s interest in its Securities must withhold ten per cent (10%) of amount the Non-US Holder realized on disposition unless it (a) provides an IRS Form W-9 or an affidavit stating it is not a Non-US person (which includes its US tax identification number) or (b) establishes another exemption to the withholding requirement under applicable IRS guidance. In the case of a Non-US Holder that is a corporation, any such gain could also be subject to the thirty per cent (30%) branch profits tax described above.
The Portfolio Manager does not expect that the Issuer will realise income from US sources and it is not anticipated that the Issuer will be subject to US withholding tax (including withholding tax imposed pursuant to FATCA, as described below). If, contrary to what is anticipated, the Issuer receives dividends from US sources, such dividends would generally be subject to US withholding tax at a rate of thirty per cent (30%). Provided applicable certification requirements are met, US source interest income, if any, received by the Issuer generally would be exempt from US federal income and withholding tax under the exemption for “portfolio interest”. In addition, interest on deposits and certain obligations with maturities of 183 days or less (from original issuance) generally would not be subject to US withholding tax. Interest (including original issue discount) derived by the Issuer from US sources not qualifying as portfolio interest and not otherwise exempt would generally be subject to US withholding tax at a rate of thirty per cent (30%).
Other US Tax Matters
FATCA
The Foreign Account Tax Compliance Act ("FATCA") provisions of the Hiring Incentives to Restore Employment Act (the "HIRE Act") provide that the Issuer must disclose the name, address and taxpayer identification number of certain United States persons that own, directly or indirectly, an interest in the Issuer, as well as certain other information relating to any such interest, pursuant to the terms of intergovernmental agreements ("U.S. IGAs").
If the Issuer fails to comply with these requirements, then a 30% withholding tax will be imposed on payments to the Issuer of United States source income and proceeds from the sale of property that could give rise to United States source interest or dividends. The withholding tax provisions of FATCA took effect on July 1, 2014 other than in relation to proceeds from the sale of property, in which case they have been postponed to January 1, 2019.
Although the Issuer will attempt to satisfy the obligations imposed on it to avoid the imposition of this withholding tax; no assurance can be given that the Issuer will be able to satisfy these obligations. In this regard, the Issuer may require investors to provide any documentation or other information regarding the investors and their beneficial owners that the Issuer determines is necessary or desirable for the Issuer to avoid the withholding tax and otherwise comply with the HIRE Act. If the Issuer becomes subject to a withholding tax as a result of the HIRE Act, the value of Interests held by all Security purchasers may be materially affected.
Future legislation
The Code, with respect to all of the foregoing matters, is constantly subject to change by Congress. In recent years, there have been significant changes in the Code, many of which are being reconsidered by
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Congress, and interpretations of which are being considered by the IRS in connection with publication of the US Treasury Regulations. It is not possible at this time to predict whether or to what extent any changes in the Code will occur. Prospective Securityholders should consult their own tax advisors regarding pending and proposed legislation.
Non-US, state and local taxes
In addition to the US federal income tax consequences described above, prospective Securityholders should consider potential non-US, as well as US state and local tax consequences of such an investment. US state and local laws often differ from the US federal income tax laws with respect to the treatment of specific items of income, gain, loss, deduction, and credit, and the US state and local tax implications of holding Securities are beyond the scope of this discussion. Each prospective Securityholder should consult its own tax advisor concerning (i) the non-US, and US state and local tax implications of an investment in Securities; (ii) the impact of any recent changes in law on these non-US and US state and local tax implications; and (iii) the extent, if any, to which an investment in Securities could cause such holder to be subject to taxation in jurisdictions in which it is not otherwise doing business.
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ERISA CONSIDERATIONS
Prospective investors that are subject to ERISA or are individual retirement accounts should consult with their counsel and other advisers as to the provisions of ERISA and the Code applicable to an investment in the Securities. In particular, the fiduciary of an ERISA plan should consider whether an investment in the Securities meets the prudence and diversification requirements of ERISA and is consistent with the terms of the plan's underlying documents.
The fiduciaries of a U.S. employee benefit plan, Keogh plan or other arrangement subject to ERISA or to Section 4975 of the Code (including any entity whose assets are considered under ERISA or the Code to include the assets of such plan or arrangement), or which is treated by the Issuer as if it were subject to ERISA ("ERISA Plan") should consider, among other things, the matters described below before determining whether to invest in the Securities.
ERISA imposes certain general and specific responsibilities on fiduciaries with respect to an ERISA Plan. Those responsibilities include satisfaction of the prudence and diversification requirements of ERISA and compliance with prohibited transaction and other rules and standards. In determining whether a particular investment is appropriate for an ERISA Plan, U.S. Department of Labor regulations provide that the fiduciaries of an ERISA Plan must give appropriate consideration to, among other things, the role that the investment plays in the ERISA Plan's portfolio, taking into consideration whether the investment is designed reasonably to further the ERISA Plan's purposes, an examination of the risk and return factors, the portfolio's composition with regard to diversification, the liquidity and current return of the total portfolio relative to the anticipated cash flow needs of the ERISA Plan and the projected return of the total portfolio relative to the ERISA Plan's funding objectives. Before investing the assets of an ERISA Plan in the Securities, a fiduciary should determine whether such an investment is consistent with its fiduciary responsibilities and the foregoing regulations. For example, a fiduciary should consider whether an investment in the Securities may be too illiquid or too speculative for a particular ERISA Plan and whether the assets of the ERISA Plan would be sufficiently diversified.
In addition, a fiduciary should consider whether an investment in the Securities could result in a prohibited transaction under ERISA or the Code. Section 406 of ERISA and Section 4975 of the Code prohibit ERISA Plans from engaging in certain specified transactions involving plan assets with any person or entity who is a “party in interest” within the meaning of ERISA, or a “disqualified person” within the meaning of Section 4975 of the Code, unless an exemption is available. A party in interest or disqualified person who engages in a nonexempt prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and the Code. In addition, a fiduciary of an ERISA Plan that engages in such a nonexempt prohibited transaction may be subject to penalties and liabilities under ERISA and the Code. The acquisition and/or ownership of the Securities by an ERISA Plan with respect to which the Issuer, the Portfolio Manager, the Trustee or any of their affiliates is considered a party in interest or a disqualified person may, depending on the facts and circumstances, constitute or result in a direct or indirect prohibited transaction under Section 406 of ERISA and/or Section 4975 of the Code, unless the investment is acquired and is held in accordance with an applicable statutory, class or individual prohibited transaction exemption.
The U.S. Department of Labor, to whom primary responsibility for administering the fiduciary responsibility provisions of ERISA has been delegated, has published regulations providing that, generally, if participation in any class of “equity interests” by "benefit plan investors" in an entity such as the Issuer is "significant" within the meaning of Section 3(42) of ERISA and Department of Labor regulations, the assets of such entity will generally be treated as "plan assets." Under ERISA and the applicable regulations, equity participation in an entity by “benefit plan investors” (as such term is defined under ERISA § 3(42)) will not be “significant” if they hold, in the aggregate, less than twenty five per cent (25%) of the total value of any class of such entity’s equity interests, excluding equity interests held by persons (other than benefit plan investors) with discretionary authority or control over the assets of the entity or who provide investment advice for a fee (direct or indirect) with respect to such assets, and any affiliates thereof. Under ERISA and the applicable regulations, an “equity interest” means any interest in an entity other than an instrument that is treated as indebtedness under applicable local law and which has no
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substantial equity features. Although there is little guidance on this subject, the Issuer believes that it is likely that the Securities will be considered “equity interests” for purposes of ERISA and the applicable regulations.
In reliance on representations made by investors in the Securities, the Issuer intends at all times to limit investment by “benefit plan investors” to less than twenty five per cent (25%) of the total value of any Securities that are likely to be treated as a class of equity interest in the Issuer so that equity participation in the Issuer will not be “significant.” Each prospective investor (including a transferee) in a Security will be required to make certain representations regarding its status as a “benefit plan investor,” and no Securities will be permitted to be sold or transferred to the extent that such sale or transfer could result in equity participation in the Issuer by “benefit plan investors” becoming “significant,” assuming that all representations made are true. Since the Issuer intends to limit investment in the Securities so that no more than twenty five per cent (25%) of the total value of any class of equity interest in the Issuer is held by "benefit plan investors", it does not anticipate that the assets of the Issuer will be treated as "plan assets" or, therefore, that the Portfolio Manager or its affiliates will be a fiduciary under ERISA or that the operation or administration of the Issuer will be subject to the provisions of ERISA.However, notwithstanding the efforts of the Issuer, there can be no assurance that the assets of the Issuer will not be treated as "plan assets" under ERISA.
The Issuer will require fiduciaries of an ERISA Plan proposing to invest in the Securities to represent that they have been informed of and understand the Securities and the Issuer’s investment objectives, policies and strategies, and that the decision to invest plan assets in the Securities was made with appropriate consideration of relevant investment factors with regard to the ERISA Plan and is consistent with the duties and responsibilities imposed upon fiduciaries with regard to their investment decisions under ERISA.
The provisions of ERISA are subject to extensive and continuing administrative and judicial interpretation and review. The discussion of ERISA contained in these Base Listing Particulars is, of necessity, general and may be affected by future regulations and rulings.
In addition to serving the other purposes for which these Base Listing Particulars are generated, disclosures in these Base Listing Particulars are intended to comply with the U.S. Department of Labor's alternative reporting for "Eligible Indirect Compensation" in Part 1 of the Schedule C to Form 5500. Prospective or existing investors that are subject to ERISA are encouraged to review the management fee, performance allocation and fee and expense disclosures set forth above in these Base Listing Particulars (including, without limitation, the summary of the Portfolio Management Agreement).
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SUBSCRIPTION AND SALE
General
All applicable laws and regulations must be observed in any jurisdiction in which Securities may be offered, sold or delivered. No person may directly or indirectly offer, sell, resell, reoffer or deliver Securities or distribute any document, circular, advertisement or other offering material in any country or jurisdiction except under circumstances that will result, to the best of its knowledge and belief, in compliance with all applicable laws and regulations.
The United States
Transfer Restrictions Applicable to the Securities and Restrictions Due to Lack of Registration under the Securities Act
The Securities have not been and will not be registered under the US Securities Act, or the securities laws of any state of the United States or any other jurisdiction. The Securities are being offered and sold in the offering:
1. outside the United States to non-US persons in reliance on the exemption from registration provided by Regulation S of the Securities Act; and
2. to US persons that are "accredited investors" as defined in Regulation D of the Securities Act and "qualified purchasers" as defined in the Investment Company Act.
Each purchaser of the Securities in the offering, by acquiring the Securities or a beneficial interest therein, will represent, agree and acknowledge in Schedule 3 to the Master Conditions that it is outside the United States and not a US person or is an "accredited investor" and "qualified purchaser," as applicable.
US Investment Company Act Restrictions
The Issuer has not been and does not intend to become registered as an investment company under the Investment Company Act and related rules. The Securities and any beneficial interest therein may not be reoffered, resold, pledged or otherwise transferred in the United States or to US persons, except to persons who are "qualified purchasers". Each purchaser of the Securities in the offering and each subsequent transferee, by acquiring the Securities or a beneficial interest therein, will be deemed to have represented, agreed and acknowledged that:
1. it is either:
(a) outside the United States and not a US person; or
(b) a qualified purchaser, and that
2. it will not offer, resell pledge or otherwise transfer the Securities or a beneficial interest therein in the United States or to a US person other than to an accredited investor and qualified purchaser, or to a non-US person in an offshore transaction.
EEA
European Economic Area
Each Securityholder represents and agrees, and each further Securityholder will be required to represent and agree, that it has not made and will not make an offer of Securities which are the subject of the
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offering contemplated by these Base Listing Particulars to the public in any Member State of the European Economic area (each a "Relevant Member State") other than:
(a) at any time to any legal entity which is a qualified investor as defined in the EU Prospectus Regulation 2017/1129;
(b) at any time to fewer than 150, natural or legal persons (other than qualified investors as defined in the EU Prospectus Regulation 2017/1129) subject to obtaining the prior consent of the Issuer for any such offer; or
(c) at any time in any other circumstances falling within Article 1(4) of the EU Prospectus Regulation 2017/1129, provided that no such offer of Securities shall require the Issuer to publish a prospectus pursuant to Article 3 of the EU Prospectus Regulation 2017/1129 or supplement a prospectus pursuant to Article 23 of the EU Prospectus Regulation 2017/1129.
For the purposes of this provision, the expression an "offer of securities to the public" in relation to any Securities in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Securities to be offered so as to enable an investor to decide to purchase or subscribe the Securities, as the same may be varied in that Member State by any measure implementing or otherwise supplementing the EU Prospectus Regulation 2017/1129.
Ireland
The Issuer is a private company with limited liability and, accordingly, its Constitution prohibit any invitation to the public to subscribe for any shares, debentures or other securities of the Issuer. No invitation has been made to the public within the meaning of the Companies Act to subscribe for any Securities. By acquiring each Security, the acquirer (including any future acquirer) shall also be deemed to represent, warrant and agree that:
1. it has not offered, sold, placed or underwritten and will not offer, sell, place or underwrite the issue of any Securities otherwise than in conformity with the provisions of the European Union (Markets in Financial Instruments) Regulations 2017 (S.I. No. 375 of 2017)(as amended) and any codes of conduct issued in connection therewith, the provisions of the Investor Compensation Act 1998 (as amended) and the Investment Intermediaries Act 1995 (as amended) and it will conduct itself in accordance with any codes and rules of conduct, conditions, requirements and any other enactment, imposed or approved by the Central Bank with respect to anything done by it in relation to the Securities;
2. it has not offered, sold, placed or underwritten and will not offer, sell, place or underwrite the issue of any Securities otherwise than in conformity with the provisions of the Central Bank Acts 1942- 2018, as amended, including any codes of conduct rules made under Section 117(1) of the Central Bank Act 1989 (as amended), the Central Bank (Investment Market Conduct) Rules 2019 (S.I. No. 366 of 2019) and any regulations made thereunder and any codes of conduct, guidance and any regulations issued pursuant to Part 8 of the Central Bank (Supervision and Enforcement) Act 2013 (as amended);
3. it has not offered, sold, placed or underwritten and will not offer, sell, place or underwrite the issue of any Securities in Ireland otherwise than in conformity with the provisions of the European Union (Prospectus) Regulations 2019 (S.I. No. 380 of 2019), EU Prospectus Regulation 2017/1129 and any rules issued under Section 1363 of the Companies Act 2014 by the Central Bank;
4. it has not offered, sold, placed or underwritten and will not offer, sell, place or underwrite the issue of any Securities in Ireland otherwise than in conformity with the provisions of (A) the Market
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Abuse Regulation (Regulation EU 596/2014); (B) the Market Abuse Directive on criminal sanctions for market abuse (Directive 2014/57/EU); (C) the European Union (Market Abuse) Regulations 2016 (S.I. No. 349 of 2016) (as amended); and (D) any rules issued by the Central Bank pursuant thereto and/or under Section 1370 of the Companies Act; and
5. it has not offered, sold, placed or underwritten and will not offer, sell, place or underwrite the issue of any Securities otherwise than in compliance with the provisions of Companies Act, as each of the foregoing may be amended, restated, varied, supplemented and/or otherwise replaced from time to time.
General
Save for applying for admission of the Securities to trading on Euronext Dublin's Global Exchange Market, no action has been or will be taken in any jurisdiction by the Issuer that would, or is intended to, permit a public offering of the Securities, or possession or distribution of the Listing Particulars or any other offering material, in any country or jurisdiction where action for that purpose is required
Legends on Securities
The Securities will bear the following legends:
"United States of America
The Issuer has not been and will not be registered under the US Investment Company Act of 1940, as amended (the "Investment Company Act"). This security and any beneficial interest herein may not be reoffered, resold, pledged or otherwise transferred in the United States or to US persons, except to US persons who are "accredited investors" as defined in Regulation D of the US Securities Act of 1933, as amended (the “Securities Act”), and "qualified purchasers" as defined in the Investment Company Act. By acquiring this security or a beneficial interest herein, each acquirer shall be deemed to represent, warrant and agree with the Issuer that: (1) it is either (A) outside the United States and not a US person or (B) an accredited investor and qualified purchaser; and (2) it will not offer, resell, pledge or otherwise transfer this security or a beneficial interest herein in the United States or to a US person other than to an accredited investor and qualified purchaser, or to a non-US person in an offshore transaction. The Issuer and its agents shall not be obligated to recognise any resale or other transfer of this security or any beneficial interest herein made other than in compliance with these restrictions.
The terms "US person" and "offshore transaction" shall have the meanings set forth in Regulation S under the Securities Act.
The Securities have not been and will not be registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, United States persons except in certain transactions exempt from the registration requirements of the Securities Act. Terms used in this paragraph have the meanings given to them by Regulation S under the Securities Act.
Notwithstanding the form of the Security, the Issuer and the Securityholders agree (and agree to cause their respective owners or affiliates) to both (1) treat the Security as equity and not debt and (2) treat the Issuer as a partnership, in both instances for all United States tax purposes and not to take any position inconsistent with such United States tax treatment for United States tax purposes, subject to any applicable Irish law, regulation or order applicable to or binding on the Issuer.
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European Economic Area
Each Securityholder represents and agrees, and each further Securityholder will be required to represent and agree, that it has not made and will not make an offer of Securities which are the subject of the offering contemplated by these Base Listing Particulars to the public in any Member State of the European Economic area (each a "Relevant Member State") other than:
(a) at any time to any legal entity which is a qualified investor as defined in the EU Prospectus Regulation 2017/1129;
(b) at any time to fewer than 150, natural or legal persons (other than qualified investors as defined in the EU Prospectus Regulation 2017/1129) subject to obtaining the prior consent of the Issuer for any such offer; or
(c) at any time in any other circumstances falling within Article 1(4) of the EU Prospectus Regulation 2017/1129,
provided that no such offer of Securities shall require the Issuer to publish a prospectus pursuant to Article 3 of the EU Prospectus Regulation 2017/1129 or supplement a prospectus pursuant to Article 23 of the EU Prospectus Regulation 2017/1129.
For the purposes of this provision, the expression an "offer of securities to the public" in relation to any Securities in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Securities to be offered so as to enable an investor to decide to purchase or subscribe the Securities, as the same may be varied in that Member State by any measure implementing or otherwise supplementing the EU Prospectus Regulation 2017/1129.
Ireland
The Issuer is a private company with limited liability and, accordingly, its Constitution prohibits any invitation to the public to subscribe for any shares, debentures or other securities of the Issuer. No invitation has been made to the public within the meaning of the Companies Act to subscribe for any Securities. By acquiring each Security, the acquirer (including any future acquirer) shall also be deemed to represent, warrant and agree that:
1. it has not offered, sold, placed or underwritten and will not offer, sell, place or underwrite the issue of any Securities otherwise than in conformity with the provisions of the European Union (Markets in Financial Instruments) Regulations 2017 (S.I. No. 375 of 2017)(as amended) and any codes of conduct issued in connection therewith, the provisions of the Investor Compensation Act 1998 (as amended) and the Investment Intermediaries Act 1995 (as amended) and it will conduct itself in accordance with any codes and rules of conduct, conditions, requirements and any other enactment, imposed or approved by the Central Bank with respect to anything done by it in relation to the Securities;
2. it has not offered, sold, placed or underwritten and will not offer, sell, place or underwrite the issue of any Securities otherwise than in conformity with the provisions of the Central Bank Acts 1942-2018, as amended, including any codes of conduct rules made under Section 117(1) of the Central Bank Act 1989 (as amended, the Central Bank (Investment Market Conduct) Rules 2019 (S.I. No. 366 of 2019) and any and any regulations issued pursuant to Part 8 of the Central Bank (Supervision and Enforcement) Act 2013 (as amended);
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3. it has not offered, sold, placed or underwritten and will not offer, sell, place or underwrite the issue of any Securities in Ireland otherwise than in conformity with the provisions of the European Union (Prospectus) Regulations 2019 (S.I. No. 380 of 2019), EU Prospectus Regulation 2017/1129 and any rules issued under Section 1363 of the Companies Act 2014 by the Central Bank;
4. it has not offered, sold, placed or underwritten and will not offer, sell, place or underwrite the issue of any Securities in Ireland otherwise than in conformity with the provisions of (A) the Market Abuse Regulation (Regulation EU 596/2014); (B) the Market Abuse Directive on criminal sanctions for market abuse (Directive 2014/57/EU); (C) the European Union (Market Abuse) Regulations 2016 (S.I. No. 349 of 2016) (as amended); and (D) any rules issued by the Central Bank pursuant thereto and/or under Section 1370 of the Companies Act; and
5. it has not offered, sold, placed or underwritten and will not offer, sell, place or underwrite the issue of any Securities otherwise than in compliance with the provisions of Companies Act,
as each of the foregoing may be amended, restated, varied, supplemented and/or otherwise replaced from time to time.
Public Offers Generally
Save for applying for admission of the Securities to trading on Euronext Dublin's Global Exchange Market, no action has been or will be taken in any jurisdiction by the Issuer that would, or is intended to, permit a public offering of the Securities, or possession or distribution of the Listing Particulars or any other offering material, in any country or jurisdiction where action for that purpose is required.
The Issuer does not make any representation that any action has been taken in any jurisdiction that would permit a public offering of any Securities, or possession or distribution of the Listing Particulars or any other offering material, in any country or jurisdiction where action for that purpose is required.
Each Securityholder agrees (and each future Securityholder will agree) that it will, to the best of its knowledge, comply with all relevant laws, regulations and directives in each jurisdiction in which it purchases, offers, sells or delivers the Securities or has in its possession or distributes the Listing Particulars or any other offering material and neither the Issuer nor any other Securityholder shall have responsibility therefor.
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GENERAL INFORMATION
Consents and Authorisations
The establishment of the Programme and the creation and issue of the Securities, and entry into of the Master Documents has been authorised by resolutions of the Board of Directors of the Issuer made at meetings of the Board of Directors of the Issuer held in Dublin, Ireland on 7 February 2013, 7 February 2014 and 24 July 2019.
The Issuer has obtained all necessary consents, approvals and authorisations in Ireland (if any) in connection with the establishment of the Programme and the issue and performance of the Securities.
No Litigation
The Issuer is not involved, and has not been involved, in any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Issuer is aware) within the previous twelve months from the date hereof which may have or have had a significant effect on the Issuer’s financial position or profitability.
Conflicts of Interest
Kate Phelan and Niall Gallagher are employees of the Corporate Services Provider. Colm O'Connell is a principal of each of the Sub-Advisor and the Portfolio Manager. However, notwithstanding the foregoing, there are no material potential conflicts of interest between the duties of the Issuer and their private or other duties.
Financial Position
Since 31 December 2018, being the date of its last audited financial statements, other than the matters specifically disclosed in these Base Listing Particulars and the issuance of the Securities by the Issuer and acquisition of Eligible Assets with the proceeds of same, there has been no material adverse change, or any, development reasonably likely to involve any material adverse change, in the financial position or prospects of the Issuer.
ISIN and SEDOL Codes
The ISIN code and SEDOL code for the Securities shall be set out in the Series Listing Particulars for such Series.
Listing
It is intended that application will be made for certain of the Series to be listed on Euronext Dublin and for the Securities to be admitted to the Official List and to trading on its Global Exchange Market.
Walkers Listing Services Limited is acting solely in its capacity as listing agent for the Issuer in relation to the Securities and is not itself seeking admission of the Securities to the Official List of Euronext Dublin or to trading on the Global Exchange Market of Euronext Dublin.
Websites
For the avoidance of doubt, any website referred to in these Base Listing Particulars does not form part of these Base Listing Particulars.
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Language
The language of these Base Listing Particulars is English. Certain names, legislative references and technical terms or references have been cited in their original language in order that the correct technical meaning may be ascribed to them under applicable law.
Material Contracts
Since its date of incorporation, the Issuer has not entered into any material contracts other than the Master Documents to which it is a party, being contracts entered into other than in its ordinary course of business, and has not produced any accounts.
For the life of these Base Listing Particulars and for as long as the Securities may be outstanding, physical copies of the following documents may be inspected during normal business hours (local time) on any weekday (excluding Saturdays, Sundays and any public holiday) at the registered office of the Issuer and the specified office of the Paying Agent during the period from the date of these Base Listing Particulars to the date of redemption of the Securities in full:
1. these Base Listing Particulars and any Series Listing Particulars and any other document required or permitted to be published by the applicable listing rules and guidelines of Euronext Dublin;
2. the Master Conditions;
3. the Master Trust Terms;
4. the Master Agency Terms;
5. the Master Definitions;
6. the Portfolio Management Agreement;
7. the Corporate Services Agreement;
8. the Certificate of Incorporation and Constitution of the Issuer; and
9. the annual audited financial statements of the Issuer for the periods ended 31 December 2013, 31 December 2014, 31 December 2015, 31 December 2016, 31 December 2017 and 31 December 2018 together with any other annual audited financial statements, once prepared and filed with the Companies Registration Office.
Post-issuance Reporting
The Issuer does not intend to provide periodic post-issuance information in relation to the Securities or the performance of any Combined Series Assets or Segregated Series Assets.
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DEFINITIONS
"Account(s)" means the account(s) held with the Account Bank and established in the name of the Issuer for the purposes of the Programme and each Series, as the context so requires, as well as any replacement account(s).
"Account Bank" means Citco Nederland Bank, N.V., Dublin Branch and such account bank(s), including any successor or substitute account bank(s), as may be designated as such by the Issuer and notified to the Trustee from time to time.
"Action" has the meaning ascribed to it in Condition 13.13 or Clause 13.3 of the Master Trust Terms (as applicable).
"Additional Funding Request" means a notice issued by the Issuer to a Securityholder, substantially in the form set out in Annex A to the Master Conditions, indicating the date and details of the requested Advance up to the aggregate maximum principal amount of each Series.
"Advance" means an additional advance made by a Securityholder under a Series pursuant to an Additional Funding Request and the amount of each such advance shall be specified in the relevant Additional Funding Request.
"Agency Agreement" means the agency agreement entered into by the Issuer, the Agents and the Trustee in relation to each series by execution and delivery of, and in accordance with the provisions of, the relevant Constituting Instrument.
"Agent(s)" means the person(s) executing the relevant Constituting Instrument in the capacity of Paying Agent, Registrar, Transfer Agent and Calculation Agent, or any of them and shall include such further or any successor agent appointed by the Issuer (with the prior written approval of the Trustee) in accordance with the provisions of the relevant Agency Agreement.
"Agents Fees" means all fees, costs and expenses (including indemnity, security and/or prefunding costs) incurred by and/or due and owing to or reasonably expected to be incurred by and/or due and owing to any or all of the Paying Agent, the Transfer Agent and the Registrar under the relevant Agency Agreement(s) and/or other Series Documents from time to time.
"Amount" has the meaning ascribed to it in schedule 1 of the Master Agency Terms.
"Audit Rules" means the revised partnership audit rules under the United States Bipartisan Budget Act of 2015 and any Sections of the Code or Treasury Regulations promulgated thereunder and with respect thereto, each as amended from time to time.
"Authorised Denomination" means USD250,000 or such other figure and currency as may be specified in the relevant Constituting Instrument provided always that such figure shall exceed the US Dollar equivalent of EUR100,000.
"Base Listing Particulars" means in respect of the Issuer the base listing particulars issued by the Issuer on 20 May 2020 with respect to the Programme and the Securities, as updated, supplemented or restated from time to time.
"Business Day" means a day on which banks and foreign exchange markets are open for business in the place(s) specified for this purpose in the Conditions.
"Brokerage Agreements" means the CITIC Brokerage Agreement, the Haitong Brokerage Agreement and such other execution brokerage agreements entered into, or to be entered into by the Portfolio Manager or the Sub-Advisor and the Brokers from time to time.
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"Brokers" means CITIC Securities Co., Ltd, and Haitong Securities Co., Ltd or such other party as may be appointed as a broker with respect to the Series Assets by the Portfolio Manager or the Sub-Advisor on its behalf from time to time.
Calculation Agent" means Hillhouse Capital Advisors, Ltd. or, as the context requires, any successor or substitute calculation agent appointed pursuant to the terms of the relevant Agency Agreement.
"Central Bank" means the Central Bank of Ireland.
"Certified Date" has the meaning ascribed to it in Clause 11 of the Master Trust Terms.
"CITIC Brokerage Agreement" means the trading entrustment agreement entered into between the Sub- Advisor and CITIC Securities Co., Ltd for the provision of certain brokerage services with respect to the Series Assets.
"Combined Series" means a Series under which Combined Series Securities are issued.
"Combined Series Assets" means all Eligible Assets acquired by the Issuer using, directly or indirectly, funds received through the issuance of a Combined Series and excluding for the avoidance of doubt all Segregated Series Assets and any Eligible Assets acquired directly or indirectly with the proceeds of other Combined Series Securities not forming part of such Combined Series.
"Combined Series Interest" means the interest payable on the Combined Series Securities with respect to any Interest Period.
"Combined Series Securities" means Securities issued under the Programme which have been designated as a Combined Series having the same Combined Series Number and in respect of which the return is earned on the specific Combined Series Assets acquired by the Issuer using the funding only of that Combined Series.
"Conditions" means the Master Conditions incorporated into the relevant Constituting Instrument (as modified or supplemented by the provisions of such Constituting Instrument and any other document specified to be incorporated into the Constituting Instrument) and identified therein as the "Conditions" and by the provisions of the Registered Certificate. Any reference to a particular numbered Condition shall be construed accordingly.
"Confirmation" has the meaning ascribed to it in the Master Agency Terms.
"Constituting Instrument" means the constituting instrument relating to a Security in respect of any Series and into which the Master Conditions are incorporated by reference and, where the context permits, includes any other document incorporated by reference into such constituting instrument.
"Consequential Loss" has the meaning ascribed to it in Condition 13.13.
"Companies Act" means the Irish Companies Act 2014.
"Corporate Services Agreement" means the corporate services agreement entered into between the Corporate Services Provider and the Issuer dated 15 February 2013.
"Corporate Services Provider" means Citco Corporate Services (Ireland) Limited or, as the context requires, any successor or substitute corporate services provider appointed pursuant to the terms of the Corporate Services Agreement.
"CSRC" means the China Securities Regulatory Commission.
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"Custodian" means China Construction Bank Corporation or, as the context requires, any successor or substitute corporate services provider appointed pursuant to the terms of the Custodian Agreement.
"Custodian Agreement" means the document custodian agreement between the Sub-Advisor and the Custodian with respect to the provision of certain custodial services to be provided in relation to the Series Assets.
"Deed of Covenant" means the deed of covenant dated 14 February 2013 executed by the Share Trustee.
"Director" in relation to any person includes any person (including a corporate person) occupying the position of director of that person, by whatever named called.
"Early Redemption" means redemption of Securities on an Early Redemption Date.
"Early Redemption Amount" means the amount payable upon redemption of each Security on the Early Redemption Date as specified in the Redemption Notice.
"Early Redemption Date" has the meaning ascribed to it in Condition 7.2.
"Effective Date" has the meaning ascribed to it in the relevant Constituting Instrument.
"Eligible Assets" means securities and other investment instruments that are permitted to be acquired by persons licensed as a Qualified Foreign Institutional Investor by the China Securities Regulatory Commission, including securities and investment instruments traded on exchanges within the People's Republic of China, including, without limitation: (i) shares, bonds and warrants traded or transferred listed on the Shenzhen Stock Exchange or the Shanghai Stock Exchange and any other stock exchange which lists securities that may be traded by QFIIs pursuant to PRC law in force from time to time (the "Stock Exchanges"); (ii) fixed income products traded in interbank bond market; (iii) securities investment funds; (iv) stock index futures, and other financial instruments approved by the China Securities Regulatory Commission.
"Eligibility Criteria" has the meaning given to it in the Portfolio Management Agreement.
"Enforcement Notice" means (i) where an Event of Default occurs and is continuing; and (ii) acting pursuant to a Written Direction, the notice given by the Trustee to the Issuer that all amounts outstanding in respect of each Security are immediately due and payable.
"Euronext Dublin" means the Irish Stock Exchange plc, trading as Euronext Dublin.
"Event of Default" has the meaning ascribed to it in the Conditions.
"Exchange Act" means the U.S. Securities and Exchange Act of 1934, as amended.
"Existing Series" has the meaning ascribed to it in Condition 16.1.
"Expenses" means all amounts due and payable to the Portfolio Manager (including management fees and performance fees), the Calculation Agent, to the independent accountants, independent tax representatives and counsel of the Issuer, to the Corporate Services Provider, to the Directors in respect of their service fees, to any Person in respect of any governmental fee or charge (excluding, for the avoidance of doubt, any taxes payable to any tax authority) and to any other Person in respect of any other fees, indemnities or expenses incurred by the Issuer other than amounts the payment of which are otherwise provided for in the applicable Priority of Payments.
"Further Constituting Instrument" has the meaning ascribed to it in Condition 16.1.
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"Further Securities" has the meaning ascribed to it in Condition 16.1.
"GMT" means Greenwich Mean Time as reckoned in accordance with the Standard Time (Amendment) Act, 1971 of Ireland.
"gross negligence" means any intentional or conscious action, omission or decision of a person which is taken with deliberate and reckless disregard for the consequences of such action, omission or decision which shall, for the avoidance of doubt, include any degree of negligence where whatever duty of care that applies to a given circumstance has not been met by a significant margin or where such person otherwise acts or omits to act with a significant degree of carelessness.
"Haitong Brokerage Agreement" means the trading entrustment agreement entered into between the Sub-Advisor and Haitong Securities Co., Ltd for the provision of certain brokerage services with respect to the Series Assets.
"Hong Kong" means the Hong Kong Special Administration Region of the People's Republic of China.
"Insolvency Official" means, in respect of any company, a liquidator, provisional liquidator, examiner, administrator (whether appointed by the court or otherwise), nominee, supervisor, trustee in bankruptcy, conservator, guardian or other similar official in respect of such company or in respect of all (or substantially all) of the company’s assets or in respect of any arrangement or composition with creditors.
"Insolvency Proceedings" means the winding up, dissolution, company voluntary arrangement, examinership or administration of a company or corporation and shall be construed so as to include any equivalent or analogous proceedings under the law of the jurisdiction in which such company or corporation is incorporated or of any jurisdiction in which such company or corporation carries on business including the seeking of liquidation, winding up, reorganisation, dissolution, examinership, administration, arrangement, adjustment, protection or relief from creditors or the appointment of an Insolvency Official.
"Interest Amount" means the amount of interest payable in respect of Security for the relevant Interest Period.
"Interest Period" shall mean the period from the Issue Date to the first Redemption Date and thereafter from a Redemption Date to the Business Day before the next Redemption Date.
"Investment" has the meaning ascribed to it in the Master Trust Terms.
"Investors" means the Securityholders.
"Investment Company Act" means the U.S. Investment Company Act of 1940, as amended.
"Investment Quota" means the amount approved by the SAFE that a QFII is authorised to trade on the PRC securities market pursuant to PRC laws.
"Issue Date" means, in respect of any Security, the date specified as such in the relevant Constituting Instrument.
"Issuer" means the person executing the relevant Constituting Instrument in the capacity of Issuer.
"Liabilities" means any loss, damage, cost, charge, claim, demand, expense, judgment, action, proceeding or other liability whatsoever (including, without limitation, in respect of taxes, duties, levies, imposts and other charges) and including any value added tax or similar tax charged or chargeable in respect thereof and any withholding tax, stamp duty or other taxes payable by the relevant party (except for income or corporate taxes payable on any parties’ income and profits) and legal and other
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professional fees, costs and expenses on a full indemnity basis (including, without limitation, the expenses of any experts, counsel or agents) (each a "Liability" and together, the "Liabilities").
"Listing Agent" means the person specified in the Conditions as the Listing Agent in relation to such Stock Exchange.
"Listing Particulars" collectively means the Base Listing Particulars and, with respect to any Series, the Series listing Particulars (if any) relating to such Series.
"Listed Securities" means (unless and to the extent otherwise provided in the Conditions) Securities which are, or are to be, admitted to trading and listed on a recognised stock exchange for purposes of Section 64 of the Taxes Act.
"Master Agency Terms" means the Master Agency Terms (2020 Edition) in the form signed for the purposes of identification by or on behalf of the Issuer and the Trustee incorporated by reference into the relevant Constituting Instrument.
"Master Conditions" means the Master Conditions (2020 Edition) relating to a Security in the form signed for the purposes of identification by or on behalf of the Issuer and the Trustee incorporated by reference into the relevant Constituting Instrument.
"Master Definitions" means the Master Definitions (2020 Edition) in the form signed for the purposes of identification by or on behalf of the Issuer and the Trustee incorporated by reference into the relevant Constituting Instrument.
"Master Documents" means the Master Definitions, the Master Conditions, the Master Trust Terms, the Master Agency Terms, the Portfolio Management Agreement and the Corporate Services Agreement.
"Master Trust Terms" means the Master Trust Terms (2020 Edition) in the form signed for the purposes of identification by or on behalf of the Issuer and the Trustee incorporated by reference into the relevant Constituting Instrument.
"Maturity Date" means, in respect of any Security, the date specified as such in the relevant Constituting Instrument.
"outstanding" means, in relation to the Securities, all the Securities issued except
(a) those which have been redeemed in accordance with the Conditions;
(b) those in respect of which the date for redemption in accordance with the Conditions has occurred and the redemption moneys (including premium, if any, and all interest accrued thereon to the date for such redemption and any interest payable under the Conditions after such date) have been duly paid to the Trustee or to the Agent and/or the Registrar as provided in the relevant Constituting Instrument and remain available for payment against presentation and surrender of Securities, as the case may be;
(c) those which have become void and those in respect of which claims have become prescribed in accordance with the Conditions;
(d) those which have been purchased and cancelled as provided in the Conditions;
(e) those mutilated or defaced Securities which have been surrendered in exchange for replacement Securities;
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(f) for the purpose only of determining how many Securities are outstanding and without prejudice to their status for any other purpose) those Securities alleged to have been lost, stolen or destroyed and in respect of which replacement Securities have been issued.
"Party" means a party to any Transaction Document.
"Paying Agent" means each person executing the relevant Constituting Instrument in the capacity of Paying Agent or, as the context requires, any successor or substitute paying agent appointed by the Issuer (with the prior written approval of the Trustee) in accordance with the provisions of the relevant Agency Agreement.
"Payment Date" means the date falling at least five (5) Business Days after each Redemption Date.
"person" or "Person" means any individual, firm, company, corporation, government, state or agency of a state or any association or partnership, limited liability company, trustee or statutory business trust (whether or not having separate legal personality) or two or more of the foregoing.
"Portfolio Manager" means Hillhouse Capital Advisors, Ltd. or, as the context requires, any duly appointed substitute or successor appointed by the Issuer in accordance with the provisions of the Portfolio Management Agreement.
"Portfolio Management Agreement" means the portfolio management agreement dated 15 February 2013 between the Issuer, the Portfolio Manager as portfolio manager and the Trustee.
"Post–Enforcement Priority of Payments" means the order of priority set forth in Condition 5 of the Master Conditions.
"PRC" means the People's Republic of China (excluding, for the purposes of this document, Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan).
"Pre-Enforcement Priority of Payments" means the order of priority set forth in Condition 4 of the Master Conditions.
"Priority of Payments" means:
(a) prior to the occurrence of an Event of Default, the Pre-Enforcement Priority of Payments; and
(b) following the occurrence of an Event of Default, the Post-Enforcement Priority of Payments,
and "Priority of Payments" shall be construed accordingly.
"Programme" means the programme for the issue of Securities by the Issuer.
"Programme Limit" means the USD 10,000,000,000 aggregate principal amount which may be funded and outstanding under the Securities at any one time, as may be amended from time to time with the consent of the Trustee acting on foot of a Written Direction.
"QFII" and "Qualified Foreign Institutional Investor" means a qualified foreign institutional investor licensed by the CRSC.
"QFII Investments" means securities and other investment instruments that are permitted to be acquired by persons licensed as Qualified Foreign Institutional Investors including securities and instruments traded on exchanges within the PRC.
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"QFII Licence" means the "Securities Investment Business Permit" issued by the CSRC to a QFII pursuant to the PRC laws.
"Redemption Amount" means in respect of a Security, on the date on which such Security is to be redeemed, the amount determined by the Calculation Agent to be due and payable to the Securityholder pursuant to the relevant Conditions. A Security shall be deemed fully paid upon payment to the Securityholder of their pro rata portion of the Combined Series Assets or Series Assets, as applicable, and pursuant to the Priority of Payments.
"Redemption Date" means (i) an Early Redemption Date; (ii) any other date on which the Issuer or the Portfolio Manager determines, in their sole discretion, that a payment of interest and/or principal shall be due and payable on the Securities in accordance with the Priority of Payments and Master Documents on the next succeeding Payment Date and (iii) the Maturity Date.
"Redemption Notice" has the meaning ascribed to it in Condition 7.2.
"Register" means the note register kept by the Registrar pursuant to the relevant Agency Agreement.
"Registered Certificates" means the registered certificates representing the Securities.
"Registered Security(s)" has the meaning ascribed to it in the Conditions.
"Registrar" means any person executing the relevant Constituting Instrument in the capacity of Registrar or, as the context requires, any successor or other registrar appointed by the Issuer (with the prior written approval of the Trustee) in accordance with the provisions of the relevant Agency Agreement.
"SAFE" means the PRC State Administration of Foreign Exchange.
"Scheduled Redemption Amount" means the amount of interest (if any) and principal payable upon redemption of the Security on the Maturity Date.
"Section 110 Asset" means a qualifying asset as defined in Section 110 of the Taxes Act.
"Security(s)" means a profit participating Security issued by the Issuer or to be constituted under a Constituting Instrument for a Series, which Security may be represented by a Registered Certificate.
"Securityholder(s)" means the holder or holders of (i) any Combined Series Securities or (ii) any Segregated Series Securities.
"Securities Act" means the U.S. Securities Act of 1933, as amended.
"Segregated Series" means a Series under which Segregated Series Securities are issued.
"Segregated Series Assets" means all Eligible Assets acquired by the Issuer using, directly or indirectly, the funds received through the issuance of a Segregated Series and excluding for the avoidance of doubt all Combined Series Assets and any Eligible Assets acquired directly or indirectly with the proceeds of other Segregated Series Securities not forming part of such Segregated Series.
"Segregated Series Securities" means Securities issued under the Programme which have been designated as Segregated Series Securities having a unique Segregated Series Number and in respect of which the return is earned on the specific Segregated Series Assets acquired by the Issuer using the funding only of that Segregated Series.
"Segregated Series Interest" means the interest payable on a specific Segregated Series Securities with respect to any Interest Period.
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"Series" means any Combined Series or any Segregated Series issued under the Programme, as applicable.
"Series Assets" means the Combined Series Assets or Segregated Series Assets relating to a Series, as more particularly described in the Terms set out in Schedule 2 of the relevant Constituting Instrument.
"Series Documents" has the meaning given to it in the Constituting Instrument.
"Series Expenses" means those Expenses, Agents Fees and/or Trustee Fees (excluding such amounts that have been paid or otherwise discharged in priority pursuant to the Priority of Payments or otherwise) which are solely attributable to a specific Series.
"Series Listing Particulars" means the series listing particulars prepared in respect of each issue of Securities under the Programme to be admitted to trading on a recognised stock exchange from time to time.
"Series Returns" means the segregated return attributable to a specific Series.
"Single Series" has the meaning given to it in the Master Trust Terms.
"Stock Exchange" means Euronext Dublin and/or any other or further recognised stock exchange(s) or securities market(s) on which any Securities may from time to time be listed and admitted to trading or on which any Securities are from time to time to be listed and admitted to trading.
"Sub-Advisor" means Hillhouse Capital Management Pte. Ltd. or, as the context requires, any duly appointed substitute, successor or additional sub-advisor appointed by the Portfolio Manager from time to time with respect to the Issuer and the Series Assets.
"successor" means, in relation to any of the Agents, such other or further person as may from time to time be appointed by the Issuer in relation to the Securities with the written approval of the Trustee and notice of whose appointment is given to the Securityholders in accordance with the Conditions.
"Taxes Act" means the Taxes Consolidation Act, 1997 of Ireland (as amended).
"Terms" means the provisions identified as such in the relevant Constituting Instrument.
"Transaction Documents" means the Portfolio Management Agreement, the Corporate Services Agreement, the Master Definitions, the Master Conditions, the Master Trust Terms, the Master Agency Terms and each Constituting Instrument for any Series and the Securities, Trust Deed and Agency Agreement(s) constituted thereby, each other Series Document and any other document, agreement or instrument that the Trustee and the Issuer may from time to time agree to designate as a "Transaction Document".
"Transfer Agent" means each person executing the relevant Constituting Instrument in the capacity of Transfer Agent and any successor Transfer Agent appointed by the Issuer (with the prior written approval of the Trustee) in accordance with the provisions of the relevant Agency Agreement.
"Trust Deed" means the Trust Deed entered into by the Issuer and Trustee with respect to each Series by execution and delivery of, and in accordance with the provisions of the relevant Constituting Instrument.
"Trustee" means the person executing the Constituting Instrument in the capacity of Trustee or, as the context requires, any substitute or successor appointed in accordance with the provisions of the relevant Trust Deed and Constituting Instrument.
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"Trustee Fees" means all fees, costs and expenses (including indemnity, security and/or prefunding costs) incurred by and/or due and owing to or reasonably expected to be incurred by and/or due and owing to the Trustee under the relevant Trust Deed(s) and/or Master Documents and/or other Series Documents from time to time.
"trust corporation" means a trust corporation (as defined in Section 30(4) of Succession Act, 1965) or a corporation entitled to act as a trustee pursuant to applicable foreign legislation relating to trustees.
"Written Direction" means a direction in writing from the holders of at least 75% of the value of the holders of Securities outstanding in respect of a particular Series at the time the direction is given.
PRINCIPLES OF CONSTRUCTION
1. General Interpretation
Any reference in the Master Definitions or any Transaction Document to:
(a) "including" shall be construed as a reference to "including without limitation", so that any list of items or matters appearing after the word "including" shall be deemed not to be an exhaustive list, but shall be deemed rather to be a representative list, of those items or matters forming a part of the category described prior to the word "including";
(b) a "law" shall be construed as any law (including common or customary law), statute, constitution, decree, judgment, treaty, regulation, directive, by-law, order or any other legislative measure of any government, supranational, local government, statutory or regulatory body or court;
(c) "repay", "redeem" and "pay" shall each include both of the others and "repaid", "repayable" and "repayment", "redeemed", "redeemable" and "redemption" and "paid", "payable" and "payment" shall be construed accordingly;
(d) "stamp duty" shall be construed as a reference to any stamp duty, stamp duty reserve tax, stamp duty land tax, registration or other documentary tax or other similar taxes or duties (including, without limitation, any penalty or interest payable in connection with any failure to pay or any delay in paying out any of the same);
2. Clauses and Sub-Clauses
Any reference in the Master Definitions or any Transaction Document to a Clause or a sub- Clause is, unless otherwise stated, to a Clause or sub-Clause hereof.
3. Headings
Headings and sub-headings and the contents page in the Master Definitions and any Transaction Document are for ease of reference only and shall not affect the construction of the Master Definitions or any Transaction Document.
4. Directives
All references in the Master Definitions or any Transaction Document to a Directive include any relevant implementing measure of each Member State of the European Economic Area which has implemented such Directive.
5. Currencies
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(a) Each of "euro", "EUR" and "€" denote the single currency of the Participating Member States.
For the purposes of the foregoing, "Participating Member State" means any member state of the European Union that has the euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.
(b) Each of "USD", "US$" or "$" denote the lawful currency of the United States of America for the time being.
(c) Each of "RMB" or "renminbi" denote the lawful currency of the PRC for the time being.
6. Principal and Interest
All references in the Master Definitions or any Transaction Document to principal or interest in respect of any Securities shall be construed in accordance with the Conditions.
7. Singular and Plural
Words denoting the singular number only in the Master Definitions or any Transaction Document shall include the plural number also and vice versa; words denoting one gender only shall include the other genders and words denoting persons only shall include firms and corporations and vice versa.
8. Enactments
Any reference in the Master Definitions or any Transaction Document to an enactment is a reference to it as amended from time to time and includes a reference to any repealed enactment which it may re-enact, with or without amendment, and to any re-enactment and/or amendment to it. Any reference to a statute in the Master Definitions or any Transaction Document shall include any regulations or statutory instruments made thereunder.
9. Certificates
All certificates required to be provided pursuant to the Master Definitions or any Transaction Document shall be certificates signed by duly authorised representatives of the persons or companies required to provide such certificates.
10. VAT Inclusive
Costs, charges, remuneration or expenses shall (unless otherwise stated) include any value added, turnover or similar tax charged in respect thereof.
11. Documents and Agreements
Reference in the Master Definitions or any Transaction Document to any document or agreement shall include reference to such document or agreement as varied, amended, extended, restarted, novated or supplemented from time to time and to any document or agreement which replaces such first-mentioned document or agreement as varied, amended, extended, restarted, novated or supplemented from time to time.
12. Proceedings
All references in the Master Definitions or any Transaction Document to any action, remedy or method of judicial proceeding for the enforcement of the rights of creditors shall be deemed to
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include, in respect of any jurisdiction other than Ireland, references to such action, remedy or method of judicial proceeding for the enforcement of the rights of creditors available or appropriate in such jurisdiction as shall most nearly approximate to such action, remedy or method of judicial proceeding described or referred to in the Master Definitions.
13. Successors
Any reference in the Master Definitions or any Transaction Document to any Party or Person includes any person deriving title therefrom and any of their respective permitted successors in title, permitted assigns or permitted transferees.
14. Guarantees
All references in the Master Definitions or any Transaction Document to guarantees or to an obligation being guaranteed shall be deemed to include respectively references to indemnities or to any indemnity being given in respect thereof and shall include any guarantee, letter of credit, bond, indemnity or similar assurance against loss, or any obligation, direct or indirect, actual or contingent, to purchase or assume any indebtedness of any person or to make an investment in or loan to any person or to purchase assets of any person where, in each case, such obligation is assumed in order to maintain or assist the ability of such person to meet its indebtedness.
15. Transaction Documents
Unless a contrary indication appears, a term used in any Security, Constituting Instrument or other Transaction Document or in any notice given under or in connection with any Security, Constituting Instrument or other Transaction Document has the same meaning in that Security, Constituting Instrument or other Transaction Document or notice as in this Master Definitions Schedule.
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APPENDIX A: OFFERING DISCLOSURES
THESE BASE LISTING PARTICULARS DO NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, (I) ANY SECURITIES OTHER THAN THE SECURITIES OR (II) ANY SECURITIES IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH AN OFFER OR SOLICITATION. THE DISTRIBUTION OF THESE BASE LISTING PARTICULARS AND THE OFFER OR SALE OF THE SECURITIES MAY BE RESTRICTED BY LAW IN CERTAIN JURISDICTIONS. PERSONS INTO WHOSE POSSESSION THESE BASE LISTING PARTICULARS OR ANY OF THE SECURITIES COME ARE REQUIRED BY THE ISSUER, THE INITIAL SECURITIYHOLDERS, THE AGENTS, THE TRUSTEE AND THE PORTFOLIO MANAGER TO INFORM THEMSELVES ABOUT, AND OBSERVE, ANY SUCH RESTRICTIONS.
EACH PROSPECTIVE PURCHASER OF ANY OF THE SECURITIES MUST COMPLY WITH ALL APPLICABLE LAWS AND REGULATIONS IN FORCE IN ANY JURISDICTION IN WHICH IT PURCHASES, OFFERS OR SELLS SUCH SECURITIES OR POSSESSES OR DISTRIBUTES THESE BASE LISTING PARTICULARS AND MUST OBTAIN ANY CONSENT, APPROVAL OR PERMISSION REQUIRED BY IT FOR THE PURCHASE, OFFER OR SALE BY IT OF THE SECURIITES UNDER THE LAWS AND REGULATIONS IN FORCE IN ANY JURISDICTION TO WHICH IT IS SUBJECT OR IN WHICH IT MAKES SUCH PURCHASES, OFFERS OR SALES, AND NONE OF THE ISSUER, THE INITIAL SECURITIYHOLDERS, THE AGENTS, THE TRUSTEE OR THEIR RESPECTIVE AFFILIATES SHALL HAVE ANY RESPONSIBILITY THEREFOR.
NOTICE TO RESIDENTS OF AUSTRALIA
NO PROSPECTUS OR OTHER DISCLOSURE DOCUMENT (AS DEFINED IN THE CORPORATIONS ACT 2001 OF AUSTRALIA) IN RELATION TO THE SECURITIES HAS BEEN LODGED WITH THE AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION ("ASIC"), AND ACCORDINGLY:
(A) OFFERS MAY NOT BE MADE AND APPLICATIONS MAY NOT BE INVITED FOR THE ISSUE, SALE OR PURCHASE OF THE SECURITIES IN AUSTRALIA (INCLUDING AN OFFER OR INVITATION WHICH IS RECEIVED BY A PERSON IN AUSTRALIA); AND
(B) NO DRAFT, PRELIMINARY OR DEFINITIVE OFFERING MEMORANDUM, ADVERTISEMENT OR OTHER OFFERING MATERIAL RELATING TO THE SECURITIES MAY BE DISTRIBUTED OR PUBLISHED IN AUSTRALIA;
UNLESS (1) THE AGGREGATE CONSIDERATION PAYABLE BY EACH OFFEREE OR INVITEE IS AT LEAST AUD500,000 (OR ITS EQUIVALENT IN OTHER CURRENCIES, BUT DISREGARDING MONIES LENT BY THE OFFEROR OR ITS ASSOCIATES) OR THE OFFER OR INVITATION OTHERWISE DOES NOT REQUIRE DISCLOSURE TO INVESTORS IN ACCORDANCE WITH PART 6D.2 OF THE CORPORATIONS ACT, (2) SUCH ACTION COMPLIES WITH ALL APPLICABLE LAWS, REGULATIONS AND DIRECTIVES, AND (3) SUCH ACTION DOES NOT REQUIRE ANY DOCUMENT TO BE LODGED.
NOTICE TO THE RESIDENTS OF AUSTRIA
THE SECURITIES ARE OFFERED OR SOLD ON A PRIVATE PLACEMENT BASIS. THE FORM AND THE CONTENT OF THESE BASE LISTING PARTICULARS DO NOT COMPLY WITH THE AUSTRIAN LAW FOR PUBLIC OFFERING OF INTERESTS IN FOREIGN FUNDS. THESE BASE LISTING PARTICULARS HAVE BEEN PRODUCED FOR THE SOLE PURPOSE OF PROVIDING INFORMATION ABOUT CERTAIN SECURITIES TO A LIMITED NUMBER OF PRIVATE INVESTORS AS WELL AS TO QUALIFIED INVESTORS IN AUSTRIA.
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NOTICE TO THE RESIDENTS OF BAHRAIN
ALL APPLICATIONS FOR INVESTMENT SHOULD BE RECEIVED, AND ANY ALLOTMENTS SHOULD BE MADE, IN EACH CASE, FROM OUTSIDE BAHRAIN. THESE BASE LISTING PARTICULARS HAVE BEEN PREPARED FOR PRIVATE INFORMATION PURPOSES OF INTENDED INVESTORS ONLY WHO WILL BE HIGH NET WORTH INDIVIDUALS AND INSTITUTIONS. THE ISSUER REPRESENTS AND WARRANTS THAT IT HAS NOT MADE AND WILL NOT MAKE ANY INVITATION TO THE PUBLIC IN THE KINGDOM OF BAHRAIN AND THAT THESE BASE LISTING PARTICULARS WILL NOT BE ISSUED, PASSED TO OR MADE AVAILABLE TO THE PUBLIC GENERALLY. THE CENTRAL BANK OF BAHRAIN ("CBB") HAS NOT REVIEWED, NOR HAS IT APPROVED, THESE BASE LISTING PARTICULARS OR THE MARKETING OF THE SECURITIES IN THE KINGDOM OF BAHRAIN. ACCORDINGLY, THE SECURITIES MAY NOT BE OFFERED OR SOLD IN BAHRAIN OR TO RESIDENTS THEREOF EXCEPT AS PERMITTED BY BAHRAIN LAW. THE CBB IS NOT RESPONSIBLE FOR THE PERFORMANCE OF THE SECURITIES.
NOTICE TO THE RESIDENTS OF BELGIUM
THE ISSUER HAS NOT BEEN AND WILL NOT BE REGISTERED WITH THE BELGIAN BANKING, FINANCE AND INSURANCE COMMISSION ("COMMISSIE VOOR HET BANK-, FINANCIE-EN ASSURANTIEWEZEN" / "COMMISSION BANCAIRE, FINANCIÈRE ET DES ASSURANCES") AS A FOREIGN COLLECTIVE INVESTMENT INSTITUTION UNDER ARTICLE 127 OF THE BELGIAN LAW OF JULY 20, 2004 ON CERTAIN FORMS OF COLLECTIVE MANAGEMENT OF INVESTMENT PORTFOLIOS. THE OFFERING IN BELGIUM HAS NOT BEEN AND WILL NOT BE NOTIFIED TO THE BELGIAN BANKING, FINANCE AND INSURANCE COMMISSION, NOR HAS THIS DOCUMENT BEEN NOR WILL IT BE APPROVED BY THE BELGIAN BANKING, FINANCE AND INSURANCE COMMISSION. ACCORDINGLY, THE SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED OR DELIVERED TO ANY PERSON IN BELGIUM OTHER THAN INDIVIDUALS OR ENTITIES WHO ARE "QUALIFIED INVESTORS" AS SET FORTH IN ARTICLE 10 OF THE BELGIAN LAW OF 16 JUNE 2006 AND "PROFESSIONAL OR INSTITUTIONAL INVESTORS" IN THE SENSE OF ARTICLE 5§3 OF THE BELGIAN LAW OF JULY 20, 2004. THIS DOCUMENT HAS BEEN ISSUED TO YOU FOR YOUR PERSONAL USE ONLY AND EXCLUSIVELY FOR THE PURPOSES OF THE OFFERING. ACCORDINGLY, THIS DOCUMENT MAY NOT BE USED FOR ANY OTHER PURPOSE NOR PASSED ON TO ANY OTHER PERSON IN BELGIUM.
NOTICE TO THE RESIDENTS OF THE CAYMAN ISLANDS
THESE BASE LISTING PARTICULARS HAVE NOT BEEN AND WILL NOT BE FILED WITH OR APPROVED BY THE CAYMAN ISLANDS MONETARY AUTHORITY OR ANY OTHER REGULATORY AUTHORITY IN THE CAYMAN ISLANDS. NO INVITATION, WHETHER DIRECTLY OR INDIRECTLY, MAY BE MADE TO THE PUBLIC IN THE CAYMAN ISLANDS TO SUBSCRIBE FOR SECURITIES OF THE ISSUE AND NO SUCH INVITATION IS MADE HEREBY.
NOTICE TO THE RESIDENTS OF DENMARK
THESE BASE LISTING PARTICULARS HAVE NOT BEEN AND WILL NOT BE FILED WITH OR APPROVED BY THE DANISH FINANCIAL SUPERVISORY AUTHORITY OR ANY OTHER REGULATORY AUTHORITY IN DENMARK, AND THE SECURITIES HAVE NOT BEEN AND ARE NOT INTENDED TO BE LISTED ON A DANISH STOCK EXCHANGE OR A DANISH AUTHORISED MARKET
PLACE. FURTHERMORE, THE SECURITIES HAVE NOT BEEN AND WILL NOT BE OFFERED TO THE PUBLIC IN DENMARK. CONSEQUENTLY, THESE BASE LISTING PARTICULARS MAY NOT BE MADE AVAILABLE, NOR MAY THE SECURITIES OTHERWISE BE MARKETED OR OFFERED FOR SALE, DIRECTLY OR INDIRECTLY, TO ANY INDIVIDUAL OR LEGAL ENTITY IN DENMARK OTHER THAN TO INDIVIDUALS OR LEGAL ENTITIES WHO WILL COMMIT TO INVEST IN THE SECURITIES AT LEAST USD1,000,000 PER INVESTOR FOR EACH SEPARATE OFFER.
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NOTICE TO THE RESIDENTS OF FINLAND
THESE BASE LISTING PARTICULARS SHALL NOT CONSTITUTE AN OFFER TO THE PUBLIC IN FINLAND. THE SECURITIES CANNOT BE OFFERED OR SOLD IN FINLAND BY MEANS OF ANY DOCUMENT TO ANY PERSONS OTHER THAN "QUALIFIED INVESTORS" AS DEFINED BY THE FINNISH SECURITIES MARKETS ACT (ARVOPAPERIMARKKINALAKI, 26.5.1989/495), AS AMENDED. NO ACTION HAS BEEN TAKEN TO AUTHORISE AN OFFERING OF THE SECURITIES TO THE PUBLIC IN FINLAND, AND THE DISTRIBUTION OF THESE BASE LISTING PARTICULARS ARE NOT AUTHORISED BY THE FINANCIAL SUPERVISION AUTHORITY IN FINLAND. THESE BASE LISTING PARTICULARS ARE STRICTLY FOR PRIVATE USE BY ITS HOLDER AND MAY NOT BE PASSED ON TO THIRD-PARTIES OR OTHERWISE PUBLICLY DISTRIBUTED. SUBSCRIPTIONS WILL NOT BE ACCEPTED FROM ANY PERSONS OTHER THAN THE PERSON TO WHOM THESE BASE LISTING PARTICULARS HAVE BEEN DELIVERED BY THE ISSUER OR ITS REPRESENTATIVE. THESE BASE LISTING PARTICULARS MAY NOT INCLUDE ALL THE INFORMATION THAT IS REQUIRED TO BE INCLUDED IN A PROSPECTUS IN CONNECTION WITH A PUBLIC OFFERING.
NOTICE TO THE RESIDENTS OF FRANCE
THE ISSUER HAS NOT BEEN AUTHORISED, AND THESE BASE LISTING PARTICULARS HAVE NOT BEEN APPROVED BY THE AUTORITE DES MARCHÉS FINANCIERS OR ANY OTHER FRENCH AUTHORITY. NO MARKETING OF THE SECURITIES HAS BEEN MADE ON FRENCH TERRITORY, AND THESE BASE LISTING PARTICULARS AND ANY OTHER OFFERING MATERIALS RELATING TO THE ISSUER ARE BEING PROVIDED ONLY AT THE REQUEST OF PROSPECTIVE INVESTORS. THESE BASE LISTING PARTICULARS AND ANY OTHER OFFERING MATERIALS ARE STRICTLY CONFIDENTIAL AND MAY NOT BE DISTRIBUTED TO ANY PERSON OR ENTITY OTHER THAN THE RECIPIENTS HEREOF.
NOTICE TO THE RESIDENTS OF GEORGIA
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE GEORGIA UNIFORM SECURITIES ACT OF 2008, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION THAT IS EXEMPT UNDER SUCH ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH ACT
NOTICE TO THE RESIDENTS OF GERMANY
THESE BASE LISTING PARTICULARS HAVE NOT BEEN SUBMITTED TO, NOR HAS IT BEEN APPROVED BY, THE BUNDESANSTALT FÜR FINANZDIENSTLEISTUNGSAUFSICHT, THE GERMAN FINANCIAL SERVICES SUPERVISORY AUTHORITY. THE SECURITIES MUST NOT BE DISTRIBUTED WITHIN GERMANY BY WAY OF A PUBLIC OFFER, PUBLIC ADVERTISEMENT OR IN ANY SIMILAR MANNER, AND THESE BASE LISTING PARTICULARS AND ANY OTHER DOCUMENT RELATING TO THE SECURITIES, AS WELL AS INFORMATION CONTAINED THEREIN, MAY NOT BE SUPPLIED TO THE PUBLIC IN GERMANY OR USED IN CONNECTION WITH ANY OFFER FOR PURCHASE OF SECURITIES TO THE PUBLIC IN GERMANY. THESE BASE LISTING PARTICULARS AND OTHER OFFERING MATERIALS RELATING TO THE OFFER OF THE SECURITIES ARE STRICTLY CONFIDENTIAL AND MAY NOT BE DISTRIBUTED TO ANY PERSON OR ENTITY OTHER THAN THE RECIPIENTS HEREOF.
NOTICE TO THE RESIDENTS OF GREECE
THE ISSUER HAS NOT BEEN APPROVED BY THE GREEK CAPITAL MARKET COMMISSION FOR DISTRIBUTION IN GREECE. THESE BASE LISTING PARTICULARS AND THE INFORMATION CONTAINED HEREIN DO NOT AND SHALL NOT BE DEEMED TO CONSTITUTE AN INVITATION TO THE PUBLIC IN GREECE TO PURCHASE THE SECURITIES. THE SECURITIES MAY NOT BE DISTRIBUTED, OFFERED OR IN ANY WAY SOLD IN GREECE EXCEPT AS PERMITTED BY GREEK
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LAW. THE SECURITIES DO NOT HAVE A GUARANTEED PERFORMANCE, AND PAST RETURNS DO NOT GUARANTEE FUTURE ONES.
NOTICE TO THE RESIDENTS OF GUERNSEY
THE SECURITIES ARE NOT OFFERED TO THE PUBLIC IN THE BAILIWICK OF GUERNSEY. PERSONS RESIDENT IN GUERNSEY MAY ONLY APPLY FOR THE SECURITIES PURSUANT TO PRIVATE PLACEMENT ARRANGEMENTS. THESE BASE LISTING PARTICULARS HAVE NOT BEEN FILED WITH THE GUERNSEY FINANCIAL SERVICES COMMISSION PURSUANT TO THE CONTROL OF BORROWING (BAILIWICK OF GUERNSEY) ORDINANCES 1959 TO 1989, AND NO AUTHORISATIONS IN RESPECT OF THE PROTECTION OF INVESTORS (BAILIWICK OF GUERNSEY) LAW 1987 HAVE BEEN ISSUED BY THE GUERNSEY FINANCIAL SERVICES COMMISSION IN RESPECT OF IT.
NOTICE TO RESIDENTS OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION
THESE BASE LISTING PARTICULARS ARE NOT A PROSPECTUS AND HAS NOT BEEN APPROVED BY THE SECURITIES AND FUTURES COMMISSION IN HONG KONG. THE SECURITIES OFFERED MAY NOT BE OFFERED OR SOLD IN HONG KONG, BY MEANS OF ANY DOCUMENT OTHER THAN (I) TO "PROFESSIONAL INVESTORS" WITHIN THE MEANING OF THE SECURITIES AND FUTURES ORDINANCE (CAP.571) OF HONG KONG AND ANY RULES MADE THEREUNDER, INCLUDING THE SECURITIES AND FUTURES (PROFESSIONAL INVESTORS) RULES (CAP.571D), OR (II) IN CIRCUMSTANCES WHICH DO NOT CONSTITUTE AN OFFER TO THE PUBLIC; AND UNLESS PERMITTED TO DO SO UNDER THE SECURITIES LAWS OF HONG KONG, THE ISSUER HAS NOT ISSUED, NOR HAS IN ITS POSSESSION FOR THE PURPOSES OF ISSUING, ANY ADVERTISEMENT, INVITATION OR DOCUMENTS RELATING TO THE SECURITIES OFFERED HEREUNDER, WHETHER IN HONG KONG OR ELSEWHERE, WHICH IS DIRECTED AT, OR THE CONTENTS OF WHICH ARE LIKELY TO BE ASSESSED OR READ BY, THE PUBLIC IN HONG KONG, OTHER THAN WITH RESPECT TO THE SECURITIES OFFERED HEREUNDER THAT ARE INTENDED TO BE OFFERED ONLY TO CERTAIN INVESTORS RECEIVING THESE BASE LISTING PARTICULARS. THIS OFFER IS ONLY BEING MADE TO RECIPIENTS TO WHOM THIS DOCUMENT IS PERSONALLY ADDRESSED AND DOES NOT CONSTITUTE AN OFFER TO THE PUBLIC. THE SECURITIES MAY NOT BE OFFERED OR SOLD IN HONG KONG OTHER THAN TO A PERSON WHO PURCHASES SUCH SECURITIES AS PRINCIPAL OR AGENT PURSUANT TO A DISCRETIONARY INVESTMENT MANDATE.
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NOTICE TO THE RESIDENTS OF INDIA
THESE BASE LISTING PARTICULARS, IN ALL CIRCUMSTANCES, SHALL NOT BE REGARDED AS BEING CALCULATED TO RESULT, DIRECTLY OR INDIRECTLY, IN THE SECURITIES BECOMING AVAILABLE FOR SUBSCRIPTION OR PURCHASE BY PERSONS OTHER THAN THOSE RECEIVING
THE OFFER OR INVITATION; OR OTHERWISE AS BEING A DOMESTIC CONCERN OF THE PERSONS MAKING AND RECEIVING THE OFFER OR INVITATION. THE SECURITIES ARE BEING OFFERED ON A PRIVATE PLACEMENT BASIS TO LESS THAN FIFTY PERSONS IN INDIA. THESE BASE LISTING PARTICULARS ARE NOT INTENDED TO BE ISSUED TO PERSONS: (I) OTHER THAN TO PERSONS PERMITTED TO ACQUIRE THE SECURITIES UNDER INDIAN LAW, WHETHER AS A PRINCIPAL OR AGENT, OR (II) IN CIRCUMSTANCES WHICH WOULD CONSTITUTE AN OFFERING TO THE PUBLIC WITHIN THE MEANING OF INDIAN LAW. THESE BASE LISTING PARTICULARS WILL NOT BE GENERALLY DISTRIBUTED OR CIRCULATED IN INDIA BUT WILL BE FOR THE SOLE CONSIDERATION AND EXCLUSIVE USE OF THE PERSONS PERMITTED TO ACQUIRE THE SECURITIES UNDER INDIAN LAW TO WHOM IT IS ISSUED OR PASSED ON. NEITHER THESE BASE LISTING PARTICULARS NOR THE SECURITIES HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE BOARD OF INDIA OR ANY OTHER INDIAN REGULATORY AUTHORITY SO AS TO PERMIT A PUBLIC OFFERING OF THE SECURITIES OR ANY OTHER SECURITIES UNDER INDIAN LAW (INCLUDING THE COMPANIES ACT, 1956 AND THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992 AND ALL SUBORDINATE LEGISLATION THEREUNDER). NO SPECIFIC PERMISSION FROM THE RESERVE BANK OF INDIA OR ANY OTHER LEGAL OR REGULATORY AUTHORITY UNDER THE FOREIGN EXCHANGE MANAGEMENT ACT, 1999 HAS BEEN OBTAINED FOR THE OFFERING OF, OR THE SUBSCRIPTION TO, THE SECURITIES. THE SECURITIES MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN INDIA OR TO ANY RESIDENT OF INDIA, EXCEPT AS PERMITTED BY APPLICABLE INDIAN LAWS AND REGULATIONS. THE PROSPECTIVE INVESTORS WHO ARE INDIAN RESIDENTS ARE REQUESTED TO CONSULT THEIR OWN LEGAL AND TAX ADVISERS IN RESPECT OF THEIR ELIGIBILITY TO SUBSCRIBE TO THE SECURITIES.
NOTICE TO THE RESIDENTS OF ISRAEL
PURSUANT TO SECTION 15A(A)(1) AND (7) OF THE ISRAELI SECURITIES LAW: (I) THE OFFER IS BEING MADE, AND THE SECURITIES WILL BE SOLD, TO NO MORE THAN 35 INVESTORS IN ISRAEL (INCLUDING THOSE INVESTORS TO WHOM SUCH SECURITIES WERE SOLD DURING THE PRECEDING 12 MONTHS), AND (II) THE OFFER OF THE SECURITIES IS ALSO BEING MADE TO THOSE INSTITUTIONAL INVESTORS SPECIFIED IN THE FIRST APPENDIX OF THE ISRAELI SECURITIES LAW.
NOTICE TO THE RESIDENTS OF ITALY
THE ISSUER IS NOT UCITS ISSUER. IT HAS NOT BEEN NOR WILL IT BE REGISTERED WITH THE ITALIAN AUTHORITIES. THE SECURITIES ARE OFFERED UPON THE EXPRESS REQUEST OF THE INVESTOR, WHO HAS DIRECTLY CONTACTED THE ISSUER OR ITS SPONSOR OUTSIDE OF ITALY AT THE INVESTOR'S OWN INITIATIVE. NO ACTIVE MARKETING OF THE SECURITIES HAS BEEN CARRIED OUT IN ITALY, AND THESE BASE LISTING PARTICULARS HAVE BEEN SENT TO THE INVESTOR AT THE INVESTOR'S REQUEST. THE INVESTOR ACKNOWLEDGES THE ABOVE AND HEREBY AGREES NOT TO TRANSFER OR OTHERWISE RESELL ANY SECURITIES. THESE BASE LISTING PARTICULARS AND OTHER OFFERING MATERIALS RELATING TO THE OFFER OF THE SECURITIES ARE STRICTLY CONFIDENTIAL AND MAY NOT BE DISTRIBUTED TO ANY PERSON OR ENTITY OTHER THAN THE RECIPIENTS HEREOF.
NOTICE TO RESIDENTS OF JAPAN
THE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES AND EXCHANGE LAW OF JAPAN (THE "SEL"), AND THE SECURITIES MAY NOT BE OFFERED OR
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SOLD, DIRECTLY OR INDIRECTLY, IN JAPAN OR TO, OR FOR THE BENEFIT OF, ANY RESIDENT OF JAPAN (INCLUDING JAPANESE CORPORATIONS) OR TO OTHERS FOR RE-OFFERING OR RESALE, DIRECTLY OR INDIRECTLY, IN JAPAN OR TO ANY RESIDENT OF JAPAN, EXCEPT THAT THE OFFER AND SALE OF THE SECURITIES IN JAPAN MAY BE MADE ONLY THROUGH PRIVATE PLACEMENT SALE IN JAPAN IN ACCORDANCE WITH AN EXEMPTION AVAILABLE UNDER THE SEL AND WITH ALL OTHER APPLICABLE LAWS AND REGULATIONS OF JAPAN. IN THIS CLAUSE, "A RESIDENT/RESIDENTS OF JAPAN" SHALL HAVE THE MEANING AS DEFINED UNDER THE FOREIGN EXCHANGE AND FOREIGN TRADE LAW OF JAPAN.
NOTICE TO RESIDENTS OF KOREA
THE SECURITIES ARE OFFERED IN KOREA ONLY TO INSTITUTIONAL INVESTORS. THE ISSUER IS NOT MAKING ANY REPRESENTATION AS TO WHETHER THE RECIPIENT OF THE ENCLOSED SALES MATERIAL RELATING TO THE SECURITIES IS QUALIFIED TO INVEST IN THE SECURITIES UNDER THE RELEVANT KOREAN LAWS AND REGULATIONS, INCLUDING WITHOUT LIMITATION THE FOREIGN EXCHANGE MANAGEMENT LAW AND REGULATIONS THEREUNDER. THE INVESTOR IS ADVISED TO CONSULT HIS, HER OR ITS OWN LEGAL ADVISER AS TO HIS, HER OR ITS QUALIFICATION TO INVEST IN THE SECURITIES.
NOTICE TO THE RESIDENTS OF KUWAIT
THE SECURITIES MAY ONLY BE OFFERED IN KUWAIT IN COMPLIANCE WITH THE PROVISIONS OF LAW NO. 31 OF 1990, AS AMENDED, ENTITLED "REGULATING SECURITIES OFFERINGS AND SALES" AND ITS EXECUTIVE BY-LAW (OR IMPLEMENTING REGULATIONS) AND OTHER APPLICABLE LAWS AND REGULATIONS IN KUWAIT. THE SECURITIES HAVE NOT BEEN REGISTERED IN KUWAIT. THIS IS NOT A PUBLIC OFFER. ANY RESULTANT SALE SHALL NOT BE CONCLUDED IN KUWAIT. THE RECIPIENTS OF THESE BASE LISTING PARTICULARS IN RESPECT OF THE SECURITIES HAVE BEEN INDIVIDUALLY SELECTED AND ARE TARGETED EXCLUSIVELY ON THE BASIS OF A PRIVATE PLACEMENT.
NOTICE TO THE RESIDENTS OF LUXEMBOURG
THE SECURITIES MAY NOT BE OFFERED OR SOLD IN THE GRAND-DUCHY OF LUXEMBOURG, EXCEPT FOR THE SECURITIES WHICH ARE OFFERED IN CIRCUMSTANCES THAT DO NOT REQUIRE THE APPROVAL OF A PROSPECTUS BY THE LUXEMBOURG FINANCIAL REGULATORY AUTHORITY IN ACCORDANCE WITH THE LAW OF JULY 10, 2005 ON PROSPECTUSES FOR SECURITIES. THE SECURITIES ARE OFFERED TO A LIMITED NUMBER OF INVESTORS OR TO SOPHISTICATED INVESTORS, IN ALL CASES UNDER CIRCUMSTANCES DESIGNED TO PRECLUDE A DISTRIBUTION THAT WOULD BE OTHER THAN A PRIVATE PLACEMENT. THESE BASE LISTING PARTICULARS MAY NOT BE REPRODUCED, USED FOR ANY PURPOSE OR PROVIDED TO ANY PERSON OTHER THAN THOSE TO WHOM COPIES HAVE BEEN SENT.
NOTICE TO THE RESIDENTS OF THE NETHERLANDS
THE SECURITIES MAY NOT BE SOLICITED, ACQUIRED OR OFFERED IN OR FROM THE NETHERLANDS, AND THESE BASE LISTING PARTICULARS MAY NOT BE CIRCULATED IN THE NETHERLANDS TO ANY INDIVIDUAL OR LEGAL ENTITY AS PART OF THEIR INITIAL DISTRIBUTION OR AT ANY TIME THEREAFTER BY MEANS OF ANY SUBSEQUENT OFFER BY AN ACQUIRER OR OTHERWISE, OTHER THAN TO INDIVIDUALS OR LEGAL ENTITIES WHO WILL COMMIT TO INVEST IN THE SECURITIES AT LEAST USD1,000,000 PER INVESTOR FOR EACH SEPARATE OFFER. THE ISSUER DOES NOT REQUIRE A LICENCE PURSUANT TO THE FINANCIAL SUPERVISION ACT, AND THE ISSUER IS NOT SUPERVISED BY THE NETHERLANDS AUTHORITY FOR THE FINANCIAL MARKETS.
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NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
NOTICE TO THE RESIDENTS OF NORWAY
THE ISSUER FALLS OUTSIDE THE SCOPE OF THE INVESTMENT FUND ACT OF 1981 AND, THEREFORE, IS NOT SUBJECT TO SUPERVISION FROM THE FINANCIAL SUPERVISORY AUTHORITY OF NORWAY (KREDITTILSYNET). THE SECURITIES ARE NOT SUBJECT TO THE SECURITIES TRADING ACT OF 1997.
THE CONTENTS OF THESE BASE LISTING PARTICULARS HAVE NOT BEEN APPROVED OR REGISTERED WITH THE OSLO BØRS (THE OSLO STOCK EXCHANGE) OR THE NORWEGIAN COMPANY REGISTRY.
EACH INVESTOR SHOULD CAREFULLY CONSIDER INDIVIDUAL TAX QUESTIONS BEFORE INVESTING IN THE SECURITIES. THESE BASE LISTING PARTICULARS SHOULD NOT IN ANY WAY BE COPIED OR OTHERWISE DISTRIBUTED BY THE RECIPIENT.
NOTICE TO THE RESIDENTS OF OMAN
THESE BASE LISTING PARTICULARS ARE BEING SENT AT THE REQUEST OF THE INVESTOR IN OMAN AND SHOULD NOT BE DISTRIBUTED TO ANY PERSON IN OMAN OTHER THAN ITS INTENDED RECIPIENT WITHOUT THE PRIOR CONSENT OF THE CAPITAL MARKET AUTHORITY.
NOTICE TO THE RESIDENTS OF POLAND
PURSUANT TO THE JULY 29, 2005 ACT ON PUBLIC OFFERS AND CONDITIONS FOR THE INTRODUCTION OF FINANCIAL INSTRUMENTS TO ORGANISED TRADING SYSTEMS AND ON PUBLIC COMPANIES (JOURNAL OF LAWS OF 2005 NO. 184, ITEM 1539; THE "ACT"), A PROPOSAL TO ACQUIRE SECURITIES DIRECTED TO NOT MORE THAN 99 OFFEREES DOES NOT REPRESENT A "PUBLIC SECURITIES OFFER" WITHIN THE MEANING OF THE ACT, WHICH MAY BE MADE ONLY VIA A "PUBLIC OFFER" REQUIRING, AMONG OTHER THINGS, THE PREPARATION, LOCAL APPROVAL AND MAKING AVAILABLE OF AN ISSUE PROSPECTUS OR AN INFORMATION MEMORANDUM.
THE OFFERING INVOLVING THE SECURITIES DESCRIBED IN THESE BASE LISTING PARTICULARS DOES NOT QUALIFY AS A PUBLIC SECURITIES OFFER WITHIN THE FOREGOING MEANING AND, CONSEQUENTLY, DOES NOT FALL WITHIN THE PURVIEW OF THE ACT. CONSEQUENTLY, THESE BASE LISTING PARTICULARS HAVE NOT BEEN APPROVED BY THE POLISH SECURITIES AND EXCHANGE COMMISSION, NOR WAS IT OTHERWISE CONSENTED TO OR OPINED ON BY THE COMMISSION.
THE SECURITIES OFFERED HEREBY MAY NOT BE OFFERED, SOLD, ADVERTISED OR
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OTHERWISE MARKETED IN POLAND IN CIRCUMSTANCES WHICH CONSTITUTE A PUBLIC SECURITIES OFFER UNDER THE ACT WITHOUT COMPLYING FIRST WITH ITS REQUIREMENTS.
NOTICE TO THE RESIDENTS OF QATAR
THESE BASE LISTING PARTICULARS HAVE NOT BEEN FILED WITH, REVIEWED OR APPROVED BY THE QATAR CENTRAL BANK OR ANY OTHER RELEVANT QATARI GOVERNMENTAL BODY OR SECURITIES EXCHANGE.
NOTICE TO THE RESIDENTS OF RUSSIA
THE SECURITIES SHALL NOT BE OFFERED, TRANSFERRED OR SOLD AS PART OF THEIR INITIAL DISTRIBUTION OR AT ANY TIME THEREAFTER TO OR FOR THE BENEFIT OF ANY PERSONS (INCLUDING LEGAL ENTITIES) RESIDENT, INCORPORATED, ESTABLISHED OR HAVING THEIR USUAL RESIDENCE IN RUSSIA OR TO ANY PERSON LOCATED WITHIN THE TERRITORY OF RUSSIA UNLESS SO PERMITTED BY RUSSIAN LAW.
NOTICE TO THE RESIDENTS OF SAUDI ARABIA
THE OFFER AND SALE OF THE SECURITIES WILL ONLY TAKE PLACE WITHIN THE KINGDOM OF SAUDI ARABIA IN ACCORDANCE WITH THE CAPITAL MARKET LAW, INCLUDING THE OFFER OF SECURITIES REGULATIONS ISSUED THEREUNDER. THE SECURITIES WILL BE OFFERED TO INVESTORS IN THE KINGDOM OF SAUDI ARABIA PURSUANT TO AN "EXEMPT OFFER" AS DEFINED IN THE OFFER OF SECURITIES REGULATIONS. PRIOR TO ANY OFFER OF THE SECURITIES IN THE KINGDOM OF SAUDI ARABIA, THE CAPITAL MARKET AUTHORITY WILL BE NOTIFIED OF THIS OFFERING IN ACCORDANCE WITH THE OFFER OF SECURITIES REGULATIONS. THE SECURITIES HAVE NOT BEEN AND WILL NOT BE APPROVED OR DISAPPROVED BY THE CAPITAL MARKET AUTHORITY NOR WILL THE CAPITAL MARKET AUTHORITY COMMENT UPON THE ACCURACY OR ADEQUACY OF THESE BASE LISTING PARTICULARS. FURTHERMORE, THE CAPITAL MARKET AUTHORITY TAKES NO RESPONSIBILITY FOR THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THESE BASE LISTING PARTICULARS.
NOTICE TO THE RESIDENTS OF SINGAPORE
THESE BASE LISTING PARTICULARS HAVE NOT BEEN AND WILL NOT BE REGISTERED AS A PROSPECTUS WITH THE MONETARY AUTHORITY OF SINGAPORE, AND THE SECURITIES WILL BE OFFERED IN SINGAPORE PURSUANT TO AN EXEMPTION INVOKED UNDER SECTION 274 AND 275 OF THE SECURITIES AND FUTURES ACT (ACT 42 OF THE 2001) OF SINGAPORE (THE "SINGAPORE SECURITIES AND FUTURES ACT"). ACCORDINGLY, THESE BASE LISTING PARTICULARS AND ANY OTHER DOCUMENT OR MATERIAL IN CONNECTION WITH THE OFFER OR SALE, OR INVITATION FOR SUBSCRIPTION OR PURCHASE, OF THE SECURITIES MAY NOT BE CIRCULATED OR DISTRIBUTED NOR MAY THE SECURITIES BE OFFERED OR SOLD, OR BE MADE THE SUBJECT OF AN INVITATION FOR SUBSCRIPTION OR PURCHASE, WHETHER DIRECTLY OR INDIRECTLY, TO THE PUBLIC OR ANY MEMBER OF THE PUBLIC IN SINGAPORE OTHER THAN: (I) TO AN INSTITUTIONAL INVESTOR OR OTHER PERSON SPECIFIED IN SECTION 274 OF THE SINGAPORE SECURITIES AND FUTURES ACT; (II) TO A SOPHISTICATED INVESTOR, AND IN ACCORDANCE WITH THE CONDITIONS, SPECIFIED IN SECTION 275 OF THE SINGAPORE SECURITIES AND FUTURES ACT, OR (III) OTHERWISE PURSUANT TO, AND IN ACCORDANCE WITH THE CONDITIONS OF, ANY OTHER PROVISION OF THE SINGAPORE SECURITIES AND FUTURES ACT.
NOTICE TO THE RESIDENTS OF SPAIN
THE SALE OF THE SECURITIES TO WHICH THESE BASE LISTING PARTICULARS REFER HAVE
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NOT BEEN REGISTERED WITH THE SPANISH NATIONAL SECURITIES MARKET COMMISSION ("COMISIÓN NACIONAL DEL MERCADO DE VALORES") PURSUANT TO SPANISH LAWS AND REGULATIONS AND IS NOT A PUBLIC OFFER OF SUCH SECURITIES IN THE KINGDOM OF SPAIN WITHIN THE MEANING OF ARTICLE 30BIS OF THE SPANISH SECURITIES MARKET ACT 24/1988 OF JULY 28, 1988 (LEY 24/1988, DE 28 DE JULIO, DEL MERCADO DE VALORES, AS AMENDED AND RESTATED), AND ROYAL DECREE 1310/2005, OF NOVEMBER 4, DEVELOPING ACT 24/1988 ON THE SECURITIES MARKETS, ON LISTING OF TRANSFERABLE SECURITIES IN OFFICIAL SECONDARY MARKETS, OFFERS FOR PUBLIC SALES OR PUBLIC SUBSCRIPTIONS. ACCORDINGLY, NO SECURITIES MAY BE, OR ARE INTENDED TO BE, PUBLICLY OFFERED, MARKETED OR PROMOTED, NOR ANY PUBLIC OFFER IN RESPECT THEREOF MADE, IN THE KINGDOM OF SPAIN, NOR MAY THESE BASE LISTING PARTICULARS OR ANY OTHER OFFERING MATERIALS RELATING TO THE OFFER OF THE SECURITIES BE DISTRIBUTED IN THE KINGDOM OF SPAIN BY ANY PERSON EXCEPT IN CIRCUMSTANCES WHICH DO NOT CONSTITUTE A PUBLIC OFFERING OF SECURITIES IN SPAIN WITHIN THE MEANING OF SPANISH LAWS AND IN COMPLIANCE WITH ALL LEGAL AND REGULATORY REQUIREMENTS IN RELATION THERETO. THESE BASE LISTING PARTICULARS AND ANY OTHER MATERIALS RELATING TO THE SECURITIES ARE STRICTLY CONFIDENTIAL AND MAY NOT BE DISTRIBUTED TO ANY PERSON OR ENTITY OTHER THAN ITS RECIPIENTS.
NOTICE TO THE RESIDENTS OF SWEDEN
THESE BASE LISTING PARTICULARS HAVE NOT BEEN NOR WILL IT BE REGISTERED WITH OR APPROVED BY FINANSINSPEKTIONEN (THE SWEDISH FINANCIAL SUPERVISORY AUTHORITY). ACCORDINGLY, THESE BASE LISTING PARTICULARS MAY NOT BE MADE AVAILABLE, NOR MAY THE SECURITIES OFFERED HEREUNDER BE MARKETED AND OFFERED FOR SALE, IN SWEDEN, OTHER THAN UNDER CIRCUMSTANCES WHICH ARE DEEMED NEITHER TO REQUIRE A PROSPECTUS UNDER THE SWEDISH FINANCIAL INSTRUMENTS TRADING ACT (1991:980) NOR TO CONSTITUTE FUND OPERATIONS IN SWEDEN UNDER THE SWEDISH INVESTMENT FUNDS ACT (2004:46). PROSPECTIVE INVESTORS SHOULD NOT CONSTRUE THE CONTENTS OF THESE BASE LISTING PARTICULARS AS FINANCIAL, LEGAL OR TAX ADVICE.
NOTICE TO THE RESIDENTS OF SWITZERLAND
THE ISSUER HAS NOT BEEN AUTHORISED BY THE SWISS FEDERAL BANKING COMMISSION AS A FOREIGN INVESTMENT FUND UNDER ARTICLE 45 OF THE SWISS INVESTMENT FUND ACT OF MARCH 18, 1994. ACCORDINGLY, THE SECURITIES OFFERED HEREBY MAY NOT BE OFFERED TO THE PUBLIC IN OR FROM SWITZERLAND. THE SECURITIES AND THESE BASE LISTING PARTICULARS MAY, HOWEVER, BE DISTRIBUTED IN SWITZERLAND TO A MAXIMUM NUMBER OF 20 PRIVATE INVESTORS DURING A BUSINESS YEAR AND TO INSTITUTIONAL INVESTORS WITH PROFESSIONAL TREASURY MANAGEMENT ("INVESTISSEURS INSTITUTIONNELS DONT LA TRÉDSORERIE EST GÉRÉE À TITRE PROFESSIONNEL") IN CIRCUMSTANCES SUCH THAT THERE IS NO PUBLIC OFFER. THE SECURITIES MAY ALSO BE OFFERED IN SWITZERLAND BY ASSET MANAGERS TO THEIR EXISTING CLIENTS ON THE BASIS OF A WRITTEN AGREEMENT IN CIRCUMSTANCES SUCH THAT THERE IS NO PUBLIC OFFER. THESE BASE LISTING PARTICULARS AND ANY OTHER MATERIAL RELATING TO THE SECURITIES ARE STRICTLY CONFIDENTIAL AND MAY NOT BE DISTRIBUTED TO ANY PERSON OR ENTITY OTHER THAN ITS RECIPIENTS.
NOTICE TO THE RESIDENTS OF TAIWAN AND THE PEOPLE'S REPUBLIC OF CHINA
THESE BASE LISTING PARTICULARS HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES EXCHANGE LAW OF TAIWAN. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND FUTURES COMMISSION OF TAIWAN OR WITH THE RELEVANT REGULATORY AUTHORITIES IN THE PEOPLE'S REPUBLIC OF CHINA PURSUANT TO RELEVANT SECURITIES LAWS AND REGULATIONS AND THE SECURITEIS MAY NOT BE OFFERED OR SOLD WTIHIN TAIWAN OR THE PEOPLE'S REPUBLIC OF CHINA THROUGH A
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PUBLIC OFFERING OR IN CIRCUMSTNACES WHICH CONSTITUTE AN OFFER WITHIN THE MEANING OF THE SECURITIES AND EXCHANGE LAW OF TAWAIN OR WITHIN THE MEANING OF RELEVANT SECURITIES LAWS AND REGULATIONS IN THE PEOPLE'S REPUBLIC OF CHINA THAT REQUIRE A REGISTRATION OR APPROVAL OF THE SECURIITES AND FUTURES COMMISSION OF TAIWAN OR THE RELEVANT SECURITIES REGULATORY AUTHORITIES IN THE PEOPLE'S REPUBLIC OF CHINA.
ACCORDINGLY, THESE BASE LISTING PARTICULARS AND ANY OTHER DOCUMENT OR MATERIAL IN CONNECTION WITH THE OFFER OR SALE OF INVITATION FOR SUBSCRIPTION OR PURCHASE OF THE SECURITIES MAY NOT BE CIRCULATED OR DISTRIBUTED TO THE PUBLIC OR MEMBERS OF THE PUBLIC IN TAIWAN OR THE PEOPLE'S REPUBLIC OF CHINA.
THE SECURITIES MAY BE OFFERED AND SOLD TO INVESTORS IN TAIWAN ONLY IF THE OFFERING IS MADE DISCREETLY (I.E., IN A NON-PUBLIC MANNER, WITHOUT ADVERTISEMENT OR OPEN SEMINARS, AND TO A SMALL, LIMITED NUMBER OF PERSONS) TO SPECIFIED PERSONS IN COMPLIANCE WITH THE REGULATORY REGIME SET FORTH UNDER THE SECURITIES AND EXCHANGE LAW AND OTHER REGULATIONS OF TAIWAN.
NOTICE TO THE RESIDENTS OF THE UNITED ARAB EMIRATES
THE SECURITIES WILL BE SOLD OUTSIDE THE UNITED ARAB EMIRATES. NEITHER THE CENTRAL BANK OF THE UNITED ARAB EMIRATES NOR ANY OTHER REGULATORY AGENCY IN THE UNITED ARAB EMIRATES HAS REGISTERED THE SECURITIES OR APPROVED THE OFFERING MATERIALS OF THE ISSUER.
NOTICE TO THE RESIDENTS OF THE UNITED KINGDOM
THE SECURITIES ARE NOT TO BE OFFERED TO PERSONS IN THE UNITED KINGDOM EXCEPT TO PERSONS WHOSE ORDINARY ACTIVITIES INVOLVE THEM IN ACQUIRING, HOLDING, MANAGING OR DISPOSING OF INVESTMENTS (AS PRINCIPAL OR AGENT) FOR THE PURPOSES OF THEIR BUSINESSES OR OTHERWISE IN CIRCUMSTANCES WHICH HAVE NOT RESULTED AND WILL NOT RESULT IN AN OFFER TO THE PUBLIC OF THE UNITED KINGDOM WITHIN THE MEANING OF THE PUBLIC OFFERS OF SECURITIES REGULATIONS 1995. THESE BASE LISTING PARTICULARS ARE DIRECTED ONLY AT PERSONS WHO (I) ARE OUTSIDE THE UNITED KINGDOM, (II) FALL WITHIN ARTICLE 19(5) ("INVESTMENT PROFESSIONALS") OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2001, (III) FALL WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC.") OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2001 OR (IV) ARE PERSONS TO WHOM THESE BASE LISTING PARTICULARS MAY OTHERWISE LAWFULLY BE ISSUED OR PASSED ON (ALL OF THE PERSONS (I) TO (IV) BEING REFERRED TO TOGETHER AS "RELEVANT PERSONS"). THIS COMMUNICATION MUST NOT BE ACTED OR RELIED UPON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS COMMUNICATION RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. RECIPIENTS OF THESE BASE LISTING PARTICULARS ARE NOT PERMITTED TO TRANSMIT IT TO ANY OTHER PERSON.
RELEVANT PERSONS SHOULD NOTE THAT ALL, OR MOST, OF THE PROTECTIONS OFFERED BY THE UNITED KINGDOM REGULATORY SYSTEM WILL NOT APPLY TO AN INVESTMENT IN THE SECURITIES AND THAT COMPENSATION WILL NOT BE AVAILABLE UNDER THE UNITED KINGDOM FINANCIAL SERVICES COMPENSATION SCHEME
Notwithstanding any other provisions contained herein, each recipient hereof (and each of their respective employees, representatives or other agents) may disclose to any and all Persons, without limitations of any kind, the tax treatment and tax structure of the Issuer and all materials of any kind (including supplements, opinions and other tax analyses) that are provided to such recipient relating to such tax treatment and tax structure.
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TRANSACTION PARTIES
Issuer
HCM QFII Investments DAC Custom House Plaza, Block 6 I.F.S.C., Dublin 1, Ireland
Portfolio Manager Trustee
Hillhouse Capital Advisors, Ltd. BNY Mellon Corporate Trustee 190 Elgin Avenue, George Town, Services Limited Grand Cayman KY1-9001, One Canada Square, London E14 Cayman Islands 5AL, United Kingdom
Calculation Agent Registrar and Transfer Agent Paying Agent
Hillhouse Capital Advisors, Ltd. The Bank of New York Mellon The Bank of New York Mellon, 190 Elgin Avenue, George Town, SA/NV, Luxembourg Branch London Branch Grand Cayman KY1-9001, Vertigo Building - Polaris One Canada Square Cayman Islands 2-4 rue Eugène Ruppert London E14 5AL, United Kingdom L-2453 Luxembourg
Custodian
China Construction Bank Corporation No.25, JinRong Street, Xicheng District, Beijing 100033 People's Republic of China
Listing Agent Auditors to the Issuer
Walkers Listing Services Limited Ernst & Young 5th Floor, The Exchange Harcourt Centre George's Dock, I.F.S.C. Harcourt Street Dublin 1, Ireland Dublin 2, Ireland Legal Advisors
To Trustee as to Irish Law To Issuer as to Irish Law To Issuer as to US law
Matheson Walkers Ireland Hogan Lovells 70 Sir John Rogerson's Quay 5th Floor, The Exchange 100 International Drive Dublin 2, Ireland George's Dock, I.F.S.C. Suite 2000 Dublin 1, Ireland Baltimore, MD 21202 United States
To Portfolio Manager as to the laws of the People's Republic of China
Hogan Lovells 100 International Drive, Suite 2000 Baltimore, MD 21202 United States
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