- This disclosure statement is prepared as at 10 October 2016.
- The disclosure statement has been prepared by Crowd88 Limited, a company incorporated in New Zealand under number 5497521 and whose registered office is at Level 22, 120 Albert Street, Auckland 1010, New Zealand (Crowd88).
- Crowd88 holds a crowd funding licence issued by the Financial Markets Authority (the FMA) and is regulated by the FMA in accordance with the Financial Markets Conduct Act 2013 (the FMCA), regulations issued under that Act and other applicable laws.
- Crowd88’s licence authorises Crowd88 to arrange for companies (each a Company) to issue shares through the medium of the service offered by Crowd88 (as described in this disclosure statement) to persons (each an Investor) who wish to subscribe for those shares.
- Crowd88’s website is at www.crowd88.co.nz (the Website).
- Crowd88 reserves the right to amend and update this disclosure statement from time to time. Any such amended or updated statement will be posted on the Website and will state its effective date.
WARNING STATEMENT ABOUT CROWD FUNDING
Equity crowd funding is risky.
Issuers using this facility include new or rapidly growing ventures. Investment in these types of businesses is very speculative and carries high risks.
You may lose your entire investment, and must be in a position to bear this risk without undue hardship.
New Zealand law normally requires people who offer financial products to give information to investors before they invest. This requires those offering financial products to have disclosed information that is important for Investors to make an informed decision.
The usual rules do not apply to offers by issuers using this facility. As a result, you may not be given all the information usually required. You will also have fewer other legal protections for this investment.
Ask questions, read all information given carefully, and seek independent financial advice before committing yourself.
- The essence of Crowd88’s service is that it offers a platform or vehicle whereby Companies may raise capital in the form of ordinary shares, or preference shares, from Investors. In that sense, Crowd88 is an arranger or broker. Crowd88 will maintain a database of potential Investors who, by agreeing to the terms and conditions set out in this disclosure statement, amongst other documents, will receive potential offers of shares in a Company (Offers). A Company requiring capital will approach Crowd88, or they will be approached by Crowd88, with a view to their offering shares for subscription through Crowd88 and its Website to Investors.
How people apply for access to the service as an Investor
- If you wish to become an Investor then you need to be a member first, which you can become by making application through the Website. You are initially required to provide your name, email address and password during the registration process. An activation email is sent to the email address provided to confirm authenticity. Once you click on the link provided in the email your account is activated and your membership is obtained. You will then have full access to the Website and be able to browse investment opportunities. Before you can make an investment Crowd88 will require additional information to verify your identity. This information includes:
- your full name (including middle name if any)
- date of birth
- contact number
- your passport or driver’s licence details
- details of your residential address (which need not be in New Zealand)
- your bank account number
- Crowd88 will then use this information to verify your identity. Crowd88 also reserves the right to seek and obtain further information from you (for example in relation to transactions you have entered into pursuant to the Website and about the Companies you may have invested in) so that we can comply with anti money laundering and countering of financing of terrorism (AML) obligations to which we are subject. Once this information is provided you will be notified by Crowd88 that you can now make an investment.
- Until such time as you become a member and you provide the information (as noted in paragraph 9 above) you are not entitled to invest in any Company. You will however have full access to details of Offers.
- Crowd88 also allows members to invest not in their own name but on behalf of a company of which they are a company officer, director or shareholder holding at least 25% of the shares. The procedure relating to becoming a corporate Investor is set out in the Investor Agreement referred to below.
- Crowd88 reserves the right to decline to accept any application to be a member or Investor without having to disclose any reason for doing that.
- A key part of Crowd88’s legal obligations, reflected in the terms of its FMA licence, is to ensure compliance with anti-money laundering rules involving the services it offers. Accordingly, Crowd88 may seek information from actual or potential Investors regarding identification of individuals and other persons, in addition to information about where Investors will be obtaining funds to enable them to invest either generally or in any particular Offer.
- Before you are entitled to utilise Crowd88’s services as an Investor you must agree to the investor agreement with Crowd88 (the Investor Agreement) by adding your digital signature online. The Investor Agreement is located here.
Eligibility criteria to be an Investor
- Members must be at least 18 years old. There are no other specific criteria required by Crowd88 before a person can become a member or an Investor. Specifically, there are no minimum net worth, earnings or other financial thresholds to be met, although the service is designed for those Investors who are financially aware and who can absorb losses in light of the risky nature of investments in companies seeking share capital via equity crowd funding agencies.
- Certain questions may be asked of members as part of the process to become an Investor, and these relate to the absence of previous convictions and similar.
- Crowd88’s services and the Website are designed for persons who are resident in New Zealand. If any Investor wishes to access the Website outside New Zealand or to receive Offers or to invest in a Company from outside New Zealand then he or she does so on the basis that they alone, and not Crowd88, are responsible for compliance with all relevant laws relevant to that activity. The Investor Agreement gives more information about these matters and about foreign Investors generally.
How issuing Companies apply for access to the facility
- Individuals wishing for their companies to access the service for the purpose of issuing capital to Investors need to complete the registration process which can be found at www.crowd88.co.nz and thereby become members. In some cases such individuals will prior to that time have contacted Crowd88 by telephone or by email and will have had preliminary discussions about the suitability of the company for using the services offered by Crowd88 and about the process to be undertaken.
- There are no formal eligibility criteria which companies must meet to enable them to access share capital through Crowd88. However, Crowd88 expects that companies which are innovative, and which have expansion plans, and where existing shareholders do not have the means or inclination to provide additional share capital, will be the most suitable companies which will wish to use Crowd88’s services.
- The services offered by Crowd88 through the Website are intended for use by Companies who are not related to, or in any way associated with, Crowd88 or any individual or other person associated with Crowd88. Crowd88 records that it has no intention that it or any such person will seek to utilise the services of Crowd88 as a Company.
- Should Crowd88 or any individual or other person associated with Crowd88 seek to utilise the service offered by Crowd88 this will be made clear to members at the time the Company is offered to Investors. Crowd88 has established policies and procedures to ensure that it becomes aware of such use of the service and that adequate disclosure is made to Investors.
Checks and Assessments
- A key part of the investment process is that there is a pre-screening process which Crowd88 undertakes with every potential Company. This is to ensure that only those companies which in Crowd88’s opinion have reasonable prospects of providing gains or returns to Investors are allowed to offer shares through Crowd88 to Investors.
- The investigations which Crowd88 staff carry out on each such potential Company and its directors, shareholders and senior management will consist of the following:
- A review of Companies Office records online to ascertain any relevant information (e.g. who the directors and shareholders are, whether there has been any evidence of liquidation or receivership matters involving those individuals, and whether any current or former director has been disqualified from acting as such).
- Searches via internet search engines for evidence of any insolvency or criminal proceedings affecting the Issuer or any of its officers or significant shareholders (being shareholders who own 25% or more of the equity in the relevant Company).
- Internal records of Crowd88 to ascertain any previous involvement with Crowd88, including any prior capital raising.
- Searches of Veda Advantage with a view to ascertaining any judgments against the Company or its officers and any credit matters which may be forthcoming.
- Police criminal records will also be checked to the extent that that is possible.
- All of these checks will be done for each potential Company before it is admitted to a second stage of involvement with Crowd88, which is the review of the Company’s offer.
Fees and charges
- Investors do not need to pay any fees or charges to Crowd88 or in relation to any offer or investment.
- Crowd88 reserves the right to introduce fees and charges payable by Investors in future, but if Crowd88 does so the obligation to pay the fees and charges will not be effective until a revised disclosure statement is posted on the Website and notified to all members.
- Investors are not entitled to receive any interest or other return in relation to monies paid by them to Crowd88. Any interest earned on those monies, while they are held in a trust account pending payment to the relevant Company or return to the Investor, shall belong beneficially to Crowd88. Crowd88 alone shall be responsible for payment of bank charges in relation to the establishment and operation of the trust account.
- The Company will ordinarily pay a fee to Crowd88, deducted from the investments made or as otherwise may be agreed, of 7% of the amount of capital actually raised using Crowd88’s facilities. The amount of that fee will be specified in the agreement between the Company and Crowd88 and will be payable in the manner and at the time or times specified therein.
- In addition, Crowd88 may by agreement with actual or potential Companies agree a different remuneration structure and may seek and retain from Companies compensation for additional services, and for payment of the costs of any third party involved in preparing the Company for offering capital through Crowd88, over and above those contemplated as forming part of the service offered by Crowd88.
How Investor money is received and dealt with
- If an Investor wishes to invest in a particular Company then he or she first must signal their commitment by clicking on the “Invest” button on the web page for the relevant Company on the Crowd88 website. They will then need to accept the Investor Agreement and the applicable Subscription Agreement (referred to in paragraph 32 below) by inputting their initials as a digital signature. They will then verify their personal details and then specify the amount of the proposed investment.
- If an Investor has decided to invest in a particular Company then he or she, by clicking on the Invest button, thereby is obliged to make payment to Crowd88 within two calendar days of the amount that he or she has committed to invest in the relevant Company. The monies are to be paid to the Crowd88 trust account. The investment monies are to be paid by Crowd88 utilising a direct debit authority which the Investor will have agreed to. The direct debit form will be included in the Website. Foreign Investors are to ensure that their investment moneys are direct credited to Crowd88’s trust account within five business days of signifying their commitment to invest.
- All money paid by Investors with the intention of being invested in a Company will be credited initially to a trust account opened by Crowd88 with a registered bank. Crowd88 shall have access to that trust account to enable it to make payment to the relevant Company in accordance with the relevant subscription agreement entered into between the Company and the Investors who have agreed to invest (the Subscription Agreement).
- If shares are not issued by a particular Company, whether as a result of minimum subscription levels from Investors not being achieved or for any other reason, Crowd88 shall promptly refund to the relevant Investor the amount of monies so paid by him or her in relation to that particular potential investment. As noted above, no interest shall be payable to Investors on any such amount.
- As a broker under the Financial Advisers Act 2008 Crowd88 is subject to a number of obligations in relation to the receipt and holding of client monies and trust accounts.
- Once an Offer has successfully closed (which means that at least the minimum level of committed capital for a particular Company has been reached) and once payments from Investors have been paid to Crowd88’s trust account then the moneys so paid, net of any fees payable to Crowd88, will be paid to the relevant Company in accordance with the Subscription Agreement and shares will be issued to the successful Investors.
Checks/assessments of risks in shares
- Crowd88 will have only a limited role in assessing the risks involved in acquiring shares offered by a Company through the services offered by Crowd88. Investors are expected to make their own credit assessment of the risks involved in any particular investment, and the attention of Investors is drawn to the warning statement on page 1 of this disclosure statement.
- Notwithstanding the above, and even though Crowd88 will screen each potential Company with a view to ascertaining its suitability for offering shares to Investors via the agency of Crowd88, Crowd88’s assessment is only preliminary and carries no legal responsibility to Investors to the fullest extent permitted by law. The ultimate credit decision on any investment must belong with individual Investors.
- Investors are reminded that before they are authorised to invest in any Company through the Crowd88 website they must signal their agreement to a confirmation in which they acknowledge, amongst other things, that equity crowd funding is risky and that they may lose their entire investments. That confirmation is contained on the Crowd88 Website on each page on which an Investor commits to invest in any particular Company.
Nature and extent of disclosure arrangements
- Where Crowd88 is satisfied that a Company is ready for offering its shares to Investors it will assist the Company in putting together an information pack or memorandum (an Information Memorandum) which will contain relevant information about the particular Company, its ownership, governance and management, its assets and liabilities and profitability, its business plan and other relevant information. That information will be posted on the Website and will be available to all those Investors who wish to access it.
- Potential Investors will be able to seek further information and ask questions of the Company by making submissions to that effect on the Website. Companies may also make themselves available for meetings with potential Investors, whether in person or by conference call or video conference. It is intended that all potential Investors have access to the same information and the same disclosure levels.
- It is for individual Investors to decide whether or not there has been sufficient disclosure prior to making any decision to invest.
Crowd88 and associates may invest in Companies
- There is no restriction on Crowd88, or any individual or other person in any way associated with Crowd88, from acquiring shares or otherwise contracting with Companies. For example, Crowd88 may elect by agreement with a particular Company to receive shares in a Company in lieu of, or in part satisfaction of, receiving cash fees as consideration for using Crowd88’s service.
- Where Crowd88 or any individual or other person in any way associated with Crowd88 acquires shares, such decision will be made prior to the Company using the service and will be fully disclosed to Investors prior to their investment. Any shares so acquired will always be less than a controlling interest in the Company. However, as stated in paragraph 42 above, it is conceivable that Crowd88 may agree with a particular Company to take shares in lieu of, or in part satisfaction of, fees due from the Company. Any such decision to acquire such shares is likely to be made prior to closing of the relevant Offer, and if Crowd88 were to take any such shares then it would propose to notify Investors in that Company accordingly.
- Crowd88 confirms that it is not aware of any interest held by any individual or group of individuals, or of any entities owned or controlled by any such individuals, that may materially adversely impact on Crowd88’s ability to have fair, orderly, and transparent systems and procedures for providing the services outlined in this disclosure statement.
- Under the current laws no Company is entitled to raise more than NZ$2,000,000 in aggregate in any 12 month period from the public pursuant to licensed crowd funding or peer-to-peer lending sources or pursuant to the “small offers” exemption contained in the FMCA.
- Investors who have complaints about Crowd88 or any queries regarding the services offered or applicable charges by Crowd88 should contact us at any of the below contact details:
Telephone:0800 CROWD88 (276938)
- If the Investor remains unsatisfied with the position then they should complain to the Financial Dispute Resolution Service, which has been approved under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 as an approved dispute resolution scheme. Their email address is firstname.lastname@example.org, their address is Freepost 231075, PO Box 2272, Wellington 6140 and their telephone number is 0508 337 337.
Transactional information available online
- Investors will be able to access all information relating to their account (including investments committed for but unpaid, and shares subscribed for) by logging into the account and using their password. The information will be available on a substantially continuous basis. Full details of all transactions will be available.
- Because this information will be made available online, Crowd88 will not be sending to Investors reports on a periodic basis which otherwise would need to be sent to Investors pursuant to the Financial Markets Conduct Regulations 2014 and the Financial Advisors (Custodians of FMCA Financial Products) 2014. Investors, by agreeing to this Disclosure Statement at the time of becoming a member of Crowd88, expressly consent to receiving this information in this manner.
- All information which Crowd88 is required to make available to actual or potential Investors will be made available to Investors free of charge.
- In addition, Investors may seek any other information from Crowd88 and we will do our best to provide that information free of charge subject always to any obligations of privacy or confidentiality that Crowd88 may owe to third parties. Any request for information should be in writing and sent by email, either to email@example.com or by filling in the Comment box on the “Contact Us” page on the Website.
- Where Investors wish to receive documents in the mail or by courier we reserve the right to charge a reasonable fee for photocopying and courier/mail charges. Ordinarily information will be sent by email to the Investor.
- Individual Investors will be able, by logging onto their account on the Website and looking at their transaction history, to access their own investment history through Crowd88. No charges will be made for any such direct accessing.