UAB NORDSTREET RULES FOR THE ASSESSMENT OF RELIABILITY OF PROJECT OWNERS
1. GENERAL PROVISIONS
Nordstreet UAB (hereinafter – the Company) rules for the assessment of the reliability of the project
owners (hereinafter – the Rules) shall establish the provisions for the evaluation of the credibility
of the project owners, including the criteria of reputations and creditworthiness of the project owners.
The present Rules shall establish the procedure, which must be complied with by the Company.
The Rules are drawn up in accordance with the Law on Crowdfunding of the Republic of Lithuania
and the accompanying applicable legal acts.
The Company hereby confirms, implements and supports adequate and efficient measures, processes
and methods that ensure consistent compliance with the present Rules. The Company shall take the
necessary measures to prevent the use of the Company’s platform for criminal purposes.
2. CONCEPTS AND DEFINITIONS
Unless otherwise implied by the context, the capitalised terms and phrases used in these Rules
shall be interpreted as provided below:
The Company’s Platform shall mean the information system managed by the Company (https://www.nordstreet.com/), the use
of which involves crowdfunding procedures.
The Law shall mean the Law on Crowdfunding of the Republic of Lithuania.
The Assessment of Reliability shall mean the assessment of the Project Owner’s
reputation and creditworthiness performed by the Company.
The Head Manager shall mean the Company’s director.
The Supervisory Authority shall mean the Bank of Lithuania.
The Project shall mean the project prepared to satisfy certain
business, professional, scientific, research and other needs, except consumption, announced on
the Company’s Platform, for the implementation of which the Project Owner is seeking to attract the financing.
3. CRITERIA AND PROCEDURE FOR THE ASSESSMENT OF REPUTATION
When evaluating the reputation, the Company shall contact the Project Owner seeking to assess the
information of the head of the Project Owner and his members, whose voting rights or share of
the authorized capital directly or indirectly is equal to or exceeds 20 percent, or which can
exert a direct and/or indirect decisive influence on the Project Owner.
Information provided by the Project Owner may be submitted in a standard format.
The reputation shall be deemed good in the absence of evidence supporting the opposite conclusion
and if there are no reasonable grounds to doubt the person’s reputation.
The following circumstances shall be evaluated during the assessment of the reputation:
- Convictions or initiated pre-trial investigations, with particular attention to convictions for:
criminal activity related to securities markets or securities or payment instruments,
activities related to the combat of money laundering, market manipulation, trade in
securities using non-public information in prejudice to law;
breach of law or financial crimes related to dishonesty and/or fraud;
violations of fiscal nature;
other legal violations, where infringement concerns the activities of legal entities,
bankruptcy, insolvency or legal acts regulating consumer safety.
Whether there is any information confirming that the person under assessment fails or failed
to discharge his/her credit obligations.
Whether there are/have been any civil claims, administrative or criminal cases, investments
or assumed risks and borrowing of funds able to exert material influence on the financial credibility of the person.
Whether the Project Owner conforms to the condition requirements set out in Article 8(1)(1) of the Law.
Seeking to evaluate the reputation of the Project Owner, the Company shall:
Collect and assess the information of the head of the Project Owner and their members, whose
voting rights or share of the authorised capital that belongs to them directly or indirectly
is equal to or exceeds 20 percent, or which can exert a direct and/or indirect decisive
influence on the Project Owner.
Upon collection and assessment of the available data (paragraph 3.6 of the Rules) prior to
announcement of the project on the Company’s Platform, the Company shall have a reasonable
ground to consider that the persons listed in paragraph 3.5 of the Rules conform to the criteria
for the assessment of the Project Owner’s reputation approved by the Company, including clearance
of these persons from commitment of crimes or criminal offences related to money laundering
or terrorist financing, serious or grave crime, or crime or criminal offence in relation
to property, proprietary rights and interests, economic and business procedures, financial
system or equivalent criminal activities under criminal law of other states, where the
conviction has not expired or where 3 years have not yet elapsed from the date of enforcement
of the court judgement recognising this person at fault for the said criminal activities.
For the purposes of assessment of the Project Owner’s reputation the Company shall use:
- the documents provided by the heads of the project owners and their members;
- the written clarification provided by the heads of the project owners and their members;
- publicly accessible information on the heads of the project owners and their members.
When assessing the reputation of the Project Owners, the Company shall not be obliged to verify the
information provided by the Project Owners, unless the Company has reasons to doubt the accuracy of the provided answers.
4. CRITERIA AND PROCEDURE FOR THE ASSESSMENT OF THE PROJECT OWNER’S CREDITWORTHINESS
- Prior to announcing the Project on the Company’s Platform, the Company shall be obliged to evaluate the Project Owner’s creditworthiness.
- In order to assess the Project Owner’s creditworthiness, the Company shall:
- collect information on the financial position of the Project Owner, including information on any outstanding obligations;
- assess whether the Project Owner’s abilities to fulfil the financial obligations towards the investors within the set terms are realistic, i.e. whether the income expected to be earned by the Project Owner from the Project is sufficient for implementation of the financial obligations assumed under the financing agreements;
- ensure that the Project Owner is not subject to bankruptcy proceedings.
- If, upon the assessment of the Project Owner’s creditworthiness under paragraph 4.2 of the Rules, the Company deems that the Project Owner’s risk is high, it shall be advised to the Project Owner to provide additional guarantees of performance.
- Seeking to evaluate creditworthiness of the Project Owner, sureties or guarantors (if any) under paragraph 4.2 of these Rules, the Company shall, directly or with assistance of the third persons (including credit bureaus), collect, manage and rely on the information received from the external databases (State Enterprise Centre of Registers, data of the Loan Risk Database managed by the Bank of Lithuania, etc.).
- Seeking to evaluate the creditworthiness of the Project Owner under paragraph 4.2 of these Rules, the Company shall also assess the information and confirmations provided by the Project Owner:
- when completing a standard questionnaire (registration form) prepared by the Company;
- when completing the Project Owner’s application for a financing agreement;
- when responding to other inquiries of the Company provided to the Company, if any.
- The Company shall ask the Project Owner to fill out the standard questionnaire (registration form) and provide the following data and information:
- the Project Owner’s main settlement account statement for a period of at least 12 months, except in cases where the Project Owner has been operating for less than 12 months. If the Project Owner has been operating for less than 12 months, the Company shall request to present the Project Owner’s main settlement account statement for the full period of operation;
- the latest approved financial statements of the Project Owner and the guarantor or surety (if any). If the guarantor or surety is a natural person, his/her consent for verification of his/her personal data in the databases shall be provided, as well as his/her main bank account statement for a period of at least 12 months, except in cases where he/she has been operating for less than 12 months;
- contact details (name, surname, residence address, e-mail, telephone (if any), mobile phone and position) of the head of the Project Owner, guarantor or surety, in case of a legal entity granting surety or guarantee, and the details of the surety or guarantor (if the surety or guarantor is a natural person);
- contact details (name, surname, residence address, e-mail, telephone (if any), mobile phone and position) and the personal ID number and/or registration number of each member of the Project Owner, whose voting rights or share of the authorised capital directly or indirectly is equal to or exceeds 20 percent, or which can exert a direct and/or indirect decisive influence on the Project Owner (providing contact details, personal ID number and specifying the percentage of shares held).
- Seeking to assess information on the financial position of the Project Owner or the guarantor or surety (if any) and the ability of the Project Owner or the guarantor or surety (if any) to execute its financial obligations, according to the data collected, the Company shall assess the following:
- the financial situation (revenue, the sources of income, their variety, stability, profitability and possible future changes, etc.) of the Project Owner and the guarantor or surety;
- history and information on the inadequate performance of the outstanding and previous financial obligations of the Project Owner and the guarantor or surety;
- any outstanding or planned obligations of the Project Owner and the guarantor or surety, if the Company is aware or must be aware of them;
- influence of the circumstances indicated by the Project Owner or known to the Company on the Project Owner’s economic and financial situation and the Project Owner’s abilities to duly perform the financial obligations throughout the entire period of validity of the agreement.
- If the data provided by the Project Owner differ from the data collected by the Company from the databases, the data to be used for the assessment of the Project Owner’s creditworthiness shall allow performing a more conservative assessment.
- The Company shall assess each Project Owner, guarantor or surety individually, and their guarantees of performance (if any) – creditworthiness shall be determined by an expert assessment.
- The purpose of the creditworthiness assessment is to evaluate the probability of investor losses. The Company distinguishes between a low (A), average (B), increased (C) and high (D) creditworthiness risk of the Project Owners.
- The respective level of significance has been attributed to each indicator, and the following equation with six factors has to be extracted:
Z = 3.3 × K1 + 1 × K2 + 0.6 × K3 + 1.4 × K4 + 1.2 × K5 + K6. The value calculated according to this formula allows defining the probability of the investor’s loss, which shall be presented as the opinion of the Platform Operator. The assessment scale is provided below:
- Z value under 1,8 =class D, high creditworthiness risk
- Z value from 1.9 to 2.7 = class C, increased creditworthiness risk
- Z value from 2.8 to 2.9 = class B, average creditworthiness risk
- Z value above 3 = class A, low creditworthiness risk
- In the event of the presence of sureties or guarantors, their creditworthiness shall be assessed in the same manner as that of the Project Owner. If the Project Owner’s risk is average, however, the Project Owner’s obligations towards the investors are warranties or guaranteed by the third party with a low risk, the final creditworthiness risk of the Project Owner shall be evaluated as low.
- In addition, the Company shall inform the investors about the value of the pledged immovable property and assess the decreased probability of the investors’ losses. If the value of the pledged property is higher than 95 percent of the requested amount of funding, the creditworthiness risk of the Project Owner shall be considered to be low; if it is above 90 percent, however, no higher than 95 percent – average; if it is above 70 percent, however, no higher than 90 percent – increased; if it is no higher than 70 percent – high. If according to the results of the risk assessment, the Project Owner’s risk is average, however, according to the property pledged, the Project Owner’s risk is low, the final creditworthiness risk of the Project Owner shall be registered as low.
- The Company shall conclude the agreement with Creditinfo Lietuva UAB (hereinafter referred to as Creditinfo in order to gain access to the system of the Creditinfo credit bureau. By using this system, the Platform Operator shall verify the data on the outstanding and overdue debts of the Project Owner, which have not yet been included in the Project Owner’s financial statements. In the event any additional information on indebtedness becomes available, the Operator shall recalculate the indicators specified in paragraph 4.10 with the application of the new data and re-assess the Project Owner’s creditworthiness.
- The Company shall also conclude an agreement with Creditinfo on the exchange of debtor information and upload these data on the loan received by the Project Owner into the Creditinfo system, in this way seeking to ensure a higher degree of safety of the investors.
5. REFUSAL TO ANNOUNCE THE PROJECT
- The Company shall refuse to announce the Project on the Company’s Platform if:
- the Project Owner does not conform to reputation and creditworthiness assessment criteria applicable to the Project Owners that has been approved by the Company;
- the Company does not possess sufficient information for the performance of the assessments described in the Rules;
- the information available to the Company creates a presumption of a threat to the investors’ interests in case of the announcement of the Project on the Company’s Platform.
6. FINAL PROVISIONS
The present Rules shall come into force on the day of their approval and may be repealed or modified only by the order of the Head Manager.
The Head Manager and his/her authorized representative shall be responsible for implementation of the present Rules.
The Head Manager and his/her authorized representative shall be responsible for compliance with the present Rules.
Law updated on 28 September 2017.