Projects risk scoring policy

UAB INRENTO

RULES FOR ASSESSING THE SOUNDNESS OF PROJECT OWNERS AND THE ACCEPTABILITY OF CROWDFUNDING TRANSACTIONS TO FINANCIERS

1. GENERAL PROVISIONS
   1. These Rules of the operator of the crowdfunding platform UAB Inrento (hereinafter referred to as the "Company") for the assessment of the credibility of Project Owners and the acceptability of crowdfunding transactions to financiers (hereinafter referred to as the "Rules") set out the requirements for the assessment of the Project Owners' reputation and creditworthiness criteria as well as the procedure for the assessment of acceptability of crowdfunding transactions to financiers. 
   2. The Chief Executive Officer of the Company shall adopt, implement and maintain appropriate and effective measures, processes and methods to ensure that these Rules are complied with at all times. 
2. Definitions
   1. Terms used in these Terms and Conditions shall have the meaning given to them in the Crowdfunding Regulation and other legislation applicable to the Company's business, unless otherwise defined in this section of the Terms and Conditions.
   2. Unless the context otherwise requires, capitalised terms used in these Rules have the following meanings:

1. ASSESSING THE CREDIBILITY OF PROJECT OWNERS
   1. In the course of its business, the Company shall take all necessary measures to ensure that the crowdfunding transactions conducted through the Platform and the Project Owners comply with the statutory requirements. In the event that a Project Owner is found not to comply with the Company's reputation and suitability requirements, the Company shall immediately cease to publish the Project whose financing does not comply with the legal requirements on the Platform. 
   2. The Company shall take all necessary measures to prevent the use of the Platform for criminal purposes. In case of reasonable suspicion that the Platform is being used for illegal purposes, the Company's employees shall inform the competent authorities, terminate the publication of the Project, and withhold the funds allocated for the financing transaction.
   3. The Company's assessment of the Project Owner's project shall take into account:
      1. The reputation of project owners;
      2. the creditworthiness of the project owners.
   4. Information, data and documents collected (assessed) during the creditworthiness assessment shall be kept by the Company for 10 years from the date of fulfilment of the obligations under the financing transaction, if other legal acts regulating the legal protection of personal data and the storage of documents do not stipulate a longer term for the storage of documents.
2. ASSESSMENT OF THE REPUTATION OF PROJECT OWNERS
   1. The Company is contacting the Project Owner to assess information on:
      1. The owner of the project; 
      2. the Project Owner's manager and his/her members who directly or indirectly hold an interest in the voting rights or share capital equal to or exceeding 20 per cent, or who are in a position to exercise a direct and/or indirect decisive influence over the Project Owner.
   2. The information to be provided by the Project Owner on reputation shall be in a standardised format. 
   3. Project owners seeking to publish Projects on the Platform must be of good repute. A Project Owner's reputation shall be presumed to be above reproach if there is no evidence to the contrary and there is no reasonable cause to doubt the person's reputation. To assess reputation of Project Owner, the Platform uses independant information: public information, official state criminal records of project owner, the director and shareholders who own or control more than 20% of voting rights.
   4. The following considerations are taken into account when assessing the reputation of the Project Owner:
      1. Convictions or pre-trial investigations, with a particular focus on convictions for:
         1. criminal offences relating to securities markets or securities or payment instruments, activities related to anti-money laundering, anti-market manipulation, insider dealing, or breaches of laws on; 
         2. tax offences;
         3. offences involving dishonesty and/or fraud or financial crime; 
         4. other offences against the law on legal persons, bankruptcy, insolvency or consumer protection.
      2. Is there any evidence that the person being assessed is in default or has defaulted in the past; 
      3. Whether there are or have been any civil actions, administrative or criminal proceedings, investments or risks taken or loans taken that could have a material impact on the person's financial soundness.
      4. Whether there is any other publicly available negative information about the owner of the Project.
   5. In order to assess the reputation of the Project Owner, the Company takes the following steps:
      1. The Company's staff shall collect and assess information on the Project Owner's manager and his/her participants, who directly or indirectly hold a share of voting rights or share capital equal to or exceeding 20 per cent, or who may have a direct and/or indirect decisive influence on the Project Owner;
      2. After collecting and evaluating the data received in accordance with these Rules, the Company's staff shall have reasonable grounds to believe that the persons listed in the Rules meet the Company's approved criteria for assessing the reputation of Project Owners, including that they have not been found guilty of a serious or very serious crime, or of a felony or a misdemeanour against property, property rights and property interests, before publishing a Project on the Platform, economic and business order, the financial system, public security, public service and public interests, or equivalent offences under the criminal laws of other States, provided that their criminal record for the above-mentioned offences has not expired or has not been revoked or 3 years have not elapsed since the entry into force of the judgment of the court by which the natural person was found guilty of the offences referred to in this paragraph;
   6. In assessing the reputation of Project Owners, the Company's employees rely on: 
      1. Documents and written explanations provided by the Project Owner, the Project Owner's Manager and the Participant.
      2. Publicly available information about the Project Owner, the Project Owner's managers and participants.
   7. In the event that the Project Owner republishes the Project on the Platform, the Company shall re-verify the information provided by the Project Owner.
3. ASSESSING THE CREDITWORTHINESS OF PROJECT OWNERS
   1. The Company's staff shall also assess the creditworthiness of the owner of the Project prior to posting the Project on the Platform. 
   2. In assessing the creditworthiness of the Project Owner, the Company's staff:
      1. collect information on the financial situation of the Project Owner, including information on its liabilities;
      2. assess whether the Project Owner's ability to meet its financial obligations to the financiers within the timeframes set out is realistic, and whether the Project Owner's expected income from the Project will be sufficient to meet the obligations assumed in the crowdfunding transaction;
      3. ensure that the Project owner is not in insolvency proceedings;
      4. In the event that the Project Owner seeks to raise between €1 million and €5 million through the Project over a 12-month period, the Company shall additionally:
         1. assess the information document prepared by the Project Owner in accordance with the procedure laid down by law on the financial instruments to be issued. Only the information document prepared by the Project Owner and approved by the Company may be published on the Platform. Before approving an information document, the Company must ensure that it is complete, including that the information contained therein is comprehensible, not contradictory and complies with the rules on the presentation of information set out in the Act and other legislation governing the requirements for the preparation of an information document. Such certification of the information document shall not in any way be considered as a confirmation of the accuracy of the information contained therein and/or as a recommendation to the sponsors;
         2. assess whether the accounting of financial instruments to be distributed by the Project Owner is properly maintained in accordance with the procedures laid down in the Law on Markets in Financial Instruments of the Republic of Lithuania. In all cases, the Company may publish information on the Platform only about the Project for which the accounting of the financial instruments to be issued is duly maintained in accordance with the procedure established by the legislation.
   3. In such case, if after assessing the creditworthiness of the Project Owner in accordance with Clause 9 of these Terms and Conditions, the Company's staff determines that the Project Owner is subject to bankruptcy proceedings, the Project Owner's ability to meet its financial obligations to the Financiers within the timeframe set out in these Terms and Conditions is unrealistic, or that the Project Owner's expected income from the Project is insufficient to meet the obligations assumed in the crowdfunding transaction, then the Project shall not be posted on the Platform. 
   4. In assessing the creditworthiness of the Project Owner, the Company's staff may also request the Project Owner to provide information about the Project Owner's participants. In this case, if the Project Owner's participants are legal persons, they may be asked to provide the same type of information as the Project Owner. The evaluation of participants shall also take into account any guarantees or sureties provided by the participants. The information evaluated on the Project Owner's participants and its impact on the Project Owner's credit rating shall be reflected in Box 3 "Other Relevant Circumstances (and risk points to be assigned)" in risk scoring table.
   5. If, in assessing the creditworthiness of the Project Owner in accordance with the Rules, the Company determines that the Project Owner's risk is high, the Project Owner shall be offered to provide additional collateral.
   6. In order to assess the creditworthiness of the Project Owner in accordance with the Rules, the Company shall also assess the information and confirmations provided by the Project Owner in the standardised questionnaire prepared by the Company, the Project Owner's application for the Financing Transaction and the Project Owner's response to the other queries (if any) made by the Company to the Project Owner. In all cases, the Company shall collect at least the following information:
      1. contact details of the Project Owner (name, company code, actual registered office address) and of the Project Owner's manager (name, surname, residential address, e-mail, telephone, position) and the personal and/or legal identity number of each participant in the Project Owner who holds, directly or indirectly, a share of 20 % or more of the Project Owner's voting rights or share capital, or who is in a position to exercise a direct and/or indirect decisive influence over the Project Owner (contact details, personal identity number and percentage of shareholding to be provided).
      2. the most recent certified 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 to the verification of his/her personal data in external databases shall be provided, as well as a statement of his/her main bank account for a period of at least 12 months, except in cases where he/she has been active for less than 12 months.
   7. The Company's staff also accesses available registers in order to assess the financial health and ability to meet financial obligations of the Project Owner or the person providing the security. The Company concludes an agreement with UAB "Creditinfo Lietuva" for access to the Creditinfo credit bureau system. The Company's staff shall assess the credibility of the Project Owner, the person who provided the collateral (e.g. guarantor, surety), if any, from reliable data:
      1. financial situation: size of income, sources of income, diversity of income, sustainability, profitability, possible future changes;
      2. a track record and information on current and past defaults on financial commitments; 
      3. current and projected liabilities (if the Company knows or ought to know);
      4. the impact of known circumstances on the Project Owner's economic and financial situation and the Project Owner's ability to adequately meet its financial obligations throughout the term of the Agreement.
   8. If the data provided by the Project Owner differs from the data obtained by the Company from the databases, the data that is more conservative in assessing the creditworthiness of the Project Owner will be used for the assessment of the Project Owner.
   9. After gathering the necessary information, the Company shall individually assess each Project Owner, guarantors or sureties, and security arrangements (if any). The creditworthiness assessment shall be carried out on an expert basis. 
   10. The Company's objective in conducting a credit assessment is to assess the likelihood of loss to the financier. The Company categorises the credit risk of Project Owners according to the following ratings:
       1. A (low risk);
       2. B (medium risk);
       3. C (above medium risk) 
       4. D (high risk) 
       5. E (Excessive risk) rating - undisclosed project.
   11. Ratings are determined by expert judgement each time data such as: 
       1. the technical details of the project for which funding is being sought; 
       2. Assessment of the project's legal documentation; 
       3. Evaluation of the lease or leases; 
       4. comparison of the property's price with the appraiser's value;
       5. the type of use of the property (commercial or residential);
       6. current lease agreements (for long-term leases);
       7. historical occupancy of real estate; 
       8. in the case of tenants, their late payment of rent;
       9. the experience of the person who owns/manages the property in the property rental market;
       10. the need for renovation of the property and the date of the last renovation carried out;
       11. the location of the property;
       12. property-related amenities (lift, parking, security, etc.)
       13. the period of time during which the property is attempted to be sold;
       14. whether the owner of the Project has all the documents, registrations and permits required for the rental activity and the validity of these documents; 
       15. assessing other risks associated with real estate, 
       16. assessing the likelihood of the project's financial flows, 
   12. The Project Owner's credit assessment shall be carried out by the Project Owner's credit assessment officer using the Project Owner's credit assessment form.
4.  REFUSAL TO PUBLISH A DRAFT
   1. The Company shall refuse to publish a Project on the Platform if:
      1. The Project Owner does not meet the Company's criteria for assessing the reputation and creditworthiness of Project Owners; 
      2. The creditworthiness of the project owner is too high risk (E rating);
      3. The company lacks information to carry out the assessments described in the Rules;
      4. If the information available to the Company gives reason to believe that the publication of the Project on the Platform would jeopardise the interests of funders.
5.  ASSESSING THE ACCEPTABILITY OF FINANCING TRANSACTIONS TO FINANCIERS
   1. Before allowing a financier to enter into a particular type of crowdfunding transaction for the first time through the Platform, the Company demands the financier to complete an assessment of the suitability of the type of crowdfunding transaction (investment in loans) for the financier.
   2. When assessing the suitability of a particular type of crowdfunding transaction for a financier, the Company shall ask the financier to provide information on its investment knowledge and experience in relation to the type of crowdfunding transaction envisaged. For this purpose, the Company shall provide the financier with a crowdfunding suitability questionnaire prepared by the Company for completion.
   3. The Company shall, taking into account the characteristics of the financier, the nature and extent of the service to be provided, the type of crowdfunding transaction envisaged, including its degree of complexity and inherent risks, ask the financier at least the following information:
      1. the types of service, transaction or financial instrument with which the funder is familiar;
      2. the size and frequency of the financier's transactions and the time period over which those transactions took place;
      3. the financier's educational background and current and former occupation.
   4. The Company shall be entitled to rely on the information provided by the Funders unless the Company knows or ought to know that the information is manifestly out of date, inaccurate or incomplete.
   5. The Company shall keep the information, data and documents collected (assessed) during the assessment of the acceptability of the type of crowdfunding transaction to the financier for 10 years from the date of their receipt, unless other legal acts regulating the legal protection of personal data and the storage of documents provide for a longer period of retention of documents.
6. FINAL PROVISIONS
   1. These Rules shall come into force on the date of their approval and may be amended or repealed only by order of the Chief Executive Officer of the Company. In the event of any amendment to these Terms and Conditions, the latest version shall also be published on the Platform.
   2. The Manager or his/her delegate shall be responsible for the implementation and observance of these Rules.
   3. The Manager or its delegate shall review periodically, but at least annually, whether the requirements for assessing the soundness of the Project Owners and the acceptability of the type of crowdfunding transaction to the financier set out in these Rules are sufficiently effective. In carrying out these functions, the Manager or its delegate shall at least:
      1. periodically review the provisions of these Rules, propose improvements to them, ensure their compatibility with other internal documents of the Company and applicable legislation;
      2. informs the Company's employees about the new procedures introduced by the Company and advises them on the procedures for implementing specific provisions of the Rules;
      3. keep abreast of developments in the legal framework and, where necessary, immediately initiate adjustments to the Rules to take account of changes in the legislation.