Elective Professional Client Loss of Protections Warning 

Two Magnolias Ltd and The Fund Incubator Ltd are only able to deal with Per Se or Elective Professional Clients. On the basis of information you have given us and at your request, we have categorised you as an Elective Professional Client (“Elective Professional Client”), by reason of your experience and understanding of the investments. As a consequence, you will lose the protections afforded to Retail Clients under the Rules of the Financial Conduct Authority (“FCA”) and may, additionally, lose any right to bring an action for damages against us under sections 71 and 150 of the Financial Services and Markets Act 2000. 

Please sign and return the enclosed copy of this letter to confirm that we can accordingly treat you as a Elective Professional Client. Your attention is drawn, in particular, to the following protections which do not apply to Elective Professional Clients.  

1. Financial Promotions 

FCA Rules relating to the form and content of financial promotions generally will not apply. In particular, FCA Rules relating to restrictions on and the required contents of direct offer financial promotions do not apply to promotions to Elective Professional Clients and such promotions need not contain sufficient information for you to make an informed assessment of the investment to which they relate, although they should still be clear, fair and not misleading. 

There is no requirement to give warnings to Elective Professional Clients or seek to ensure that overseas firms whose services are promoted will treat Elective Professional Clients in an honest and reliable way, nor is the firm under any obligation to provide the same level of indication regarding past performance to Elective Professional Clients as it would to retail clients.

2. Information to be provided 

FCA Rules regarding disclosure of information to clients, including details about costs and associated charges and warnings to be given of the nature of any risks involved (both generally and in respect of a number of particular types of investment and investment activity) if transactions are recommended, or carried out for, clients will not apply when you are treated as a Elective Professional Client. 

3. Confirmations and Reports 

The rules relating to the confirmation of transactions will apply in a modified form. Provisions regarding reporting requirements for dealings with Retail Clients will not apply to Elective Professional Clients.

4. Financial Ombudsman Service 

Access to the Financial Ombudsman Service will not extend to you as a Elective Professional Client. 

5. Financial Services Compensation Scheme 

The right to claim compensation under the Financial Services Compensation Scheme will not apply to you as a Elective Professional Client. 

6. Communications 

We may have regard to your expertise as a Elective Professional Client when complying with the requirements under the regulatory system that our communications be clear, fair and not misleading. 

If you have any queries on this warning or require any further information, please contact our Compliance Officer. 

7. Understanding Risk 

FCA Rules requiring warnings to be given of the nature of any risks involved (both generally and in respect of a number of particular types of investment and investment activity) if transactions are recommended, or carried out for, clients will not apply when you are treated as a Elective Professional Client. 

8. Disclosure of charges, remuneration and commission 

There will be no obligation under the FCA Rules to disclose in advance the basis and amount of the applicable charges or the amount of remuneration or commission or other income payable to us or our associates for conducting the relevant business. 

9. Suitability 

We may have regard to your expertise as a Elective Professional Client when complying with the requirement to ensure that transactions are suitable. 

10. Best execution 

FCA Rules will not require us to provide best execution to funds in which you invest providing certain procedural steps are followed. 

11. Client Money 

FCA Rules relating to client money may be disapplied by agreement with you. In signing this document you give that agreement. 

Loss of Protections Warning Letter

To: The Fund Incubator Limited, Orchard Brae House, 30 Queensferry Road, Edinburgh EH4 2HS

Elective Professional Client Status Notice

I have read and understood the Loss of Protections Warning and agree:

(a) that I shall be treated as an Elective Professional Client;

(b) that I do not require periodic statements or other reports in the format required by the FCA Rules but only such reports as may be agreed by Two Magnolias

(c) to having telephone calls and other real time communications made to me/us in respect of the investments and investment activities for which I am classified as an Elective Professional Client and such other investments and investment activity as I/we from time to time agree.

Jurisdiction

The United Kingdom

This website refers to potential investment into the Fund which would necessitate relevant investment or promotional materials relating to the Fund (“Documents”).  Such Documents are exempt from the general restriction (section 21 of FSMA) on the communication of invitations or inducements to engage in investment activity on the grounds that it is only made to or directed at persons falling within the one or more of the exemptions set out in the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (FPO), including, but not limited to: 

INVESTMENT PROFESSIONALS (article 19 FPO): persons having professional experience in matters relating to investments as more fully described in article 19 FPO; CERTIFIED HIGH NET WORTH INDIVIDUALS (article 48 FPO): individuals who have signed, within the previous 12 months, a statement confirming, among other things, that they had an annual income to the value of £100,000 or more or net assets to the value of £250,000 or more and accept that they can lose their property and other assets from making investment decisions based on financial promotions;

HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS ETC (article 49 FPO): corporate entities, unincorporated associations and trustees of high value trusts each meeting specific criteria as more fully described in article 49 FPO; 

CERTIFIED SOPHISTICATED INVESTORS (article 50 FPO): individuals with a current certificate, signed by a person authorised under FSMA within the previous 3 years, stating that they are sufficiently knowledgeable to understand the risks associated with investments acknowledging indebtedness of an unlisted company (i.e. unlisted bonds) and who have signed, within the previous 12 months, a statement in the terms specified in article 50(1) (b) FPO; and 

SELF-CERTIFIED SOPHISTICATED INVESTORS (article 50A FPO): individuals who have signed, within the previous 12 months, a statement confirming that, among other things, they (a) are a member of a network or syndicate of business angels and have been so for at least the last six months, (b) have made more than one investment in an unlisted company in the last two years, (c) are working, or have worked in the last two years, in a professional capacity in the private equity sector or in the provision of finance for small and medium enterprises, or (d) are currently, or have been in the last two years, a director of a company with an annual turnover of at least £1 million, and accept that they can lose their property from making investment decisions based on financial promotions.

Without reliance on the above exemptions, the Documents would require approval, for the purposes of section 21 of FSMA, by an authorised person within the meaning of FSMA.

Persons who do not fall within one of the above exemptions (or any other applicable exemption) should not rely on or act upon the Documents and will not be permitted to invest in opportunity described in the Documents. The Documents cannot be made available to such persons.

If you are in any doubt about the action you should take or the contents of this notice or the Documents, you should contact your stockbroker, solicitor, accountant, bank manager or other professional adviser authorised under the Financial Services and Markets Act 2000 (FSMA), who specialises in advising on investment in shares and other securities, including unlisted securities. 

The United States

INTERESTS IN THE FUND ARE BEING OFFERED IN A PRIVATE PLACEMENT TO A SELECT NUMBER OF INSTITUTIONAL AND OTHER SOPHISTICATED INVESTORS. INTERESTS WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY U.S. STATE OR NON-U.S. SECURITIES LAWS AND HAVE NOT BEEN RECOMMENDED BY ANY GOVERNMENTAL BODY, REGULATORY AUTHORITY, OR SECURITIES COMMISSION. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY, OR DETERMINED THE ADEQUACY OF THIS WEBSITE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THIS WEBSITE DOES NOT CONSTITUTE, AND MAY NOT BE USED FOR THE PURPOSES OF, AN OFFER OF INTERESTS OR AN INVITATION TO PARTICIPATE IN THE FUND BY ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR INVITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON ENDEAVORING TO MAKE SUCH OFFER OR INVITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR INVITATION. IT IS THE RESPONSIBILITY OF PROSPECTIVE INVESTORS TO COMPLY WITH THE RELEVANT LAWS AND REGULATIONS OF ANY TERRITORY IN CONNECTION WITH ANY APPLICATION TO PARTICIPATE IN THE FUND, INCLUDING OBTAINING ANY REQUISITE GOVERNMENTAL OR OTHER CONSENT AND ADHERING TO ANY OTHER FORMALITY PRESCRIBED IN SUCH TERRITORY.

INTERESTS IN THE FUND ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE U.S. STATE AND NON-U.S. SECURITIES LAWS. ADDITIONALLY, TRANSFERABILITY OF INTERESTS IS RESTRICTED BY THE FUND’S LIMITED PARTNERSHIP AGREEMENT. ACCORDINGLY, INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF AN INVESTMENT IN THE INTERESTS FOR AN INDEFINITE PERIOD OF TIME. THERE WILL BE NO PUBLIC MARKET FOR THE INTERESTS AND THERE IS NO OBLIGATION ON THE PART OF ANY PERSON TO REGISTER THE INTERESTS UNDER THE SECURITIES ACT OR ANY U.S. STATE OR NON-U.S. SECURITIES LAWS. THE FUND WILL NOT BE REGISTERED AS AN INVESTMENT COMPANY UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS AMENDED. 

Australia

THIS WEBSITE IS NOT A PRODUCT DISCLOSURE STATEMENT, PROSPECTUS OR ANY FORM OF DISCLOSURE DOCUMENT FOR THE PURPOSES OF AUSTRALIAN LAW. ACCORDINGLY. INTERESTS IN THE FUND MAY NOT BE OFFERED, ISSUED, SOLD OR DISTRIBUTED IN AUSTRALIA BY TWO MAGNOLIAS, OR ANY OTHER PERSON OTHER THAN BY WAY OF OR PURSUANT TO AN OFFER OR INVITATION THAT DOES NOT NEED DISCLOSURE TO INVESTORS UNDER CHAPTER 6D OR PART 7.9 OF THE AUSTRALIAN CORPORATIONS ACT 2001 (CTH) (“CORPORATIONS ACT”), WHETHER BY REASON OF THE INVESTOR BEING A “PROFESSIONAL INVESTOR”, “SOPHISTICATED INVESTOR” OR A “WHOLESALE CLIENT” (AS DEFINED UNDER THE CORPORATIONS ACT). THIS WEBSITE DOES NOT CONSTITUTE OR INVOLVE A RECOMMENDATION TO ACQUIRE, AN OFFER OR INVITATION FOR ISSUE OR SALE, AN OFFER OR INVITATION TO ARRANGE THE ISSUE OR SALE, OR AN ISSUE OR SALE, OF INTERESTS TO A “RETAIL CLIENT” (AS DEFINED UNDER THE CORPORATIONS ACT). THE PERSONS REFERRED TO ON THIS WEBSITE MAY NOT HOLD AN AUSTRALIAN FINANCIAL SERVICES LICENCE. COOLING OFF RIGHTS DO NOT APPLY TO AN INVESTMENT IN THE INTERESTS. THIS WEBSITE DOES NOT TAKE INTO ACCOUNT THE INVESTMENT OBJECTIVES, FINANCIAL SITUATION OR PARTICULAR NEEDS OF ANY PARTICULAR PERSON.  ALL PROSPECTIVE INVESTORS ARE STRONGLY RECOMMENDED TO SEEK PROFESSIONAL ADVICE.

Singapore

THE FUND HAS NOT BEEN REGISTERED WITH THE MONETARY AUTHORITY OF SINGAPORE ("MAS").  NO PROSPECTUS HAS BEEN REGISTERED WITH THE MAS. ACCORDINGLY, THIS WEBSITE AND ANY OTHER DOCUMENT OR MATERIAL IN CONNECTION WITH THE OFFER OR SALE, OR INVITATION FOR SUBSCRIPTION OR PURCHASE, OF INTERESTS MAY NOT BE CIRCULATED OR DISTRIBUTED, NOR MAY INTERESTS BE OFFERED OR SOLD, OR BE MADE THE SUBJECT OF AN INVITATION FOR SUBSCRIPTION OR PURCHASE, WHETHER DIRECTLY OR INDIRECTLY, TO PERSONS IN SINGAPORE OTHER THAN (I) PURSUANT TO, AND IN ACCORDANCE WITH, THE CONDITIONS OF AN EXEMPTION UNDER ANY PROVISION OF SUBDIVISION (4) OF DIVISION 2 OF PART XIII OF THE SECURITIES AND FUTURES ACT, CHAPTER 289 OF SINGAPORE (THE “SFA”), OTHER THAN AN EXEMPTION IN SECTION 302C AND SECTION 305 OF THE SFA OR (II) PURSUANT TO, AND IN ACCORDANCE WITH, THE CONDITIONS OF AN EXEMPTION IN SECTION 302C OF THE SFA WHERE THE OFFER, SALE OR INVITATION TO THE PERSON NAMED ABOVE IS NOT MADE WITH A VIEW TO THE INTERESTS BEING SUBSEQUENTLY THE SUBJECT OF AN OFFER, SALE OR INVITATION TO ANOTHER PERSON UNDER SECTION 302C OR SECTION 305 OF THE SFA.

Hong Kong

THE FUND HAS NOT BEEN AUTHORIZED BY THE SECURITIES AND FUTURES COMMISSION AND, ACCORDINGLY, THIS WEBSITE MUST NOT BE ISSUED, CIRCULATED OR DISTRIBUTED IN HONG KONG OTHER THAN (1) IN CIRCUMSTANCES WHICH DO NOT CONSTITUTE AN OFFER OR SALE OF INTERESTS TO THE PUBLIC IN HONG KONG, OR (2) TO A PROFESSIONAL INVESTOR AS DEFINED IN THE SECURITIES AND FUTURES ORDINANCE (CAP. 571) AND THE SECURITIES AND FUTURES (PROFESSIONAL INVESTOR) RULES (L.N. 188 OF 2002).  UNLESS PERMITTED BY THE SECURITIES LAWS OF HONG KONG, NO PERSON MAY ISSUE IN HONG KONG, OR HAVE IN ITS POSSESSION FOR ISSUE IN HONG KONG, THIS WEBSITE OR ANY OTHER ADVERTISEMENT, INVITATION OR DOCUMENT RELATING TO THE INTERESTS OTHER THAN TO A PROFESSIONAL INVESTOR AS DEFINED IN THE SECURITIES AND FUTURES ORDINANCE AND THE SECURITIES AND FUTURES (PROFESSIONAL INVESTOR) RULES.

YOU ARE ADVISED TO EXERCISE CAUTION IN RELATION TO THE OFFER.  IF YOU ARE IN ANY DOUBT ABOUT ANY OF THE CONTENTS OF THIS WEBSITE, YOU SHOULD OBTAIN INDEPENDENT PROFESSIONAL ADVICE.