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At its simplest, it means that Republic Europe holds the shares of companies on your behalf when you invest through our platform. While Republic Europe will be registered as shareholder and take care of all the administrative shareholder work, the full economic interest in the shares (e.g. the right to dividends, capital returns on an exit and any tax relief) all flow back to you, and applicable fees will be deducted from any profits (further information below).<\/p>\n
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When you invest through Republic Europe, we hold the funds securely on your behalf until the company has actually reached its fundraising target set out in the campaign. Post-investment, Republic Europe takes care of all the technical shareholder work where we are required to, such as reviewing and acting on shareholder resolutions, while allowing investors to easily track their investment and engage with the company through the platform.[\/vc_column_text][\/vc_column_inner][vc_column_inner width=”1\/3″][vc_single_image image=”16876″ img_size=”large” alignment=”center”][\/vc_column_inner][\/vc_row_inner][vc_toggle title=”Learn more” custom_font_container=”tag:h6|text_align:left|color:%23453b75″ custom_google_fonts=”font_family:Lato%3A100%2C100italic%2C300%2C300italic%2Cregular%2Citalic%2C700%2C700italic%2C900%2C900italic|font_style:400%20regular%3A400%3Anormal” use_custom_heading=”true” css=”.vc_custom_1773305074967{margin-top: -30px !important;}”]We only release investors\u2019 funds once we have carried out our final due diligence checks, confirmed all other investors have transferred funds and the relevant legal documents have been signed.<\/p>\n
In the absence of a nominee arrangement, investors would hold their shares directly and have to manage the administration on their own, e.g. signing subscription agreements, ensuring share certificates are issued, giving shareholder approval, etc.<\/p>\n
This would be an administrative burden not just for investors but also for the company, who will need to deal directly with a large number of investors and their legal advisors.<\/p>\n
It is also critical to ensure that the company is able to raise again in the future and achieve an exit. Investment rounds and share sales can be complex. Often, various documents need to be signed by shareholders and this regularly requires input from legal counsel. If this relied on the company having to track down hundreds of investors around the world and such investors being available to respond quickly, then it could easily result in a financing round or exit falling apart.<\/p>\n
A widely-scattered shareholder base without a nominee structure is also likely to deter future investors and buyers.[\/vc_toggle][vc_row_inner content_placement=”middle”][vc_column_inner width=”1\/3″][vc_single_image image=”16877″ img_size=”large” alignment=”center”][\/vc_column_inner][vc_column_inner width=”2\/3″][vc_column_text]<\/p>\n
Aggregating smaller investments through the Republic Europe Nominee allows Republic Europe to justify receiving certain minority shareholder protections that individual investors might not otherwise be able to obtain.[\/vc_column_text][\/vc_column_inner][\/vc_row_inner][vc_toggle title=”Learn more” custom_font_container=”tag:h6|text_align:left|color:%23453b75″ custom_google_fonts=”font_family:Lato%3A100%2C100italic%2C300%2C300italic%2Cregular%2Citalic%2C700%2C700italic%2C900%2C900italic|font_style:400%20regular%3A400%3Anormal” use_custom_heading=”true” css=”.vc_custom_1773184511683{margin-top: -30px !important;}”]As a condition for transferring funds at the end of a campaign, we ensure there are adequate contractual protections in place, including basic investor protection such as pre-emption rights, drag-along rights and tag-along rights.<\/p>\n
While no investor can control the success or failure of a business, we want to avoid a situation where the company becomes hugely successful, but investors are not able to realise that value because their rights were not protected along the way.<\/p>\n
However, it is standard practice that as companies grow and take on further investment, existing shareholders have less leverage and voting power, particularly if they do not follow-on in future rounds.<\/p>\n
Investors should therefore be conscious that the level and strength of contractual rights that Republic Europe can put in place will depend on a number of factors, including the stage of the company and size of investment, and such rights will most likely change over the lifetime of the investment. For this reason, we cannot \u2018guarantee\u2019 any particular rights for investors, but our team of in-house corporate lawyers are constantly reviewing and negotiating to ensure Republic Europe investors are being treated fairly.<\/p>\n
Investors should keep in mind that negotiating pressure can be heavily exerted on companies in future funding rounds by incoming investors, and often the decision is one of agreeing to their proposed terms or rejecting the (often business-critical) funding.[\/vc_toggle][vc_row_inner content_placement=”middle”][vc_column_inner width=”2\/3″][vc_column_text]<\/p>\n
The Secondary Market allows Republic Europe investors to sell and buy beneficial interests in shares, creating both a unique exit opportunity for existing investors as well as an exciting investment proposition for new investors who may have missed the primary raises of our portfolio companies.[\/vc_column_text][\/vc_column_inner][vc_column_inner width=”1\/3″][vc_single_image image=”16878″ img_size=”large” alignment=”center”][\/vc_column_inner][\/vc_row_inner][vc_toggle title=”Learn more” custom_font_container=”tag:h6|text_align:left|color:%23453b75″ custom_google_fonts=”font_family:Lato%3A100%2C100italic%2C300%2C300italic%2Cregular%2Citalic%2C700%2C700italic%2C900%2C900italic|font_style:400%20regular%3A400%3Anormal” use_custom_heading=”true” css=”.vc_custom_1773184638399{margin-top: -30px !important;}”]When investing in private companies, typically investors need to hold on to their shares until the company is sold or IPOs, which could take a number of years.<\/p>\n
Investors through Republic Europe, however, have access to Republic Europe\u2019s Secondary Market, which adds an element of liquidity to an otherwise illiquid asset class.<\/p>\n
As Republic Europe remains the legal shareholder of the company, holding the same number of shares, there is no impact on the Company or its other shareholders when these trades occur on our Secondary Market.[\/vc_toggle][\/vc_column][\/vc_row][vc_section full_width=”stretch_row” css=”.vc_custom_1637161759652{padding-bottom: 64px !important;background-color: #3d5165 !important;}”][vc_row][vc_column][vc_column_text]<\/p>\n
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We are incentivised as a business to maximise returns for investors. We take a 5% carry over any profits investors make on their investments through Republic Europe. If investors do not make a profit, they do not have to pay for the work we do as a nominee. When making distributions to investors, Republic Europe deducts transaction costs.<\/p>\n
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Having a nominee structure in place makes life easier for the entrepreneurs and companies that you invest in \u2013 they do not have to worry about managing numerous individual investors. Apart from the administrative burden of a large fragmented cap table, it can also make it difficult to raise further financing and can cause major problems on an exit.<\/p>\n
[\/vc_column_text][\/vc_column][\/vc_row][\/vc_section][vc_row full_width=”stretch_row” css=”.vc_custom_1637162847186{padding-bottom: 64px !important;background-color: #f4f6f8 !important;}”][vc_column][vc_column_text]<\/p>\n
[\/vc_column_text][vc_tta_accordion style=”modern” color=”white” gap=”15″ c_icon=”chevron” c_position=”right” active_section=”0″ collapsible_all=”true”][vc_tta_section title=”How does Republic Europe make decisions when it comes to shareholder voting rights?” tab_id=”1637161857223-e178ab13-7479″ el_class=”faq-header-text”][vc_column_text]We are very conscious that the founders and management of a company are the people who have the requisite knowledge and expertise to run and grow the business \u2013 and investors will have invested in their ability to do so. This is why when it comes to voting, we will support the board of directors\u2019 proposal unless there is reason to believe that it would not be in the best interest of investors to do so.<\/p>\n
When considering what would be in the best interest of investors, our key concerns are to (a) maximise return in the long term for investors, and (b) ensure that investors are being treated equitably.<\/p>\n
Before companies take certain corporate actions, Republic Europe requests them to confirm that they have obtained Investor Majority Consent, which ensures that third-party investors can approve certain matters that could affect the value of their investment.<\/p>\n
This is a market-standard investor protection that Republic Europe seeks to include in any investment documents. Generally, Republic Europe\u2019s shareholding percentage is quite low, which means we often do not form part of this Investor Majority threshold, and would therefore not be required to consent to these actions.<\/p>\n
Republic Europe does not generally require operational matters to be subject to Investor Majority Consent, such as the company\u2019s commercial activities, directors\u2019 remuneration, etc.<\/p>\n
This approach strikes a balance between allowing the team in which you invested to manage the business efficiently, whilst also providing a layer of protection to ensure your investment is dealt with appropriately.[\/vc_column_text][\/vc_tta_section][vc_tta_section title=”When will Republic Europe investors be able to vote?” tab_id=”1637162177986-1bbc60d0-3f07″ el_class=”faq-header-text”][vc_column_text]We do not typically pass votes back to individual investors unless there is a choice that needs to be made by each investor individually, or we would like to understand the investors\u2019 view as a group. Examples of this would be:<\/p>\n
\u2022 We allow investors to vote to follow-on their investment in a portfolio company\u2019s new investment round. When portfolio companies raise investment again, in some instances, we allow Republic Europe investors to vote on whether or not to follow-on their investment. We will follow the majority of investors’ votes – your interest in participating in the round is therefore the deciding factor in these circumstances.<\/p>\n
\u2022 If we receive an offer to purchase shares from Republic Europe that is not part of an exit or mandatory sale, i.e. there is a choice to be made by each investor as to whether to sell their own shares.<\/p>\n
The nominee allows voting efficiency, considering the companies only deal with Republic Europe as your nominee, instead of a large number of investors. As Republic Europe holds shares in a vast portfolio, we have the technical expertise to make shareholder decisions in line with your interests and market standards.<\/p>\n
Investors should also keep in mind that even the Republic Europe Nominee voting on behalf of investors will not always have the power to influence a shareholder vote or decision.<\/p>\n
Typically, Republic Europe will only hold a minority stake in the company and, like any other minority shareholder, won\u2019t be able to unilaterally decide on a matter. For example, companies will generally have drag-along provisions in their Articles of Association, which allow majority shareholders to approve a sale of the company\u2019s shares, in which case all shareholders will be automatically required to sell their shares on at least the same terms.[\/vc_column_text][\/vc_tta_section][vc_tta_section title=”What information rights do Republic Europe investors have?” tab_id=”1637162466741-d1394897-a526″ el_class=”faq-header-text”][vc_column_text]<\/p>\n We do not prescribe the content of the updates. We do ask that companies ensure investors are kept up to date on material issues. The nature of crowdfunding means that in most cases, companies have raised funds from hundreds or even thousands of investors. As a result, information disclosures can, and often do, make their way into the public domain. We therefore need to strike a balance between maintaining oversight and keeping commercially sensitive information confidential.<\/p>\n Our platform monitors whether or not a company has provided a recent update, and if the company has not, it will prompt the company to post their update.<\/p>\n We know that a lack of information is one of the biggest frustrations of investors. Although our team works hard to ensure investors receive regular updates, the reality is that, in the day-to-day of running a fast-growing start-up, entrepreneurs sometimes struggle to find the time to provide full updates or respond to the high volume of queries they may be receiving.<\/p>\n Where a company is consistently failing to provide updates and we have seen no activity in the company for a significant period of time, e.g. no Companies House filings, no response to requests for information or warnings and escalation through different contact channels has failed, then in accordance with our Valuation Policy, we will mark the company valuation down to zero, which will allow investors to make S\/EIS loss relief claims if applicable.<\/p>\n 2. Maintaining portfolio records<\/strong><\/p>\n When we close an investment, important details of the company are stored on our platform, and key information will feed through to the investors\u2019 Portfolio on our platform. Investors will be able to monitor information about the performance of their investments, including whether they are raising, IRR across their portfolio, and any tax documents.<\/p>\n Investors can track the company\u2019s latest share price in their Portfolio. You can read more about our Valuation Policy here<\/a>.<\/p>\n Investors will also be able to access updates from the company through the post-investment page, post any questions they have for the company directly and join in discussions with other investors, while respecting our Code of Conduct<\/a>.[\/vc_column_text][\/vc_tta_section][vc_tta_section title=”What happens when a company exits?” tab_id=”1637162514213-36d0e63f-a596″ el_class=”faq-header-text”][vc_column_text]When an exit opportunity arises, Republic Europe\u2019s team of experienced lawyers will review, negotiate and agree the legal documents with the company and buyer. However, when majority shareholders rely on their drag-along rights to complete a transaction, they will require the Republic Europe nominee to adhere to the transaction documentation. At this point, we, alongside other minority shareholders, will not have any negotiating power. We always ensure our investors are treated equitably.<\/p>\n Once the legal documents are signed, we transfer the shares to the buyer on behalf of the investors in return for payment of the purchase price. We then distribute each investor\u2019s share of the purchase price to their Republic Europe investment account after deducting our 5% carry (applied only to any profit made by investors) and applicable transaction costs.<\/p>\n If the consideration is equity in a new business, Republic Europe will continue to hold these new shares as your nominee. Investors will then be able to see their new shares in their Portfolio.[\/vc_column_text][\/vc_tta_section][vc_tta_section title=”What happens when a company winds up?” tab_id=”1637162547149-53d2c511-a5ad” el_class=”faq-header-text”][vc_column_text]It is always very disappointing when a business that raises on Republic Europe fails. While we cannot prevent business failure, in these circumstances, we make every effort to recover as much value as possible for investors and ensure that they are treated equitably.<\/p>\n If we are able to recover some proceeds from liquidation, we will distribute each investor\u2019s share of the proceeds to their Republic Europe investment account. In such a case, given investors will likely not have made any profit, we do not take a carry and no fees are charged.<\/p>\n Investors will then be able to claim loss relief if the initial investment was S\/EIS eligible.[\/vc_column_text][\/vc_tta_section][vc_tta_section title=”What happens when a company lists on the stock market?” tab_id=”1637162583583-89c24d89-f928″ el_class=”faq-header-text”][vc_column_text]When a company IPOs, Republic Europe (trading as Republic Europe) will continue to hold the shares on investors\u2019 behalf as their nominee. Investors who wish to sell their shares will simply need to submit their sale order via our platform, and the sale will be executed by Republic Europe\u2019s broker. Further information about submitting sale orders and applicable fees can be found here<\/a>.<\/p>\n The proceeds of the sale will be distributed to the relevant investor\u2019s Republic Europe investment account, after deducting the broker trading fees and our 5% carry over the profits made (after broker fees).[\/vc_column_text][\/vc_tta_section][vc_tta_section title=”What happens if Republic Europe winds up?” tab_id=”1637162611207-1c3929c4-331c” el_class=”faq-header-text”][vc_column_text]We like to believe this will never happen, but if it does, the shares we hold on behalf of investors will either be transferred to a replacement nominee or, failing that, back to each investor.<\/p>\n Our company structure, our platform and each investment we make are set up carefully to ensure that investors\u2019 money and shares are ring-fenced and protected, so if Republic Europe did not exist, investors would still have ownership of their shares and any money deposited in their Republic Europe investment account. This is part of our regulatory obligations as a FCA-regulated entity.[\/vc_column_text][\/vc_tta_section][vc_tta_section title=”S\/EIS” tab_id=”1637162636197-7a8a1e3d-2b0d” el_class=”faq-header-text”][vc_column_text]<\/p>\n The S\/EIS paperwork needs to be completed within two years of either the company trading or the end of the tax year in which the shares were issued, whichever is later. Whilst this gives us plenty of time, we aim to kickstart the tax process as soon as shares are issued so that investors can claim the relevant reliefs as quickly as possible.<\/p>\n The process is as follows:<\/p>\n 1. Company provides Republic Europe with relevant information for the S\/EIS application (\u2018S\/EIS1\u2019).<\/p>\n 2. Republic Europe confirms information is accurate and drafts the S\/EIS1.<\/p>\n 3. Company reviews and approves the S\/EIS.<\/p>\n 4. S\/EIS1 is submitted to HMRC.<\/p>\n 5. HMRC approves the S\/EIS1 and provides Republic Europe with authority to issue tax certificates (\u2018S\/EIS3\u2019) to Republic Europe investors.<\/p>\n 6. Digital S\/EIS3\u2019s delivered through the Tax Documents section of investors\u2019 Republic Europe Portfolio.<\/p>\n 7. Investors can then make S\/EIS claims.<\/p>\n Republic Europe cannot provide tax advice of any kind, so if you have any questions around your personal tax affairs, please do consult a tax advisor.<\/p>\n<\/section>\n [\/vc_column_text][\/vc_tta_section][\/vc_tta_accordion][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]<\/p>\nGet started today<\/h1>\n