Professional opt up

What is the opt-up for investors?

The opt-up for investors allows investors to request Carbon Equity to qualify them as professional investors. Professional investors have access to a different range of investment opportunities and receive less investor protection than retail investors. The reason behind this is that professional investors are considered to have sufficient expertise, knowledge, and resources to evaluate investment opportunities and require less disclosure from the fund manager to make a well-informed investment decision.

A professional investor is generally a financial institution such as a bank or pension fund. Private individuals are not considered to be professional investors, although certain investments with a minimum investment amount of €100,000, are also treated as investments made by professional investors. Investors who do not invest €100,000 can request to be treated as a professional investor if they meet two out of three of the below requirements. They should meet these requirements at the time of investing.

Requirement 1:

You have a financial portfolio that exceeds €500,000. This includes assets such as cash and financial instruments, but does not include real estate that you are not holding as an investment property (i.e. the house you live in or a second home).

Requirement 2:

You work or have worked, in the financial sector for at least one year in a position which requires knowledge of comparable investments. This means that you have been exposed to similar investments and investment decisions in your professional career, and have knowledge which is helpful in evaluating whether this is a good investment for you.

Requirement 3:

You have done 10 or more transactions per quarter, of significant sizes, over the last four quarters, in the private markets. This means any type of financial instrument in which you decided to invest significantly more than an average private investor.

Carbon Equity can accept an investor's request to be treated as a professional investor but is not required or obliged to do so. If Carbon Equity has a reasonable indication that the investor does not meet two out of three of the requirements, we will refuse the request. Carbon Equity can request additional information to ensure that the investor meets the requirements.

Who needs to meet these requirements?

The person or entity making the investment should meet these requirements. If an investor invests through a personal holding or is a “small entity” (i.e., an SMB-like entity without specific financial expertise), the person subject to the below requirements is the person authorized to make investment decisions on behalf of the company.

The location of the investor does not, in principle,  affect eligibility for the opt-up

What does this mean for investor protection?

The investor protection rules that apply when offering Carbon Equity’s funds to retail investors (i.e., investing less than €100,000 and not qualifying for the opt-up) mainly involve investor information or disclosure requirements. For example, if Carbon Equity were to offer its funds to retail investors, Carbon Equity would have to publish half-yearly figures and a more detailed prospectus. Many of the other protections involve internal procedural requirements such as good governance, treatment of complaints, valuation procedures, and fair treatment of customers. Carbon Equity has voluntarily put most of these protections in place as a part of its license under Article 2:65 of the Financial Supervision Act (WFT). Carbon Equity is a member of the Dutch Institute for Financial Disputes, the Kifid, for non-binding dispute resolutions.

What are the benefits for investors?

Qualifying as an opt-up professional investor primarily gives investors more flexibility regarding their minimum investment amount and the capital call regime they are subject to.

Opt-up investors have a minimum investment amount of €50,000 rather than €100,000.

Secondly, the initial capital call will be 25% of their commitment instead of a minimum amount of €100,000, with regular capital calls following until the investment is fully paid in.

What are the drawbacks for investors?

If investing with Carbon Equity is compared to investing in a retail fund, the drawbacks are primarily giving up certain investor protections as set out above. Investors who opt-up may receive information that is not tailored to the needs of non-professional investors.

There are no drawbacks to using the opt-up for an investor who would otherwise invest more than € 100,000.

Does using the opt-up affect the investment in any other way?

This does not affect the terms of the investment in any other way. The fund agreement and subscription form, which together contain the terms and conditions that govern the fund, are not amended by the investor’s qualification as a professional investor. The terms are also not affected other than that the investor can invest with a different amount and is subject to a different capital call regime.

For the avoidance of doubt, the opt-up also does not affect the investor rights, costs or information requirements established by the fund's terms and conditions. These apply regardless of the type of investor. The management fee is determined by the amount committed and decreases as the committed amount increases.

Does using the opt-up affect any previous investment made via Carbon Equity?

Previous investments made via Carbon Equity are not affected.