Schedule 2 – Description of the Issuer
Version 1 - Released and Dated 14th November 2022
SCHEDULE 2 – DESCRIPTION OF THE ISSUER
FRICTIONLESS MARKETS Sàrl is a limited liability company (société à responsabilité limitée) under the Commercial Companies Law 1915 and a management company for securitisation fund company (société de gestion de fonds de titrisation) under and within the meaning of the Securitisation Law.
FRICTIONLESS MARKETS Sàrl has been initially incorporated by a notary deed dated 17th October 2022 and is registered with the register of commerce and companies in Luxembourg under the number B272278.
FRICTIONLESS MARKETS Sàrl in its capacity as a Management Company has setup a Securitisation Fund named FRICTIONLESS MARKETS SECURITIES (fonds de titrisation) which general management regulations (the “Management Regulations”) has been registered under the register of commerce and companies in Luxembourg under the number O46.
FRICTIONLESS MARKETS SECURITIES is therefore a Securitisation Fund established and created under Luxembourg laws for an unlimited duration pursuant to the provisions of the Law of 22 March 2004 as amended and also subject to the law of 27 July 2003 on trust and fiduciary contracts.
Assets and/or liabilities entrusted or allocated to the Securitisation Fund shall be strictly separated from assets and/or liabilities attributed to its Management Company.
The Arranger is FRICTIONLESS MARKETS SARL;
The Management Company has opted for the creation and the establishment of several compartments (the "Compartments"), each of the Compartments shall be constituted by a portfolio of assets and/or liabilities strictly segregated from each other.
Each compartment is subject to specific management regulations (the "Specific Management Regulations") issued by the Management Company with provisions that could differ from the General Management Regulations itself.
Each Compartment may have consequently distinctive features from the others including but not limited to the distribution policy of the assets.
The Management Company on behalf of the Securitisation Fund may create additional or new Compartment.
For each Compartment, the Management Company will issue units (the "Units") representing the net assets of each Compartment. All Unitholders are entitled to an equal proportion in any profits, liquidation proceeds and dividends related to the Compartment thereof.
This Private Placement Memorandum set out the rules and Conditions of the issuance of Notes and not the Units of the Compartment.
With regard to the management of the Securitisation Fund and pursuant to Article 5 of the General Management Regulations, the Management Company shall be invested with all powers and be entitled in particular to buy, sell, subscribe for, exchange, and receive any assets or risks and to exercise any right, directly or indirectly, pertaining to the assets or risks transferred to or acquired by the Securitisation Fund.
The Management Company shall determine the investment policy of the Securitisation Fund and for each Compartment, as specified in each Specific Management Regulations and shall be subject to the limits set forth in Article 5 of the General Management Regulations.
The Management Company may decide that the assets in whole or in part entrusted to a Compartment may be invested indirectly through a company wholly owned or controlled by the Management Company.
The Management Company may have recourse to consultants, information services, and any other services relating to accountancy, book-keeping, domiciliation, valuation, asset valuation, custody, tax consultancy, audit, translation, publication, and administration which may differ for each Compartment.
The Management Company may also delegate, either wholly or in part, the management of the Securitisation Company’s Underlying Assets to Portfolio Managers and may also have recourse to Index Provider or Investment Advisers’ services. Such Portfolio Managers, Index Providers or Investment Advisers shall :
Be appointed by a resolution of the Management Company;
Be mentioned in the relevant Final Terms;
Be selected and appointed based on their experience in the sector in connection with the Underlying Assets held or to be held by the Compartment for which they would be/have been appointed.
Demonstrate at any time their good standing, reputation and professional honourability
Enter into respectively a portfolio management agreement, index provider agreement or investment advisory agreement with the Issuer in order to govern their appointment in respect of any Series of Notes where it is requested to provide services in relation to the Underlying Assets held or to be held by the respective Compartment.
All fees, commissions and charges relating thereto shall be exclusively borne by the relevant Compartment unless otherwise specified in the relevant Final Terms.
Management fees and any other remunerations to be paid to the Management Company as well as their respective frequency of payments shall be indicated in the Specific Management Regulations that will be issued for each Compartment.
The purpose of the Securitisation Fund is to acquire or to assume, either directly or through the intermediary of another undertaking, the risks associated with financial assets, equities, loans, credit, receivables, swaps, guarantees, commitments or cash flow generated by third party’s activities (the “Underlying Assets”), by issuing Units or any type of securities which value and yield are linked with the Underlying Assets.
Taking advantage of the ring-fencing principle at Compartment level, the Management Company will determine for each Compartment a distinctive investment strategy that shall be reflected in the Specific Management Regulations thereof.
The Management Company on behalf of the Securitisation Fund may also authorise to have recourse to techniques and instruments involving transferable securities, provided that they are conducted for the purposes of efficient cash or asset management, or that such techniques and instruments are intended to hedge currency and interest rate risk as part of the asset management, and that they are employed to hedge risks related to market fluctuations.
The Management Company is issuing one or several Series and tranches of Notes at the charge of one Compartment as specified in the Final Terms.
Each Compartment may therefore be involved in any securitisation transactions as permitted under the Securitisation Law and, to this effect, the Issuer may, inter alia, acquire or assume, directly or through another entity or vehicle, the risks relating to the holding or ownership of claims, receivables and/or other goods or assets (including securities of any kind), either movable or immovable, tangible or intangible, and/or risks relating to liabilities or commitments of third parties or which are inherent to all of part of the activities undertaken by third parties, by issuing securities of any kind whose value or return is linked to these risks. The Issuer may also assume or acquire those risks by acquiring, by any means, claims, receivables and/or assets, by guaranteeing the liabilities or commitments or by binding itself by any other means. It may also transfer, to the extent permitted by law, dispose of claims and other assets it holds, whether existing or future, in one or more transactions or on a continuous basis.
The registered office (siège) of the Issuer is currently situated at 2C, Parc d’activités, L-8308 Capellen, Grand Duchy of Luxembourg.
The Issuer can be reached by email at the following address: support@frictionless.markets
Share capital
The share capital of the Management Company is EUR 12,000.00, divided into 1.200 fully paid shares in registered form with no nominal value.
The number of Units issued by each Compartment of the Securitisation Fund may vary and are not subject to any minimum or maximum.
Capitalisation and finance
The financial year of the Issuer coincides with the calendar year.
Because the Issuer is a (newly incorporated) securitisation fund, it does not have any (relevant) financial position or financial statements (yet). Save for the issue of Notes and their related arrangements, the Issuer should not have any borrowings, other forms of indebtedness or other contingent liabilities.
The Issuer has not (yet) published any financial statements and may opt not to prepare semi-annual or other interim financial statements subject to and in accordance with applicable law and regulation.
Audit Conseils Services Sarl has been appointed as the statutory auditor (réviseur d'entreprises agréé) of the Issuer.
Managers
The management and administration of the Issuer is incumbent upon its Management Company, represented by one or several managers, who together form a board (the “Board of Managers”), which board may exercise all powers not reserved by law or the articles to the general meeting or any other body of the Issuer.
The following persons form the Board of Managers of the Management Company: Mr Patrick Michael HOURIGAN
Management Company has in particular, the exclusive rights to:
perform securitisations, within the meaning of the Securitisation Law, of risks associated to any kind of assets on behalf of the Issuer;
issue securities of any nature and in any currency and, to the largest extent permitted by the Securitisation Law, pledge, mortgage or charge or otherwise create security interests in and over its Underlying Assets, property and rights to secure its obligations, on behalf of the Issuer;
enter into any agreement and perform any action necessary or useful for the purpose of carrying out transactions permitted by the Securitisation Law, including, without limitation, disposing of its Assets in accordance with the relevant agreements;
secure information pertinent to the Underlying Assets;
procure research investigations, information and other investment advisory services from the Investment Advisor, the Index Provider, etc if any;
appoint any other service providers to provide services to the Issuer; and
appoint dealers and other intermediaries and execute any document necessary to this end.
The Management Company shall operate the Issuer within the terms and comply at all times with its obligations contained in the Issuance Documentation, and any applicable laws and other relevant legal requirements, in particular the Securitisation Law.
The members of the Board of Managers of the Management Company may be reached at their professional address which is at the registered office (siege social) of the Issuer situated at 2C, Parc d’activités, L-8308 Capellen, Grand Duchy of Luxembourg.
Business
The Issuer will carry out securitisation transactions within the meaning of the Securitisation Law and participate in any such transaction by assuming (acquiring) assets (risks) and/or by issuing securities to ensure the financing of the relevant transaction.
The Issuer may, on a transitional or a lasting but limited basis and subject to the Securitisation Law, its articles of association, the General Management Regulation of the Securitisation Fund and the Specific Management Regulation of each Compartment and any relevant Final Terms, borrow in order to pre-finance the acquisition of assets to be securitised and/or to improve investors' yield (and such borrowing is acceptable only if the Issuer also issues securities for a proportionally substantial amount within an appropriate timeframe). The main and determining purpose of the overall transaction within which any borrowing occurs must always be a securitisation, that is an economic transformation of risks into securities.
In specific circumstances, the Issuer may, subject to the Securitisation Law, its articles of association and any relevant Final Terms, grant loans instead of acquiring them on the secondary market.
The issuer will not issue securities to the public on a continuous basis within the meaning of the Securitisation Law as amended.
The Issuer will therefore not make more than three (3) issuances of Notes per year to investors assuming these 3 conditions are met at the same time :
The issuance of the Notes is not made to Professional Client within the meaning of article 1(5) of the law of 5th April 1993 on the financial sector, as amended, and
The denomination of the Notes is less than 100.000,00 Eur and
The issuance of the Notes is not carried out by way of private placement.
Compartments
Under the Issuer's Management Regulation, the Issuer's Management Company may create one or more Compartments, each Compartment corresponding to a distinct part of the Issuer's assets and liabilities.
Each Compartment may be liquidated separately without such liquidation resulting in the dissolution or liquidation of any other Compartment (or the Issuer at large).
Each Series of Notes shall be issued by a separate Compartment of the Issuer and, by way of derogation from article 2093 of the Civil Code, the assets of a Compartment are exclusively available to satisfy the rights of the creditors of that Compartment (including the holders of the Notes issued by that compartment). Conversely, the recourse of the Compartment's creditors (including its Noteholders) is limited to the assets of that Compartment.
The Issuer's general expenses and liabilities, which do not specifically relate to any Compartment or Series of Notes or which otherwise relate to the general core of the Issuer, may be apportioned between the Compartments in such commercially reasonable manner as the Issuer's Management Company may determine in its sole discretion.
No proceedings
There are no (nor have there been any) governmental, legal or arbitration proceedings pending (or threatened of which the Issuer is aware) against the Issuer.
No change
Since the Issuer is a newly incorporated entity that has not carried on any business or carried on any activities yet, other than those which are incidental to the preparation of this Private Placement Memorandum, there is nothing to be mentioned in terms of any change in the financial or trading position of the Issuer.
Legal Entity Identifier LEI
The Legal Entity Identifier (LEI) is a 20-character, alpha-numeric code based on the ISO 17442 standard developed by the International Organization for Standardization (ISO). It connects to key reference information that enables clear and unique identification of legal entities participating in financial transactions.
The LEI number of the Issuer (the Securitisation Fund) is 213800PVGXAUM7KDT872
Arranger of the Issuance
The Arranger of the issuance of the Notes is FRICTIONLESS MARKETS SARL
With registered office at 2C, Parc d’activités L-8308 Capellen, GD of Luxembourg
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