due diligence finexis s.a. - finex-hk.com

FINEXIS Phone: (+352) 20 21 29

Société Anonyme Fax: (+352) 20 21 29 99 R.C.S. Luxembourg B 154916 of 30

25A, Boulevard Royal www.finexis.lu LU22 0025 1977 9507 4700 – CODE BIC : BILLLULL

L-2449 Luxembourg [email protected] TVA 2010 2217 676 13/10/2013

Due diligence – Finexis S.A.

A. Background information B. Staff information

C. Asset management activities

D. Portfolio management

E. Due diligence on manager selection

F. Performance

G. Risk management

H. Service providers

I. Compliance / regulation

J. Conflict of interest

K. Anti-money laundering

L. Business continuity / disaster recovery

M. Insurance

N. Client information / reporting

O. Documents to be provided





A. Background information

A.1. Contact information

Christian DENIZON

CEO

FINEXIS S.A.

25A, Boulevard Royal

L-2449 Luxembourg

Phone: (+352) 20 21 29 / 0033 621 19 87 26

Fax: (+352) 20 21 29 99

email: [email protected]

Tom BERNARDY

COO

FINEXIS S.A.


L-2449 Luxembourg

Phone: (+352) 20 21 29

Fax: (+352) 20 21 29 99

e-mail: [email protected]

mailto:[email protected]

mailto:[email protected]





A.2. Company structure

A.2.1. What is the legal structure of your company?

FINEXIS S.A. is a Société Anonyme (S.A.) whose headquarters are located in Luxembourg Ville.

The official address of the current company headquarters is the following:


L-2449 Luxembourg.

The administrative address of the company is the following:


L-2449 Luxembourg.

A.2.2. Provide a chart of the legal structure of the company and list all branch /

subsidiary or affiliate offices

Audit ExterneArtemis Audit

Conseil d’administration /Board:Christian Denizon, PrésidentTom Bernardy, Vice Président

Maud Jund (CFO) / Gerry Salucci, CAODeclan O’Hannrachain: risk mgtIndependant board members:

Laurent & Frédéric Muller Marta Lavaroni

Chief Administration OfficerCustomer relation

Gerry Salucci

Compliance & RiskPatrice Ollagnier

Supervision ofCommercial activities

Financial and operationalControl

Review of CompliancePre-& Post-trade

Review of Risk Management

Review of Investment Performance

Review of Operations incl. asset mgt

Audit interneFIDEWA CLAR

Dirigeant Christian Denizon CEO Dirigeant Tom Bernardy COO

Internal Audit

Financial and CSSFreporting

Accounting and reportingof FINEXIS

Review of Distribution and AM





A.2.3. Provide details of the company’s current ownership structure.

Initial Capital Initial: 125.000,00 EUR (legal minimum)

Capital increased to : 2.250.000,00 EUR

Fully paid : 100.00%

Number of equities: 22.500

Nominal value : 100.00 EUR

Shareholders:

Finex.lu SA Soparfi (pool of the company’s managers): 77.78%

Faminvest SA: 22,22%

Main managers:

Christian DENIZON CEO, Commercial, control units and internal support

Tom BERNARDY COO, Operations and IT

Gerry SALUCCI CAO, Transfer Agency and Domiciliary

Declan O’HANNRACHAIN CFA, Fund accounting and funds Risk management

Maud JUND CFO, HR and finance, budgeting and controlling

Patrice OLLAGNIER Head of Compliance and internal risk management

………………………. Head of Client Relationship Management (CRM)

Maciej WALOSZYK Sales and distribution

Sophia FAILLA Companies accounting

Elena GAVRUSEVA Fund accounting

Magali AUER Domiciliary

Maria CARDIGOS Logistics

A.2.4. Detail fundamental changes in the last 3 years.

The Company is not older than 3 years, and we can not notice any fundamental changes since

its creation apart from an impressive growth of our activities. Inception as per August 10th, 2010.

License as Conseil economique received in November 2010, license as a Management Company

chapter 15 received in September 2011.





A.2.5. Are there any plans for further ownership changes.

No. The company is and plans to remain fully independent, even if partnerships can always be

envisaged in future stages.

A.2.6. Provide a short history of the company with the most important milestones.

August 10th, 2009: creation of Paddock fund administration (in short PFA), providing Central

administration services. Official agreement received in September 2009 with the license 25, 29

(now 28-9 and 28-10), 29-1, 29-2 and 29-5.

August 10th 2010: creation of FINEXIS S.A. after the success of PFA, and registration as a

company providing advices, with the official agreement “conseil économique” received in

November 2010.

September 2011: Finexis S.A. receives the official CSSF Agreement to act as a management

company according to the Chapter 15 of the Law of 20/12/2010. This enlarges the scope to the

provision of additional services like fund Promotorship, risk management, asset management,

fund compliance and directorship, on top of the Central administration services like fund

accounting, domiciliation and registrar previously performed by PFA. FINEXIS S.A. merges

and integrate all staff, clients, procedures and assets of PFA within one single company. March 2013: PFA receives the Family office license to enlarge its activities.

B. Staff information

B.1. Number of permanent staff

Twelve (12)people and recruitment is ongoing for two additional staff.

This number does not include the support of staff of related companies of the group (around

40).





B.2. Provide an organization chart including the different departments and the

various competencies for each staff.

Christian

Denizon

Tom

Bernardy

Gerry

Salucci

Declan

Ohannrac

hain

Elena

Gavruseva

Sophia

Failla Maciej

Waloszyk

Magali

Auer

Maud

Jund

Legal

structuring

Fund set up

Domiciliation

Client

Management

Transfer

Agent

Registrar

Client

Communicati

on Agent

Billing





Christian

Denizon

Tom

Bernardy

Gerry

Salucci

Declan

Ohannrac

hain

Elena

Gavruseva

Sophia

Failla

Maciej

Waloszyk

Magali

Auer

Maud

Jund

Fund

Accounting

Financial

Reporting

Sales

Asset

Management

Risk

management

Fund

Compliance

Directorship

Patrice Ollagnier is dedicated to Compliance and risk, Maria Cardigos is dedicated to Logistics.

B.3. Could the resignation or change of the principals or senior managers of the firm influence the Fund project or its investment process? Please explain.

The number of employees will increase with the expansion of the company. Otherwise no

significant employee turnover is considered for now. Since August 2009 (PFA inception) and

August 2010 (Finexis inception) turnover was only one person for full time employees.

Moreover people have overlapping skills as seen in above table.





B.4. Provide a brief background for Managers (education, professional background).

Christian Denizon

Administrateur délégué, Directeur Général (CEO)

• Maîtrise en économie et gestion, Diplom-Kaufmann et MBA

• Master of Business Administration MBA, Sacred Heart University, Fairfield, USA

• Diplômé de l’Institut de Formation Bancaire du Luxembourg

• Diplom-Kaufmann, Université J.W.Goethe, Francfort, Allemagne

• Maîtrise des Sciences de Gestion, Université Paris-IX-Dauphine, France

• French, English, Deutsch

Former COO and MD of The Bank of New York Mellon Luxembourg S.A., former Head of

Funds at Commerzbank Luxembourg SA, former Head of Financial reporting and Fund

compliance at Citigroup Luxembourg PLC, former Head of Internal Control and Domiciliation

for funds at BGL Luxembourg SA (now BNP Paribas). 20 years of experience in funds.

Tom Bernardy

Administrateur délégué, Directeur en charge des Opérations

Ingénieur commercial et MBA

• Ingénieur commercial et de Gestion, Diplômé de l’Université catholique de Louvain (UCL),

Belgique

• Diplômé de l’Institut de Formation Bancaire du Luxembourg

• Master Business Administration MBA, Sacred Heart University Fairfield, USA

• Lëtzebuergesch, French, English, Deutsch

20 years of experience in funds.

Declan o’Hannrachain

TA specialist

• Bachelor of Arts Degree, University College Dublin

• Diploma in European Management, Royal Holloway

• Fluent in English, Gaelic, Luxemburgish, French and German.






Gerry Salucci

Customer service and cash management specialist

• Fluent in Italian, Luxemburgish, English, French and German


Sophia Failla

Accountant

• BTS comptabilité, CFA Astier de Metz.

• Fluent French, English and Italian Etc etc…

B.5. How many managers are currently managing the company’s clients’ assets?

Two managers: Christian Denizon and Gerry Salucci.

Backup : Declan O’hAnnrachain and Maciej Waloszyk. B.6. Please discuss possible retirement of key individuals. How does the company

secure and expand capacity for further management mandates?

It would take several years before our managers reach the pensionable age. Average age : 43, so

no risk in the coming 25 years.

C. Asset management activities

C.1. Total AUM and AUM in funds

Total assets in companies: 105.000.000€

Total assets in funds: 302.000.000€

Total AUM: 407.000.000€

C.2. Show the growth of assets under management over the last 5 years.





Concerning the funds of PFA, refer to the evolution graph of the fund performances on the

website of Finexis. 1% of the funds created in the last four years in Luxembourg were setup

with PFA/Finexis. We do expect a large growth, but our main goal is not to setup a large factory

with low quality but to attract key clients and partner with them in their own development for

long term in order to avoid risks and generate stable and sustainable growth.

C.3. Does the company conduct any business other than asset management? If so, please state the nature of those businesses.

- Transfer Agent and Registrar

- Domiciliation

- Client Communication Agent

- NAV accounting and financial reporting

- Risk Management

- Directorship

- Promotorship

- Fund compliance

- Family office

Activities of central fund administration can also be delegated to PFA, or another external

company. C.4. Apart from this Fund project, does the company manage other products? Provide

the breakdown of assets (EUR%) for each product family (traditional, FoHF, HF, etc.).

No, it does not.

Currently FINEXIS manages 75 accounting books and records, made with 30 companies linked

to investment funds and around 25 fund structures (34 sub-funds), mostly SIFs, SICAR and Part

I funds.

C.5. Does your company sponsor or have any ownership interest in third party

managers or brokers? If so, does your company invest in / through them?





No, we do not.

C.6. Which investor group does the company primarily target?

Different kinds of investors, within UCITS funds whose promoters can be:

- Foreign (Foreign=non Luxembourg based) authorized banks

- Foreign authorized asset manager

- Foreign institutions without agreement

- All three above without proper license

- Foreign or local non financial companies

- Private individuals

C.7. Provide a breakdown of assets under management by client group (banks, institutional investors, HNW1, retail, aso) and client domicile.

Banks: 100.000.000€

Institutional investors: 107.000.000€

Private investors 100.000.000 €

C.8. Has the company got any business relation with clients domiciled outside of the EU or in a non-GAFI country?

No. We have only client from Switzerland but mainly from the European Union, such as France,

Luxembourg, Sweden, Italy, UK, Benelux and Germany. Finexis is open to any GAFI country

though. C.9. what is the percentage of assets under management represented by your largest

client, and your three largest clients?

Our largest client represents 12% of AUM.

The three largest clients represent 33% of AUM.





D. Portfolio management

D.1. Describe your investment philosophy.

Our investment philosophy depends on the management of the portfolio for our clients. We do

not choose your investment philosophy, we apply the clients’ ones.

D.2. Describe your investment process.

Investment activities include:

Minutes of the committee for selecting counterparties and brokers and investments

Minutes of the Credit Committee

Performance reports and comments from the Portfolio management team (market,

interest rates, fx rates)

risk management reports with an executive summary to identify interest, market and

foreign currency exchange risks

Fund compliance report with potential or real passive or active breaches

new distributors

D.3. Which strategies do you use? Which one do you avoid ?

We apply the strategy of our clients. We avoid extremely risky investment strategies. D.4. Provide a short description of your flagship products or more representative

products (structured products, guaranteed products, funds, aso)

Our flagship products are the investment funds, as UCITS, FCP or SICAV or SICAF, SICAR and

SIF.

We can make use of SPV or SOPARFIs and SCSP.

D.5. In which areas does the company use external research and which sources do

you employ?





Private Equity, Real Estate, World Equities with High Yield Dividend, Renewable Energy,

Mixed Equities, Bonds, futures, Securitized Natural Resources, Art fund, Hybrid securities…

D.6. Is there an investment committee to approve portfolio allocation? If applicable, please describe its set up and authority.

No, there is not in general. An investment Committee is setup for each fund or structure and

made with representative of all parties involved for the specific fund. Each Committee has full

authority to propose a fund allocation to the Board of Directors of the fund, and to review in a

regular manner, as per regulation and prospectus, this investment policy and allocation.

D.7. How often are portfolios rebalanced?

It depends on what our client wants. Finexis does not promote high frequency trading, the long

term investment strategies are key in our philosophy. Some exceptions can be made for specific

products and market or circumstances.

D.8. Do investment guidelines exist for all products?

Yes. For each fund, the Board of Directors establishes an appendix describing the investment

guidelines of the fund, should those need more clarity than the description of the initial offering

document (fund prospectus and appendix).

D.9. State the average number of portfolios lines and turnover within the portfolios.

Our goal is to set up portfolios which count 37 lines on average. Turnover: average turnover of

most of our funds is low. The reason is that Finexis S.A. does not promote any churning activity,

and intends to reduce any transaction fees to the bare minimum. Finexis S.A. key policy and

philosophy is to promote long term investments based on a sound systemic macro- and micro





analysis of target investments. Our fees are not based on the number of transactions for this

reason. It is also a question of ethical behavior towards our investors.

D.10. Does the company apply leverage to some or all of its products? If so, please explain.

No, we do not apply any leverage to our products. We could, but so far we do not.

E. Due diligence on manager selection

E.1. Manager / Fund selection process

E.1.1. On what principles is the company’s due diligence process based?

See answer on 2.4., but main principles are:

- Completeness

- Accuracy

- Validity

E.1.2. Where does your due diligence process differ from that of others in the marketplace?

Our staff is highly experienced as all executive did learn the back office aspects of the

investment fund industry. They used to manage themselves departments performing fund

accounting, financial reporting, transfer agent and registrar, custody and all banking aspects,

domiciliation, fund compliance, risk management, cash management, asset management and

fund setup including the legal aspects. Because they dispose of such experience themselves, the

staff is well equipped to assess other’s capacities and features. This is applicable for the

selection of target funds within a fund of fund for instance.





E.1.3. How many managers / funds are you invested in or intend to invest in?

We are invested into 25 funds, divided into 34 Sub-funds. And each day we get new

subscriptions and applications for new funds or structures to setup, or applications from

potential investors.

E.1.4. How many managers / funds do you analyze per year?

This is only applicable for funds of funds, and we have currently only one for 3 funds of funds.

It will come soon.

E.1.5. Do you conduct on-side visits with the managers?

As and when appropriate, yes we will.

E.1.6. How many visits to a manager will you make prior to making an investment?

Not relevant, because we are the own manager of the fund we create. For funds of funds and

the selection of target funds, see answer on E 1.2..

E.1.7. How much time is spent with each manager during the due diligence process?

The due diligence process is a day-to-day process.

E.2. Operational Due Diligence

E.2.1. Do you have a dedicated due diligence team / person?

All members of the team are committed to due diligence.

E.2.2. Do you perform reference check on the manager?

Reference check on the manager might be performed at any moment.





E.2.3. Do you perform operational due diligence on the middle and back office operations ?

Yes, the due diligence is also applicable on the middle and back office operations.

E.2.4. Do you perform due diligence checks on the administrator and the Transfer

Agent or any other service provider to the targeted funds ?

Yes, due diligence is applicable to all funds. The due diligence is performed using our own

competencies and standards and procedures regarding transfer agent and central

administration services. Because this is a key component of FINEXIS S.A. service offer and we

dispose of competent staff on those matters, those due diligences follow very much our internal

standards as well as the local Luxembourg regulation and market practice.

E.2.5. Do you contact the outside audit company prior to approval?

As and when appropriate, especially if requested by Law or market practice or any potential

contractual agreements.

F. Performance

F.1. Provide historical performance for all your products (current only) since inception net of standard fees.

a. Monthly returns: please refer to our funds’ performances for accurate answers, under

section www.finexis.lu section “subscribe”, listing all of our registered funds.

b. Standard deviation (annualized): see answer above.

c. Three largest drawdowns and recovery periods: see answer above, but in general not

applicable so far.

http://www.finexis.lu/





d. Percentage of positive / negative months: see answer above.

F.2. What was the background of the three largest drawdowns?

Answer above, but in general not applicable so far.

G. Risk management

G.1. Describe how risk management is structured within your organization.

Risks connected to the activity of asset management

FINEXIS S.A. will carry out a detailed analysis of the funds internal risk management

procedures and will ensure that these procedures are in compliance with Luxemburg’s laws,

rules and regulations (especially the circular 07/308 as well as a strict separation between the

entities involved into risk management for the management and control functions). FINEXIS

S.A. will also make sure that these entities use a compliance system that takes into account all

legal investment restrictions as well as all restrictions as defined in the prospectus. (It is

important to note that for some funds part I for the 2002 Law, the investment policy is defined

as non-sophisticated and the risk management will be determined by the “commitment

approach”). FINEXIS S.A. will establish a list of risk control reports that these entities will have

to provide on a daily, weekly and monthly. FINEXIS S.A. will receive regular

Multifonds/STATPRO reports assessing that the investment limits have been respected

(compliance report). FINEXIS S.A. will consider the option to complete its control of financial

risk by adding an external independent control.

In this model, FINEXIS S.A. exercises all functions of management and control of fund activity.

Operational risk





FINEXIS S.A. will determine with its contractors the type of information (statistic datas, KPIs,

aso) to be provided on a regular basis. In case of delegation, the fund prospectus will expressly

mention it prior to its agreement.

FINEXIS does make use of some well known risk measurement methods like FMEA (Failure

mode and effect analysis) to assess its internal risks.

KYC / AML risk

The Management Company will require the Transfer Agent to provide any information

necessary to assess the compliance with the KYC/AML rules.

The managers will specifically undertake the following tasks:

- To control that Risk Measurements are performed according to CSSF Circular 07/308;

- Review of the operational risk reporting;

- Review of the derivative risk management statement;

- Regular liaison with the Custodian and the Board of Directors of the OPC.

- Quarterly reporting on risk breaches/weaknesses or other matters to the Board;

- Immediate escalation of serious issues to the Board of Directors of FINEXIS S.A. and the

relevant OPC.





G.2. What risk management concepts does the company apply?

The management of risks process foresees the following main phases:

1. Risk analysis

2. Evaluation and reporting

3. Decision and containment

4. Compensation, restoration and imple-mentation

5. Monitoring

1. Risk analysis

Risk identification sets out to identify and organisation’s exposure to uncertainty. This requires

an intimate knowledge of the organisation, the market in which it operates, the legal, social,

political and cultural environment in which it exists, as well as the development of a sound

understanding of its strategic and operational objectives, including factors critical to its success

and the threats and opportunities related to the achievement of these objectives.

Business activities and decisions will be classified according to the below:





Strategic - These concern the long-term strategic objectives of the organization. They can

be affected by such areas as capital availability, sovereign and political risks, legal and

regulatory changes, reputation and changes in the physical environment.

Operational - These concern the day-today issues that the organization is confronted

with as it strives to deliver its strategic objectives.

Financial - These concern the effective management and control of the finances of the

organization and the effects of external factors such as availability of credit, foreign

exchange rates, interest rate movement and other market exposures.

Knowledge management - These concern the effective management and control of the

knowledge resources, the production, protection and communication thereof. External

factors might include the unauthorized use or abuse of intellectual property, area power

failures, and competitive technology. Internal factors might be system malfunction or

loss of key staff.

Compliance - These concern such issues as health & safety, environmental, data

protection, employment practices and regulatory issues.

2. Evaluation and reporting

On a regular basis, the management submits to the board the risk analysis for the period.

Each identified risk is compared to the grid and an action implemented accordingly.

Different levels within an organization need different information from the risk management

process.

The Board of Directors should:

○ know about the most significant risks facing the organization

○ know the possible effects on shareholder value of deviations to expected performance

ranges





○ ensure appropriate levels of awareness throughout the organization

○ know how the organization will manage a crisis

○ know the importance of stakeholder confidence in the organization

○ know how to manage communications with the investment community where

applicable

○ be assured that the risk management process is working effectively

○ publish a clear risk management policy covering risk management philosophy and

responsibilities

Business Units should:

○ be aware of risks which fall into their area of responsibility, the possible impacts these

may have on other areas and the consequences other areas may have on them

○ have performance indicators which allow them to monitor the key business and

financial activities, progress towards objectives and identify developments which

require intervention (e.g. forecasts and budgets)

○ have systems which communicate variances in budgets and forecasts at appropriate

frequency to allow action to be taken

○ report systematically and promptly to senior management any perceived new risks or

failures of existing control measures

○ Individuals, employees should:

understand their accountability for individual risks





understand how they can enable continuous improvement of risk management

response

understand that risk management and risk awareness are a key part of the

organization’s culture

report systematically and promptly to senior management any perceived new risks

or failures of existing control measures

3. Decision and implementation

Once a decision has been taken in terms of how a specific risk can be contained or compensated

for, the according implementation is documented and reported to the board on the next

reporting period or immediately if the risk has been evaluated as significant and requires

immediate action.

4. Monitoring

Accordingly the risks are monitored going forward and reassessed every period.

The following information for each risk are recorded:

- Name of Risk

- Scope of Risk – Size, type and dependency

- Nature of Risk – eg operational, financial,…

- Stakeholders

- Quantification of Risk – Probability, Significance, predictability

- Risk Treatment & Control Mechanisms – means implemented





- Potential Action for Improvement – recommendations to reduce risk

- Developments – evolution of risk over time

G.3. Risk Management responsibilities

The Board has responsibility for determining the strategic direction of the organization

and for creating the environment and the structures for risk management to operate effectively.

The business units have primary responsibility for managing risk on a day-to-day basis.

Business unit management is responsible for promoting risk awareness within their operations;

they ensure that risk management is incorporated at the conceptual stage of projects as well as

throughout a project.

The risk management function is meant to evolve through time from a single risk

champion, a part time risk manager, to a full scale risk management department. For now the

Compliance officer is also acting as risk manager for internal risks, while the Head of Fund

accounting performs the external funds risk management reports preparation.

The Internal Audit’s role includes focusing the internal audit work on the significant

risks, as identified by management, and auditing the risk management processes across the

organization and co-ordinate risk reporting to the board, audit committee.

G.4. Describe the company’s quantitative risk management tools.

Risk is quantified from 1 (low risk) to 5 (high risk) according to three main axes:

○ Probability of the event

The likelihood of the event is the statistical probability of an specific event to happen on a

specific day. This probability can either be assessed based on historical data which allows a

statistical exact calculation of the probability of a specific event to happen.

If no statistical and/or historical data is available it is the responsibility of the management to

make a sound assessment.

○ Predictability of the event





The predictability of an event is introduced to fine-tune the probability. As such the probability

gives the likelihood of an event to occur on any specific day, the predictability introduces the

notion of control. The predictability indicates actually whether the event can easily be avoided

or whether a major investment of money and time is necessary to counter the risk.

○ Significance of the event

The significance of an event indicates the financial impact of a specific event if it were to occur.

The financial impact can either be an effective loss (Cost incurring error), a lost opportunity

(loss of potential business) or a reputational loss. The rating of 1-5 determines the impact on the

company.

For more accuracy sometimes we do use a 1 to 10 rating grid.

G.5. How are liquidity provision monitored and controlled?

Finexis has at his disposal two experienced managers with more than 20 years within the

banking and investment funds sector, who will manage cash of the portfolios using the most

recent liquidity management techniques.

H. Service providers

H.1. Provide a list of professional counterparts the company maintains a business relationship with (legal advisors, auditors, banks,…).

IT Support: IGEFI, DSL, Telindus, Ceekee, Mixvoip, Bloomberg, Finesti/Fundsquare..

Bank of FINEXIS S.A.: Dexia BIL

Custodian banks (so far): Natixis, BIL, ABN Amro, Swedbank, ING, Raiffaisen, BSI, EFG,

CBPQuilvest, SGBT.

External/ Internal Auditeurs: Artemis audi and advisory sàrl + FIDEWA-CLAR

Legal Councel: Cabinet Mosar Dewolf & Partners Luxembourg, Cabinet Delagardelle for funds





H.2. Describe your Due Diligence process for service provider selection.

It is the same process as that for the other services.

H.3. Has the company ever terminated a contract with any service providers (including auditors)? If so, explain the circumstances.

Yes, it happened only twice with car leasing providers, as the contract for cars ended at natural

term. For consolidation purpose no renewal was made with two of them, which allowed to

harmonize the car policy of the company.

No other contracts were broken, apart when the company moved to larger premises in order to

match with staff growth.

I. Compliance / regulation

I.1. Describe how compliance is structured within your organization.

One manager is in particular in charge of compliance, with the following tasks:

- Review of any suspicious shareholder transactions as reported to the Conducting Officer

by the Administrator;

- Monthly review of investment restrictions reporting and other compliance reporting;

- Monitoring the follow up of reported compliance issues or breaches;

- Monthly liaison with the OPC Board of Directors;

- Report quarterly on investment restriction and other compliance matters;

- Immediate escalation of serious issues to the Board of Directors of FINEXIS S.A. and the

relevant OPC.





As for the administrators, he provides a yearly compliance reporting including NAV timeliness

report, details of all late Transfer Agency (TA) trades in the month with reasons why deal was

accepted and confirmation that it was signed off in accordance with the agreed procedure,

compliance report in respect of investment breaches (investment limit broken, active or passive,

period of breach details of any compensation, controls in place to prevent re-occurrence,

breaches and compensation notified to and agreed with Investment Manager), update on

UCITS III compliance checks, such as counterparty risk, derivatives, deposits, etc. (if

applicable), list of illiquid securities with comments from the Portfolio Manager.

However, any active investment breaches are immediately communicated upon discovery to

the “Dirigeants”.

I.2. Is the company registered with any regulatory and / or supervisory bodies?

Finexis S.A. is registered with the CSSF (Commission de Surveillance du Secteur Financier).

I.3. When was the last inspection of these bodies?

The CSSF inspection is done as far as possible to check the legal compliance of our funds or the

NAV. The review is annual. The date of review is generally the end of the financial accounting

year, so mostly 31/12 and 30/06. External auditor of each fund is performing an annual and

semi-annual full audit of each fund, as well as a full due diligence onto our company. This is

completed by the full internal auditor’s control which we decided to outsource to an external

auditor, in order to guarantee two full audit of Finexis S.A. per year on top of the regulator’s

supervision and the external review of each fund under management.

I.4. Are there any law suits pending against the company?

No, there are not.

We did not have any so far, since inception.

I.5. Is your company a member of any other relevant trade association?





Finexis S.A. (PFA formerly) is an indirectly –via funds- member company of ALFI (Luxembourg

Association of Investment Funds), ILA (Luxembourg Association of board members),

Fundsquare (legal reporting of the Luxembourg Stock exchange), and will be a member of the

AGDL (to guarantee clients assets) if needed.

We have a full coverage insurance for the company as well as its board members including for

the funds in which they act as board members in the name of the company.

J. Conflict of interest

J.1. Will key people invest in internal funds?

Not allowed. And if we have to invest our manager’s money in our own funds together with

investors to show involvement, then it is declared internally. This process is severely controlled

though, and no short term trading is allowed to employees, so long term investments only are

made. The company can co-promote funds as well in the spirit of partnership with clients.

J.2. Does the company have direct or indirect interest in Brokerage Company? If some, please describe. Will your fund process any transactions with that broker?

No, it has not.

J.3. Are there any other conflicts of interests one should be aware of?

No.

K. Anti-money laundering

K.1. Confirm that the company has established Anti-Money Laundering (AML) procedures.

Yes, we did. For instance: each new subscriber has to provide us his CV, a certified copy of his

ID, his police record, and for the administrator we also require a sworn statement. We also have





an AML KYC procedure to prevent any money laundering and terrorist financing. Refer to our

application forms to see detailed examples of what is required.

K.2. Please advise which jurisdiction’s regulations you comply with.

Luxembourg, and of course all applicable European Directives. We do apply also as and when

appropriate specific tax reporting like the German tax calculations (Zwischengewinn,

Aktiengewinn...)

L. Business continuity / disaster recovery

L.1. Does the company have a formal disaster recovery plan? Please describe the basic provisions.

All files and documents are scanned. A tape does copy the whole database on a daily, weekly,

monthly and yearly basis. Every second week, the whole system is saved on an external hard

disk, which is then kept in a safe-deposit box outside the administrative premises. The two

managers of the company have access to this safe-deposit box. The company is hence prepared

to face any kind of disaster.

L.2. What contingency plans do you have in terms of

a) Incapacitated investment decision makers?

The backup of competencies between the various executives of Finexis does prevent a gap due

to the incapacitation of any one. On top of that the internal flow of information allows a real

time update of any company executive. b) Presence of in-house computer technician?

Finexis Direction and highest executive are in a position to solve most issues themselves, on top

of the support of 4 external companies including full time on site support.

c) Back-up system?

Finexis has 3 different and redundant systems for backup of files and folders.





Finexis has at his disposal a complete set of Disaster recovery procedure covering all potential

aspects of disorders or disasters.

M. Insurance

M.1. Do you currently hold insurance for the following

a) Director and Officers Liability? Yes

b) Professional Indemnity? Yes

c) Crime (Employee fidelity / third party fraud)? No. Fraud is unlikely to happen as all

employees are shareholders of the company, so that any damage to the company would

damage their own investments in the company. Key managers are working together for

more than 10 years.

d) Key Person Insurance? Yes

e) Other? Yes: company life insurance for all employees including disability.

N. Client information / reporting

N.1. What is your client reporting policy? Address topics, such as level of transparency and frequency.

- Multilingual: English, French, German, Italian, Luxemburgish, Polish, Russian, and even

Dutch, polish and Spanish to some extent.

- As regular as the company or fund accounting is: daily, weekly, monthly and yearly as

appropriate

- 7/7 and from 7:00 to 20:00 availability of Finexis executives





- Answers within 24:00 to all client requests or questions

- Full transparency

N.2. What is the normal method of communication with your clients?

Most of the times we communicate by email with our clients for non critical information but fast

delivery, and important documents are sent by mail or registered mail. Phone is used daily to

clear details followed by written confirmation of understanding.

O. Documents which can be provided

O.1. For the company, these documents can be sent:

- Copy of the articles of incorporation

- Recent copy of the extract of register of commerce or equivalent (not older than 3 months)

O.2. For the Company’s senior managers and the Fund’s managers and / or members

of the Fund’s Board of Directors, these documents can be sent:

- Copy of the identity card or passport, curriculum vitae showing the expertise and experience in the activity that will be carried out, copy of the criminal record, letter of commitment, affidavit

- Letter of agreement from CSSF

As and when required.