Rules of Engagement
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RULES OF ENGAGEMENT - DECEMBER 2009
This note summarises the rules under which opportunities may be offered to members of the Archangels investment syndicate and the procedures adopted for the completion of investments by such members.
The Archangels investment syndicate (often just called Archangels or Archangel) is comprised of a core group of investors and a larger group of non-core investors. The syndicate is administered by Archangel Informal Investment Limited (AIIL), which is a not for profit company, and the executive team of this administration company is headed up by John Waddell, CEO.
The provisions of the Financial Services and Markets Act 2000 and the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) (together the "FSMA") have been taken into account in framing these rules and procedures.
1. All new business proposals for investment by members of the Archangels syndicate and requests for further funding from existing investments will be reviewed by John Waddell.
2. The decision to invest in a proposal and the structure of the deal will be the responsibility of the core investor group, currently consisting of Mike Rutterford, Barry Sealey, Eric Young, Gavin Gemmell and Alastair Salvesen. Any decision to invest by the core investor group will be unanimous and will give rise to a personal investment by the core investor group members (or their nominees) of at least £100,000 between them.
3. If the total investment is less than £100,000, the core investor group are likely to cover the investment themselves. If the total investment exceeds £100,000 then all syndicate members will be offered the opportunity to invest on the same basis as the core investor group. Minimum investment level for each non-core investor is likely to be £10,000.
4. Investment opportunities will be circulated by way of email and potential investors have the opportunity to exercise any diligence they wish such as meeting with management teams, requesting full business plans etc. A presentation to potential investors from Archangels by the management team will normally be organised by AIIL.
5. Those members who make investments in new business proposals will be charged an administration fee by AIIL of 5% plus VAT of the amount invested up to a maximum of £5,000 per investment. No fee is charged for further funding rounds.
6. All members are required to comply with the certification requirements of the FSMA and the terms of the Money Laundering Regulations 2007 (as amended). All members must also sign an Archangels membership form and a 2 year General Archangels Power of Attorney which is in favour of the directors of AIIL. The Power of Attorney is used to help administer the investments of each Archangels member in accordance with the instructions of each member.
7. Equity investments by individual members of Archangels will normally qualify for Enterprise Investment Scheme relief (unless otherwise advised or the nature of the investment is such (eg a loan, which may be convertible into shares) where such relief shall not apply).
8. The completion of investments will be co-ordinated by our lawyers, normally MBM Commercial and John Waddell, Robert Pattullo or another director of AIIL who will, where required, act as attorney under the General Archangel Power of Attorney for those members of Archangels who plan to invest.
9. Each member of Archangels acknowledges that a decision to invest is a decision by that member alone and that no responsibility for the consequences of that decision is accepted by AIIL, any member of the core group, John Waddell or any directors of Archangels.
10. Dissemination of information post investment is the responsibility of the relevant investee company to each Archangels investor. There will normally be an investment agreement entered into with the company and this agreement will set out the information rights of Archangels members.
11. Where appropriate, application will be made to the Scottish Enterprise - Scottish Co-Investment Fund for investment of up to 50% of the total required. Such investment will be on the same terms as apply to individual Archangels members.