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SyndicateRoom Opts for Nominee Structure




By Ryan Weeks on 9th November 2015


SyndicateRoom is a platform in transition.

 

The “Angel-led” equity crowdfunder is abandoning the direct shareholding model, in favour of a nominee structure. This means that SyndicateRoom will act as the legal owner of all company shares that are sold via the platform, acting on behalf of its individual investors. The change took hold on Saturday 7th November, and will apply for all future fundraising campaigns. Campaigns that were listed prior to that date – whether already completed or active – will continue to operate a direct shareholding model.

 

SyndicateRoom CEO Goncalo de Vasconcelos stated that the shift comes in response to feedback from a number of high-growth business owners, who have suggested that managing multiple shareholders might “distract them from running their business”.

 

Practically speaking, SyndicateRoom investors can expect the following changes:

 

  • Investors maintain “beneficial ownership” of shares and SEIS relief, but legal ownership is passed to SyndicateRoom.
  • The nominee (SyndicateRoom) is responsible for the completion and provision of all EIS certificates.
  • SyndicateRoom will receive a 2.5% carry for every profitable investment made by its investors. If a company fails to produce a positive return for investors, then the platform receives no fees from those investors. SyndicateRoom charges a 5% up-front fee to fundraisers, in addition to a 0.5% transaction fee and “a one-off legal fee”.

 

Goncalo de Vasconcelos has implied that the effect of the new model will be to lessen the administrative burden faced by the platform’s investors. He also believes that the 2.5% Platform Carry will serve to ensure that SyndicateRoom remains committed to sourcing high quality investment opportunities, better aligning the incentives of the platform and its investors.

 

SyndicateRoom’s new format closely mirrors the model employed by rival equity crowdfunder Seedrs, which has operated a nominee structure since the outset. Might further platforms soon look to follow suit? 

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