Adopted on 26 October 2016
Archangels Investors (“Archangels“) is an unincorporated association consisting of a Management Board (as defined below) and a larger group of members (together with the Management Board, the “Members“) that was formed by its founder Members on 26 October 2016.
Archangels is administered by Archangel Investors Limited (“AIL“) (company number SC209206). AIL has been nominated by the Management Board to assess and vet investment opportunities and to carry out initial due diligence on such opportunities before passing them on to the Management Board. If the Management Board considers it appropriate, they will then contact Members to provide the Members with details of any potential investment opportunity and the terms on which an investment in the proposed investee company is to take place (the “Investment Proposal“).
All regulated activities in connection with the business of Archangels are carried out by Archangel Investors (Management) Limited (company number SC490050), a subsidiary of AIL which is authorised and regulated by the Financial Conduct Authority.
Archangels does not carry on any business or undertake any regulated activities.
Members will be invited to join Archangels on an annual basis at the discretion of the Management Board. The membership year shall run from 1 January to 31 December unless changed at the discretion of the Management Board.
All Members must, as a condition of their annual membership, enter into (and agree to update as and when reasonably requested by the Management Board): (i) a power of attorney appointing a representative of AIL to enter into relevant documentation in relation to the acquisition or disposal of any investments which the Member decides to make; and (ii) a financial promotion certificate, confirming that they are a sophisticated investor or a high net worth investor and as such can lawfully receive information relating to the Investment Proposals. All investment decisions are made entirely by Members individually and AIL does not provide investment advice or recommendations.
Members acknowledge and agree that investment in an entity which is the subject of an Investment Proposal (an “Investee Company”) involves risk and a summary of certain of the key risks is set out at the end of these rules.
All Members will be invoiced an annual membership fee in advance. The membership fee is set at a rate to make a contribution to the running costs of the Archangels’ office, but not to make a profit. AIL may issue invoices on behalf of Archangels. All fees will be reviewed annually by the Management Board.
Where an Investee Company has been subject to a successful, profitable exit, a discretionary 5% charge will be made by AIL to the profit on exit of each Member who has invested in such Investee Company to incentivise the management team of AIL who have been involved in identifying the Investee Company and managing it through to exit. This is not a mandatory payment, but will be deducted from the Member’s proceeds unless the Member notifies the Archangels’ office in writing otherwise.
Members shall be entitled to participate in any Investment Proposal on the same terms as the other Members. AIL shall allocate each Member’s entitlement based on their indication of interest and Members shall be entitled to indicate their interest in taking an excess entitlement above their pro rata entitlement provided that entitlements may in certain circumstances be adjusted at the Management Board’s discretion in order to facilitate a fair allocation of entitlements in an Investee Company or to address legal or practical considerations.
There may be certain exceptional circumstances where members of the Management Board invest in investee companies that the Management Board do not consider appropriate to offer to Members as a result of the size or stage of development of such company and Members may be offered the opportunity to invest during a later round of investment. Where possible, the Management Board will endeavour to ensure that Members are not disadvantaged in these circumstances.
In the case of any Investment Proposal in respect of an Investee Company in which Members have previously made an investment as individuals, those Members having previously made an investment shall be offered priority to make the follow-on investment in that Investee Company and remaining Members shall be entitled to invest as individuals on the same terms in any unallocated investment.
All Members will receive the following in their capacity as Members:
· regular updates on the Investee Companies in respect of which they have an investment, including an annual report;
· access to the investment portal hosted by AIL;
· invitations to the Chorus event organised by AIL, including the annual dinner, showcase and training half day;
· an invitation to the Convocation event organised by AIL;
· invitations to the various social events organised by AIL for the Members; and
· access to such further information relating to Investee Companies as the Management Board decides to make available to Members.
The Management Board may also offer the management team of AIL the opportunity to invest in Investee Companies on the same terms as Members. There are no obligations on the management team of AIL to invest and they may do so at their discretion.
The Management Board shall be responsible for the management, affairs, promotion and control of Archangels and shall have the power and authority to do all things necessary to carry out the purpose of Archangels. The Management Board currently consists of five Members and the Management Board may supplement or reduce in size as the then members of the Management Board think fit. Members of the Management Board currently receive no remuneration for their services.
Meetings of the Management Board and its various sub-committees shall be held regularly and in any event at least four times per year. All decisions of the Management Board shall be taken by simple majority and the chairman shall not have a casting vote.
The members of the Management Board shall not be liable, responsible or accountable in damages or otherwise to any of the Members, their successors, or assigns, except by reason of acts or omissions due to bad faith, negligence or wilful default, material breach of these rules, or for not having acted in good faith in the reasonable belief that the Management Board’s or their actions were in, or not opposed to, the best interests of the Members of Archangels.
Meetings of the Members shall be held at least once per calendar year.
Members are not permitted to sell or transfer their memberships.
Any Member may cease to be a Member at any time during the annual membership term by giving not less than one month’s written notice (or such shorter period as is accepted by the Management Board) to the Management Board of their intention to cease to be a Member. The obligations in respect of confidentiality set out below continue after the cessation of membership.
The annual membership fees are non-refundable.
The Articles of Association of all Investee Companies contain “drag” provisions, which allow minority shareholders to be swept up on an exit event, even where they have ceased to be Members of Archangels.
Each Member undertakes that he shall not at any time, either during the term of their membership of Archangels or thereafter, disclose to any person any Confidential Information concerning the business or affairs of Archangels or the other Members or of any Investee Company.
Each Member may disclose Confidential Information as may be required by law, a court of competent jurisdiction or any governmental or regulatory authority.
No Member shall use any Confidential Information for any purpose other than to perform their obligations under these rules or to make any decision in relation to an investment in or a disposal of their interest in an Investee Company.
All Confidential Information shall, as between each Member, and Archangels, be deemed to be the property of the Management Board on behalf of Archangels.
Each Member shall immediately inform the Management Board if they become aware of the possession, use or knowledge of any Confidential Information by any person who is not authorised to possess, use or have knowledge of it.
For the purposes of these rules “Confidential Information” means any of the following information, documents, papers or property which, at any time, comes into the Management Board’s or any other Member’s possession or under their control in the course of the business and which the Management Board regards or could reasonably be expected to regard as confidential, whether or not such information is, in itself, confidential, marked as “confidential” or reduced to tangible form:
The Management Board shall be entitled to amend these rules at its entire discretion provided that Members shall be given 30 days’ prior written notice of any amendment.