Crowdcube request to change Investor Nominee Terms

So am I , but just because you signed doesn’t make them legal, the terms look wholly one sided and unfair which is illegal. I guess I’ll have to have a proper look.

Looks like they snuck that term in there in 2017.

The terms from 2016 were far simpler:

(yes! just 4 points)

None of the power grabbing they seem to be doing now.

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It is harder for me to justify that they are unfair terms as on their own they are not vastly unfair. They allow Crowdcube to do things, including invoking fees, if I wanted to buy shares with them. I had the choice of accepting those terms or not last December.

If these terms pass then people on the previous crowdfunding could possibly be forced onto worse terms than they originally have. Thats unfair and hasn’t been put to these shareholders in a fair way.

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I’ve not got one either :neutral_face:

So they did, my bad I was in that round too and only had one copy of a Declaration of Trust so assumed it was the same from 2016. I’ve just seen now they attached them directly to the share certificate :man_facepalming:

Hi everyone,

Following some questions we have received in response to the email sent to investors regarding changes in the nominee terms, we wanted to address some of the frequently asked questions raised in this thread. Please accept our apologies for the delay in putting this response together with Monzo. As always, if you have any further queries, I’d be more than happy to help - please email me at support@crowdcube.com, and I’ll come back to you directly.

Firstly, please be assured that there will be no change to your shareholding, as Crowdcube Nominees has always been and will continue to be the holder of the legal title to your shares. This is the case for all of Monzo’s funding rounds with Crowdcube.

For reference, please find the existing Declaration of Trust here. You will see that most of the terms remain the same, if not identical.

We would also like to confirm that the vote for this proposed change closes on 18 March 2019, so please do take your time making your decision.

Did Monzo have prior warning about this vote?
Yes, we have worked closely with Monzo to coordinate this, we and Monzo saw the benefit of all investors being on these new improved terms.

Are there any disadvantages to investors that may result from the changes proposed?
There are no disadvantages to investors from these changes. Many of the terms are exactly the same. Crowdcube Nominees still holds the shares, but it does so as a completely passive holding company. Crowdcube Capital, which is authorised by the Financial Conduct Authority to hold third-party assets on behalf of investors, enters into a contract with investors. In practice, the situation is the same.

Apart from the benefits mentioned, is there anything else that is changing? For example, is Crowdcube going to charge investors for holding their shares?
There is nothing in the new terms that could leave you worse off. Crowdcube is not going to charge you for holding your shares in Monzo, except in the unlikely scenario mentioned in the next FAQ.

One point states that Crowdcube may from time to time charge the Investor fees and expenses for providing the services under this Agreement. Any such fees and expenses shall be exclusive of any fees and expenses which are covered by the Investor Terms. Can you clarify this?
Under the previous terms, some expenses were deductible; this new clause would allow for it in different circumstances. This means that in exceptional circumstances we could deduct money from proceeds we receive to distribute to shareholders, for example, charging an international transaction fee in the event of an exit for an international investor.

We will not charge investors for providing services under this Agreement in normal circumstances. However, if there is a particular transaction where Crowdcube is required to incur material costs or carry out a large amount of work on behalf of investors, then we will need to cover those costs/work. We would notify investors and Monzo before charging any such fees or expenses.

What happens if I don’t vote?
If a majority (weighted by shares) vote in favour, the new terms will apply to everyone.

Am I signing over full rights to control over my shares sale to acquisition?
No, you are not signing full rights to control over your shares on an acquisition. Please see our response a little further below about a sale of the shares.

Will these terms now apply to all companies that I hold shares in via the Crowdcube nominee structure?
This particular vote only applies to Monzo shares. If you have invested in another company on Crowdcube where your shares are held by a nominee, those shares would continue to be held in line with the terms that apply to that investment.

Am I going to lose my individual voice and will Crowdcube now be using one collective voice instead?
There is no change to your shareholding; Crowdcube Nominees has always been and will continue to be the holder of the legal title to your shares. The nominee holds the shares on trust for you, the beneficial owner, and Crowdcube will administer the holding on the terms set out in the Investor Terms and Monzo’s Articles of Association to safeguard your rights and entitlements. You may find this article, which provides further information about Crowdcube’s nominee structure, helpful.

Can Crowdcube use the value of our shares held in their trust to cover any losses they might incur for fraud, negligence or breach of the terms?
This term has not changed and was included in the existing Declaration of Trust.

Does Crowdcube have the authority to sell the shares on our behalf if they deem it to be in the best interests of crowdfunding investors as a whole?
If there is a potential sale of the whole company, or there is an opportunity for investors to sell some of their shares, we will always seek to ask Monzo investors to vote on the matter. If there is a sale that is clearly in the best interests of shareholders, and which depended on a very quick execution, then we would not want to prevent that transaction from happening, or for Monzo investors to miss out on the opportunity. We have allowed for this situation, but in reality, this is very unlikely and we would always want to seek investors views on how they wished to proceed.

Is Monzo charged any ongoing fees for holding shares under the Crowdcube nominee?
There is no ongoing fee being paid by Monzo, this structure was included in the fee associated with their recent fundraise.

I hope that helps addresses some of the questions raised here. Of course, if you have any further queries, please don’t hesitate to get in touch.

Thank you,

Hannah

Community Executive at Crowdcube

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Hi everyone,

Just to follow on from Crowdcube’s post, we wanted to just confirm that we’ve been in the loop on this. We knew about the vote and the change in terms. And we’ve been working together behind the scenes on this clarification.

We’re sorry that we weren’t quicker to clear up what was happening here - but rest assured that we’re always in touch and working together to make sure all our investors get the support you need.

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Contrary to popular opinion.

Would have been a more reassuring response if it hadn’t taken 3 days to write it up, considering the the terms would have obviously been rigorously checked and thought over, and people at crowdcube would know the exact reasons for each of the changes proposed.

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Thanks for the above clarification - it’s certainly an improvement on the original communication.

I’ve already voted no, and to be honest, nothing in the above makes me want to change that.

However benign the changes are, and even though it’s claimed there are no disadvantages, I don’t see that there are advantages to investors to agree to the change.

I am, of course, open to having my mind changed by those who know/understand/care more than I!

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Pretty poor response to that one - as they haven’t said a clear ‘no’, I can only assume the answer is a ‘yes’. @Hannah_Crowdcube - why don’t you just answer this question clearly? It’s a very important clause and one that could have a very significant impact on shareholders via the Crowdcube Nominee service.

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The least that could happen is the term is clarified.

Wow this is pretty eye opening. I was of the impression that when I invested, I was buying the shares and would own them. It seems that is not fully the case. Pretty worrying that even in the updated FAQ there are several clear scenarios stated where crowdcube can deduct from the value of the shares without our approval.

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This is not true. There are plenty of disadvantages in the new terms. What you are saying is you “promise” to only use them to negatively impact us in exceptional circumstances.

Now do I trust you to do that? No. If you only intend to utilise certain terms in certain conditions make that part of the conditions. Specify when fees will occur. If you are asking for the open ended right to charge fees then I can only assume you intend to use that right.

Put that you have added the ability to charge fees in your summary of the terms on the vote page and restart the vote. There is a reason it isn’t there, it is misleading and I intend to involve the ombudsman if this is not handled correctly.

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I’m trying to pick out the positives in both responses. I’m really struggling .
It’s lip service at best.
Are the terms fair ?
Which third party is monitoring this vote ?
Has the communication included a full disclosure not just a summary ?
Did Monzo issue the vote or Crowd cube ?
I’m voting no

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It is worrying to give someone the right to deduct your money, even if they promise not to.
Four scenarios.

  1. they don’t take your money (youre no worse or better off)
  2. they change their mind and charge you fees (youre worse off)
  3. they get taken over and the new owners decide to charge fees they are allowed to charge (you’re worse off)
  4. they go bust and an administrator charges you as they are allowed to (you’re worse off)

Why would you vote yes?
Why would monzo think this was in everyone’s interest? I wonder what the alternative was?

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If you can list one thing that is improved in these new terms then I will not make a complaint to the FCA about the language Crowdcube used and continues to use to hype these new terms.

As mentioned throughout this discussion no one has been able to identify the improvements that you allege. It appears to be a deterioration of terms from the investors perspective so unless you can clarify what the improvements are then I think it is very misleading to keep talking about improvements.

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Hi Hannah, can you explain why you’re changing the terms?

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Point 1 vs Point 1, 2, (4) and (8). As shown by JamesBell who did not realise how the share ownership worked.

I said No!

I lost money on that … luckily a small amount. One investor lost 100K. A real scandal right there.

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