I think you’d be surprised - I agree that if they wanted to they would - but I also think sometimes things lie and lurk under the surface “just because”.
At the end of the day - these terms are already within the latest crowdfunding round and so something that Monzo may have had some knowledge about. I think it would be a completely different story if they were trying to port all the rounds over.
I still don’t think its great of CrowdCube - and does look more opportunistic than anything else.
Any company that is unlisted has a responsibility to manage its shareholders in some way. When a vote is called, for example, the company in question has to give notice to investors with voting rights.
Monzo chose to use a nominee structure. It’s more expensive than doing it yourself (I think Monzo pays about £3/investor/year to Crowdcube for it’s nominee service) but it has a few benefits too.
Crowdcube Nominees is effectively a supplier for a service, contracted by Monzo. If that service isn’t performing upto scratch, Monzo will be able to cancel the agreement and either move to a different nominee or just manage the shares themselves.
Monzo do have some clout here, and although the proportion of the crowd’s share in Monzo is low, they have an obligation to keep their investors happy.
In case my position isn’t clear, I strongly believe Crowdcube are the culprits for these horrendous change in terms, but Monzo has the ability to push back, if they do desired.
Edit: I think regards how this would happen, would be a proposed change in the articles of association, a vote is called and won (as long as vc’s are on board) and the structure changes.
I think Company is the wrong word here - technically the Shareholders own the company and the Directors run the company - but yes the Directors have a duty to Shareholders and the Shareholders in some instances can push for decisions to be made without the Directors voting on it.
This depends on whether your shares have voting rights attached to them - as ours are with a Nominee we don’t technically have any say in how our shares should vote.
I definitely agree with you here and that is something that Monzo may think about - But that will be a separate agreement between Monzo and Crowdcube which is Crowdcube will do X and Monzo will do Y.
CrowdCube then have a separate agreement with each Shareholder for how their shareholding is operated - so long as the agreement with Monzo isn’t breached then there is technically nothing from Monzo’s part to get angry over.
This is true and they could go through a change in structure from Nominee to your more “traditional” shareholding in companies changing the description of the shares in the Articles - but would require the Shareholders to agree at a large percentage and would (I’m not entirely sure on this one) the consent of those shares being changed as well (i.e. the circa 36,000).
I’m in complete agreement that CrowdCube are the troublemakers here - but I think that as much sway as Monzo may have - it is a tricky one
I think it really just highlights the risk of using third party providers for certain aspects of your business. Monzo chose crowdcubes, the people buying the shares could only use crowdcube. Monzo seem to be proud of developing everything in house, right down to the in app chat system. Why not manage the shares themselves? That way they can guarantee the satisfaction of their customers. It’s something I can only let see getting worse as monzo involve more third parties to provide added services. They are paying a substantial sum to crowdcube, in some cases more than the shareholder invested.
I don’t believe Monzo was behind the messaging that went out from Crowdcube. They were probably aware of Crowdcube intention to present an alternative set of terms to wider group of investors at the most.
After reaching out to Monzo yesterday they told me their legal team would reach out to Crowdcube today and investors would receive an update from Crowdcube regarding the new terms.
My opinion is because the adoption or rejection of these new terms will impact Crowdcube’s revenue from its users the Monzo team have to be very careful about anything they say that could be seen to influence investors in making a decision on these new terms. I strongly believe Monzo is behind their customers and investors in this situation but having to tread lightly because of potential legal implications.
Save in respect of the Nominee’s fraud, negligence or default, the Nominee shall have no liability whatsoever to the Investor and may use any assets it holds on trust to cover any loss, liability, damages, costs and expenses incurred or suffered by the Nominee in the due performance of its rights and obligations under this Declaration of Trust.
So to clarify …
if the Crowdcube (Nominee company) directors run off with all the company money, Crowdcube is allowed to sell my shares to cover their costs?
If Crowdcube (Nominee company) run their business into the ground then they are allowed to us my money to cover their losses and pay their directors a fat exit bonus? … and there is nothing I can do about it?
It’s saying they can use your shares to pay their running costs and bonuses etc, but not to pay for fraud or wrongdoing.
Although if they can spend your investment anyway they don’t really need to defraud anyone
The radio silence from both Crowdcube and Monzo is not helping allay the fears of CC investors.
Monzo has not distanced itself from the Crowdcube communication informing of the vote to change terms despite the fact that Crowdcube used language like "Monzo have issued a new vote " . This could end up being being very bad PR for all parties.
This is not going to be great for the perceived share value . Let hope Crowdcube’s Greed doesn’t kill the Golden Goose for for all parties.
I hope clarification comes swiftly and I have it totally wrong . Please break radio silence !!
That is little use though when @kennygrant (and many others, I’m not singling you out Kenny!) in the comment before yours has ALREADY voted. Everything needed to be explained clearly before people had the chance to vote, doing so now is something, but too little too late.