Policy for the Treatment of Conflicts of Interest

IGENERAL PROVISIONS

Article 1. The Policy for the Treatment of Conflicts of Interest of Investment Intermediary (II) Financial House Ever Inc. (“Policy”) was adopted on the grounds of Article 65, Paragraph 1, items 7 and 76, Paragraph 1 of the Markets in Financial Instruments Act (MFIA) and Article 34, Paragraph 1 of Commission Delegated Regulation 2017/565.

Article 2. This Policy governs:

1. the treatment of conflicts of interest in accordance with the size and organizational structure of the II and the nature, scale and complexity of the investment services and activities performed;

2. the circumstances constituting conflicts of interest or that may lead to conflicts of interest, which create a risk of damaging the interests of a client or clients of the II in relation to any particular service or activity performed by the II;

3. the procedures and measures for the treatment of conflicts of interest.

Article 3. This Policy is adopted to minimize the risk of damaging clients’ interests in the event of conflicts of interest. The conflict of interest should only be regulated when an investment service or ancillary service is provided by the II. The status of the client to whom the service is provided – professional, retail or eligible counterparty, is not relevant for that purpose.

II. PRINCIPLES

Article 4. (1) In carrying out investment services and activities, the II shall take the necessary measures to prevent, identify and manage potential conflicts of interest between:

1. The II, including the persons managing the II, the persons working under contracts, tied agents or, on the one hand, any person directly or indirectly linked by control to the II, and, on the other hand,  its clients:

2. its individual clients.

(2) The II shall take the actions referred to in subitem a) of Paragraph 1 and in cases where a conflict of interest may arise as a result of receiving remuneration by the II, of providing incentives by third parties or other incentive mechanisms.

Article 5. (1) If, despite the implementation of the internal organization regulations of the II and this Policy, there is still a risk to the interests of clients, the II may not carry out activities on behalf of a client unless it has informed it of the general nature and/or sources of potential conflicts of interest and measures taken for mitigating the risk to the client’s interests.

(2) In the cases under the preceding subparagraph, prior to carrying out an activity on behalf of a client in relation to which there is a conflict of interest, the II shall provide the client with information on the conflict of interest stored on a durable medium in order to enable them to make an informed decision on the service in respect of which a conflict of interest has arisen.

(3) Front office staff, brokers or investment advisers are required to notify the clients of the II of potential conflicts of interest under the preceding paragraph.

Article 6. In order to avoid conflicts of interest, persons working under contracts for the II are required to observe the following principles:

a) absence of conflict – the II and person who work for it under contracts should not be put in a position where their interests would conflict with the interests of a client, and if this happens, priority should always be given to the client’s interests. This Policy adopts the principle that the best management of conflicts of interest management is their complete avoidance,

b) equal and fair treatment and loyalty to clients – the II must always act in the interest of its clients. The II should not be placed in a position in which the interest of one of its clients conflicts with its obligation to another of its clients. The II is obliged to apply for the benefit of its client all of its professional knowledge and experience, including any publicly available information received by it and that is relevant to the service provided to the client;

c) confidentiality – the II shall not use for its own benefit or for the benefit of a third party, including, but not limited to, another client, a member of a management body or an employee of the II, any confidential information received from a client acting on their behalf.

(d) The II shall act honestly, fairly and professionally in providing investment and ancillary services in accordance with the best interests of its clients.

III. CONCEPT OF CONFLICT OF INTERESTS

Article 7. A potentially detrimental conflict of interest is a situation that arises in connection with the provision of investment and/or ancillary services by the II or a combination thereof and may impair the interests of a client.

Article 8. In identifying the types of conflicts of interest arising from the provision of investment and/or ancillary services or a combination thereof, the existence of which may impair the client’s interest, the II shall take into account by applying minimum criteria the circumstance whether the II, a person who works under a contract for it, or a person directly or indirectly linked by control to it, falls into any of the following situations, whether they arise as a result of the provision of investment and/or ancillary services or otherwise:

1. The II or that person is likely to make a financial  gain or avoid  a financial loss for the account of the client;

2. The II or that person has an interest in the outcome of a service provided to the client or of a transaction carried out on behalf of the client, which is different from the client’s interest in that outcome;

3. The II or that person has a financial or other incentive to favour the interest of another client or group of clients over the interests of the client;

4. The II or that person carries out the same business as the client;

5. The II or that person receives or will receive from a person other than the client an inducement in connection with the service provided to the client in the form of monetary or non-monetary benefits or services.

IV. SITUATIONS OF CONFLICT OF INTEREST IN PROVIDING INVESTMENT SERVICES TO CLIENTS BY THE II

Article 9. (1) Provision of investment and ancillary services and activities under Article 6, Paragraphs 2 and 3 of the MiFID would create potential conflicts of interest if the investment intermediary or a person working under a contract for the II:

-> find themselves in a situation described in Article 8, items 1-5 of this Policy;

-> acquire or may acquire, or enter into a transaction on its own account with financial instruments, the purchase of which it recommends to its clients, if from the purchase of the client the II, the person working under a contract for it, respectively, will have a personal benefit;

-> a person simultaneously or sequentially participates in the provision of separate investment or ancillary services, which impair the interests of the client;

-> carries out unauthorized exchange of information, which is a trade or business secret, between II’s employees;

-> makes unauthorized disclosure of information that is a trade or business secret to third parties or make public statements without their prior approval by the Internal Control Department;

-> involvement in determining the remuneration of different units/departments of the II in relation to their work is clients, which leads to jeopardize the interest of the client;

-> enters into transactions in financial instruments in volume or frequency, at prices or with a specific counterparty, which under the particular circumstances may be considered as being exclusively in the interest of the II;

-> enters into personal transactions in contravention of the requirements of the Rules for Personal Transactions, MiFID and delegated Regulation 2017/565;

-> acquire or may acquire, or enter into a transaction in financial instruments for its own account, the purchase of which it recommends to its clients, if from the purchase by the client the IP, the person working under a contract for it, respectively, would have a personal benefit;

-> advises a client to buy or sell certain financial instruments that another client wants to sell or buy;

-> advises a client to buy or sell financial instruments to a person designated by the II in order to influence the exercise of voting rights in them.

-> the presence of qualifying holdings of a person working under contract for the II in another legal entity, which conducts business competitive to the II’s business;

-> the existence of a relatedness within the meaning of the MFIA between a person working under a contract for the II and another person, when such other person is a client of the II;

-> enters into transactions in financial instruments that are the subject of the investment research when the person has access to information about the content and conclusions of the research, before disseminating the investment research itself.

(2) This listing is not exhaustive, as long as other situations qualifying as a conflict of interest, may arise in the practice of the II, their settlement will be made in accordance with the provisions of this Policy.

METHODS OF AVOIDING CONFLICTS OF INTEREST AND METHODS OF MANAGING CONFLICTS OF INTEREST

Article 10. The methods by which conflicts of interest are avoided, or when such a conflict has arisen, methods by which fair and equitable treatment of all clients are ensured are:

a) full and prior disclosure of information on potential and specific conflicts of interest by persons working under a contract for the II.

-> The disclosure to clients of a conflict of interest under the MFIA is a measure of last resort applied only in cases where the effective organizational and administrative mechanisms established by the II for the prevention or manage its conflicts of interest in accordance with the MFIA are not sufficient to ensure reasonable assurance that the risks of damaging the clients’ interests will be prevented.

-> The disclosure explicitly states that the organizational and administrative mechanisms established by the II to prevent or manage that conflict are not sufficient to ensure with reasonable confidence that the risks to the client’s interests will be prevented.

-> Disclosure shall include a specific description of the conflicts of interest arising from the provision of investment and/or ancillary services, taking into account the nature of the client to whom the disclosure is made.

-> The description shall contain a sufficiently detailed explanation of the general nature and sources of the conflicts of interest, as well as the risks to the client arising from the conflicts of interest, and the steps taken to limit those risks so that the client can make an informed decision about the investment or ancillary service within the context of which conflicts of interest arise.

-> Excessive reliance on disclosure of conflict of interest is considered to be a deficiency in the II’s conflict of interest policy.

(b) refusal to act in the event of a conflict of interest in cases where the principles set out above cannot be complied with;

(c) avoidance of simultaneous or sequential involvement of one person in the provision of separate investment or ancillary services where such involvement may impair the proper management of conflicts of interest;

d) adherence to the need-to-know principle – exchange of information (about clients’ financial capabilities, portfolio structure, investment intentions, recommendations or investment advice prepared but not disseminated, etc.) between different departments of the II, which exchange may give rise to a conflict of interest and that information may harm the interests of one or more clients- is carried out after consultation with the head of the Internal Control Department and the BD of the II, in compliance with the need-to-know principle;

(e) absence of direct linkage between the remuneration of the persons carrying out mainly one activity and the remuneration of the persons carrying out mainly other activity for the II, or the revenue generated by the latter if a conflict of interest may arise in connection with those activities;

(f) fair determination of the remuneration and any additional payments to persons working under a contract for the II in a manner which does not create preconditions for negligent performance of the functions assigned to those persons.

(g) separate control over persons whose principal functions include the provision of services on behalf of/for the account of clients or the provision of services to clients when conflicts of interests may arise between clients, or which otherwise constitute conflicting interests, between which a conflict may arise, including the interest of the II;

h) prohibition of reconciliation of functions between the persons working under a contract for the II, if such reconciliation creates the preconditions for non-objective and unprofessional performance of the employment duties and could harm the interest of the client.

Article 11. Conflict of interest is managed through the following methods:

1. Disclosure of information by persons working under a contract for the II on:

-> financial instruments held, both directly and through related parties.

-> related parties within the meaning of the MFIA,

-> marital status,

-> qualifying holdings in other participants in the capital market, issuers or public companies,

-> employment or civil relations with other legal entities, clients of the II or its competitors,

-> occupied corporate positions – memberships in the management and supervisory bodies of commercial companies, management of departments or units, as well as any other positions the occupation of which allows taking management decisions.

-> the existence of loans or debt relationships with legal or natural persons, clients of the intermediary or related clients of the intermediary,

-> performing the same activity as the intermediary’s client,

-> receiving undue payments from a third party, if a particular investment or ancillary service is provided to the client (fees, bonuses, incentives, etc.),

-> other circumstances required by applicable law or as specified by an order of the BD.

2. Establishment of an effective internal organization that prevents misuse of information constituting proprietary information within the organizational structure of the II, development and implementation of Chinese wall model. The measures may also include the establishment of an internal control department.

3. Self-withdrawal and abstention to act – when a situation qualifying as a conflict of interest under the MFIA, Regulation 2017/565 and this Policy arises for a person working under a contract for the II in the provision of an investment or ancillary service, such person is obliged to withdraw and not to participate in the decision-making process or in the actions related to the provision of the respective service.

4. Third party evaluation – when a disputed situation qualifying as a conflict of interest under the MFIA, Regulation 2017/565 and this Policy arises for a person working under a contract for the II in the provision of an investment or ancillary service, then the members of the BD of the II have the right to request the evaluation by a third party that will independently assess whether there is a conflict of interest or not, as well as the degree of threatening the interest of a particular client. The evaluation shall be drafted in the form of a protocol stating the respective reasons and conclusion, which shall be provided to the members of the BD.

5. Implementation of separate supervision (through the Internal Control Department) of the persons concerned, whose principal functions are related to the performance of activities on behalf of clients or providing services to clients whose interests may be in conflict or which represent in another way different interests that may be in conflict, including those of the II.

6. Removal of any direct link between the remuneration of relevant persons principally engaged in the performance if a certain activity and the remuneration of other relevant persons principally engaged in other activities, or the revenue generated by such activities, where a conflict of interest may arise in relation to those activities;

7. Taking measures the avoidance or control of the simultaneous or successive participation of a relevant person in particular investment or ancillary services or activities, where such participation may impair the proper management of the conflict of interest.

Article 12.(1) The II applies measures to prevent or limit the possibility of inappropriate influence by any person on the manner in which a person working under a contract for the II provides services and activities under the MFIA.

(2) The measures referred to in the previous subparagraph shall be as follows:

1. Restricting the exchange of computer information between employees, unless it is necessary for the normal and effective provision of services for the account of clients;

2. Restricting the exchange of paper media which may give rise to a conflict of interest, unless the exchange is necessary for the normal and effective provision of services for the account of clients;

3. Signing of privacy statements in accordance with the requirements of the MFIA.

4. Persons working under a contract for the II are prohibited to receive gifts the value of which exceeds the value determined by an order of the Members of the BD.

Article 13. The II maintains records and archives of information, including updates the same, on the types of investment or ancillary services or investment activities performed by it or on its behalf, in which a conflict of interest has arisen – or in the case of an ongoing service or activity – a conflict of interest may arise  resulting in a risk of damaging the interests of one or more clients (detrimental conflict of interest).

VI. MANAGEMENT OF CONFLICTS OF INTEREST IN THE PRODUCTION OF

INVESTMENT RESEARCHES

Article 14. (1) When preparing or organizing the production of investment researches that are intended or may subsequently be make available to the public or to clients of the investment intermediary, under the responsibility of the investment intermediary or member of the group to which it belongs, the II ensures that all measures set out in this policy are applied to the financial analysts involved in the production of the investment research and to other relevant persons, whose responsibilities or business interests may conflict with the interests of the persons to whom the investment research is provided.

(2) The obligation under Paragraph 1 shall also apply to marketing communications.

Article 15 (1) In the cases referred to in the preceding article, the II also ensures that the following additional conditions will be observed:

1. financial analysts and other relevant persons do not enter into personal transactions and do not trade in any capacity other than market-makers acting in good faith and in the ordinary course of business or in the execution of an order of a client, given on their own initiative, on behalf of any other person, including the II, in financial instruments to which the investment research relates, or in related financial instruments based on information about the probable period or content of that investment research that is not accessible to the public or clients and which cannot be easily deduced from the information available to the public or clients until the recipients of the investment research have a reasonable opportunity to act in accordance therewith;

2. in circumstances not covered by Paragraph 1, financial analysts and any other relevant persons involved in the production of the investment research must not undertake personal transactions in financial instruments to which the investment research relates, or in related financial instruments, contrary to the current recommendations, except in exceptional circumstances and with the prior approval to a member of the legal or compliance department of the II;

3. physical separation exists between the financial analysts involved in the production of investment research and other relevant persons whose responsibilities or business interests may conflict with the interests of the persons to whom the investment research is provided, or – when considered not appropriate to the size and organisation of the of the II, as well as the nature, scale and complexity of its business, the establishment and implementation of appropriate alternative information barriers;

4. investment intermediaries, financial analysts and other relevant persons involved in the production of the investment research do not accept inducements from persons having a substantial interest in the subject-matter of the investment research;

5. the investment intermediary, financial analysts and other relevant persons involved in the production of the investment research do not promise the issuers favorable research coverage;

6. before the dissemination of investment research issuers, relevant persons other than financial analysts, and any other persons are not permitted to review a draft of the investment research for the purpose of verifying the accuracy of factual statements made in that research, or for any purpose other than verifying compliance with the firm’s legal obligations, where the draft includes a recommendation or a target price.

(3) For the purposes of this paragraph, ‘related financial instrument’ shall be any financial instrument the price of which is closely affected by price movements in another financial instrument which is the subject of investment research, and includes a derivative on that other financial instrument.

(4) The requirements of Paragraphs 1-2 do not apply when the II disseminate  investment researches produced by another person to the public or to clients, provided that the following conditions are met:

1. the person that produces the investment research is not a member of the group to which the II belongs;

2. The II does not substantially alter the recommendations within the investment research;

3. The II does not present the investment research as having been produced by it;

4. The II verifies that the producer of the research is subject to requirements equivalent to the requirements under this Regulation in relation to the production of that research, or has established a policy setting such requirements.

(5) “Investment research” within the meaning of this Policy shall be a research or other information recommending or suggesting an investment strategy, explicitly or implicitly, concerning one or several financial instruments or the issuers of financial instruments, including any opinion as to the present or future value or price of such instruments, intended for distribution channels or for the public, and in relation to which the following conditions are met:

1. the research or information is referred to as an investment research or in similar terms, or is otherwise presented as an objective or independent explanation of the matters contained in the recommendation;

2. if the recommendation in question were made by an II to a client, it would not constitute the provision of investment advice for the purposes of Directive 2014/65/EU, as implemented by the Markets in Financial Instruments Act.

(6) A recommendation of the type covered by point (35) of Article 3(1) of Regulation (EU) 596/2014 that does not meet the conditions set out in paragraph 1 shall be treated as a marketing communication for the purposes of Directive 2014/65/EU and IIs that produce or disseminate that recommendation shall ensure that it is clearly identified as such.

VIIMANAGEMENT OF CONFLICTS OF INTEREST IN THE PROVISION OF PLACING SERVICES OF FINANCIAL INSTRUMENTS

Article 13. (1) The II, when placing financial instruments, establishes, implements and maintains effective rules for avoiding situations where existing or future relationships have an inappropriate effect on placement recommendations.

(2) The II establishes, implements and maintains internal arrangements that prevent or manage conflicts of interest arising in cases where the persons, responsible for the provision of services to the investment intermediary’s clients, are directly involved  in decisions about recommendations to the issuer client on allocation.

(3) The II must not accept third party payments that are in conflict with the conditions of the inducements obligations set out in the MFIA. In the context of underwriting and placing, the following practices would be considered abusive:

a) an allocation made to incentivise the payment of a large amount of fees for unrelated services provided by the II (‘laddering’). For example, very high rates of commissions paid to the II by an investment client, or an investment client providing very high volumes of business at normal levels of commission as compensation for receiving an allocation of the issue;

b) an allocation made to a senior executive or a corporate officer of an existing or potential issuer client, in consideration for the future or past award of corporate finance business (spinning); and

c) an allocation that is expressly or implicitly conditional on the receipt of future orders or the purchase of any other service from the II by an investment client, or any entity of which the investor is a corporate officer.

(4) The II shall establish, implement and maintain an allocation policy that sets out the process for developing allocation recommendations. This allocation policy shall be provided to the issuer client before agreeing to undertake a placing. The policy shall set out relevant information (to the extent it is known at that stage) about the proposed allocation methodology for the issue.

(5) The II shall ensure the participation the issuer client to participate in discussions about the placing process so that the II can take the interests of the issuer client into account, for example by obtaining the issuer client’s agreement to its proposed allocation per type of client for the transaction in accordance with the allocation policy.

VIII. ADDITIONAL REQUIREMENTS CONCERNING THE CONSULTING, DISTRIBUTION AND PLACING OF OWN FINANCIAL INSTRUMENTS

Article 17. The II shall maintain systems, controls and procedures for the identification and management of conflicts of interest arising from the provision of an investment service to an investment client for participation in a new issue, when the II receives commissions, fees or any monetary or non-monetary benefits in relation to the organization of the issuance.

Article 18. The II, when participating in the placement of financial instruments issued by it or by an entity in the same group, among its clients, or investment funds managed by entities in their group, shall establish, implement and maintain in place these clear and effective rules for the identification, prevention or management of potential conflicts of interest arising in connection with this type of activity. These rules include the possibility of considering the option of abstaining from engaging in the business if conflicts of interest cannot be properly managed  in order to prevent any adverse effect on clients.

(2) Where the disclosure of a conflict of interest is required, the intermediary complies with the requirement that the disclosure of the conflict of interest is a last resort, including to clarify the nature and source of the conflicts of interest inherent in that type of activity, providing information on the specific risks related to these practices to allow clients to make an informed investment decision.

Article 19. The II, where it offers to its clients financial instruments issued by it or by other entities in the group and included in the calculation of the prudential requirements laid down in Regulation (EU) No 575/2013 of the European Parliament, provides those clients with additional information explaining the differences between the respective financial instrument and bank deposits in terms of profitability, risk, liquidity and any protection provided in accordance with the Bank Deposits Guarantee Act.

Article 20. (1) Where an earlier loan or credit granted to an issuer client by the II or an entity in the same group may be repaid with proceeds from the issue, the II shall apply these rules to identify and prevent or manage any conflicts of interest that may be caused by this circumstance.

(2) Where this conflicts of interest policy is insufficient to ensure that the risk of damaging the interests of the issuer client is prevented, the II shall disclose to the issuer client the specific conflicts of interest arising from its activities or from the activities of a group entity acting as lender, and their activities related to offering of securities.

(3) The information on the financial position of the issuer client may be shared with the entities in the group acting as lenders as long as this does not violate the information barriers established by the intermediary to protect the interests of the client. The Client explicitly agrees to this intermediary’s policy.

IX. ADDITIONAL PROVISIONS

§ 1. “Relevant person” in relation to an investment intermediary means any of the following persons:

a) a director, partner or an equal partner, a manager or tied agent of the intermediary;

b) a director, partner or an equal partner, or manager of a tied agent of the intermediary;

c) an employee of the intermediary or tied agent of the intermediary, as well as any natural person whose services are made available and under the control of the intermediary or a tied agent of the intermediary and who participates in the provision of investment services and activities by the intermediary;

d) a natural person directly involved in the provision of services of the II or its tied agent by virtue of an outsourcing agreement for the purposes of providing investment services and activities by the II;

§ 2. “A person with whom a person is a family member” means one of the following persons:

a) a spouse of the relevant person or a partner of that person who under the national laws is the equivalent of a spouse;

b) a dependent child or a step-child of the relevant person;

c) any other relative of the relevant person who shares the same household with that person for at least one year as at the date of the personal transaction in question;

§ 3. A “personal transaction” means a transaction in a financial instrument executed by or on behalf of a relevant person when at least one of the following criteria is met:

(a) the relevant person acts outside the scope of their  professional activities;

(b) the transaction is undertaken on behalf of  any of the following persons:

i) the relevant person,

ii) any person with whom they have a family relationship or with whom they have a close relationship,

iii) a person whose relationship with the relevant person is such that the relevant person has a direct or indirect material interest in the outcome of the transaction other than receiving a fee or commission for the transaction;

§ 4. “Related parties” are two or more natural or legal persons that are connected by:

a) a participation which is the direct or controlling holding of 20 or more than 20 per cent of the voting rights or of the capital of the company;

b) control which a parent exercises over a subsidiary under the Accountancy Act or similar relationship between a natural or legal person and a company, and each subsidiary of a subsidiary is also considered to be a subsidiary of its parent undertaking which is at the head of the group of these subsidiaries;

c) a permanent relationship between the two persons or all of them with the same person through control.

§ 5. Terms that are used in the Policy but are not defined in these Additional Provisions are used in the meaning attributed to them in the MFIA and Commission Delegated Regulation (EU) 2017/565.

X. FINAL PROVISIONS

1. The members of the BD of II shall review and assess on an annual basis the compliance of this Policy with the services and activities performed by the II, and in case of incompleteness and / or need for improvement of the internal organization, adopt amendments and supplements to the Policy. Notwithstanding the requirement under the preceding sentence, the Governing Body shall adopt amendments to this Policy when deemed necessary to do so.

2. This Policy is provided for information and implementation to the members of the BD of the II, as well as to all persons working under contract for it.

3. This policy is also applicable to the tied agents appointed by the II, if any.

4. This Policy was adopted by the Board of Directors of Financial House Ever Inc. on 31 January 2020.

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