Regulatory obligations

In accordance with Article L.533-22-1 of the French Monetary and Financial Code, SEVEN CAPITAL MANAGEMENT informs you that it is takes environmental, social and environmental criteria into consideration in its research, but these are not used as filters in its investment method.

BEST SELECTION POLICY

The best selection policy has been established by SEVEN CAPITAL MANAGEMENT in accordance with the requirements of the European Markets in Financial Instruments Directive (2004/39/EC of 21 April 2004, hereinafter referred to as “MiFID”), which entered into force on 1 November 2007 and was transposed into French law within the Monetary and Financial Code and the AMF General Regulations.

When executing orders, investment service providers must take all reasonable measures to obtain the best possible outcome for their clients. This is referred to as the “best execution” obligation.

SEVEN CAPITAL MANAGEMENT does not execute its orders directly. Rather, it forwards them to certified market intermediaries for execution. In doing so, it is held to a “best selection” obligation.

When SEVEN CAPITAL MANAGEMENT issues an order for its management of collective investments, it must take all reasonable measures to obtain the best possible execution with regard to the execution factors and criteria as defined by current regulations.

SEVEN CAPITAL MANAGEMENT guarantees the best execution of orders by selecting the entities in charge of executing its orders on the basis of the following criteria:

• price of the financial instrument;
• execution cost;
• execution speed;
• liquidity of the execution venue.

The implementation of these criteria by the selected intermediaries is described in the best execution policy and are reviewed beforehand by SEVEN CAPITAL MANAGEMENT.

SEVEN CAPITAL MANAGEMENT monitors the efficiency of its mechanism for selecting the entities in charge of executing orders with a view to detecting any shortcomings and to rectifying such shortcomings, if any. SEVEN CAPITAL MANAGEMENT reviews its policy for selecting intermediaries on an annual basis.

This execution policy applies to all UCITS managed by SEVEN CAPITAL MANAGEMENT and whatever the financial instruments used.

As SEVEN CAPITAL MANAGEMENT is not a member of the market, it does not execute its own orders on the financial markets. Orders are transmitted and placed with third parties for execution, namely French brokers, intermediaries and authorized counterparties.

Report on intermediation costs

In accordance with Article 321-122 of the AMF General Regulations, SEVEN CAPITAL MANAGEMENT reports on intermediation fees if such fees amounted to more than €500K during the previous financial year.

The Chief Compliance Officer is in charge of drawing up this report and updating it annually. He is also in charge of ensuring that it has been disseminated on the company’s website and for inserting a reference to it in the performance report of each collective investment managed.

VOTING POLICY

As an investment management company certified by the AMF under number GP-0600004, SEVEN CAPITAL MANAGEMENT has established a policy that states the conditions under which it intends to exercise the voting rights embedded in the listed securities held by the collective investments governed by French law which it manages, during annual general meetings of shareholders.

The policy established and updated as needed complies with Articles 321-132 et seq. of the General Regulations of the French Financial Markets Authority (AMF).

Obligation to exercise voting rights

The Investment Management Companies possesses a staff in charge of:

• reviewing the resolutions submitted by the managers of listed companies in which house funds are invested;
• participating in the annual general meetings of listed companies held in the portfolio and exercising the voting rights attached to the securities of listed companies.

The management team may either be represented or vote by mail.

Persons authorised to exercise voting rights by SEVEN CAPITAL MANAGEMENT are:

• SEVEN CAPITAL MANAGEMENT senior managers;
• Members of SEVEN CAPITAL MANAGEMENT’s investment management team who have been empowered to do so by the senior managers.

Principles determining the cases in which the investment management company exercises voting rights

Voting rights are exercised when the investment management company, through the collective investments that it manages, holds more than 2% of a company’s shares or voting rights.

Below this threshold, the investment management company’s stake is not sufficiently influential to effectively defend fund holders’ interests, and exercising voting rights would incur costs that would be prohibitive compared to the value that the vote is meant to provide for fund holders.
Regarding foreign securities, SEVEN CAPITAL MANAGEMENT reserves the right to raise said threshold from 2% to 5%. Such a decision is justified by the difficulties in determining the dates of the annual general meetings, in procuring the documents necessary for voting on resolutions, and in analysing such resolutions in a foreign legal and regulatory context.

SEVEN CAPITAL MANAGEMENT exercises its voting rights with due consideration to the recommendations of the French Financial Management Association (AFG).

Justification is provided for all votes or abstentions for each draft resolution, particularly with regards to resolutions pertaining to:

• changes in company by-laws;
• approval of the accounts and allocation of income;
• appointment and dismissal of corporate officers;
• regulated agreements;
• issuing and redeeming equity securities;
• appointing statutory auditors;
• other resolutions in which SEVEN CAPITAL MANAGEMENT wishes to take part.

Potential conflicts of interests that might affect the free exercise of voting rights are governed by the procedure for preventing and managing conflicts of interests.

Conflicts of interests

Generally speaking, SEVEN CAPITAL MANAGEMENT relies on a mechanism and an organisational set-up allowing it to govern potential conflicts of interests and to manage such conflicts when they do occur.

Hence:

• SEVEN CAPITAL MANAGEMENT is an investment management company that is fully independent and owned by its managers; it depends on no financial establishment with multiple activities that could lead to conflicts of interests.
• Moreover, all company employees are subject to strict compliance rules regarding personal financial transactions.

1. Employees share declare each year any securities accounts opened in their name with a third party or on which they act as proxy.
2. Transactions carried out are reported as they are made and are subject to ex-post inspections by the Chief Compliance Officer.

SEVEN CAPITAL MANAGEMENT exercises special care in risks of conflicts of interests arising from corporate posts and external positions held by employees of the investment management company. Such corporate posts and external positions require the prior approval of the Chief Compliance Officer.

The Chief Compliance Officer undertakes, on a fully independent basis, regular inspections of the enforcement of these provisions, particularly regarding employees’ personal transactions, as well as corporate posts and external positions held by employees and ensures that no situation is likely to affect the company’s free exercise of voting rights.

How voting rights are exercised

SEVEN CAPITAL MANAGEMENT prefers to vote by mail but, depending on the circumstances, reserves the right to vote in person at annual general meetings or by empowering the company chairman to vote on its behalf or, on an exceptional basis, by proxy.

POLICY FOR MANAGING CONFLICTS OF INTERESTS

In accordance with the European Markets in Financial Instruments Directive (MiFID), which entered into force on 1 November 2007, SEVEN CAPITAL MANAGEMENT has formalised a policy for managing conflicts of interests and has established special provisions in terms of organisation (means and procedures) and inspections in order to prevent, identify and manage conflicts of interests that could undermine the interests of its clients.
With this in mind, SEVEN CAPITAL MANAGEMENT takes utmost care in protecting its clients’ interests.

The purpose of this policy is to lay out the main measures for achieving this objective of managing conflicts of interests. However, if conflicts of interests do arise, they shall be managed in the client’s interest in an equitable manner and while providing said client full and relevant information.

With this in mind and depending on the conflict of interests, SEVEN CAPITAL MANAGEMENT shall:

• execute the activity or operation to the extent that its organisational set-up can manage the potential conflict of interests in an appropriate manner;
• inform the client in the event that any conflicts of interests persist and provide him with the necessary information on their nature and origin;
• where applicable, refrain from executing the activity or operation leading to a conflict of interests.

SEVEN CAPITAL MANAGEMENT must manage all conflicts of interests, from detection to suitable processing.

For this purpose SEVEN CAPITAL MANAGEMENT has set up an organisation allowing it:

• To prevent conflicts of interests from arising, by making all employees aware of the in-house and local market rules and codes of good conduct and by setting up strict rules and procedures, including:

1. an internal system of checks;
2. separation of roles that might generate conflicts of interests;
3. ensuring on an ongoing basis that  SEVEN CAPITAL MANAGEMENT’s offering does meet clients’ expectations and profiles and is never at odds with their needs; from this point of view, forced sales of products or services constitute professional misconduct;
4. banning personal market transactions that fail to comply with the company’s rules;
5. training and making all employees aware of good professional practices;

• To draw up a map of conflicts of interests risks in order to identify situations of conflict of interests that could harm clients’ interests.

This map shall state the types of activities for which a conflict of interests is likely to arise. One of the roles of SEVEN CAPITAL MANAGEMENT’s Chief Compliance Officer is to ensure that this map is updated regularly.

• To manage potential conflicts of interests:

1. Inform clients fully and objectively, while refraining from using biased arguments while pointing out the constraints and risks related to certain products and transactions;
2. Report gifts and benefits to the Chief Compliance Officer based on SEVEN CAPITAL MANAGEMENT’s rules;
3. Report potential conflicts of interests as soon as they arise, in which employees may find themselves to the Chief Compliance Officer, who will see to the resolution of the conflict with the persons concerned.

COMPENSATION POLICY

To find out more about the employee compensation policy, download the pdf file.

PROCESSING CLAIMS

This section has been included in accordance with Article 321-40 of the General Regulations of the French Financial Markets Authority (AMF) and AMF Instruction n° 2012-07. It is meant to inform SEVEN CAPITAL MANAGEMENT’s clients of the procedure for processing claims that the Investment Management Company has put into place. Only those statements pertaining to client dissatisfaction with Seven Capital Management are concerned. Requests for information, advice, clarification, and service are not included. The company’s person in charge of processing claims is Mr Johann Schwimann, Chairman.

To find out more about the claim processing policy, download the pdf file.

ESG criteria

Article 173 of the Law on the Energy Transition for Green Growth (n°2015-992) of 17 August 2015 amends Article L. 533-22-1 of the French Monetary and Financial Code, which now provides that “investment firms shall disclose to subscribers of each of the funds that they manage, information on how the firm’s investment policy complies with social, environmental and governance objectives. Firms shall describe the nature of these criteria and the manner in which they apply them, based on a sample presentation set by ministerial order. They shall indicate how they exercise the voting rights attached to the financial instruments resulting from these choices”.

a. General procedure for taking ESG criteria into account

Although well aware of these issues, Seven CM does not currently take environmental, social and governance (ESG) criteria into account in the delegated management process of its funds. Seven CM reserves the right to modify this position and to later opt for a commitment in favour of these criteria.

b. Content, frequency and forms of disclosure used

Upon request, Seven CM discloses information on how it takes environmental, social and governance (ESG) criteria into account and includes such information in its annual report.

c. Funds concerned by ESG criteria

Accordingly, the SICAV funds managed by Seven CM are not required to disclose ESG information, as they do not take ESG criteria into account.