HIGHNESS CAPITAL RELATIONSHIP DISCLOSURE INFORMATION (RDI)
Highness Global Capital Inc. (Highness Capital) would like to share the following Relationship Disclosure Information (RDI) with you that we think you would consider important about your relationship with us. If any of the information below raises any questions or concerns, please ask for clarification. Some of the information you may be interested in are incorporated in the RDI by reference and can be provided upon request. We ask that you read the RDI carefully and acknowledge receipt by signing the RDI and returning it to us before you make an investment. We will advise you in a timely manner if there are any significant changes to the RDI. A current copy of the RDI can be found on our site at highnesscapital.com.
OUR SERVICES, OUR CLIENTS and OUR FEES
Local Dealer to Global Managers. Highness Capital is designed to be the leading global placement agency firm in Canada offering local dealer services as an Exempt Market Dealer (EMD) to global alternative investment managers or non-Canadian issuers. Highness Capital will assist these issuers on how to navigate through the Canadian regulatory landscape in terms of regulatory updates, compliance, suitability, collection of data and completion of documentation. We will help facilitate investments from Permitted Clients who will complete certifications of eligibility and provide supporting evidence.
Highness Capital will only work with established global managers who have engaged independent and reputable Canadian legal counsel. These managers will comply with applicable regulatory requirement including the filing of required notices and exemptions. We will require managers to make an annual certification of compliance that they are abiding by all applicable Canadian rules and regulations.
Highness Capital is a predominantly referral-based business working with prestigious global service providers including law firms and prime brokers and direct referral sources such as investment fund managers and investors. This is a fee for service model paid by the global managers. As a local dealer, we will not charge the investor any fees.
Sophisticated Capital Liaison. From time to time, Highness Capital will act as a sophisticated capital liaison by introducing special investment opportunities (select exempt products such as funds, private deals, etc.) to specific eligible investors including ultra-high net worth investors (UHNW), family offices (FO) and institutional investors. These investors will generally satisfy Accredited Investor and Permitted Client exemptions. We will not introduce products offered by prospectus that are not exempt products.
Highness Capital performs Know Your Product (KYP) activities, qualitative due diligence and appetite assessments before clients are introduced to any third-party products. While Highness Capital may liaison the introduction to third-party products, Highness Capital will not be affiliated or otherwise tied to any of these third parties or their products. While we will introduce products to prospective investors, we will not be advising or trading on behalf of the prospective investor. This arm’s length relationship reduces conflict of interests. Generally, relationships with third parties will be non-exclusive.
Should Highness Capital engage in introduction services, it will be with full transparency and in accordance with the rules around referral arraignment including the provision of a Referral Arrangement Disclosure Form (RAD). In most cases, Highness Capital is compensated by the issuer after a successful introduction has been made and an investor’s investment has been processed. Any changes to RAD will be disclosed to the client within 30 days before next referral fee is paid to Highness Capital. We do not expect the investor to pay us any fees.
Once an investment is made, the issuer or manager of the product introduced will provide ongoing reporting to investors and manage the client account. Our role will be transactional in nature and not ongoing. Investors will receive regular client statements and reports from the referred party. The issuer of the exempt security that we introduced will hold the assets in the client’s accounts.
For client accounts where Highness Capital is the sole EMD on record, it will abide with required delivery of client conformations and statements as per section 14 of NI 31-103. As Highness Capital does not hold any client accounts and does not participate in any ongoing transactions for the client, the reporting will be restricted to transactional information (not account balances) upon investment.
KYC AND SUITABILITY
Highness Capital will perform Know Your Client (KYC) to confirm client eligibility and has an obligation to conduct other applicable suitability assessments. A large amount of personal and financial information will be requested prior to a transaction including ID, personal financial information, supporting documents and corporate materials. In assessing suitability, we will consider your age, income, investment knowledge, investment objectives, time horizon, risk tolerance, net worth and personal circumstances.
KYC information including verification of identity will be collected to satisfy securities, banking and anti-money laundering, anti-terrorist financing rules and regulations. The collected information will be reviewed and updated regularly to ensure accuracy and validity. We rely on you to provide accurate and up-to-date KYC information. Please keep us apprised of any changes to your information.
Permitted Clients will have the option to sign a Waiver of Permitted Client to indicate that they do not require Highness Capital to comment on the suitability of their investment.
WHAT WE DO NOT DO
Highness Capital is registered in a single investment category as an EMD. Highness Capital does not produce, manufacture, distribute or otherwise promote its own products. Highness Capital will not be allocating amongst clients, trading on behalf of investors or offering investment advice to any prospective investor. We do not manage nor have any discretion over any client accounts.
While the principal of the firm is a licensed lawyer, Highness Capital does not offer legal, securities or other advice to clients about their financial needs or circumstances. Highness Capital does not offer ancillary corporate services such as tax planning, estate planning, succession planning or other financial planning.
Highness Capital will not hold or have access to any client’s funds or to any securities in safekeeping on behalf of clients. Any ‘client-files’ maintained at the head office will be for reference only and simply hold information.
All investments have certain risks. Clients are expected to review the offering documents and marketing materials of any third-party product that elaborate on risks, terms and conditions, and rights and duties. In the exempt market, these product materials and risk documents are not reviewed by regulators prior to distribution. An issuer that is a non-reporting may engage in less reporting to investors than reporting issuers.
There is a wide array of risks that must be considered for third-party products we may introduce. Exempt products do not have the benefit of bank deposit insurance or protection by the Canadian Investor Protection Fund/Investor Protection Corporation. Exempt products may be less liquid than other investments including publicly listed securities and there may be risks relating to small companies. If the opportunity is early stage or with a small firm, there may be emerging manager risk or key person risk that should be considered. Investors (with the assistance of their independent advisors) will need to assess the merits of the prospective investment. Other risks you may need to consider are those that pertain to credit, concentration, currency, foreign investments and interest rates.
There is no guarantee of performance. This means that we cannot guarantee a success (profit), that you will recoup your principal investment or that you will be able to repay borrowed funds used to make the investment. There are many other affiliated risks with borrowed funds should be considered including (but not limited to): interest rate risk, market risk and tax risk.
Please take a careful look at the risk disclosed in the issuer’s offering documents and marketing collateral. Please also refer to issuer’s information for a discussion on benchmarks and relative performance.
OUR AFFILIATED FIRM
The principal of Highness Capital owns and operates a global advisory firm, Highness Global Inc. (Highness Global). As a Bespoke Business Ambassador™ Highness Global strategically tailors its services to help businesses and individuals grow. While Highness Global is industry agnostic it will not focus on capital markets players, global alternative investment managers or Canadian institutional investors. In short, the business model, firm objectives and/or clientele of Highness Global do not overlap in any way with Highness Capital. There will be no competing interests of clients. To assure you that we are fully committed to serving and protecting our clients, we have developed a dedicated Conflict of Interest Policy documented in Highness Capital’s Policies and Procedures Manual (available upon request). All outside business activities and shareholdings have been disclosed to the regulators.
Highness Capital does not have any other related or connected issuers.
OTHER POTENTIAL CONFLICTS OF INTEREST
Highness Capital expects that all employees will avoid any activity, interest or association which might interfere or give the perception of interference with the best interests of the firm, its clients and the public. We will also avoid any situation in which our personal interests conflict with their duties at the firm including certain outside business activities and shareholdings. Our code of ethics sets standards of business conduct.
Highness Capital does not engage activities requiring consideration of best execution, fair allocation or soft dollar arrangements. We may operate in shared premises, but we will implement safeguard and privacy measures to ensure we continue to abide by the Highness Capital Privacy Protection Policy and Confidentiality Policy.
We have considered other conflicts and have not identified anything else to disclose. We will be mindful and do our best to avoid taking any action we take that benefits us as your expense. Should a questionable situation arise, we will assess the situation to identify the potential conflict, determine the level of risk and respond appropriately.
Highness Capital has procedures that sets out how complaints are dealt with and to ensure they are addressed in a fair and prompt manner. Complaints can be filed with us by contacting our office by mail, phone or email at email@example.com. If you have a complaint about a product that we have introduced you to or a third party, we may need to direct your complaint to another individual or firm who can better assist you. We recommend that you make complaints in writing with the provision of as much detail as possible. In addition to the internal complaint mechanism, the Ombudsman for Banking Services and Investments (OBSI) is also an available avenue for investors to pursue. The OBSI is a free service and can be accessed by calling 1.888.451.4519.