MFIDRPU Disclosure

Introduction

The Financial Conduct Authority (“FCA” or “regulator”) in the Prudential sourcebook for MiFID Investment Firms in the FCA Handbook (“MIFIDPRU”) sets out the detailed prudential requirements that apply to 3W Equity Ltd Limited (“Traditum” or the “Company”). Further to those prudential requirements, Chapter 8 of MIFIDPRU (“MIFIDPRU 8”) sets out public disclosure rules and guidance with which the Company must comply, Traditum is classified under MIFIDPRU as a small and non-interconnected MIFIDPRU investment firm (“SNI MIFIDPRU Investment Firm”). As such, the Company is required by MIFIDPRU 8 to disclose information regarding its remuneration policy and practices.

The purpose of these disclosures is to give stakeholders and market participants an insight into the Company’s culture and to assist stakeholders in making more informed decisions about their relationship with the Company.

This document has been prepared by Traditum in accordance with the requirements of MIFIDPRU 8 and is verified by the Management Body (as defined in the FCA Handbook). Unless otherwise stated, all figures are as at the Company’s 31 January financial year-end.

Remuneration Policy and Practices

As an SNI MIFIDPRU Investment Firm, Traditum is subject to the basic requirements of the MIFIDPRU Remuneration Code (as laid down in Chapter 19G of the Senior management arrangements, Systems and Controls sourcebook in the FCA Handbook (“SYSC”)). The purpose of the remuneration requirements is to:

• Promote effective risk management in the long-term interests of the Company and its clients;
• Ensure an appropriate relationship between risk and individual reward;
• Support positive behaviours and healthy firm culture; and
• Discourage behaviours that can lead to misconduct and poor client outcomes

The objective of Traditum’s remuneration policies and practices is to establish, implement and maintain a culture that is consistent with, and promotes, sound and effective risk management and does not encourage risk-taking which is inconsistent with the risk profile of the Company and the services that it provides to its clients.

In addition, Traditum recognises that remuneration is a key component in how the Company attracts, motivates, and retains quality staff and sustains consistently high levels of performance, productivity, and results. As such, the Company’s remuneration philosophy is also grounded in the belief that its people are the most important asset and provide its greatest competitive advantage.

Traditum is committed to excellence, teamwork, ethical behaviour, and the pursuit of positive outcomes for its clients. From a remuneration perspective, this means that performance is determined through the assessment of various factors that relate to these values, and by making considered and informed decisions that reward effort, attitude, and results.

Characteristics of the Company’s Remuneration Policy and Practices

Remuneration at Traditum is made up of fixed and variable components. The fixed component is set competitively, in line with the market, and at a level to attract and retain skilled staff. Variable remuneration is paid on a discretionary basis only and takes into consideration the Company’s financial performance as well as the financial and non-financial performance of the individual in contributing to the Company’s success. All staff members are eligible to receive variable remuneration.

All employee remuneration is formed of a fixed component, or ‘base salary’, and a variable component, or ‘discretionary’. bonus. Fixed remuneration is permanent, pre-determined, non-discretionary, and except for the case of termination of employment, non-revocable. Due consideration is given to market practice to ensure competitive, but not excessive, base salaries are set, reflective of individual experience, qualifications, expertise, and role.

The discretionary bonus is based on several factors, including corporate and individual performance and an individual’s regulatory conduct and investment and client servicing performance throughout the year. Ultimately, the payment of any discretionary bonus is subject to the discretion of management. By ensuring that the fixed element of remuneration is sufficient and the discretionary bonus is not solely linked to performance, the Company seeks to minimise excessive risk-taking by its employees and encourages them to act with integrity. This also allows for the possibility of paying no variable remuneration component, which the Company would do in certain situations, such as where the Company’s profitability performance is constrained, or where there is a risk that the Company may not be able to meet its capital or liquidity regulatory requirements.

Governance and Oversight

The Remuneration Committee is responsible for setting and overseeing the implementation of Traditum’s remuneration policy and practices. To fulfil its responsibilities, the Remuneration Committee:

• Is appropriately staffed to enable it to exercise competent and independent judgment on remuneration policies and practices and the incentives created for managing risk, capital, and liquidity.
• Makes decisions regarding the structure of remuneration, including decisions that have implications for the risk and risk management of the Company.
• Ensures that the Company’s remuneration policy and practices consider the long-term interests of shareholders, investors, and other stakeholders in the Company.
• Ensures that employees receive training on the importance of avoiding conflicts of interest.
• Ensures that the overall remuneration policy is consistent with the business strategy, objectives, values, and interests of the Company and of its clients.

Traditum’s remuneration policy and practices are reviewed annually by the Management Body/Remuneration Committee.

Quantitative Remuneration Disclosure

For the financial year 1 February 2022 to 31 January 2023, the total amount of remuneration awarded to all staff was £634k of which £634k comprised the fixed component of remuneration, and £NIL comprised the variable component. For these purposes the definition of ‘staff’ is defined to include employees of the Company itself and directors.

This document outlines Traditum’s approach to Shareholder Engagement. It is required by Article 3g of the European Shareholder Rights Directive II (SRD II), as amended, and COBS 2.2B of the FCA Handbook. Traditum has adopted a proportionate approach as the firm is a sub-threshold (not full-scope) AIFM and has not yet initiated its discretionary portfolio offering.

The Shareholders Rights Directive II aims to promote effective stewardship and long-term investment decision making by enhancing the transparency of asset managers’ investment strategies. An engagement policy should describe how an asset manager monitors investee companies on relevant matters, conducts dialogues with investee companies, exercises voting rights and other rights attached to shares, cooperates with other shareholders, communicates with relevant stakeholders of the investee companies and manages conflicts of interests.

It should be noted that Traditum and its clients are only investing in unquoted companies where Traditum has been instrumental in helping to raise funds for the investee company. As such, Traditum is closely involved in monitoring the way in which management of investee companies are meeting the agreed targets and metrics and will often have a director on the Board of the investee company to protect the rights of the investors it has placed in the company, either via the vintages of its collective undertaking, its discretionary portfolios of private equity investments or via direct execution only transactions.

Monitoring of Investee Companies

Prior to investing, the Investment Director assesses the business model, competitive position, key risks, management and culture of an organisation. This typically includes a detailed review of financial history, current trading and management forecasts.

The Investment Director typically takes a board seat with the portfolio company and monitors the performance of the business against the investment plan on a monthly basis, if not more frequently where the Investment Director is actively engaged in assisting the portfolio company deliver specific projects.

There is a formal review of the portfolio companies at least once a quarter by the Investment Director, CEO of the portfolio company, and Traditum’s CEO. In advance of this meeting the Investment Director will outline the performance of the portfolio company relative to its Investment Plan, derived at the time of Investment, along with any relevant developments, including any changes to the Investment Plan

There is no specific monitoring of social and environmental impact.

Dialogue and Escalation

A key part of Traditum’s investment process is to assess the management and culture of companies, drawing on its own experiences with the company, publicly available materials such as annual reports, reviews from customers and current/former employees and meetings/dialogue with management.

The dialogue is first to determine whether the investee company is a sustainable and scalable investment proposition that is deemed appropriate to present to Traditum’s investor base. If the company does pass this assessment by Traditum then Traditum will work with the company to establish broad parameters for an investment including, but not limited to, agreeing a valuation for the company, funding requirement and key investment terms.

On an ongoing basis the Traditum team review key metrics and the progress of the business plan, engaging in regular dialogue with senior management and offering support and advice where necessary.

If Traditum considers material weaknesses exist in the management and culture of a company, these will be discussed with Traditum’s invested clients and the company may not be presented to Traditum’s investors for further investment.

Traditum believes that growth companies often require more than just new capital to deliver their growth plans for the business Traditum’s hands-on engagement, including having a director on the Board, is designed to counter this problem.

Proxy Voting

Traditum takes fiduciary duty seriously and votes to create long term stakeholder value over the life of the investment holding period.

Traditum expects to vote on mandatory corporate actions in the best interest of the underlying beneficial shareholders unless there is a plan to sell the company or any interest in it immediately. Traditum will consider the specifics of each situation and apply considered judgement.

Cooperation With Other Shareholders

Traditum is potentially limited by concert party rules however is open to cooperation with other shareholders, where this is likely to be in the best interests of investors.

Often Traditum’s collective undertaking or its individual investors for whom it acts will hold a significant minority equity stake in the business. Where Traditum does not hold majority voting rights Traditum will obtain specific legal controls that will protect Traditum’s minority position.

Communication with Relevant Stakeholders

Traditum has significant and unfettered to management, in most cases through having a member of Traditum staff as a Board member.

Access is unfettered given the reliance the investee company places on Traditum being able to support the business case and acquire interested and suitable investors.

Conflicts of Interest

Traditum has a company-wide policy on Conflicts of Interest and Personal Account Dealing. All employees are required to comply with these policies, and we have in place arrangements to prevent or manage any conflicts identified. A copy of our conflicts policy is available to clients on request.

Disclosure

This document will be reviewed at least annually and on any material change in Traditum’s business model.

Reviewed June 2023 (IJM/GDT)