RELATIONSHIP DISCLOSURE INFORMATION
GENERAL
The Ontario Securities Commission requires that we provide all of our clients with this Relationship Disclosure Information (“RDI”) which is designed to help clients of RealShare Inc. (“RealShare”) clearly understand the nature of the services that are provided by RealShare, and the necessary elements of satisfactory ongoing relationship. RealShare will take reasonable steps to advise you of any significant changes to the information in the RDI in a timely manner.
REGISTRATION
RealShare is registered as an Exempt Market Dealer (“EMD”) for tokenized securities offerings in Ontario, Alberta, British Columbia and Manitoba. RealShare sells exempt market securities of issuers (each an “Issuer") over the internet through the RealShare Platform (the “Platform”).
PRODUCTS AND SERVICES
RealShare presents a unique approach to real estate investment through its secure and convenient online Platform along with its commitment to a high standard of client care.
RealShare sells tokenized securities of related, unrelated or connected Issuers who are investors in the commercial real estate market to individuals and corporations (i.e., accredited investors and/or permitted client) that can rely on an exemption provided under National Instrument 45-106 –Prospectus Exemptions, or other available exemptions, if applicable. RealShare may sell the securities of Related Issuers and/or Connected Issuers (as defined below) - the securities that RealShare sells are not offered by prospectus.
Members of the RealShare team may contact you to assist with requests like account opening, transfers and other account maintenance/Platform-related issues.
Related Issuers and Connected Issuers of RealShare
RealShare is obligated to inform its clients of the relationship or connection between RealShare and the Issuer of the securities it offers. RealShare may, from time to time, offer securities of Related Issuers and Connected Issuers which can be viewed as proprietary products. Under all circumstances, RealShare will deal fairly, honestly, in good faith with and in the best interests of its clients.
A person or company is a “Related Issuer” to RealShare if, through the ownership of or direction or control over voting securities or otherwise, the person or company is an influential security holder of RealShare, RealShare is an influential security holder of the person or company, or if each of them is a Related Issuer of the same third person or company.
A person or company is a “connected issuer” to another person or company if, due to its relationships with such person, a prospective purchaser of securities of the person or company might question the other person or company’s independence from the first person or company.
Further details regarding Issuers related to RealShare’s are [detailed below/attached hereto as Appendix A] and are also available in each Issuer’s respective offering documentation and/or within the Issuer’s profile on the Platform.
Related Issuer or Connected Issuer
Feed Income Fund (the Fund)
Details Regarding The Relationship
RealShare and Freed Income FND GP Inc. (the General Partner of the Fund), are ultimately controlled by the same individual and Mr. Peter Freed acts as a Director of RealShare and the Fund.
Start Date 17th April 2023
A “related registrant” is a registered adviser or dealer under securities legislation that has a principal shareholder, director or officer that is a principal shareholder, director or officer of RealShare. As of today’s date, RealShare. has no related registrants.
RISKS
General Risks
It is important to be aware of the potential for risk inherent in investing in the capital markets. Generally, investments are not guaranteed. Factors that may affect the value of your investments include general economic factors; market and business conditions; fluctuations in securities prices, interest rates, and foreign currency exchange rates; changes in government regulations; and catastrophic events.
On a personal level, investment decisions should be based on what is suitable for your circumstances. RealShare recommends an investment to you by examining your financial circumstances, risk tolerance and your investment needs and objectives. We are required to determine that holding exempt market securities through the RealShare Platform is appropriate for you and as such we must put your interests first.
Clients may or may not borrow to invest in a financial transaction. There are certain risks involved in using borrowed money to finance the purchase of a security. If you borrow money to purchase securities, your responsibility to repay the loan and pay interest as required by its terms remains the same even if the value of the securities purchased declines.
Generally, one should only borrow to invest if:
You are comfortable with taking risk.
You are comfortable taking on debt to buy investments that may fluctuate in value.
You are investing for the long-term.
You have a stable income.
As an EMD, there are risks associated with exempt market securities some of which are listed herein below:
Exempt market securities may not be listed on any stock exchange that could restrict your ability to resell them. There could be a lockup period that applies to the security that restricts you from trading, selling or transferring the security.
Exempt market securities are generally not covered by deposit or investor protection insurance;
Securities Regulators do not review offering memoranda for completeness;
Non-Reporting Issuers are not subject to the same ongoing disclosure obligations as reporting issuers. Issuers of exempt market securities (i.e., Non-Reporting Issuers) generally do not have to file a prospectus (a prospectus describes the investment in detail and gives you some legal protections). Furthermore, Non-Reporting Issuers are not obligated to publish financial information or notify the public of changes in its business.
There is a risk that the Issuer will be unable to meet interest and principal payments on its obligations on a timely basis.
There are no assurances that an investment will maintain its net acquisition value or produce any projected income or capital return. Investment values can frequently fluctuate, and past performances may not be repeated.
Security-Specific Risks
Given the nature of RealShare’s business model, there are certain risk factors which can affect the value of a specific investment holding such as:
Real Estate Industry Investment Risk
Real estate investments are generally subject to varying degrees of risk depending on the nature of the property. Such risks include the highly competitive nature of the real estate industry, changes in general economic conditions (i.e., availability and cost of mortgage funds), local conditions (i.e., the supply of office, industrial, retail space or warehousing or the demand for residential real estate in the area and thereby the prices at which serviced lots and parcels may be sold), government regulation and changes therein (i.e., planning, zoning, taxation of property and environmental legislation), changes in governments and the political environment in the applicable jurisdictions, competition from other available properties and the attractiveness of the property to potential purchasers, including builders. In addition, each segment in the real estate industry is capital intensive and is typically sensitive to interest rates and general economic conditions.
Risks Associated with Real Property
All real property investments are subject to elements of damage and destruction such as fire, flood, and casualty as a result of natural disasters, criminal acts, or negligence that may result in significant losses for your investment holdings.
The risks highlighted above are not conclusive. Risk disclosures specific for each offering are reviewed by RealShare and are presented within the offering memorandum or other offering documents for the issuance.
Offering documents and the risks associated with the securities of an Issuer contained therein should be reviewed thoroughly by an investor or an investor’s professional advisors before making any investment through RealShare.
KNOW YOUR CLIENT OBLIGATIONS (“KYC”) AND INVESTOR SUITABILITY
RealShare is obligated to ensure the proposed investment is suitable for you. To assess the suitability of proposed investments, RealShare will obtain information relating to your investment objectives, risk tolerance, investment knowledge and financial situation.
The cornerstone of our relationship with you is the Know Your Client Form (KYC Form).
We are required to obtain the following information before we open an account for you, in order to:
1. Establish your identity
2. Establish whether you are an insider of a publicly traded company
3. Ensure that we have adequate information regarding your personal circumstances to satisfy the required suitability determinations which includes assessing your financial circumstances, investment needs and objectives, investment knowledge, risk profile and investment time horizon.
For non-individual clients, we are required to verify the legal name of the entity, the type of legal entity, formation details, information about the beneficial owners of 25% or more of the shares or units of the legal entity etc.
On an annual basis, or on an ad hoc basis, as required, we will update your KYC information to ensure that it has current information to make suitable investment decisions for you which act in your best interest.
It is important for us to have current KYC information to ensure that we can accurately assess suitability for you. Therefore, if there are any significant changes to your circumstances, please inform us so that we may update your KYC documentation accordingly. A significant change is a change that affects your personal or financial situation, your investment needs and objectives, your risk profile or your investment time horizon, as well as any change that can reasonably be expected to have a significant impact on your net worth or on your income since the last update of your file.
We are not responsible for any losses you may incur as the result of your failure to do so.
Trusted Contact Persons and Temporary Holds
For individual clients, we will ask you for the name and contact information for a trusted contact person (“TCP") to assist us in protecting your investments with RealShare. We will also obtain your consent to contact your TCP in certain circumstances. A trusted contact person is generally someone we can reach out to if there are concerns about your possible financial exploitation or concerns about your mental capacity as it relates to your ability to make decisions involving financial matters.
Additionally, should we reasonably believe that you are in a vulnerable position, that you are/or are at risk of being financially exploited or that you are experiencing diminished mental capacity which may affect your ability to make financial decisions relating to your investment(s) with us, we may place a temporary hold on a particular transaction. If we place a temporary hold on a particular transaction, we will document all relevant details regarding the matter will provide you with notice, either written or verbal, explaining our reasons for the temporary hold, and at least every 30 days thereafter until the temporary hold is revoked. We may also contact your Trusted Contact Person about a temporary hold.
CLIENT’S ACCOUNT WITH REALSHARE
A client’s account with RealShare is governed by the terms of the applicable offering documents relating to a specific RealShare investment product in which the client wishes to invest.
Client funds belonging to the client that are held by RealShare are deposited into a trust account the RBC. Funds from registered accounts for the purpose of purchasing deferred plan eligible exempt market products will be held by a trust company that provides custodial services, such as Computershare Canada Inc. or Olympia Trust Company.
ACCOUNT FEES AND OPERATING EXPENSES
The fees applicable to any RealShare investment product are as set out in the offering documents related to that product. The offering documentation also describes the costs that may be charged to you, the client, as operating expenses (audit fees, legal fees, etc.). RealShare, acting in its capacity as an exempt market dealer, currently does not charge clients any fees for the operation of their account on the Platform. You will be notified of any changes in fees charged to you the Investor at least 60 days before the date on which a change of fee becomes effective.
Referral Arrangements
RealShare may enter into referral arrangements with affiliated or non-affiliated registrants and non-registrants, some of which are related registrants to RealShare, so that we may provide services and products to referred clients. We may pay a referral fee to the referrer. A referral fee is any monetary or non-monetary benefits provided for the referral. We negotiate the referral fee with the referrer. Any fees and expenses paid by referred clients remains the same regardless of any referral fee paid by RealShare to the referrer. We will inform all referred clients under a referral arrangement.
RealShare may also receive a referral fee for referring its clients to other service providers.
CONFLICTS OF INTEREST
Canadian Securities legislation requires RealShare to make certain disclosures regarding conflicts of interest. This statement is to inform you of the nature and extent of conflicts of interest that might be expected to arise between RealShare and its clients, including the individuals acting on its behalf. RealShare considers a conflict of interest to be any situation where:
a. the interests of a client and those of RealShare are inconsistent or divergent.
b. RealShare or its Registered Individuals acting on its behalf may be influenced to put their interests ahead of their client’s interests;
c. monetary and/or non-monetary benefits are made available to RealShare or its Registered Individuals acting on its behalf, or where there is a potential detriment to a client which may potentially compromise the trust that a reasonable client has in RealShare or its Registered Individuals.
RealShare and its Registered Individuals take reasonable steps to identify all existing material conflicts of interest and those that we would reasonably expect to arise. RealShare assesses the materiality of the conflict in order to determine the level of risk for each conflict and the controls that will need to be implemented. RealShare will assess the materiality and the risk level of the conflict and what the appropriate control and response should be. RealShare avoids situations that would result in a serious conflict of interest that would be too high a risk for both its clients and market integrity and it will ensure that it always act in the client’s best interest.
RealShare manages material conflicts of interest in three ways:
Avoidance: RealShare avoids conflicts of interest that are prohibited by law, as well as any conflicts that cannot be effectively addressed other than by not engaging in the activity that would give rise to the conflict.
Control: In RealShare’s judgment, the conflict of interest can be successfully managed, RealShare will so by restricting access to information and/or separating business functions.
Disclosure: If RealShare is unable to avoid or control the conflict, then RealShare will disclose the conflict to clients appropriately. The clients can then assess the significance of the conflict in light of the services offered by RealShare and determine with RealShare whether and how to proceed accordingly.
Outside Activities
RealShare has policies and procedures to identify and address material conflicts of interest and risk arising from all outside activities that individuals acting on its behalf may participate in. RealShare has established a reporting mechanism that requires its Registered Individuals to report their outside activities. Before approving an outside activities, RealShare’s chief compliance officer will consider any existing or potential material conflicts of interest and other risks that may arise from such outside activity. If the material conflict of interest cannot be managed or addressed in the best interest of the client and, RealShare will not permit the outside activity.
Every director, officer or employee of RealShare shall conduct themselves in a manner consistent with the highest ethical standards. They will avoid any action, whether for personal profit or otherwise, that results in an actual or potential conflict of interest, or the appearance of a conflict of interest, with a client or which may be otherwise detrimental to the interests of a client.
USE OF PERFORMANCE BENCHMARKS
RealShare Inc. does not make use of benchmarks as the nature of the investments recommended do not correspond to any existing benchmarks.
REPORTING
RealShare delivers a trade confirmation when a client purchases or sells a security, setting out the following information:
the quantity and description of the security purchased or sold;
the price per security paid or received by the client;
the commission, sales charge, service charge and any other amount charged in respect of the transaction;
whether the registered dealer acted as principal or agent;
the name of the dealing representative, if any, in the transaction;
the settlement date of the transaction;
if applicable, that the security is a security of the registrant, a security of a Related Issuer of the registrant or, if the transaction occurred during the security’s distribution, a security of a Connected Issuer of the registered dealer.
Additionally, RealShare delivers a client activity statement to clients on a quarterly basis, only if there was any activity in the preceding quarter.
The statements contain the following:
the date of the transaction;
the type of transaction;
the name of the security;
the number of securities;
the price per security; and
the total value of the transaction.
As a registered firm, RealShare Inc. is required to be a member of The Ombudsman for Banking Services and Investments (OBSI). Please see the explainer below.
COMPLAINTS PROCESS
If you have a complaint about our services or a product, email us at: info@RealShare.ca or reach us by mail at:
Attn: Aditya Koparde, Chief Compliance Officer
RealShare Inc.
552 Wellington Street W,
Suite 1500
Toronto, ON M5V 2V5
Tell us:
what went wrong
when it happened
what you would like as a resolution
We will acknowledge your complaint in writing, as soon as possible, typically within 5 business days of receiving your complaint. We may ask you to provide clarification or more information to help us resolve your complaint.
Help us resolve your complaint sooner by:
Make your complaint as soon as possible.
Reply promptly if we ask you for more information.
Keep copies of all relevant documents, such as letters, emails and notes of conversations with us.
We normally provide our decision in writing, within 90 days of receiving a complaint. It will include:
a summary of the complaint
the results of our investigation
our decision to make an offer to resolve the complaint or deny it, and an explanation of our decision
If we cannot provide you with our decision within 90 days, we will:
inform you of the delay
explain why our decision is delayed, and
give you a new date for our decision
You may be eligible for the independent dispute resolution service offered by the Ombudsman for Banking Services and Investments (OBSI).
You always have the right to go to a lawyer or seek other ways of resolving your dispute at any time. A lawyer can advise you of your options. There are time limits for taking legal action. Delays could limit your options and legal rights later on.
You may be eligible for OBSI’s free and independent dispute resolution service if:
we do not provide our decision within 90 days after you made your complaint, or
you are not satisfied with our decision
OBSI can recommend compensation of up to $350,000.
OBSI’s service is available to clients of firm. This does not restrict your ability to take a complaint to a dispute resolution service of your choosing at your own expense, or to bring an action in court. Keep in mind there are time limits for taking legal action.
You have the right to use OBSI’s service if:
your complaint relates to a trading or advising activity of our firm or by one of our representatives
you brought your complaint to us within 6 years from the time that you first knew, or ought to have known, about the event that caused the complaint, and
you file your complaint with OBSI according to its time limits below
If we do not provide you with our decision within 90 days, you can take your complaint to OBSI any time after the 90-day period has ended. If you are not satisfied with our decision, you have up to 180 days after we provide you with our decision to take your complaint to OBSI.
Filing a complaint with OBSI
Contact OBSI
Email: ombudsman@obsi.ca
Telephone: 1-888-451-4519 or 416-287-2877 in Toronto
OBSI will investigate
OBSI works confidentially and in an informal manner. It is not like going to court, and you do not need a lawyer.
During its investigation, OBSI may interview you and the representatives of our firm. We are required to cooperate in OBSI’s investigations. OBSI can help you best if you promptly provide all relevant information, including:
your name and contact information
our firm’s name and contact information
the names and contact information of any of our representatives who have been involved in your complaint
details of your complaint
all relevant documents, including any correspondence and notes of discussions with us
OBSI will provide its recommendations
Once OBSI has completed its investigation, it will provide its recommendations to you and us. OBSI’s recommendations are not binding on you or us.
OBSI can recommend compensation of up to $350,000. If your claim is higher, you will have to agree to that limit on any compensation you seek through OBSI. If you want to recover more than $350,000, you may want to consider another option, such as legal action, to resolve your complaint.
For more information about OBSI, visit www.obsi.ca