Shackleton Finance Limited Pillar 3 Disclosure
As at 1 March 2022
Shackleton Finance Limited (the “Company”), is authorised and regulated by the Financial Conduct Authority (the “FCA”). The Company acts as an investment manager and adviser to a number of limited partnership funds (together the “Funds”).
The Company is categorised as a BIPRU limited licence firm by the FCA for capital purposes.
Pillar 3 disclosure fulfils the Company’s obligation to disclose to market participants key pieces of information on a firm’s capital, risk exposures and risk assessment process.
Risk Management Objectives and Policies
The directors of the Company (“Directors”) determine its business strategy and its risk appetite. The Managing Partner is responsible for the overall systems and controls with the Company (“SYSC”) to ensure governance and oversight of the business and that the levels of risk are consistent with the risk appetite of the Company. The Managing Partner allocates responsibilities to other staff within the SYSC framework of the Company. The Directors and Compliance Officer
• Have designed and implemented a risk management framework that recognises the risks the business faces;
• Have approved the risk management framework;
• Have determined how those risks may be mitigated; and
• Assess, on an ongoing basis, the controls and procedures necessary to manage those risks.
The Directors meet regularly and discuss projections for profitability, liquidity, regulatory capital, business planning and risk management.
As an investment manager, the Company considers the following as key risks to its business:
• Business risk – this risk represents a fall in assets under management, as a result of realisations or liquidation, which may reduce the fee income earned by the Company and reduce its ability to finance its operations and pay its expenses. Business risks are assessed and mitigated as part of the Internal CApital Risk Assessment (“ICARA”);
• Operational risk – this risk covers a range of operational exposures from risk of trading errors to risk of breach of a Fund’s investment objectives. Legal and reputational risks are also included within the category of operational risk. Operational risks and mitigants are assessed as part of the ICARA;
• Credit risk – this risk relates to the exposure to the Funds for non-payment of management and performance fees and counter-party exposure relating to the Company’s bank balances and any other debtors. Management fees are generally drawn in advance and other balances are monitored monthly by Directors; and
• Market risk – this risk is the exposure to foreign exchange fluctuations, which has limited influence as the majority of fee income and expenses are sterling denominated.
Capital Resources
The consolidated capital resources of the business comprise Tier 1 capital with no deductions. As a limited license firm, the consolidated capital resources requirement is calculated as a total of Pillar 1 and Pillar 2 capital, where Pillar 1 capital is the greatest of:
• A base capital requirement of €75,000;
• The sum of market and credit risk requirements; and
• The fixed overhead requirement (“FOR”).
The FOR is based upon the Group’s 3 months’ overheads excluding the salaries of the three directors of the Company’s parent, Shackleton Ventures Limited. The Directors have confirmed in writing that they will defer their salaries should this be required for the Company to maintain its ICARA capital figure.
Pillar 2 capital is calculated by the Company as representing any additional capital to be maintained against any risks not adequately covered under the requirements in Pillar 1 as part of its ICARA. It is the Company’s experience that its capital requirement normally is the market and credit risks requirements, although FOR risks are reviewed annually. The Company applies the standardised approach to credit risk, applying 8% to the Company’s risk weighted exposure amounts, consisting mainly of investment management fees due but not paid and cash at bank. 20% is applied to the credit risk on board fees due but not yet paid.
The Company’s ICARA concluded that no additional capital is required in excess of its Pillar 1 capital requirement.
Shackleton’s Pillar 1 requirement
The permanent minimum capital requirement (PMR), which for UK investment managers should generally be £75,000; and fixed overheads requirement (FOR), which would be an amount equal to three months of the firm’s “relevant expenditure” (being, broadly, a firm’s total expenditure for the preceding year but with certain deductions, e.g., profit distribution, staff bonuses, non-recurring expenses from non-ordinary activities, amongst others). All firms will be required to hold an amount of liquid assets equal to one third of their FOR.
Shackleton’s Pillar 2 requirement
The Company’s ICARA concluded that no additional capital is required in excess of its Pillar 1 capital requirement.
The Company’s consolidated regulatory capital position was £566k of Tier 1 Capital, comprised of share capital and unaudited reserves as at 1 March 2022. Share capital and audited reserves of Tier 1 Capital on 31 December 2020 was £536k.
Liquidity Policy
The Company maintains a surplus of liquid resources sufficient at all times to meet any immediate requirements it could prudently foresee. The Company holds its working capital requirements in cash and daily liquidity funds.
Remuneration Policy
SFL is a limited company in which the profits of the firm are shared on the performance of the firm as a whole rather than allocated to individual directors and members of staff on the basis of their personal performance.
SFL has taken full account of the Remuneration Principles as set out in SYSC 19A of the FCA Handbook and are of the view that their remuneration strategy lies well within the requirements as set out in the Principles. Two particular Principles are referred to here to exemplify and highlight the nature of SFL’s strategy:
Principle 1: Risk management and risk tolerance
SFL’s policy is to create and build on long term business relationships with their clients. Remuneration levels are set by the Directors on the basis that the firm has a sufficient infrastructure and capital to ensure that it can meet the needs of its clients both now and in the future.
Principle 12: Remuneration Structure
In contrast to large firms, SVL’s structures are simple, transparent and based on current profitability. The SFL Board has adopted this Remuneration Policy Statement in full. Staff to whom the Code applies (Code Staff) have been identified as shown below. Furthermore, in evidencing its commitment to the Code, SFL will look to ensure that in the future, SFL’s remuneration policies continue to be consistent with and to promote effective risk management, all in compliance with the Code.
This statement, including an analysis of Code Staff, will be reviewed by the firm along with its remuneration policy on an annual basis.
Code Staff
SFL is a Level 3 firm under the Code. At the time of this Statement, SFL treats its Directors (Deborah Hudson is SMF3, Hugh Stewart is SMF1, SMF3, SMF16 and SMF17), as Code Staff. In SFL’s view, none of its other employees qualify as Code staff at present.
All staff, once they have passed a probationary period, share in the profits of the firm by way of carry in the funds. Whilst bonuses may be issued, they form a low percentage of the individual’s overall earnings.
Company distributions and bonuses are set at a level where there is significant margin of safety surrounding the firm’s minimum capital requirements. The minimum capital requirements are reported to the FCA on an annual basis by means of the Pillar 3 Disclosure.
Management of the ICARA
The approach of the Company to assessing the adequacy of its internal capital to support current and future activities is contained in the ICARA. This process includes an assessment of the specific risks to the Company and the internal controls in place to mitigate those risks. Finally, an assessment is made of the probability of occurrence and the potential impact, in order to arrive at a level of required capital. The Company also performs a review of the costs to close, should it be unable to generate sufficient revenue to meet its liabilities as they fall due, which would enable it to be closed in an orderly manner.
The Company’s ICARA is formally reviewed by the Directors every 12 months, but will be revised should there be any material change to the Company’s business or risk profile.
Promotion of our Funds
Not all securities, products or services described within the Shackleton Ventures website are available everywhere. The information contained herein does not constitute a distribution, an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction in which such distribution or offer is not authorised. In particular, the information herein is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States (“US”) to or for the benefit of any US person (being residents of the US or partnerships or corporations organised under the laws of the US).
The funds referred to within this site are defined as “Unregulated Collective Investment Schemes” (“UCIS”), the promotion of which within the UK or from the UK is severely restricted by statute. Such funds are only made available to certain persons having the benefit of an exemption set out in the Financial Services and Markets (Promotion of Collective Investment Schemes)(Exemption) Order 2001, as amended (“CIS Exemption Order”) or set out in Chapter 4.12 of the FCA‘s Conduct of Business Sourcebook (“COBS Rules”). The fund information on this website is directed only at the following categories of persons:
- Persons who have professional experience in participating in unregulated collective investment schemes;
- Persons who qualify as high net worth companies, unincorporated associations, partnerships or trustees of high value trusts (including, in the latter case, occupational pension schemes);
- “Professional clients” and “eligible counterparties” as defined for the purposes of the COBS Rules; or
- Any other persons such as certified high net worth individuals, certified sophisticated investors and self-certified sophisticated investors to whom communications relating to unregulated collective investment schemes may otherwise lawfully be made pursuant to the CIS Exemption Order or the COBS Rules.
Nothing within the Shackleton Ventures website constitutes investment, legal, tax or other advice nor is it to be relied upon in making an investment decision. Subscriptions for participations in any of the funds will only be made on the basis of the current prospectus, scheme particulars, offering circular or other offering document for the relevant fund.
Stewardship and Social Responsibility
Shackleton takes its management and stewardship responsibilities seriously. As such, we believe it is important to remain up to date on issues that affect our investee companies, and to engage with them where appropriate. Our focus is the long-term value of an underlying company and thus the value of our clients’ holdings.
At Shackleton we also believe that good long-term performance of companies is directly related to their approach to good governance, ethical and environmental responsibility and consideration of social impact. When specific Socially Responsible Investment (SRI) issues are identified we will consider these in relation to other investment factors.
Our approach to stewardship and Socially Responsible Investing is encapsulated in the following principles which are embedded in our investment philosophy:
- We regularly monitor our investee companies.
- We evaluate any situation which arises and are willing to engage with the investee directly.
- We are willing to act collectively with other investors where appropriate.
- We will always vote in the long-term interests of our clients and will record what decisions we have taken in this respect. We do not normally make those decisions public.
Complaints
At Shackleton Finance Limited we take all complaints seriously. If you would like to make a complaint then we would recommend you do so in writing but please get in touch with us by whatever method suits you best – post, phone or email.
If you wish to make a complaint then please contact:
The Compliance Officer: Hugh Stewart
Tel: +44 1962 842621
There are risks associated with sending confidential information by email – so please be aware that, if you contact us this way, we may reply by post or phone.
Your complaint will be handled by our Compliance Officer, if you are not satisfied with their response the Financial Ombudsman Service may be able to help.
We will try and resolve your complaint as quickly as we can preferably within 24 hours. At the latest we will acknowledge it within five working days. Our aim is to put things right in our first response. However, sometimes a longer investigation is needed. In these cases, we will try and complete our review within four weeks. If that is not possible we will explain why and let you know when you can expect to hear from us again.
We hope you are satisfied with our response. If we do not hear from you within eight weeks, we will treat your complaint as settled and close our files. Should you tell us later that you are still unhappy, we will review it again.
Subject to meeting certain criteria, you have the right to refer your complaint to the Financial Ombudsman Service Financial ombudsman or telephone 0800 023 4567 or write to the Financial Ombudsman at Exchange Tower, Harbour Exchange, London, E14 9SR.
Registered Office
Shackleton Finance Limited, 1st Floor, 48 Chancery Lane, London WC2A 1JF
Privacy and Data Protection
This Privacy Notice describes how we at Shackleton Ventures Limited (“SVL”) collect, use and share the Personal Information that we gather through the websites, mobile apps, other digital properties and paper forms that are collected, operated and used by SVL and that link to this Privacy Notice (collectively, the “Services”.
If you are in the European Union and/or the United Kingdom, SVL, who owns and operates the service you are visiting will be the data controller responsible for the collection and use of your Personal Information. If you have any questions about this Privacy Notice or our information practices, please contact us using the options provided below.
Please read this Privacy Notice carefully. By using our Services, you acknowledge the information practices and other terms set forth in this Privacy Notice.
How we collect and use Personal Information
We use the term “Personal Information” to mean information which can be used to identify you as an individual. We collect several categories of information through our Services, including information you provide. We use and share this information for the purposes described below.
We rely on separate and overlapping basis to process your Personal Information lawfully. For example, it may be necessary for us to process your Personal Information in certain ways in orcer to process any action you may have requested or otherwise in accordance with a contract between us, or in certain cases we may process your Personal Information where necessary to further our legitimate interests, where those legitimate interests are not overwritten by your rights and interests or in order to comply with our legal obligations.
Information you provide
We collect information you provide, for example, when you enter the information into form fields on our Services or provide the information via paper documents. We may collect:
| Category of personal data | Purposes of processing | Legal basis for processing |
| Contact information (name, address, telephone number email address, signature | To communicate with, pay funds to, keep records for, contract with and provide services to investors (including prospective investors) (“Investors”) or vendors, employees and other contacts.
To perform marketing and research for investors To perform due diligence on or monitor target or portfolio company key individuals, key customers, partners, suppliers, shareholders To perform background screening of Investors, investment partners and propective/current/retired employees To perform employment decisions and screenings of prospective employees To perform employee recruiting To authenticate users To meet relevant regulatory requirements |
Legitimate interest
Performance of contract Legal compliance Consent (where applicable) |
| Employment information (including title/role, institution/company, location, compensation, work history and qualifications/training | To perform due diligence on or monitor target or portfolio company’s key individuals, key customers, partners, suppliers, shareholders and debtholders
To perform background screening of Investors, investment partners and employees |
Legitimate interest
Performance of contract Legal compliance Consent (where applicable) |
| Account/Financial Information including contact information, date of birth, bank account information, wire transfer information, expense details, beneficiary designation, investor commitments, ledgers, positions, balances, percentages of fund, credit information and share or option numbers, values and vesting. | To perform fund/subscription processes, accounts, records, marketing and onboarding services for Investors
To perform background screening of Investors and employees To meet relevant regulatory requirements To communicate with, pay funds to, keep records for, contract with and provide services to Investors, vendors and employees To perform due diligence on or monitor target or portfolio company’s key individuals, key customers, partners, suppliers, shareholders and debtholders |
Legitimate interest
Performance of contract Legal compliance |
| Government Identification Information including social security number, taxpayer identification number, date of birth, driver’s license, passport, other official government identification and numbers, legal work status and Know Your Customer (“KYC”) details | To perform marketing and research services for Investors
To perform background screening of Investors and employees To meet relevant regulatory requirements To comply with tax requirements To accept/process funds from, pay funds to, keep records for, contract with and provide services to Investors, vendors and employees |
Legitimate Interests
Performance of contract Legal compliance Consent (where applicable) Employment (where applicable) |
| Investment Analytics Information including investment history, proposals or recommendations and preferences | To perform investor advisory services
To perform due diligence on target or portfolio company’s shareholders and debtholders |
Legitimate Interests
Performance of contract |
| Certification Information including business partners or employee certification/accreditation details, conflicts information, approvals, registrations, licenses and consents | To meet relevant regulatory requirements
To perform background screening of Investors and employees |
Legitimate Interests
Legal compliance Consent (where applicable) |
| Identification Information including photo, log-ins, dial-ins and codes | To secure physical and digital access control, electronic communications and electronic asset management
To perform marketing and research for Investors To perform investment presentations |
Legitimate Interests
Employment |
Information We Obtain from Third Party Source
We may obtain certain Personal information about you from a third party source, which we may use to serve our Legitimate Interests, comply with legal obligations, perform a contract or, in some cases, in accordance with your consent.
Business Partners and Service Providers – we use business partners and service providers, for example payment processors and analytics providers, to perform services on our behalf. Some of these partners have access to Personal Information about you that we may not otherwise have (for example, where you sign up directly with that provider) and may share some or all of this information with us. We use this information to administer the Services and conduct marketing campaigns as well as process transactions that you request. In this respect you acknowledge your right to object to the use of your Personal Information for marketing purposes by contacting SVL.
Supplemental Information: We may receive additional Personal Information from third party sources, such as public/subscription based databases which we may append to existing Investor and business partner information, such as email address verification. We may use this information to process actions that you may request and to prevent fraud and to improve our operations, Services and marketing offerings.
Additional Uses of Personal Information
In addition to the uses described above, we may use your Personal Information for the following purposes, which uses may under certain circumstances be based on your consent, may be necessary to fulfill our contractual commitments to you and are necessary to serve our legitimate interest, for example, in the following business operations:
- Operating our business, administering the Services and managing your accounts:
- Contacting you to respond to your requests or inquiries
- Processing and completing your transactions
- Providing you with newsletters, articles, service alerts or announcements, event invitations and other information which we consider to be of interest to you
- Providing you with marketing information and other information that are personally tailored to your interests and market profile
- Conducting market research, surveys and similar inquiries to help us understand trends and investor needs
- Administering investor profiles, analyzing you investments with us, presenting customized marketing
- Alerting you about a correction or providing marketing material
- Preventing, investigating or providing notice of fraud, unlawful or criminal activity or unathorised access to or use of Personal Information or to meet legal obligations
Legitimate Interests
We rely on several legitimate interests in using and sharing your Personal Information. These interests include but are not limited to:
- Communicating with, paying funds to, keeping records for and providing Services for you
- Performing due diligence and contractual obligations
- Filing for regulatory and legal compliance
- Exploring ways to grow, administer, develop and market our business
- Ensuring the safety, security and legal compliance of the Services
Data Retention
We will retain your Personal Information only for as long as is necessary for the purposes set out in this Privacy Notice, subject to your right, under certain circumstances, to have your Personal Information erased (see Your Rights below) unless a longer period is required under applicable law or is needed to resolve disputes or protect our legal rights.
Unless agreed otherwise, if a prospective client does not proceed to take up our services, then we typically destroy the personal information which we have collected after six months have elapsed since the last meeting with the client. Any prospective client can contact us before then if they want their information destroyed sooner.
How We Share and Disclose Personal information
We share your Personal Information with third parties only in the ways described in this Privacy Notice. We may share your Personal Information within SFL, with service providers and business partners in connection with SVL transactions and to comply with the law and enforce our legal rights.
Service Providers: we share your Personal Information with third party service providers who complete transactions or perform services on our behalf for your benefit, such as payment processing, marketing, analytics, processing employment applications and performing human resources administration to verify personal data.
Affiliates: we may share your Personal Information with affilitated legal entities within SVL for purposes and uses that are consistent with this Privacy Notice.
Business Partners: we may share your Personal Information with our business partners for the purpose of administering programs and services, such as, (but not limited to), investor onboarding, anti-money laundering review and investor background examination.
Legal Processes, Safety and Terms Enforcement; we may disclose your Personal Information to legal or government regulatory authorities as required by applicable law. We may also disclose your Personal Information to third parties as required by applicable law in connection with background screens, claims, disputes or litigation or if we determine its disclosure is necessary to enforce our legal rights or contractual commitments that you have made.
Business Transfers: your Personal Information may be disclosed as part of a corporate business transaction of SVL, such as a joint venture or financing or sale of company assets and could be transferred to a third party as one of the business assets in such a transaction. It may also be disclosed in the event of insolvency, bankruptcy or receivership. You will be notified of any change of ownership or uses of Personal Information as well as your choices regarding your Personal Information in that eventuality.
Your Rights
We process all Personal Information in line with your rights, in each case to the extent required by and in accordance with applicable law.
- Upon request we will provide you with information about whether we hold any of your Personal Information . In certain cases you might also have the right to:
- Rectify any of your Personal Information which is inaccurate
- Restrict or limit the ways in which we use your Personal Information
- Object to the processing or your Personal Information
- Request the deletion of your Personal Information
- Obtain a copy of your Personal Information
To submit a request, please contact us as set forth in the Contact Us section below. We will respond to your request within a reasonable timeframe.
You also have the right to withdraw your consent to our processing of your Personal Information, where our processing is solely based on your consent. You can do this by contacting us as set forth in the Contact Us section below to request that your Personal Information is deleted. If you withdraw your consent to the use of your Personal Information for the purposes set out in this Privacy Notice, you may not have access to all (or any) of the Services. Please note that we may, in certain cases, continue to process your Personal Information after you have withdrawn consent and requested that we delete it if we have a legal basis to do so. For example, we may retain certain information if we need to do so to comply with an independent legal obligation or if it is necessary to do so to pursue our legitimate interests in keeping the Services safe and secure.
If you have any complaints about our privacy practices, you have the right to lodge a complaint with your national data protection authority.
Updates to the Privacy Notice
This Privacy Notice is subject to occasional review and if we make any material changes in the way we use your Personal Information we will notify you by email. Please note that at all times you are responsible for updating your Personal Information to provide us with your most current email address along with any other provided contact information or settings. In the event that the last email address you have provided us with is not valid or for any reason is not capable of delivering to you a notice from us, our dispatch of the email containing such notice will nonetheless constitute effective notice of the changes described in the notice.
Managing Communication Preferences
If you have provided us with your contact information, we may send you email messages or other communications regarding services. At any time you may elect to discontinue receiving commercial messages from us by submitting an opt-out request to the contact information below or by following the unsubscribe instructions in the form of the communication you received, as described below.
Printed/electronic material: to opt out of receiving printed/electronic marketing material at your postal/email address, please contact us at the addresses below. Please be sure to include your name and mailing/email address exactly as they appear on the respective communication you received.
Emails: to opt out of receiving marketing communications via email, please send an Unsubscribe request to the email address below or click on the Unsubscribe link at the bottom of the email that was sent to you. Please note that you may continue to receive certain transactional or account-related electronic messages from us.
Contact us
If you have any questions, comments, requests or concerns about this Privacy Notice or other privacy related matters, you may contact us in the following ways:
Email: info@shackletonventures.com
Address: Thistle Court, 1-2 Thistle Street, Edinburgh, EH2 1DD
Stewardship Code – policy
The UK Stewardship Code (“Code”) was published on 25 October 2019 and, with effect from 1 January 2020, is a revision of the earlier version of the Stewardship Code, published in 2012 by the Financial Reporting Council (“FRC”), the UK’s independent regulator responsible for promoting high quality corporate governance and reporting to encourage investment in UK listed companies. Under COBS 2.2.3 of the FCA Handbook, SFL is required to make a public disclosure in relation to the nature of its commitment to the Financial Reporting Council’s (“FRC”) Stewardship Code. The FCA, via COBS 2.2.3, requires a firm that is managing investments for a professional client to disclose clearly in an accessible form:
- the nature of its commitment to the Financial Reporting Council’s Stewardship Code; or
- where it does not commit to the Code, its alternative investment strategy.
As a manager of secondary venture capital funds, Shackleton Finance Limited (“SFL”) does not generally invest in quoted equities and we do not manage funds for retail investors.
SFL supports fully the objectives of the Code, and its broader application by institutional investors and takes its management and stewardship responsibilities seriously. As such, we believe it is important to remain up to date on issues impacting our investee companies, and to engage with them where appropriate. We assess any issue in terms of its impact to the long-term value of an underlying company and thus the value of our clients’ holdings.
At SFL we also believe that good long-term performance of companies is directly related to their approach to good governance, ethical and environmental responsibility and consideration of social impact. We work closely with our investee companies to encourage this, often by having board representation.
However, we have not formally signed up to the Code because of the nature of our business, involving a close relationship with both investors and investees, and because we consider it would be a duplication.
The BVCA response to the FRC consultation process was taken into consideration when defining SFL’s approach to the Code:
Their response can be summarised thus:
“Considering the stewardship practices already in place within our industry, we believe the Code is less applicable for PE/VC firms as adopting it will result in duplicative reporting requirements, albeit in a different form.’
Therefore, while SFL supports the objectives that underlie the Code, the nature of SFL’s investment strategy is such that the stewardship practices and reporting practices already in place are in line with the Code.
Wendy Stewart
Company Secretary
March 2022
For further information on the application of the Code and related matters, please contact the Head of Compliance: Hugh Stewart
Revised: Nov 2022