Collective Investment Scheme and AIF

It should be quite clear that the primary purpose of the token launch is not to generate a pooled return. For there to be a pooled return it must be the return generated by the pooled risk of acquiring, holding or selling investment assets. In this case, the token launch is not a mechanism for pooling risk arising from the acquisition, holding or sale of investment assets by WePower. It will not apply the proceeds of the token launch for the purposes of investing in one or more asset classes; the proceeds will be applied towards software development and ongoing business operating costs. One clear example of why rewards are not ‘pooled’ is that the only rewards available to token holders are in respect of renewable energy that is donated to the platform. It is only the token holders who participate in the rewards scheme that will be rewarded for submitting a claim.

In addition to this, there is no defined mechanism for winding up or distribution of WePower’s assets, or for generating any form of return from the WePower at any particular time. Moreover, there is no mechanism for the redemption of WPR for Ether, Bitcoin, Dash or otherwise. These are further hallmarks that differentiate the token sale from any collective investment scheme or undertaking. Similarly, there is no gain that may be achieved by any token holder from the realization of any underlying asset or holding by WePower.

WePower platform does not contain any of the key features of a collective investment scheme other than in respect of the pooling of the contributions (but not the returns). This is of course a hallmark of any company; whether issuing tokens that may be considered to be un-diluted ‘capital’ or issuing shares in respect of share capital of any business.

On the basis that the token launch will not constitute a collective investment undertaking, it will also, by definition, fall outside of the scope of the definition of an AIF. It should be further noted that for the purposes of the definition of an AIF, the token launch will not, in our view, meet the relevant test of constituting a scheme which raises capital with a view to investing it in accordance with a defined investment policy for the benefit of investors.

WePower will not be raising capital in the typical interpretation of the term, it is also important to note that there is no ‘defined investment policy’ which is required for the definition of an AIF to be met. For the avoidance of doubt, the Project Documentation published by WePower which establishes its commercial purpose and breaks down how the token sale proceeds will be applied on development activities, should not be interpreted as a defined investment policy. In our view a defined investment policy must be specific enough to create an obligation to an investor that is legally enforceable by them, to follow such a policy, and all changes to that policy. In addition, we would typically expect to see specific investment guidelines that reference criteria that may relate to a particular strategy, category of asset, to conform to certain restrictions, holdings, risks or other relevant criteria.