Institutional Risk & Due Diligence Policy
1. Introduction and Objectives
Poupz Capital (Poupz Capital Plataforma de Investimentos Alternativos Ltda., Tax ID 54.812.940/0001-72) adopts this Risk Management Policy in strict compliance with article 74 of CVM Resolution No. 88/2022. This document establishes the guidelines for identifying, assessing, monitoring, mitigating, and reporting risks inherent to the platform’s activities.
Our objective is to maintain a robust governance and control framework that enables us to:
- Proactively identify the risks to which we are exposed;
- Assess the materiality and likelihood of those risks;
- Implement appropriate controls and mitigation measures;
- Continuously monitor the effectiveness of controls;
- Disclose risks to investors in a transparent manner.
2. Risk Governance Structure
2.1. Responsibilities
- Board of Directors: approves the policy and oversees the risk management framework;
- Executive Management: implements the policy, allocates resources, and reports to the Board;
- Compliance and Risk Area: coordinates risk identification, measurement, and monitoring activities;
- Business Areas: identify risks in their operations and implement operational controls;
- Internal Audit: assesses the effectiveness of the risk management framework.
2.2. Risk Management Cycle
We adopt a continuous risk management cycle:
- Identification: mapping risks across relevant processes;
- Assessment: analysing likelihood, impact, and speed of manifestation;
- Treatment: defining strategies to avoid, mitigate, transfer, or accept risks;
- Implementation: applying controls and mitigation measures;
- Monitoring: ongoing follow-up and reporting.
3. Risks Inherent to the Platform’s Activities
3.1. Credit Risk
Description: the possibility that issuing companies may fail to meet their payment obligations, resulting in delays or partial or total loss to investors.
Main drivers: operational weakness, industry crises, poor management, customer defaults, and adverse external events.
Mitigation:
- Rigorous due diligence before listing offerings;
- Assessment of payment capacity and indebtedness;
- Verification of guarantees when applicable;
- Ongoing monitoring of issuer obligations;
- Transparent disclosure of platform default history.
3.2. Liquidity Risk
Description: the offered securities may lack an organised secondary market, making it difficult or impossible for investors to exit before maturity or the scheduled liquidity event.
Mitigation:
- Clear disclosure regarding the absence of secondary liquidity;
- Expected redemption or exit timing in offering materials;
- Guidance for investors to align investment horizon and objectives;
- A 7-day cooling-off period for withdrawal without penalty where applicable.
3.3. Market Risk
Description: economic, financial, or sector conditions may affect the payment capacity of issuing companies.
Examples:
- Interest-rate risk: higher rates may increase issuers’ financing costs;
- FX risk: issuers with foreign currency exposure may be affected by exchange-rate swings;
- Inflation risk: inflation may erode margins and purchasing power;
- Commodity risk: input prices may vary substantially;
- Macroeconomic risk: recession and political instability may affect performance.
Mitigation: sensitivity analysis, sector diversification, and periodic stress tests.
3.4. Operational Risk
Description: losses resulting from failures in processes, people, systems, or external events.
Main sources:
- Technology failures and service outages;
- Cyberattacks such as phishing, ransomware, or system intrusion;
- Human error and inaccurate data input;
- Natural disasters and widespread emergencies;
- Internal and external fraud.
Mitigation:
- System redundancy and resilient infrastructure;
- Regular and tested backups;
- Information security controls, encryption, and multi-factor authentication;
- Business continuity and disaster recovery plans;
- Insurance coverage where appropriate;
- Training and segregation of duties.
3.5. Legal and Regulatory Risk
Description: changes in law or regulation may affect the platform’s operations or the economics of investments.
Main aspects:
- Changes to CVM Resolution No. 88/2022 or related rules;
- Tax law changes affecting investments;
- New capital or compliance requirements;
- Divergent interpretations by supervisory authorities.
Mitigation: ongoing regulatory monitoring, specialised legal advice, and industry participation.
3.6. Fraud and Inaccurate Information Risk
Description: issuers may provide false, misleading, or incomplete information about their financial condition, operations, or projections.
Mitigation:
- Enhanced due diligence and documentary verification;
- Background checks of controllers and managers;
- Site visits when feasible;
- Independent audit requirements for larger offerings;
- Representation and warranty clauses in contractual documentation.
3.7. Concentration Risk
Description: excessive exposure to a single investor, issuer, sector, or geographic region.
Mitigation: diversification policies, issuer limits, investor limits, and correlation analysis.
3.8. Reputational Risk
Description: damage to the image and credibility of the platform due to negative internal events or events involving issuers or investors.
Mitigation: rigorous issuer selection, transparent crisis communication, and a robust compliance programme.
4. Due Diligence Process
Before publishing any offering, we perform a structured multi-layer due diligence process:
4.1. Legal Review
- Corporate organisation and amendments;
- Tax authority, registry, and corporate filing regularity;
- Existence of judicial, administrative, or arbitral proceedings;
- Intellectual property and material assets;
- Relevant contracts with suppliers, customers, and lenders.
4.2. Financial Review
- Financial statements when available;
- Cash flow analysis and projections;
- Debt and repayment capacity review;
- Revenue and customer concentration;
- Operating cycle and working capital needs.
4.3. Business Review
- Business model and value proposition;
- Market and competitive analysis;
- Technical and operational feasibility;
- Corporate governance and management experience;
- ESG considerations where relevant.
4.4. Risk Review
- Issuer- and sector-specific risk matrix;
- Stress scenarios and contingency planning;
- Due diligence on partners and managers;
- Background verification.
5. Risk Classification and Scales
We use a risk matrix considering:
- Probability: remote, unlikely, possible, likely, almost certain;
- Impact: insignificant, minor, moderate, major, catastrophic;
- Result: low, medium, high, or critical risk.
Risks classified as high or critical receive priority attention from senior management.
6. Exposure Limits and Controls
6.1. Regulatory Limits
- Maximum fundraising amount per offering according to applicable regulation;
- Investment limits for non-qualified investors as established by law;
- Minimum dispersion and participation rules where applicable.
6.2. Internal Control Limits
- Maximum exposure per issuing company relative to total offerings;
- Sector concentration ceilings;
- Minimum approval standards according to risk bands.
7. Ongoing Monitoring and Alerts
7.1. Post-Fundraising Monitoring
- Periodic receipt of operational and financial reports from issuers;
- Verification of payment obligations;
- Review of early warning indicators;
- Proactive communication to investors about relevant events.
7.2. Red Flag Indicators
- Delays in payments to suppliers or employees;
- Sudden changes in management or corporate structure;
- Material litigation not previously disclosed;
- Divergence between reports and public information;
- Tax domicile changes without notice;
- Default on other financial obligations.
7.3. Actions in Case of Default
- Immediate notification to affected investors;
- Attempted renegotiation of terms and deadlines;
- Acceleration of obligations and enforcement of guarantees when applicable;
- Publication on the defaulting companies list when required;
- Collection efforts or judicial action as appropriate.
8. Risk Disclosure to Investors
We are committed to:
- Comprehensive risk descriptions in offering documents;
- Clear visual prominence for risk alerts;
- Mandatory suitability assessment before investment;
- Educational materials on alternative investment risks;
- A 7-day reflection period where applicable under regulation.
9. Reporting and Escalation
Risk events are reported according to severity:
- Level 1 (Low): reporting to the risk area;
- Level 2 (Medium): reporting to executive management;
- Level 3 (High): immediate reporting to the Board and the CVM when required;
- Level 4 (Critical): emergency reporting to relevant stakeholders and, where applicable, public communication.
10. Review of this Policy
This Risk Management Policy is:
- Reviewed annually by senior governance bodies;
- Updated whenever there are significant changes in the risk profile;
- Reassessed after material risk events;
- Adjusted to comply with structural regulatory changes where applicable.
This policy is reviewed annually, or earlier when a relevant event justifies it.