
For details on how to read the above model - please, browse a brief explanation. Note that the columns of the above systemic overview are read from the left.
The left Column: "Limited Partners" are those who buy- and hold Impact Bonds* - which may be convertible into Vote-weak B-shares. Thereby, investors can become Self-Directed Capital Partners, see Column 3..
Column 2 from the left is: Bankier.co + Regional Network Partners (RNPs).
The latter have negative control from day 1 by Vote-rich A-shares and organize competent trustees in maritime regions - also named "the vital engine" of the CVN-initiative.
Column 3 from the left is: Self-directed Capital Partners** - they only hold vote-weak B-shares.
But, they are the wanted, future majority-owners of the CVN for Impact Investing.
The right Column: Alliances/Catalysts represents "the systemic engine" of the initiative; namely, the syndicate- and policy for systematic spreading of risk.
*) There are a range of interpretations of what the term ‘impact bond’ means. Generally, social impact bonds are a type of bond, but not the most common type. While they operate during a fixed period of time, they do not offer a fixed rate of return. Repayment to investors is contingent upon specified social outcomes being achieved.
**) Note: By definition and in practice - a Self-directed Capital Partner, who is member of the CVN's Protection Club, manages her-/his own assets in an individual Master Account. There - the assets can increase - or they can be reduced by withdrawals - subject to a release from possible intermediate commitment(s). A Self-directed Capital Partner can be an individual person or a judicial entity like an association, a foundation, a LLP or a LLC.
This Page presents different financial models for value creation, including the above model:
A. Investment firms - of which there are 3-three different classes*;
B. Financial groups - and other financials (e.g. banks) with several roles "under the same hat" –
as well as activities of- and investments in listed companies - to attain liquidity financed by
OPM**;
C. Small- and Mid-sized Enterprises (SMEs), hereunder family-owned firms, which may have an
Internal “bank" for owner(s). In most cases SMEs have closed ownerships;
D. The fund management sector, which covers different types of funds: UCITS = Undertakings
for Collective Investment in Transferable Securities, which can be sold to retail investors –
and Alternative Investment Funds (AIFs) - for professionals only.
AIFs include Hedge Funds, Private Equity Funds and Real Estate Investment Funds.
Look to ESMA.Europa.eu - mentioned below;
E. Social Enterprises - mutual-, cooperative- and other open ownership models - for stakeholders'
economic co-responsibility by efforts & participations, which can be individual or shared –
and even made negotiable.
One subject - corporate finance - is shared by professionals of the above models, A. - E.
*) Licensed securities companies regulated by Markets in Financial Instruments Directive (MiFID II) - and licensed European Crowdfunding Services Providers (ECSPs) - according to separate EU-/EEA regulations. The latter are likely to align with other financial models and compete with funds mgmt.
**) OPM = Other People’s Money. Cf. Louis Brandeis. 1914. Other People’s Money: And How the Bankers Use It. Cf. in contrast a Green Paper on building a Capital Markets Union (CMU) /COM/ 2015/63: Efforts to develop a single rule book - i.e. to harmonize- and facilitate capital markets across borders in EU/EEA.
Re A: Investment firms - according to EU Regulation 2019/2033 on prudential requirements of investment firms
An excerpt of the EU Investment Firms Regulation - the aim of the regulation and key points:
- It sets out new prudential requirements and supervisory arrangements for certain categories of investment firms;
- For these categories, it sets out specific requirements on own funds, concentration risk, liquidity risk, reporting and public disclosure;
- The regulation, also known as the Investment Firms Regulation (IFR), introduces prudential requirements that are proportionate to a firm’s size, nature, complexity, risk profile and business model, while ensuring adequate protection of its customers and of the markets in which it operates. The IFR sets out prudential requirements that are proportionate to the nature, size and complexity of an investment firm’s activities;
- The IFR applies to investment firms that:
- are not subject to Regulation (EU) No 575/2013 capital requirements regulation (CRR);
- and are sufficiently small and non-interconnected (‘class 3’ investment firms – cf. IFR Article 12); or
- do not fall under either of the two other categories (‘class 2’ investment firms). The ‘class 2’ category comprises investment firms that are too small for the ‘class 1’ category (subject to CRR rules) yet are bigger and more interconnected than a class 3 category.
- Investment firms, which deal on their own account, underwrite financial instruments and/or place financial instruments on a firm commitment basis, are subject to the CRR rules, if their consolidated assets are very large ('Class 1' firms > Euro 30 billion).
Look to Markets in Financial Instruments Directive (MiFID II) vs. separate regulations for Financial model B below: Financial Groups/-holding companies – and other financials (e.g. banks) etc.
Re B: Financial groups/-holding companies - and other financials (e.g. banks) with several roles “under the same hat" as well as activities and investments in listed companies of capital markets to attain liquidity
They invite those who manage “Other People’s Money (OPM)" - e.g. fund managers – to participate as investors in their clients' businesses. Since 1988 the financial group model has resulted in a corporate development and increasing corporatism that change the distribution of power and undermines pluralism. Today's favored financial groups/-holding companies with several roles “under the same hat", e.g. banks, insurance activities, securities-brokers and fund managers - they practice so-called "cross-selling strategies" stimulated by internal bonus schemes to obtain transaction fees. By contributing to stock market-listings, capital raising and increased marketability - they can obtain additional fees. Therefore, they pursue “Names” in financial markets to achieve repeat business – and they tend to underserve SMEs, hereunder family-owned firms, without “Names” in media and markets.
Note: Deregulation of capital markets by allowing Multi-Role Financial Groups took place 1987/-88 in Europe and 1999 in USA by Repeal of the Glass-Steagall Act (since 1933). Today there is little need to stimulate an already influential financial economy. Politicians, media, lobbies and authorities do, because they focus on "Names" in financial markets - even regulations tend to be to their advantage.
Re C: Small and Mid-sized Enterprises (SMEs), hereunder family-owned firms, which are mainly activities and companies with closed ownership
It doesn't have to be this way. SMEs account for a large share of GNP and job creation in well-developed economies. They represent a large majority of the real economy - and therefore they are of general interest. By enhancing economic co-responsibility in SMEs, one can strengthen access to equity capital for further development, shared interest, spread ownership and empowerment. Therefore, academia, analysts, politicians and authorities should focus on SME-behavior, ethics & enterprise as well as predictability – and less on special interests & lobbies. Then they will understand the real economy's need for general, predictable policies, institutional development and basic infrastructure - read: identify what is perceived as improvements (read: real innovations with social impact).
However, investors in SME-shares should be skeptical of ill-prepared, costly IPOs of companies without "Names" in media and markets - and many are. Assembling and spreading risk by applying a financial model E (see below) can be an alternative – e.g. to avoid premature listing(s).
Re D: ESMA.Europa.eu is a financial authority in the area of collective investment management –
as well as a wide range of entities and activities, including fund administrators, depositaries, specialist providers (e.g. risk management consultants) and valuers.
Today there are more funds than listed companies - resulting in vast and ever-changing transaction volumes - with- and/or without merits. Look to Bankier.co’s website – its Page on: "Funds Mgmt”.
Re E: Social Enterprises - mutual-, cooperative- and other open ownership models - for stakeholders' economic co-responsibility by efforts & participations, which can be individual or shared - and even made negotiable
There are historic precedents of Social Enterprises, like credit unions, mutual-/ cooperative banking and -insurance. Some are innovative - e.g. Credit Agricole Group of France. It is Cooperative in banking and -insurance with many different options for stakeholders' participations - although the Group remains true to its roots. Another example of dynamic social enterprises are the cooperative Raiffeisen Banks in German-speaking parts of Europe - also true to their roots. Many mutual organizations and cooperatives elsewhere have been transformed by their corporate managements - or consolidated - to become multi-role financial groups.
On the top of this Page there is a brief on- and a short explanation of an innovative Social Enterprise for Impact Investing* - organized as a Collaborative Value Network (CVN).
It is a financial model for value creation, where the majority-owners are self-directed. Therefore, they are free to increase and/or reduce their participations as members of a Protection Club.
A CVN-Approach for Impact Investing can keep roles in financial markets separate and thereby contribute to impartiality. How - and why?
It has a "No-Group-Structure", which combines a Role-divided Business Model and an Open Ownership Model**).
That combination can be applied for assembling strengths- and spreading risk of Self-directed Capital Partners. They get access to:
- "Bridging-functions" - like a Protection Club for assembly of strengths and spreading of risk - and Enterpriser-Mart(s) for broadcasting needs, initiatives, etc.
- "Wedges" - like impartial, competent trustees/-fiduciaries and independent expertise, who build peer.to-peer relations - for Impact Analyses before-, under- and after investments...
*) Impact Investing refers to “investments made into companies, organizations and/or funds in order to generate a measurable, beneficial social- and/or environmental impact alongside a financial return";
**) A CVN-Approach for Impact Investing applies a combined business- and open ownership model to assist relations - as well as at arm’s length to assemble strengths from many, spread risk and build capacities to facilitate e.g. Pro-Active Restructuring and Reorganization (PARR) and/or effective carry through of Equity Capital-formation - by Alliances’- and Regional Network Partners’ vote-rich A-shares and Self-directed Capital Partners’ vote-weak B-shares + participations by others in quasi-equity instruments - e.g. Limited Partners’ paid in capital - or so-called “impact bonds”:
A) Guaranteed and/or non-redeemable; B) Convertible in vote-weak B-shares.
A Crux of Bankier.co’s CVN-Approach for Impact Investing and adjacent Enterpriser-Marts:
Step by step can viability and sustainability be proven by Impact Analyses + Pro-Active Restructuring & Reorganization (PARR) assisted by Enterpriser-Marts for broadcasting of needs, initiatives, etc. - and verified by independent expertise. That process can help make Self-directed Capital Partners’ participations in companies negotiable.
Cf. for more details Page:"Impact Analyses + Restructuring & Reorganization".
Please note again: By definition and in practice - a Self-directed Capital Partner, who is member of the CVN's Protection Club, manages her-/his own assets in an individual Master Account. There - the assets can increase - or they can be reduced by withdrawals - subject to a release from possible intermediate commitment(s). A Self-directed Capital Partner can be organized as a LLC and/or a LLP.
Bankier.co has proposed this alternative since the establishment of a Bankier-house in 1988 - as well as by promoting the idea of an investment firm with single-role trustees/-fiduciaries in capital markets since 1995.
This has met strong head winds, because national authorities have favored certain business models; namely, banks financed by deposits, securities brokers, fund managers - and multi-role financial groups since 1988 in Europe and 1999 in the USA.
Cf. optional reading on Bankier.co's history on the Page: "Impact Analyses + Restructuring & Reorganization".
The Case below on illegal favoring of financial incumbents complements the optional reading.
Note: Favoring of financial incumbents is illegal according to EU-/EEA Law. Cross-selling of services should be illegal.
A Case about illegal favoring of financial incumbents by national authorities
Illegal favoring should be stopped by EU-/EEA infringement proceedings - resulting in "National Remedy" and "State Liability"; i.e. compensation of damages caused by e.g. faulty and/or late implementation EU-directives. Bankierhuset AS/Ltd. has complained to ESA in Brussels since July 15, 1999. Then it had been proven that the EU's Investment Services Directive 93/22/EEC had been incorrectly implemented due to a special Norwegian "Security Regulation" on 10-1996. It favored the securities brokers. An "Investor Compensation Scheme (ICS)”, similar to that, which already existed in other EU-/EEA countries, was not possible to achieve on one’s own by Bankier.co. In other words - an ESA complaint was necessary to achieve "National Remedy".
A Norwegian “ICS” came much later - in the form of the Securities Firms’ Protection Fund on July 1, 2006, also called "Lex Evensen" due to Bankier.co's ESA complaint since 7-1999.
Favoring of securities brokers continued. On November 1, 2007, the EU's MiFID I was incorrectly implemented, because investment service-definition no. 7: “Placing financial instruments without a firm commitment basis” was lacking; i. e. the investment service for raising capital to SMEs without "Names" in the media and markets had not been implemented in the national law of securities firms.
A correct implementation of the EU's MiFID II was carried through 6-2019 without any "National Remedy" and "State Liability", i. e. compensation for damages caused by errors and/or late implementation of EU Law and regulations. That could happen, because the lobby of the financial industry is influential - and because Norway is a "power house" in ESA. The other participants of ESA are EEA-member countries Iceland and Liechtenstein. Therefore, ESA has so far failed to demand that Norway carry out "National Remedy" - as well as "State Liability" in the above-mentioned Case of Bankier.co’s complaint since 7-1999.
A Summing Up:
ESA and the Norwegian financial authorities have repeatedly been reminded of the above injustice. Bankier.co's ESA-complaint has still more than 10 active dossiers.
The damage to Bankier.co's initiative is small compared to the negative consequences for the real economy - caused by favored, transaction fee-driven players of the financial economy, who underserve needs of SMEs, including family-owned enterprises, without "names" in the media and markets.
Favoring of influential special interests happens everywhere - especially in the financial markets and when it comes to climate- and environmental challenges.
Value creation by the different financial models A – E mentioned above should be based on environmental viability by "Green Pricing"; i. e. by stimulating and/or taxing the actual use of resources and technical standards - to achieve a real "Green Shift".
Therefore, access to competent trustees in the fields of Impact Analyses + Pro-Active Restructuring and Reorganization (PARR) will be needed - as well as specialized courts for financial reconstruction and resource conflicts, which will require efforts for harmonization from global organizations, like U.N.'s: www.UNCITRAL.org
Ingress:
The above Case is based on efforts to stimulate share savings and to organize share owners in order to achieve good ownership policies, since a proposal of public control by a Public Registry of Share Savings (1977) - and the start of The Share Savers Association in Norway (1979) - e.g. to achieve a Share Savings Account (SSA) tax-free until withdrawal with a profit for all types of equity savings - also if you choose to reduce a salary by having the employer deposit the salary-saving-amount in the form of shares in a SSA.
Cf. S.T.Evensen. 1981. Economic co-responsibility: A Dividing Line in Politics. Cappelen/Bonnier - and S.T.Evensen's establishment of Association of Enterprisers in Norway (1987) with secretariat at the Polytechnic Association in Oslo. The latter was actively opposed by the Federation of Employers, despite what it could mean for the real economy. Look to Sweden – where www.foretagarna.se is the largest business organization with arm's length to party politics and employers.
When deregulation of financial markets happened in 1987/-88 in Europe – then the Single-Role Invest-Banc Initiative started as an Alternative to Multi-Role Financial Players driven by transaction fees.
The purpose: To contribute to real financial innovation with social impact.