Risk Disclosure Statement

Effective Date: May 7, 2025
Version: V1.1
Last Version: V1.0 – Jan 1, 2025
Entity: Klub Capital Technologies Limited (“KCTL”)
Regulated by: Financial Services Regulatory Authority (FSRA), Abu Dhabi Global Market (ADGM), Licence No. 220119

This Risk Disclosure Statement (“Disclosure”) is intended for all Capital Partners participating in Klub Capital Technologies Limited’s Capital Partner Platform (“CPP”). It outlines the principal risks associated with funding working-capital products to UAE-based businesses via the Platform.

By onboarding as a Capital Partner or offering any Product to borrowers, you acknowledge that you have read, understood, and accepted the risks described in this Disclosure. If you do not agree to these terms or are unwilling to accept these risks, you must not proceed to fund any advances via the CPP.

1. Credit Risk (Risk of Borrower Default)

As a Capital Partner, you retain the full and direct credit risk associated with every advance you offer and fund to prospective borrowers via the Platform. There is no guarantee that a borrower will repay their obligations in full or on time, even if their historical performance or creditworthiness appears satisfactory.

Borrowers may default due to:

Deterioration in business operations (e.g., loss of key customers, cashflow mismatch);
Market disruptions (e.g., seasonal downturns, supply chain issues);
Legal or regulatory sanctions (e.g., licence revocation, VAT issues);
Insolvency or business closure.

KCTL does not provide any credit guarantee, insurance, or loss absorption on your behalf. KCTL also does not provide any credit or investment advice to any capital partner or borrower. You must rely on your own internal credit policy, underwriting models, and due diligence before approving any transaction.

2. Operational and Platform Risk

There exists a residual risk of disruption in the functionality of the Platform or its integrations. These include, but are not limited to:

System downtime or service outages due to technical failures, scheduled maintenance, or cyberattacks;
Latency in disbursement or repayment instructions due to API/API-failure at third-party sales platforms (e.g., Noon, Shopify);
Human errors in data entry or configuration;
Integration issues between settlement systems and borrower-linked channels.

KCTL endeavours to maintain a highly resilient and secure environment but cannot guarantee uninterrupted performance. Delays in disbursement or repayment settlements may temporarily affect your cashflow expectations.

3. Regulatory and Legal Risk

Participation on the Platform is subject to regulatory requirements from the FSRA, ADGM, and any applicable laws governing cross-border financing.

Examples of potential legal and regulatory risks include:

Changes in FSRA’s Conduct of Business Rulebook or lending disclosure standards;
Revisions to anti-money laundering or data protection obligations;
New licensing requirements for specific Product types or lender classes;
Enforcement actions or penalties imposed due to non-compliance with onboarding disclosures or risk assessment protocols.

You are responsible for maintaining your own compliance with both UAE and home-jurisdiction laws. KCTL will inform you of major regulatory changes affecting Platform operation but does not assume legal liability for your non-compliance.

4. Liquidity and Cashflow Mismatch Risk

Repayments from borrowers—whether via sales-based deductions, invoice collections, or scheduled transfers—may be delayed, smaller than expected, or partially missed.

This creates a potential mismatch between:

The timing of your expected returns;
Your internal fund rotation or deployment requirements;
Your own investor or treasury expectations (if applicable).

Examples of events that may trigger repayment delays:

Week-over-week sales decline by borrower;
Invoice debtor delays payment (for invoice discounting);
Bank-level or settlement errors beyond KCTL’s control.

You are advised to maintain a liquidity buffer or staggered exposure allocation to mitigate the impact of cashflow timing mismatches.

5. Concentration Risk

You may inadvertently overexpose yourself to one or more borrowers, sectors, or transaction types, increasing your vulnerability to specific shocks. Examples:

Overfunding a single high-performing borrower without diversification;
Excessive exposure to the e-commerce sector in a slowdown;
Dependence on a single Product (e.g., only RBF).

KCTL provides transparency and borrower profiles to support informed allocation decisions. However, final portfolio construction is your responsibility.

6. Information Asymmetry and Limited Visibility

While KCTL validates and shares relevant borrower data, you may not always have full visibility into:

Non-Platform liabilities or parallel borrowing by the same merchant;
Management team dynamics or internal governance weaknesses;
Off-platform revenue decline or informal business pressures;
Customer churn, refund rates, or supplier disputes.

You should treat Platform data as a base reference and augment it with independent diligence as per your own internal credit policy, underwriting models, wherever necessary. KCTL makes no representations regarding undisclosed obligations or third-party lending.

7. Cybersecurity and Data Breach Risk

Although KCTL implements industry-standard security protocols, no platform is immune from cybersecurity threats.

In the unlikely event of a cyberattack or data breach:

Confidential borrower data may be exposed;
Repayment routing could be interrupted or compromised;
Regulatory disclosures may be required, impacting your records.

KCTL will notify all affected parties and take immediate mitigation steps, but losses from cyber incidents must be evaluated and managed within your own risk management framework.

8. Dispute and Enforcement Risk

In cases of borrower default, repayment dispute, or contract breach:

Enforcement may require legal action under UAE law or ADGM Arbitration Regulations;
The legal cost, time, and enforceability may vary depending on borrower structure and documentation;
KCTL facilitates administrative support but does not act as a legal representative or creditor agent.

You must be prepared to undertake independent enforcement actions, including engaging local counsel or debt recovery agencies, where necessary.

9. No KCTL Guarantee or Fiduciary Role

It is expressly understood that KCTL:

Is not a lender unless explicitly stated in a specific Product;
Does not provide investment advice, underwriting services, or portfolio structuring to either capital partner or borrower;
Is not liable for losses resulting from your lending decisions or borrower conduct;
Does not act as a trustee or fiduciary on your behalf.

Your use of the Platform is based on an “execution-only” basis. You are responsible for participating in financing proposals identified on the Financing Platform through your own product selection, credit analysis, documentation acceptance, and funding exposure.

10. Conflict of Interest and Platform Revenue

KCTL earns commission or fees based on successfully disbursed and repaid advances. While KCTL operates with transparency and neutrality, this economic interest may create potential perceived conflicts, such as:

Prioritisation of volume over partner caution;
Increased borrower onboarding incentives during commercial cycles;
Batch visibility or promotional programs for select lenders (where agreed).

To address this:

All Capital Partners receive equal dashboard functionality;
Offers are displayed on merit, not pay-to-play mechanics;
KCTL does not provide borrower advice or recommend specific Capital Partners.

11. Additional Documentation and Operational Readiness

Before you finance any advance, you may be required to provide additional internal policy documents such as:

Lending guidelines, risk thresholds, or scoring models;
Proof of funds or escrow statements;
Legal templates for contracts, demand notices, and collections;
AML/CTF certifications and data protection policy.

KCTL reserves the right to suspend or delay access until such documents are received and approved.

12. Acknowledgment and Acceptance

By proceeding to finance one or more borrower transactions via the Capital Partner Platform, you confirm that:

You have reviewed this Disclosure carefully and understand the risks involved;
You accept the possibility of partial or total capital loss, delayed repayments, or non-performance;
You understand your regulatory, contractual, and operational obligations under FSRA rules and KCTL’s onboarding agreement;
You have made an independent decision to fund each advance without relying on representations or advice from KCTL.