Brief description of the product Scope of beneficiaries Fees, expenses Application, decision-making, contracting process Collaterals

Brief description of the product

Start Zrt. offers equity guarantee for professional financial investors investing in Hungarian SMEs. The guarantee applies to a specified (maximum of 80%) share of the equity investment in the event of the investee company being liquidated or entering final settlement during the term of the guarantee.

Start Zrt. provides equity guarantee for a minimum of HUF 5 million to a maximum of HUF 100 million and for a term of maximum 5 years.

Scope of beneficiaries

The beneficiary of an equity guarantee may be any such professional financial investor – venture capital fund, investment company or individual ("business angel") – who/which acquires a (primarily minority) share by capital increase through cash contribution in an SME that is registered in Hungary as a Kft. or Zrt. and adheres to the regulations set by double-entry bookkeeping for its accounts.

Fees, expenses

Guarantees are issued against a fee payment.

Evaluation fee

An amount of 0.5% of the guarantee requested by the client is payable at the time of application as evaluation fee.

Contract and notary fee

The client is requested to pay a one-time fix contract fee upon signing the contract amounting to 35.000 HUF in addition to notary charges arising from the notarisation of the contract and its appendices.

Guarantee fee

A pre-payment amounting to between 1-4% annually is required every six months calculated on the basis of the guarantee provided by Start Zrt.

Profit-sharing

During the term of the guarantee the client is required to pay a percentage (maximum of 10%) of the profit realized on the guaranteed amount of the investment to Start Zrt. as a profit-share.


P = profit;
S = sales price of the portion of the shareholding guaranteed;
R = payments received by the client during the term of the guarantee (dividend, capital decrease, others);
I = client’s initial investment guaranteed by Start Zrt.

Application, decision-making, contracting process

1. Application is initiated by the client. The client (the investor) provides Start Zrt. with an electronic- and a hardcopy of the completed and signed data sheet available from the homepage of Start Zrt. together with its appendices;
2. The client provides proof of payment of the evaluation fee to the account of Start Zrt.;
3. Following execution of points 1. and 2. the decision-preparatory process begins at Start Zrt.:
4. Based on the risk and financial analysis conducted by Start Zrt. and following the evaluation of the documentation provided by the client, Start Zrt. makes a decision about the client’s application. In the event of Start Zrt. approving the application it submits a written guarantee offer to the client, which offer, amongst others, includes the amount of the guarantee, the term, conditions of payment and any other conditions the client must meet in addition to the time available for accepting the offer;
5. Following the client’s acceptance of the offer outlined in point 4. Start Zrt. signs a guarantee contract with the client based on which it then issues the guarantee of payment statement in relation to the guarantee offered.

During evaluation of an application and in determining terms of the guarantee Start Zrt. conducts a complex analysis primarily of the investee company and of the project to be realized by the investment/capital increase and bases any decision on this analysis.

Start Zrt. reserves the right to reject any application submitted on the account of its own decision without having to provide any reason to the client for the decision. Until such time that a guarantee contract is signed Start Zrt. has the right to desist from a transaction.

Collaterals

In the event of the guarantee being drawn due to the liquidation of the investee company, the client must transfer ownership of its share in the company under liquidation as a condition for executing Start’s payment guarantee, if Start Zrt. so requests.

If necessary Start Zrt. may request further liens or collaterals for issuing the guarantee which either the client or any other entity of legal capacity may provide.