Partner Risk Disclosure

PARTNER RISK DISCLOSURE DOCUMENT

RBI Liberalized Remittance Scheme (“LRS”)

WHAT IS IT?

The Reserve Bank of India currently allows overseas remittances of up to U.S. $250,000 per year per Permanent Account Number.

1. WHO IS RESPONSIBLE?

The customer’s Indian bank is responsible for complying with various regulations, including:

1. FEMA compliance;

2. Source of funds (PMLA);

3. Purpose of remittance (PMLA)

4. RBI Guideline: https://www.rbi.org.in/Scripts/BS_ViewMasCirculardetails.aspx?id=9899#18

5. Frequently asked Questions issued by RBI: https://m.rbi.org.in/scripts/FAQView.aspx?Id=115#Q1

2. WHAT IS THE PURPOSE CODE OF THIS REMITTANCE UNDER RBI?

S0001 – Portfolio Investments in foreign securities.

3. WHO DETERMINES IF THE APPROPRIATE PURPOSE IS DISCLOSED?

   1. The customer’s bank is responsible.

   2. The customer is responsible. All customers/remitters are required to sign mandatory terms and disclosures as provided by their banks.

4. PROTECTION OF ASSETS

As a prerequisite of engaging in business, all broker dealers in the U.S. must be registered members of and are subject to the regulations and bylaws of the:

1. Financial Industry Regulatory Authority (“FINRA”)- https://www.finra.org/#/

2. Securities Investor Protection Corporation (“SIPC”)-https://www.sipc.org/

5. HOW ARE CUSTOMER ASSETS SECURED?

   1. Virtually in all cases, when a brokerage firm ceases to operate, customer assets are safe and typically are transferred in an orderly fashion to another registered brokerage firm. Multiple layers of protection safeguard customer assets. For example, registered brokerage firms must keep their customer securities and cash segregated from their own trading account so that, even if the company fails, its customer assets will be safe. Brokerage firms are also required to meet minimum net capital requirements to reduce the likelihood of insolvency in the first place, and to be members of the SIPC.

2. Borderless Investing Inc. (“Borderless Investing”), who is the owner of the Stockal platform/service, has its brokerage partner, DriveWealth LLC as its clearing agent (“Clearing Agent”).

3. DriveWealth LLC, a member of the Securities Investor Protection Corporation (SIPC), will serve as the custodian for your securities account.  In the event that DriveWealth LLC fails and is placed in liquidation under the Securities Investor Protection Act, securities in your brokerage account may be protected up to $500,000.  For details, please see www.sipc.org.

4. In those rare cases of firm failure, where customer assets are missing because of theft or fraud such protection then comes into play.

6. WHO ARE THE CUSTODIANS OF CUSTOMER ACCOUNTS?

The assets of the customer are owned by the custodian which services multiple brokerages who are in turn registered with the United States Securities and Exchange Commission and regulated by FINRA. The custodian in the case of Borderless Investing is DriveWealth LLC.

7.  WORKFLOWS: WHAT HAPPENS WHEN ANYONE IN THE ECOSYSTEM STOPS BUSINESS

1. IF BROKERAGE CEASES TO EXIST

   1. Borderless Investing will facilitate the movement of customer assets to another broker where Borderless Investing has a relationship. The customer will also have the ability to move accounts directly to another brokerage firm, but it is generally not needed.

2. If a brokerage account cannot be moved or liquidated (due to the Custodian also going out of business), SIPC will appoint a Trustee and follow due process.

2. IF BORDERLESS INVESTING CEASES TO EXIST

   1. Borderless Investing will arrange for direct contact between its customers and their respective brokers (relevant contact information is always directly made available even when Borderless Investing exists).

2. Because all trade confirmations and regulatory statements are sent to customers directly by the brokerage firm at all times, customers have constant access to their brokerage account.

3. Customers can access and operate their accounts at:

   1. the brokerage front-end; and/or

   2. liquidate their accounts and/or

   3. move to a different brokerage by coordinating directly with the new brokerage firm.

4. Borderless Investing shall also facilitate the process if needed.

8. KYC & FATCA COMPLIANCE RESPONSIBILITIES

   1. As a referrer, the partner is not responsible nor liable for customer Know Your Customer (“KYC”) procedures.

2. KYC, Anti-Money Laundering (“AML”), Foreign Account Tax Compliance Act (“FATCA”) compliance is undertaken and fulfilled by the Clearing Agent involved who in this case is DriveWealth LLC.

3. Borderless Investing’s responsibility is to facilitate KYC by providing a digital infrastructure.

4. Regulatory reporting requirements are with the foreign regulator (SEC and FINRA) and with the Indian bank. These are managed by the Clearing Agent and the respective Indian banks. Borderless Investing assists as and when needed, by providing relevant data to all.

9. CUSTOMER PROFILING

   1. Mandatory customer profiling is automatically completed while opening the brokerage account with the Clearing Agent.

2. Facilitation for profiling is carried out by Borderless Investing (by gathering requisite information and supporting evidence, should it be required, from the customer).

3. Final approval/rejection and filing is carried out by the Clearing Agent.

4. Any and all products that are not allowed by the RBI are periodically monitored by Borderless Investing and removed from the platform if required. The final responsibility of not investing in any disallowed product lies with the customer.

10. CLEARING AGENT CREDENTIALS

FINRA Broker check: https://brokercheck.finra.org/firm/summary/165429

11. REGARDING RISKS TO REFERRAL PARTNER

1. BUSINESS

   1. As all accounts are cash accounts there is no margin that any referral partner, Clearing Agent or Borderless Investing will provide to the customer.

2. RBI does not allow any speculative investments under LRS, so the platform does not provide derivative products nor futures and options and therefore none of the platform partners carry any risk in this regard.

3. All accounts are DIY (“Do IT Yourself”) accounts, so the partner will not be placing trades on behalf of customers and does not carry the risk of being targeted with false or malicious claims in regard to order placement.

4. The Clearing Agent is not liable for advisory services because advisory, as and when made available on the platform, will be offered by separately regulated/accredited advisory firms.

2. COMPLIANCE

   1. Foreign investments do not come under the purview of SEBI, accordingly there are no obligations of the partner to SEBI with regards to managing customers who make overseas investments.

2. Borderless Investing has appropriate structures in place to ensure compliance with SEBI reporting expectations.

3. Because the business mode of operation is purely self-directed and controlled by the customer, taxation is not an item that the partner is obligated to support. The customer is expressly notified of this and is treated as automatically consenting to obtaining external taxation advisory resources before engaging in any transactions by utilising the Service. Please note:

1. There is no capital gains tax in the US for NRA customers. All funds are credited, as-is to the customer’s accounts. The partner is not required to do any reporting in this respect.

2. Dividend payments are credited to the customer’s account after US tax withholding automatically. This is handled by the US broker and facilitated by Borderless Investing. Customers can request for tax-paid acknowledgement directly on the platform. The partner has no role to play in this respect either.

3. CURRENCY

   1. Currency conversion is a subject of bank authorized remittances only and so the partner does not bear any risk on currency fluctuations.

2. Customers can plan their remittances to and from their investing accounts based on their preferred currency rates.

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