The Participatory Notes offer no fixed return. The return is exclusively linked to the performance of the underlying asset (equity or loan). This means that investors through Participatory Notes will only be paid cash sums if the underlying assets pays out such sums. In case of equity, this means if, when and to the extent that dividends (very rare) or exit proceeds are paid. In case of a loan, this means interests payments and principal reimbursements. Participatory Notes linked to loans will thus only procure cash payments to investors if, when and to the extent that the loan is reimbursed or the interests are paid.

No guarantee exists as to these payments or the timing of such timings. However, Spreds Finance is obliged and will obviously pay the investors any sums received from the underlying assets as soon as it has received such payments.

In case of equity investments, there is a risk of not finding (in a reasonable time or at all) a buyer for the shares held in a compartment in the name of the investors or finding a buyer but at a price assuring a decent return to the investors. Spreds Finance will to its best to find such buyer, but offers no guarantee, especially as, in most of the cases, the sale of its shares will be linked to the sale of the whole underlying company.

In case of sale of the shares held by a compartment of Spreds Finance, it is possible that the price will be paid in different tranches or that Spreds Finance will be asked to give certain guarantees (based on market standards) or to pay certain taxes. In these cases, all or part of the payment of the proceeds to the investors may be delayed and all or part of the unpaid sums could be withheld by the buyer to cover the guarantees in certain events. This may reduce the return for the investors.

Equity investments are often subject to a drag along clause (which is a market standard), whereby minority shareholders, such as Spreds Finance, may be obliged to sell their shares if the majority shareholders decide to sell their shares. There is no guarantee as to the price of such sale, which might result in a lower-than-expected return for the investors (and a possible partial loss of the tax reduction under the tax shelter scheme). Spreds tries in any case to mitigate this risk by imposing a clause that states that a minimum price must be obtained to cover the possible tax shelter loss if such a sale occurs during the first 4 years after the investment.