Alset Capital Inc. is a publicly traded company: TSXV:KSUM | OTC:ALSCF | FSE:1R60, WKN:A3ESVQ

Investment Policy

Investment Objective

The investment objective of Alset Capital Inc. (the “Corporation”) is to provide investors with long-term capital growth by focusing on investing in a wide range of diverse industries, including but not limited to technology, healthcare, industrial and manufacturing, and other industries from time to time.

Investment Strategy

The following shall be the guidelines for the Corporation’s investment strategy:

  1. Investments shall be focused in a wide range of diverse industries, including but not limited to technology, healthcare, industrial and manufacturing, and other industries from time to time. It is expected that such investments shall primarily include private issuers and issuers listed on Canadian stock exchanges, with some exposure to global equity markets.
  2. The investment portfolio may be comprised of securities of both public and private issuers in a wide range of diverse industries, including but not limited to technology, healthcare, industrial and manufacturing, and other industries from time to time.
  3. Target investments shall encompass companies at all stages of development, including inception, early stage, and pre-initial public offering technology companies with undeveloped and undervalued technology products or services requiring start-up or development capital, as well as intermediate and senior companies.
  4. Initial investments of equity, debt or a combination thereof may be made through a variety of financial instruments including, but not limited to, private placements, participation in initial public offerings, bridge loans, secured loans, unsecured loans, convertible debentures, warrants and options, royalties, net profit interests and other hybrid instruments, which will be acquired and held both for long-term capital appreciation and shorter-term gains.
  5. The nature and timing of the Corporation’s investments will depend, in part, on available capital at any particular time and the investment opportunities identified and available to the Corporation.
  6. A key aspect of the investment strategy shall be seeking earlier stage high-growth potential companies in a wide range of diverse industries, including but not limited to technology, healthcare, industrial and manufacturing, and other industries from time to time. backed by strong management teams and solid business models that can benefit from macro-economic trends. Notwithstanding this requirement, consideration may be given to opportunities where existing management may need the infusion of high level guidance, direction and expertise from the Corporation. In such situations, the Corporation intends to work closely with an investee company’s management and board of directors to structure and deliver the strategic and financial resources to help such company best take advantage of its prospective or estimated resources and to mature into a successful commercial enterprise.
  7. The Corporation may, from time to time, seek a more active role in situations where involvement of the Corporation is expected to make a significant difference to success and resulting appreciation. The Corporation may seek equity participation in situations to which the Corporation can potentially add value by its involvement, not only financially but also by the contribution of guidance and additional management expertise.
  8. In a wide range of diverse industries, including but not limited to technology, healthcare, industrial and manufacturing, and other industries from time to time, the Corporation expects to invest in securities of issuers which are early stage high-growth potential technology companies. In any other sectors, the Corporation expects to invest in securities of issuers which it believes have competitive advantages in an area with a large potential market. In both sectors, the Corporation will look for seasoned and capable management to be in place.
  9. Immediate liquidity shall not be a requirement, but each investment shall be evaluated in terms of a potential growth and/or exit strategy designed to maximize the relative return in light of changing fundamentals and opportunities.
  10. Subject to applicable laws, there are no restrictions on the size or market capitalization with respect to the Corporation’s investments in the equity securities of public or private issuers.
  11. The Corporation will not purchase or sell commodities, purchase the securities of any mutual fund, purchase mortgages or sell mortgages or purchase or sell derivatives (except that the Corporation may sell call options to purchase securities owned by the Corporation as a means of locking in gains or avoiding future losses).
  12. Subject to the full approval of the board of directors of the Corporation (the “Board”), the Corporation may establish an investment committee or other committee as it deems necessary. Such committee may consider certain special investment situations, including assuming a controlling or joint-controlling interest in an investee company, which may also involve the provision of advice to management and/or Board participation.
  13. All investments shall be made in full compliance with applicable laws in relevant jurisdictions, and shall be made in accordance with and governed by the rules and policies of applicable regulatory authorities.

From time to time, the Board may authorize such additional investments outside of the guidelines described herein as its sees fit for the benefit of the Corporation and its shareholders.

Asset Allocation

In determining the sector weighting of the investment portfolio, the Board or a designated committee thereof, shall analyze the current economic conditions and trends in North American and global economies and shall seek to respond quickly to such changes. The investment portfolio shall be positioned in accordance with the market view of the Board or a designated committee thereof, from time to time. Sector allocations may vary significantly over time.

Rebalancing

Asset allocations will be reviewed by the Board or a designated committee thereof, on a monthly basis. Reallocations are anticipated to be required infrequently except during extremely volatile market periods.

Implementation

The officers, directors and management of the Corporation shall work jointly and severally to uncover appropriate investment opportunities. These individuals have a broad range of business experience and their own networks of business partners, financiers, venture capitalists and finders through whom potential investments may be identified.

Prospective investments will be channeled through the Board or a designated committee thereof. The Board or a designated committee thereof, shall make an assessment of whether the proposal fits with the investment and corporate strategy of the Corporation in accordance with the investment evaluation process below, and then proceed with preliminary due diligence, leading to a decision to reject or move the proposal to the next stage of detailed due diligence. This process may involve the participation of outside professional consultants.

Once a decision has been reached to invest in a particular situation, a short summary of the rationale behind the investment decision should be prepared by a designated committee of the Board, if applicable, and approved by the Board. This summary should include guidelines against which future progress can be measured. The summary should also highlight any finder’s or agents’ fees payable.

All investments shall be submitted to the Board for final approval. The Corporation will select all investments for submission to the Board and monitor the Corporation’s investment portfolio on an ongoing basis, and will be subject to the direction of the Board. One member of the Corporation may be designated and authorized to handle the day-to- day trading decisions in keeping with the directions of the Board and a special committee designated by the Board, if applicable.

Negotiation of terms of participation is a key determinant of the ultimate value of any opportunity to the Corporation. Negotiations may be on-going before and after the performance of due diligence. The representative(s) of the Corporation involved in these negotiations will be determined in each case by the circumstances.

Investment Evaluation Process

The Board or a designated committee thereof, incorporates both a top-down and bottom-up approach in identifying and evaluating investments for Board approval. In conducting its due diligence the Corporation considers various factors in relation to the potential investee, including but not limited to the following:

  1. Alignment with this Policy;
  2. Ability to progress the entity’s business in a timely manner;
  3. Capital market appetite for the sector being invested in;
  4. Future capital requirements to develop the full potential of its business and the expected ability to raise the necessary capital;
  5. Growth capabilities; and
  6. Exit strategies.
Conflicts of Interest

The Corporation has assembled a strong Board and management team, with diverse backgrounds and significant business expertise and experience. In assembling a Board with these characteristics, the Corporation has two primary goals:

(a) to gain exposure to a wide variety of potential investments, including investments that Board members may already be familiar with or that come to their attention through other business dealings: and

(b) where a Board member has a personal interest in a potential investment, to ensure that the Corporation has independent, qualified directors available to conduct an independent assessment.

The Corporation has no restrictions with respect to investing in companies in which a Board member may already have an interest. Any potential investments where there is a material conflict of interest involving an employee, officer or director of the Corporation may only proceed after receiving approval from disinterested directors of the Board. The Corporation is also subject to the “related party” transaction policies of the TSX Venture Exchange, which mandates disinterested shareholder approval to certain transactions.

Management Participation

The Corporation may, from time to time, seek a more active role in the companies in which it invests, and provide such companies with financial and personnel resources, as well as strategic counsel. The Corporation may also ask for board representation in cases where it makes a significant investment in the business of an investee company. The Corporation’s nominee(s) shall be determined by the Board as appropriate in such circumstances.

Monitoring and Reporting

The Corporation’s Chief Financial Officer shall be primarily responsible for the reporting process whereby the performance of each of the Corporation’s investments is monitored. Quarterly financial and other progress information shall be gathered from each corporate entity, and these shall form the basis for a quarterly review of the Corporation’s investment portfolio by the Board or a designated committee thereof. Any deviations from expectation are to be investigated by the Board or a designated committee thereof, and if deemed to be significant, reported to the Board.

With public company investments, the Corporation is not likely to have any difficulty accessing financial information relevant to its investment. In the event the Corporation invests in private enterprises, it shall endeavour in each case to obtain a contractual right to be provided with timely access to all books and records it considers necessary to monitor and protect its investment in such private enterprises.

A full report of the status and performance of the Corporation’s investments is to be prepared by the Board or a designated committee thereof, and presented at the end of each fiscal year.

Amended and Restated effective August 4, 2023.