This Conflict of Interests Policy (“Policy”) has been developed for LBK EXCHANGE FZE (“LBank” or “Company”). This Policy is reviewed annually, unless there is a change in regulation that requires to implement an earlier update. The Compliance Officer (“CO”) is responsible for maintaining, developing, implementing, and updating this Policy and ensuring compliance with all applicable laws, regulations, and best practices. The Board of Directors of LBank (“Board”) is responsible for approving and monitoring the implementation of this Policy and the related procedures. Upon establishing that an update is required, the CO proposes changes by presenting them to the Board. Once the Board approval is sought, the changes are incorporated in the Policy.

Document History

LBank endeavours to ensure that its conflicts of interest practices are in compliance with the regulatory framework of the Virtual Assets Regulatory Authority (“VARA”), including, inter alia, the Virtual Assets and Related Activities Regulations 2023 (“VARA Regulations”), and the accompanying rulebooks issued by VARA. All capitalised terms, if not defined within this Policy, have the same meaning ascribed to them in the VARA Regulations or the accompanying rulebooks.

This Policy is binding on LBank’s directors, employees (temporary and permanent), vendors, counterparties, and any person directly or indirectly linked to the Company by control.

1. 
PURPOSE AND SCOPE

1.1. The purpose of the Conflicts of Interest Policy (hereinafter the “Policy”) is to set out LBank’s approach in identifying the circumstances which may give rise to a client’s conflict of interest with the Company, its vendors, counterparties, employees, directors or another client; the Company’s measures for preventing such conflicts of interest from arising; and managing conflicts of interest which cannot be avoided.

1.2. The Company is committed to act honestly, fairly and professionally and in the best interests of its clients and to comply, in particular, with the principles and rules set out in VARA Regulations.

1.3. This Policy aims to identify and effectively manage all actual or potential conflicts of interest. In cases where conflicts cannot be adequately managed, despite reasonable efforts, this Policy ensures that such conflicts are fully disclosed to affected clients, allowing them to make informed decisions and ensuring fairness. The said disclosure shall be done in within a reasonable time, indicating the general nature and source of conflicts of interest, the risks to the client with sufficient details so as to allow the client to take an informed decision with the regards to its investment as well as the steps taken by the Company to mitigate such risks.

1.4. This Policy sets out an outline of the systems and controls adopted by the Company to identify and mitigate actual or potential conflicts of interest, which may be detrimental to the interests of the Company’s clients.

1.5. The Policy applies to all stakeholders including but not limited to the Company’s directors, employees (temporary and permanent) (directors, employees are collectively referred to as “Employees”), vendors, counterparties, and any persons directly or indirectly linked to the Company by investment or control who might be exposed to conflicts of interests arising between their personal interests and/or the interests of the Company with the interests of the Company’s clients as well as between one client and another, in the course of providing any services.

1.6. In particular, the Policy aims to prevent any conflict between its clients and any of the following:

Any other companies in the LBank Group (“Group Companies”);

a. The Company;

b. The Company’s Board;

c. The Company’s Employees (including both permanent and temporary staff members, as well as contract workers);

d. The Company’s clients; and/or

e. The Company’s investors 

1.7. The Policy is designed to:

a. Avoid conflicts of interest;

b. Where such conflict cannot be avoided, Company aims to manage such conflict; or

c. Where conflict of interest cannot be avoided, the Company aims to Disclose such conflict to the affected clients.

2. RESPONSIBILITIES

The Company has established suitable and adequate internal procedures for minimising any potential conflicts of interest. 

2.1. Board of Directors 

a. The Board and the CO are responsible for identifying, managing, and mitigating the conflicts of interest that may arise while doing business activities. Reasonable care should be taken by the Board to establish and maintain such systems and controls as are appropriate to the business and to implement appropriate processes to enable to manage conflicts of interest effectively.

b. The Board will regularly review the systems, controls, and processes for managing and mitigating conflicts, with reviews conducted at least annually.

c. In any Board meeting, where a member of the Board discloses to the Board that they have a material interest in a transaction, the remaining members of the Board shall consider whether there is a conflict that may affect the objectivity of that member. In such event, the remaining members of the Board will determine whether it is appropriate for that Board member to continue to participate in the Board meeting. If the remaining members of the Board decide that it is not appropriate for that member to participate, they may ask that member to leave the Board meeting. That Board member is not entitled to use the member’s personal influence in issues whether in or outside the meeting. Such conflict shall be recorded in the minutes of meeting by the Company Secretary.

2.2. Compliance Officer (CO)

a. The CO is the primary officer for administration of this Policy. The CO is responsible for maintaining the disclosure register and maintain this Policy based on the discussions and approval from the Board.

b. The CO will conduct training for the Board and the Employees and be responsible for bringing this Policy and any amendments thereon to the notice of the Employees.

c. The CO will conduct annual reviews of the Conflict Register and update this Policy from time to time, upon approval of the Board.

2.3. Employees

a. All Employees are required to review this Policy and familiarise themselves with the provisions of this Policy.

b. New Employees are required to confirm their understanding of and compliance with this Policy by completing the “Declaration of Policy Understanding” as provided under Appendix A and returning it to the CO within one (1) week of being given the policy and once annually thereafter.

c. All Employees are required to report any conflicts of interest that may arise to the CO in the format of declaration provided under Appendix B.

d. Any failure to comply with this Policy may be considered as a breach of an Employee’s contract.

e. In case of any doubt or concern, the Employees are expected to reach out to their manager or the CO for further guidance.

3. IDENTIFICATION OF CONFLICT OF INTEREST

3.1. Preventing and controlling conflicts of interest at LBank is an important element in ensuring that the interests of clients and investors, and the integrity and reputation of LBank are protected.

3.2. A Conflict of Interest occurs when a personal or outside (non-Company) interest conflicts with, or appears to conflict with, what is in the best interest of the Company or the Company’s clients. Personal interest can include financial gains, family ties, or other personal relationships that may compromise the impartiality of the Company’s Employees, or Related parties. A conflict of interest can also occur when the interest of the Company, its employees, board members or related parties conflicts with the duty it owes to clients. Even a perception of competing interests, impaired judgement or undue influence may be damaging to the Company’s reputation. Any conflict of interest, whether actual, potential, or perceived, holds equal significance in our policy.

3.3. For the purposes of identifying the types of conflicts of interest that arise in the course of providing LBank’s services and whose existence may damage the interests of a client, the Company takes into account, by way of minimum criteria, the question of whether the Company, Employee, investor or a person directly or indirectly linked by control to the Company, vendor, or counterparty (collectively the Company, Employees, Related Party, vendors and counterparties are called “Potential Conflict Person”), is in any of the following situations, whether as a result of providing Company’s services or activities:

3.3.1. The Potential Conflict Person is likely to make a financial gain, or avoid a financial loss, at the expense of the client;

3.3.2. The Potential Conflict Person has an interest in the outcome of a service provided to the client or of a transaction carried out on behalf of the client, which is distinct from the client’s interest in that outcome;

3.3.3. The Potential Conflict Person has an interest in the outcome of a service provided to the client or of a transaction carried out on behalf of the client, which is distinct from the client’s interest in that outcome;

3.3.4. The Potential Conflict Person has a financial or other incentive to favour the interest of another client or group of clients over the interests of the client;

3.3.5. The Potential Conflict Person carries on the same business as the client;

3.3.6. The Potential Conflict Person receives or will receive from a person other than the client, an inducement in relation to a service provided to the client, in the form of monies, goods or services, other than the standard commission or fee for that service.

4. MANAGEMENT OF CONFLICTS OF INTEREST

4.1. Control and measures: The Company has established adequate and appropriate internal procedures for minimizing any potential conflicts of interest which include the following:

a. Initial and ongoing training for all Employees, on conflict of interest identification, avoidance, and reporting;

b. Relevant information is recorded promptly in a secure environment to enable identification and management of conflicts of interests;

c. Adequate records are maintained of the services and activities of the Company where a conflict of interest has been identified;

d. There is a periodic review of the adequacy of the Company’s systems and controls;

e. Employees are required to avoid conflicts of interest with activities they undertake outside LBank;

f. There is a clear distinction between the operations of different departments of the Company, in order to avoid exchange of information that may harm the interest of the clients;

g. The CO cannot hold a position at the Board;

h. All Employees are required to sign a disclosure document, indicating whether they hold employment, board positions or any other key positions with any other companies.

i. Mandatory reporting of all actual or potential conflicts of interest by an Employee (refer Appendix B);

j. Maintenance of a Conflicts of Interests Register (refer Appendix C) in the ownership of the CO;

k. Adequate training for all Employees to ensure that all gifts, entertainment, hospitality and/or inducement over a total of Five Hundred UAE Dirhams (AED 500.00) are reported to the CO; and

l. Signing disclosure document with clients where an activity may lead to a potential conflict of interest with the client.

4.2. Personal Benefits and Gift Policies

a. Any offer, opportunity or gift that could improperly influence professional decision making is an Improper Personal Benefit. Improper Personal Benefits include goods, services, entertainment, hospitality, cash, cash equivalents, opportunities for which an Employee pays less than fair market value, or any other benefit. An Improper Personal Benefit is prohibited, whether offered directly to any Employee of the Company, or indirectly through family members or others.

b. Benefits of a nominal value (less than AED 500.00 in total value) are not considered Improper Personal Benefits.

c. Any Improper Personal Benefits in value of more than Five Hundred UAE Dirhams (AED 500.00) is required to be reported to the CO no later than 2 business days from its receipt in the form stipulated in Appendix B.

d. Should an Employee intend to gift a client or business partner of the Company, the Employee is required to get a prior written consent from the CO.

e. Infrequently, Employees may be offered benefits that are not Improper Personal Benefits because they are primarily for the benefit of the Company. Employees and board members must exercise moderation and good judgment when determining whether such benefits can be accepted. A benefit may only be accepted if it is:

i. not a Conflict of Interest or Improper Personal Benefit, as described above, and

ii. in the best interests of the Company.

f. So long as they comply with the above criteria, the following benefits may be accepted:

i. Presentation, seminar or conference that has been pre-approved by the manager or CO, if most of the content is educational or on a business/professional topic directly relevant to your job. (A meal provided to participants directly before or afterwards is also permitted); or

ii. A meal with a client or business partner on a regular business day that has been pre-approved by the manager or CO, if provided while working on a business-related matter and the primary purpose is to discuss business; or

iii. A local cultural, sporting or entertainment event that has been pre-approved by the CO.

g. The CO shall maintain a record of reasonable gifts in the gifts register for a period of eight (8) years from the date of receipt.

4.3. External Board and Business Involvements 

a. All Employees are required to disclose their participation with external board and business involvements to the CO as per the declaration document attached as Appendix D of this Policy. Any changes or updates to the external board and business involvements are required to be updated with the CO on an annual basis.

b. External board and business involvement refers to any business activity that involves an Employee to be engaged in a business other than the Company’s business.

c. Examples of external board and business involvement include (but are not limited to):

i. Owning private shares of another company;

ii. Sitting at the board of another company, including sitting at the board of a charity, non-profit corporation, or political position;

iii. Being employed as an employee, director, consultant, or officer at another company, including non-profit entities, with or without compensation;

iv. Volunteer engagements at any other company, including a non-profit or political engagement; or

v. Performing any honorary or paid work such as attending a seminar as a speaker, writing an article or position held at the request of the Company.

4.4. Personal Account Dealing

a. All Employees are required to understand and comply with their obligations in terms of personal account dealing as provided in the Company’s internal policies.

4.5. Specific Conflicts of Interest

a. The below is a sample, of specific examples of activities at the Company that may give rise to conflicts of interest which require appropriate management, mitigation or prevention:

4.6. Method of Management of Proprietary Positions:

i. LBank shall maintain segregation of its own assets from clients’ assets. LBank shall implement Chinese walls between the proprietary operations and client asset operations of the Company. Access control restrictions shall be in place in terms of client information available to personnel handling proprietary operations for LBank.

ii. LBank structurally segregates its business functions and duties to allow for their independence. Specifically, supervisory and advisory functions and other internal review functions shall be effectively segregated from operational duties in order to ensure that supervisory and other internal controls are effectively maintained; and avoid undetected errors or abuses of certain functions.

iii. Additionally, business divisions implement policies and procedures and systems and controls so that one person or unit does not execute all phases of a transaction, including applying a “four eyes” principle to avoid or mitigate the risk of asset or information loss.

4.7. Internal Reporting of Conflicts of Interest

a. All Employees are expected to have an understanding of a conflict and report any actual or potential conflicts of interest to the CO immediately in the form provided in Appendix B.

b. Failure to identify and appropriately manage Conflicts of Interest could result in a range of adverse consequences for clients, the Company and/or Employees, such as reputational damage, damage to client relationships and loss of client business, regulatory sanctions, and risk of litigation.

c. The Company operates internal escalation processes for conflicts of interest, with each member of the Company having the responsibility of defining and documenting their respective processes under the Company’s conflicts of interest framework. This escalation process includes reporting in the declaration form provided under Appendix B which needs to be filed with the CO before undertaking the act, transaction or appointment.

d. The declaration will be discussed and decided upon by the Board, with the outcome documented in the Conflict-of-Interest Register as per Appendix C. This register will comprehensively capture the implemented management and remedial measures. These records will be retained for a period of up to eight (8) years.

e. Where a declaration has been filed by the Board member, that they have a material interest in any act or a transaction, the remaining members of the Board present at the Board meeting shall consider whether it is appropriate for that Board member to continue to participate in the Board meeting after reviewing whether the conflict may affect the objectivity of that member and/or their ability to perform their tasks towards the Company properly. If the remaining members of the Board decide that it is not appropriate for that member to participate, they may ask that member to leave the Board meeting. That Board member is not entitled to use the member’s personal influence on issues whether in or outside the meeting. The Board member shall not vote on the decision. The Company Secretary shall record the conflict in the relevant Board minutes.

5. Disclosure of Conflicts

a. In events where a conflict cannot be avoided, it is imperative for the Company to disclose such conflict or potential conflict of interest to the affected clients. Any failure to identify or manage conflicts can result in irreversible damage for the Company and its clients including client relationships, regulatory sanctions, lawsuits, and reputational damage.

b. If the Company, or its Employee has an interest that may reasonably impair its objectivity which gives rise to an actual or potential conflicts of interest which cannot be avoided by the Company after using all reasonable efforts, the Company shall promptly disclose the nature of such conflict to its affected client and, to the extent that the affected client’s interests can be sufficiently protected, manage and minimise such conflict by adopting appropriate measures.

c. Employees are required to disclose all Conflicts of Interest in writing to the CO within 2 business days of discovery of such actual or potential conflict as per Appendix B. The reporting individual is required to furnish all material facts and any requisite documents pertinent for the disclosure.

d. There may be occasions where, despite all reasonable efforts, the Company cannot avoid Conflicts of Interests. Where an Employee has an interest that may reasonably impair its objectivity, in a transaction with or for a client or a relationship which gives rise to an actual or potential conflicts of interest in relation to the transaction, the Company must:

i. promptly disclose the nature of such conflict to its affected client; and

ii. to the extent that the affected client’s interests can be sufficiently protected, manage and minimise such conflict by adopting appropriate measures to ensure fair treatment to its affected client, including establishing and maintaining “Chinese Walls” to separate employees into different teams. 

e. Rules of disclosure: The disclosure must:

i. be made in durable medium, within a reasonable period of time;

ii. provide all pertinent details to enable that client to make an informed decision with respect to the service in the context of which the conflict of interest arises; and

iii. must disclose that it is being provided to the client because the Company’s administrative arrangements established to prevent or manage that conflict of interest are not sufficient to ensure that the risk of damage to the interests of the client will be prevented.

f. If the Company cannot avoid conflicts of interest after using all reasonable efforts, the clients should be fairly treated by the Company.

g. Where, subsequent to the disclosure, the client does not agree to provision of service, the Company will immediately cease to proceed with the transaction or said provision of service.

6. Employee positions 

6.1. For the purposes of promoting fair and transparent markets, preventing conflicts of interest and ensuring compliance with applicable laws and regulations, the Company shall implement policies to govern and monitor the transactions and positions of their Employees. Such policies shall be developed by the CO and shall specify:

i. any Virtual Assets for which Board members and Employees are prohibited from engaging in transactions, holding positions, or possessing any other financial interests;

ii. any legal entities of which Employees cannot have any shareholding or hold a directorship; and

iii. the forms in which Employees shall:

a. obtain prior approvals, as stated below; and

b. provide notifications, as stated below.

6.2. Approval requirements

i. All Employees shall obtain written approval from the CO or Board (as applicable) or any of the designees appointed by the Board prior to taking any of the following actions which is reasonably likely to cause actual or potential conflicts of interest:

a. opening, modifying or closing any Virtual Asset positions held directly or indirectly on their own account;

b. increasing or decreasing their shareholding, held directly or indirectly on their own account, in a legal entity other than the Company;

c. taking up a directorship in a legal entity other than the Company; or

d. all additional actions stated by the Company as may be conveyed through the policies drawn up by the CO in this regard.

6.3. Notification requirement

i. The Company shall, at least every six months, require Board members and/or Employees to notify them of:

a. in relation to all Virtual Asset positions held directly or indirectly on their own account:

● a description and the identifier of each Virtual Asset and/or related investments;

● the size of positions for each Virtual Asset and/or related investments;

● the nature of the transactions; and

● transaction history relevant to positions held.

b. in relation to their shareholding, held directly or indirectly on their own account, or director roles in any legal entities other than the Company:

● the full name and place of the legal entity;

● the purpose of such shareholding and directorship;

● the shareholding percentage (if applicable); and

● full details of any remuneration for such director roles.

6.4. Remedial actions

i. If the Company has any information or reason to believe any Board member or Employee is likely to cause, or has caused, an actual or potential conflict of interest, it shall take all necessary actions to ensure such conflict of interest is removed, including but not limited to:

a. procuring the relevant Employee to divest the relevant Virtual Asset positions or shareholding;

b. resign from the board of the other legal entity; or

c. any other action required to remove the conflict of interest, either with respect to the other entity or the Company.

ii. The Company shall notify all Employees of their obligations under this Policy and any policies made under Section 5 of this Policy in writing prior to the start of their employment.

7. Related Party Transaction

“Related Parties” include the chairman of the Board, members of the Board, senior management of the Company, Employees and the companies in which any of such individuals owns ten per cent (10%) or more of its share capital or other ownership interest, as well as the subsidiaries or affiliate companies of such companies.

7.1. Consent of the Board

a. The Company shall not enter into transactions with any Related Party without the prior written consent of the Board where the value of the transaction exceeds five per cent (5%) of their issued share capital. If there is a significant change to the terms of such transactions, further written consent of the Board is required before the Company enters into the transaction under the changed terms.

b. The Related Party who has an interest in such transactions shall not participate in the voting that takes place for approving such transactions.

7.2. Register of Related Party transactions

a. The Company shall maintain a register of transactions with Related Parties where the names of such Related Parties shall be recorded together with relevant transactions and actions taken in relation thereto in detail.

7.3. Reporting and disclosure requirements

a. In the event that the Company enters into a transaction with a Related Party:

i. the Board shall provide VARA with prior notice which shall identify the Related Party and provide details of the transaction, including the nature and the benefit of the involvement of that Related Party in the transaction, together with a written confirmation that the terms of the transaction with that Related Party are fair, reasonable, and proportional to the interests of the shareholders of the Company; and

ii. the Board shall allow clients and shareholders to review its records and any documents relating to those transactions.

b. The Company shall report all transactions with Related Parties to VARA monthly, or otherwise upon request by VARA, including the details of those transactions. Further, the Company shall provide any documents and other information relating to transactions with Related Parties as reasonably requested by VARA.

8. Outsourcing agreements

8.1. All outsourcing arrangements entered into by the Company, will be in the form of legally binding written agreements, clearly setting out the relevant rights, liabilities and obligations of the vendor and the Company, including procedures for identifying, measuring, managing, mitigating, controlling and reporting the risks of an outsourcing arrangement and any conflicts of interest. These agreements shall be prepared in accordance with the procedures laid out under Outsourcing Policy of the Company.

8.2. Before selecting a vendor for the purposes of outsourcing certain functions or business processes, the Company shall conduct detailed due diligence, which shall include an assessment of any possibility of the occurrence of a conflict of interest.

9. Remuneration

9.1. A conflict of interest may arise where the Company’s remuneration practice could incentivise an Employee to act contrary to their responsibilities, regulatory requirements or the Company’s Code of Conduct. The Company shall have a compensation framework in place to align compensation practices to avoid such an incentive.

10. Listing Virtual Assets

10.1. The Company shall establish standards for the Virtual Assets it avails for trading. Such standards (“VA Standards”) shall be disclosed publicly to clients. The VA Standards shall disclose all potential or actual conflicts of interest that arise from the fact that the Company is providing services in relation to certain Virtual Assets along with remedial measures taken in this regard.

  APPENDIX A

DECLARATION OF POLICY UNDERSTANDING

The declaration below is to be completed by all Employees after having had an appropriate amount of time to read and digest the contents of the Conflicts of Interest Policy.

Understanding the Conflicts of Interest Policy is crucial for ensuring compliance and integrity in your role at LBank. This declaration confirms that you have not only read but also understood the contents of this document and the expectations towards the regulatory requirements and objectives of the Company.

Once signed, a copy of the declaration will be saved in your training file and also in the Company’s compliance monitoring records.

Employee Name: _____________________________ Date: _________________

Position: _____________________________ Dept: _________________

Line Manager: _____________________________ Employee No:  ___________

Declaration:

I confirm that I have read the contents of this Conflicts of Interest Policy and that I have understood all aspects of its contents, and the expectations placed on me by the Company and by any regulators or governing bodies.

Employee Signature: _______________________________________

APPENDIX B

CONFLICT OF INTEREST DECLARATION

This Declaration is to be used by the affected person and for the CO to record conflicts of interest identified and the decision of the Board. The completed Form should be kept with the minutes of each meeting.

APPENDIX C

CONFLICT OF INTEREST REGISTER

APPENDIX D

OUTSIDE BUSINESS INTEREST DECLARATION

FORM FOR OUTSIDE BUSINESS INTEREST DECLARATION

*********