INVOICE INVESTMENT REGULATIONS

INVOICE INVESTMENT REGULATIONS FOR INVOICES AND OTHER CREDIT INSTRUMENTS FOR CIRCULAR FACTORING SAS

Preamble

These regulations set out the terms and conditions under which Buyers may acquire invoices and other credit instruments that form part of the Circular Factoring SAS portfolio (hereinafter, “Circular”). Their purpose is to ensure clarity and transparency in transactions, as well as the protection of the rights and obligations of the parties involved.

Article 1: Buyer’s Responsibility and Risk

The Buyer assumes full responsibility for their investment decision and accepts all risks associated with such investment. Circular and its intermediaries will not provide financial advice, investment suggestions, or recommendations. Circular’s role is limited to providing the available offers so that Buyers can carry out their own evaluations and investment decisions.

Article 2: Investment Authorization

Every investment must have explicit authorization from the Buyer. This authorization may be granted through various means of communication including, but not limited to: WhatsApp, email, SMS, phone call, among others. In accordance with Colombian national legislation, all such means of communication are considered data messages that have the same legal and functional value as physically signed documents.

Pursuant to Law 527 of 1999, which regulates access to and use of data messages, electronic commerce, and digital signatures in Colombia, these data messages are recognized as functional equivalents to physical, signed documents. This implies that any authorization granted through these means will be considered valid and binding, provided it meets the requirements established by applicable regulations.

The Buyer must ensure that their authorization is clear, unequivocal, and verifiable regardless of the medium used. Circular undertakes to maintain a secure and accessible record of all authorizations received, thereby guaranteeing the integrity, authenticity, and preservation of such records in accordance with applicable regulations.

In the event of a dispute regarding the validity of an authorization, Circular may rely on the data-message records as evidence of the Buyer’s expressed intent, supported by Law 527 of 1999 and other applicable provisions regarding data messages and electronic commerce.

Article 3: Payment Commitment

The Buyer undertakes to transfer the funds to the Seller within a maximum period of three (3) business days following acceptance of the offer. If this period is not met, the corresponding slot will be released for other interested Buyers.

Article 4: Withholdings and Taxes

No withholdings or taxes will be applied to the Buyer, except the Financial Movements Tax (GMF) if the bank does not authorize the exemption for Circular’s account. This tax will be applied at the time of reinvesting the funds or returning them to the Buyer’s account.

Article 5: Purchase Certificate

Once each investment is completed, Circular will issue a purchase certificate detailing relevant information, including the invoice number, transaction and payment dates, seller, payer, investment rate, investment days, purchase value, and future value. This document will serve as official proof of the completed transaction.

Article 6: Commission

The Buyer undertakes to pay the corresponding commission to Circular’s accounts when necessary. This commission will be assumed by the Seller, who must previously authorize such charge in accordance with the contract signed between the parties.

Article 7: Auction and Other Forms of Negotiation

Investments may be carried out through an auction system, in which preference will be given to Buyers offering the best interest rates. However, Circular may also facilitate other forms of direct negotiation between Buyers and Sellers, allowing flexibility in transactions and the possibility of customized agreements according to the parties’ needs.

The Buyer will be entitled to receive the return generated from the acquisition date until the payment date of the corresponding invoice amount, regardless of the negotiation method used.

Article 8: Collection and Collection Management

Circular will be solely responsible for collecting the invoices and managing collection efforts. The Buyer will refrain from intervening in this management or collecting on their own, thus ensuring centralized and efficient administration. This clause is established in compliance with applicable regulations and in order to guarantee transparency and proper payment management, as required by current regulations.

Article 9: Management or Judicial Collection

If a judicial collection or enforcement action is required, it will be at the Buyer’s discretion to decide whether to authorize Circular to carry out such action or to pursue it through their own means. If Circular is authorized, it may carry out these actions through its attorneys, in accordance with the guidelines issued by the judge at each stage of the judicial process, always respecting current legal provisions.

 

Article 10: Endorsement Documentation

Circular will assume responsibility for the proper documentation of endorsements and other necessary documents that ensure payment of the invoices acquired by Buyers. This responsibility includes verifying the authenticity and legality of the documents, in accordance with applicable legal provisions and consumer protection duties for financing and credit transactions set forth in Decree 1074 of 2015.

 

Article 11: Funds Handling

Circular undertakes to manage the funds transferred by the Buyer correctly and in accordance with the law, transferring these funds to the invoice Seller. Circular will guarantee integrity and transparency in the handling of funds, in compliance with pertinent legal and regulatory obligations, and assuming the responsibilities that arise therefrom.

 

Article 12: Buyer Protection Clause and Funds Refund

 

  1. Immediate Refund Commitment:

 Circular Factoring undertakes to refund the monies received from invoice debtors to Buyers within a maximum period of two (2) business days from the Buyer’s refund request. This refund will be made to the bank accounts designated by the Buyers, without deductions or withholdings, except those authorized by the Buyers or required by law.

 

  1. Control Mechanism:

   Circular Factoring will implement a control system that guarantees tracking and traceability of payments made by debtors, as well as the correct and timely transfer of such payments to Buyers. This system will include

 

  • Electronic Notification: Circular Factoring will send the Buyer an immediate electronic notification upon receiving payment of an invoice from the debtor. This notification, which may also be carried out through a phone call, will include detailed information about the payment received, such as the invoice number, the amount paid, and the receipt date. During the call, the Buyer will be informed of the schedule planned for the refund, providing any additional information necessary to clarify doubts or confirm the next steps in the process.
  • Record of Payments and Refunds: Circular Factoring will maintain a detailed and accessible record of all payments received from debtors and of all refunds made to Buyers. This record will be available for inspection by Buyers at any time, providing transparency and confidence in the management of the funds.

 

  1. 3. Penalty for Non-Compliance

   If Circular Factoring does not refund the monies within the established period, an automatic penalty equivalent to 2% of the amount owed will apply for each day of delay, without prejudice to the Buyer’s right to seek judicial enforcement and any additional damages that may arise.

 

  1. 4. Priority in the Refund

   The funds received from invoice debtors will have absolute priority for refunding Buyers over any other financial obligation of Circular Factoring. Under no circumstances may Circular Factoring use these funds for other purposes until the total refund to Buyers has been completed.

 

  1. 5. Personal Guarantee

   In addition to the foregoing obligations, the legal representatives of Circular Factoring will assume a joint and several personal guarantee for compliance with refunds to Buyers. In the event of non-compliance, Buyers will have the right to claim directly against the personal assets of such representatives.

 

Article 13: Restricted Lists Check Clause

 

The contracting party undertakes to carry out, diligently and in accordance with applicable law, checks against national and international restricted lists in order to verify the inclusion of the counterparty and/or related third parties in such lists. This check will be performed prior to execution of the contract and periodically throughout its term, in accordance with the contracting party’s internal policies and applicable regulations. The contracting party will notify the counterparty of any relevant finding that may affect execution of the contract or the contractual relationship. This clause does not limit the contracting party’s liability, nor does it imply a waiver of consumer rights as established in Article 43 of Law 1480 of 2011 and the guidelines of the Superintendence of Industry and Commerce.

 

Article 14: Non-Competition Clause with Issuing Clients

 

The Buyer undertakes not to establish direct or indirect commercial relationships with the issuing clients of the invoices that have been endorsed by Circular to the Buyer. This obligation includes the prohibition of conducting business directly or indirectly with such clients without Circular’s intermediation, during the term of this contract and for up to two (2) years after its termination, regardless of the cause thereof.

In the event of breach of this clause, the Buyer will be required to pay Circular an indemnification equivalent to the value of the commissions and the interest that Circular ceased to receive as a result of the business entered into by the Buyer with the issuing clients of the invoices endorsed to the Buyer. Such indemnification will be due by operation of law, without the need for judicial or extrajudicial demand.

 

Article 15: Penalty Clause for Non-Compliance

If the Buyer breaches any of the obligations established in these regulations, including, but not limited to, the Non-Competition Clause with Issuing Clients, the Buyer must pay Circular a penalty equivalent to the value of the commissions and interest that Circular would have ceased to receive as a direct consequence of the breach.

This penalty clause will become effective upon simple notice by Circular to the Buyer of the breach, without prejudice to any legal actions Circular may initiate to obtain payment.