Pomegranate’s compliance with sanctions

The Company believes that its activities have at all times been conducted in full compliance with all applicable sanctions.

Sanctions compliance strategy

The Company adopted a Sanctions Compliance Strategy on 26 June 2014 setting out the fundamental position of the Board of Directors that the Company shall strive to observe strict compliance with all rules that apply to the Company, including the prevailing international sanctions applicable to investments in Iran. The Sanctions Compliance Strategy sets out principles for compliance with EU sanctions administered by the Swedish competent authorities, primarily the Agency for Non-Proliferation and Export Controls (Sw. Inspektionen för strategiska produkter or “ISP”), including prior ISP approval for any financial transactions between the Company and Iranian entities above EUR 400,000. In addition, the Sanctions Compliance Strategy states that the Company will not allow US or Canadian citizens, residents or corporations to invest in the Company.
The Sanctions Compliance Strategy sets out procedures for performing legal due diligence on each target company, in order to identify all officers, shareholders and beneficiaries, based on target companies’ records, publicly registered documents and, where deemed necessary, information obtained through a business intelligence provider specialising in the Middle East. The Sanctions Compliance Strategy also provides for a general review of the Company’s portfolio from a compliance perspective to be undertaken periodically. The first such review was completed by the Board of Directors on 30 June 2015, reviewing the Company’s investment in Sheypoor and its initial investment in Sarava. The Board of Directors found no changes in shareholder or other circumstances in relation to the Company’s portfolio companies that would render any of the Company’s investments non-compliant with then current sanctions against Iran.
On 22 February 2016, the Board of Directors adopted a new more detailed Trade Controls Policy, replacing the Sanctions Compliance Strategy, addressing compliance with applicable Swedish, EU and US trade controls and economic sanctions. The Trade Controls Policy sets out the compliance roles and responsibilities of the Board of Directors and Pomegranate’s employees, and includes provisions for transaction screening and due diligence, continuous monitoring, compliance by Pomegranate’s portfolio companies, record keeping, violations and disciplinary action, reporting of violations and training.

Compliance to date

The Board of Directors administers the Company’s Trade Controls Policy, and Anders F. Börjesson, Director, is the individual chiefly responsible for ensuring the Company’s compliance with sanctions.
In connection with the Company’s investments in 2014 and 2015, the Company evaluated the permissibility of each individual investment on a case-by-case basis, with a focus on identifying key persons in the target entity – including Board members, members of management, and shareholders – in order to verify that no such key persons appeared on the Consolidated List of Persons, Groups and Entities Subject to EU Financial Sanctions. Pomegranate has representation on the Board of each of its investments from which it is in a position to monitor and promote sanctions compliance by its portfolio companies. The Company’s investment agreements have also generally included representations regarding compliance with applicable laws and regulations.
Payments in connection with the Company’s investments have been made in full compliance with EU requirements. All fund transfers in connection with the Company have been made in currencies other than US dollars, no Company employee or member of the Board of Directors is a US persons, and no Company personnel have engaged in any business activities related to the Company while located in the US. In addition, to ensure that its investors do not subject it to the application of US primary sanctions, the Company has sought in all capital raisings to verify that potential investors are not US persons, by requesting passport copies from each investor as well as assurances that no investor is or is acting on behalf of any US person.