Public disclosure and trading implications of owning more than 10% of a series

Public Disclosure

The Company is required to disclose in its public SEC filings the name, address, and share ownership of any fractional Investor owning more than 10% of the shares in any individual Series. However, based on our understanding of current SEC staff interpretations of these requirements, an Investor who irrevocably forfeits a portion of their voting rights so that such Investor does not own more than 10% of the total voting rights of an individual Series should not be subject to the disclosure requirements. If you wish to restrict your voting rights to 10% or less of a Series, please complete the Vote Limit Certificate and email it to support@asharex.com.  

Trading Restrictions

The Securities Act of 1933 regulates the resale of securities by Investors. Rules promulgated thereunder, including Rule 144, impose certain restrictions on the resale of securities by “affiliates” of the Company. Notwithstanding any reduction in their voting rights, an Investor who owns more than 10% of an Individual Series may be deemed an “affiliate” and therefore subject to certain trading restrictions absent an available exemption. These restrictions include the volume of securities the “affiliate” may sell at a given time and the manner of sale. Investors subject to these restrictions may also be required to make certain filings with the SEC, and their ability to resell shares may be impacted by what information is publicly available about the particular Series. Each Series may impose certain requirements on these Investors as well in order to ensure compliance with applicable securities law. Any Investor that owns more than 10% of a Series is advised to consult with legal counsel prior to reselling any shares in such Series.  

Taxes

An Investor subject to U.S. taxation that is an individual, trust or estate and who (i) owns less than 10% of the voting power or equity value of the Company (as opposed to an individual Series), (ii) has held their shares in a Series for more than 12 months, (iii) has a timely filed IRS “QEF election” in effect for the year in which the Investor acquired the Series shares (QEF election will be handled by aShareX), and (iv) has sold their shares prior to the year in which the Asset is sold, should be subject to federal income tax at their long-term capital gains rate plus the Net Investment Income Tax, if applicable (maximum tax rate of 23.8%). If the shares are held for less than 12 months then the Investor’s short term capital gains rate will apply plus the Net Investment Income Tax, if applicable (maximum tax rate of 40.8%). Shares held through the year of the asset sale will be taxed at the Investor’s collectible tax rate plus the Net Investment Income Tax, if applicable (maximum tax rate of 31.8%).  

An individual, trust or estate that owns, through its investment in the Company, 10% or more of the voting power or equity value of the Company will likely be treated as a “U.S. Shareholder” for purposes of the Controlled Foreign Corporation (“CFC”) rules. As a result, the Investor is expected to (i) recognize ordinary income on their share of the gain recognized upon the sale of the Asset if their shares are sold prior to the year in which the Asset is sold and (ii) capital gain if their shares are sold prior to the year of the sale of the Asset. Investors that are C corporations are generally taxable at a maximum federal income tax rate of 21% on the gain derived from the sale of the Asset or their shares in the applicable Series. Investors not subject to U.S. taxation (e.g., foreign investors or tax exempt organizations) should not be subject to tax on the gain from the sale of the Asset or their shares in any Series.

Because each Investor’s investment and tax profile, including its particular facts and circumstances, is different, our summary may not be fully applicable to you. Accordingly, you are urged to consult your own professional advisors.

‍