REGULATION OF COLLECTORS’ CO-OWNERSHIP

ART SHARE Project

1. APPLICABLE NORMS

1.1. Ownership of the works of the ART SHARE project is divided into co-ownership shares (“Shares”) which are subject to the present regulation and, where the matter is not here regulated, to the principles of law of the Republic of San Marino regarding the communal property of movable assets (“Communion”)

2. AIMS OF THE COMMUNION

2.1. The interest of the communion consists of subdivision of the final sale price on the market or by auction of a work of art (“Whole work” or “WW”) among all the co-owners (”Users”) who have purchased shares of the work, setting up a communion of property with other collectors.

3. PLACE IN WHICH THE WORK IS KEPT

3.1. The work will be deposited in San Marino at Art Shares Srl (“Art Shares”), the title holder of the ART SHARE project.

3.2. Art Shares may place the works intended for co-ownership sale in exhibitions, galleries, public and private organizations, preferably in the Republic of San Marino, giving information on its online site as to the place of exhibition so that all co-owning collectors are able to take note of it.

3.3. The collectors authorize Art Shares to be indicated as purchasing beneficiaries of the shares of the works making up the capital resources of a specially-created trust non so come tradurre il “trust di scopo”, è un termine che si usa in italia e che è usato anche nella legge di San Marino forse potremmo dire “Special purpose trust” which will act in accordance with the present regulation. The participating collectors benefit through the trust from the segregation of the capital resources destined to fulfill their interests.

The trust will be used at the discretion of the administrator, when the running costs are in line with Art Shares’ commercial policy and when they can be covered by the management contribution as of Art. 4.

4. MANAGEMENT OF THE WORK

4.1 The costs of management, conservation and insurance of the works purchased in co-ownership are to be sustained by the co-owning collectors within the maximum limit comprehensive of taxes equal to 1% of the price paid, to be debited at the moment of the division of the price of the sale of the whole work (final sale price). These costs must not exceed the margin profit of the co-owning collector.

5. SALE OF THE SHARE

5.1. “Share” is understood as being the total number of single shares of a whole work belonging to a single co-owner. Each participant in the communion can sell their shares to third parties only by communicating to Art Shares all the identity data of the new purchaser and the sale price of the shares, together with the buyer’s acceptance of the present regulations.

5.2. In the absence of that communication and the requested attachments, the rights and obligations connected with co-ownership will remain with the original participant in the communion.

5.3. In order to enjoy selling rights, the seller must approve the present regulations and supply all the data as of Art. 10 below.

6. RIGHT OF SALE BEFORE EXPIRY AND REIMBURSEMENT

6.1. Art Shares reserves the right to sell the works of the co-owners when the market price net of selling charges such as taxes, auction fees and so on is at least 10% more than the price of the first purchase of shares.

6.2. Realization and receipt of proceeds by co-owners can only occur via sale of the whole work by Art Shares, except as laid down in Arts. 7 and 8 below.

7. PLACEMENT OF WHOLE WORK

During the operations of placing the shares, the administrator of the co-ownership may establish a booking period in which it reserves the right to accept the booking within a term of 30 days, extendable for the same duration, in order to verify whether there are the proper conditions for the placement of the WW, i.e. the sale of the WW to a single interested collector.

The conditions for placing a WW with a single interested collector are verified by the administrator of the co-ownership in the presence of a collector interested in the purchase of a share of at least 20% of the whole work, except for exceptional cases to be assessed at the discretion of the administrator of the co-ownership.

In the presence of more than one interested collector, the bookings will be classified according to the size of the share and the present procedure will be applied starting from the client requesting the highest number of shares. When the collector interested in the highest number of shares shows he/she is not interested in the WW Placement, the administrator will re-present the proposal to the subject requesting the next highest share, one by one until interest in the WW Placement is shown.

When interest has been shown in WW Placement, the interested collector must pay a deposit of 10% of the price of the work within 5 bank opening days.

In the case of failure to pay the deposit within the said term, the administrator has two alternatives:

• to grant an extension up to 10 bank opening days;
• to apply the procedure to the collector interested in the next highest share.

Assignment of the work will be communicated to the interested collector by the administrator within 3 days. Within 5 bank opening days after the administrator’s communication the interested collector must pay the price simultaneously with withdrawal of the work from the Art Shares premises.

If the interested collector does not follow up the purchase for any reason, the price paid as a deposit will be retained by Art Shares as a penalty, and no exception of any kind may be raised by either party.

If the procedure of placement of the WW is not concluded positively, when the reserve period of 30 days or its extension has ended the administrator will proceed with the sale of the shares to interested parties on the basis of the present regulation.

8. RIGHT TO PURCHASE ON THE PART OF A CO-OWNING COLLECTOR

In the absence of better sales opportunities as of Art. 6.1., a collector holding shares of the work for at least a year has the right to purchase the whole work at a price which is at least 10% higher than the placement one.

Reimbursement to the other collectors will take place according to the procedure as of Art. 6.2

The price paid by the collector, net of the sales and management commissions, will be divided among all the co-owners within 30 days of receipt of payment.

9. CONSIGNMENT OF THE WHOLE WORK

In all cases the whole work must be collected by the buyer from our premises in San Marino. If home delivery is requested the price will be increased by the consumer tax which is in force in the buyer’s state of residence (22% VAT for residents in Italy)

10. ADMINISTRATION

10.1. The Administrator of the communion is Art Shares, in the person of its legal representative.

11. EXPIRY DATE AND FINAL DIVISION

11.1. The administrator will make every effort to obtain the sale of the whole work on the market within two years from the placement of the work in shares.

In any case the co-ownership is fixed-term and will end at the latest at the 60th month after the first purchase of the shares. If it has not been sold previously, the work will be placed on the market near the expiry date in an auction sale.

11.2. The sale price net of selling expenses and auction fees will be shared among all the co-owners in proportion to the shares possessed by each one, subject to their payment of management costs to the extent indicated in Art. 4.1.

11.3. Art Shares will send all co-owners their share of the sale price within 30 days of its collection.

12. TAX TREATMENT

12.1. We are dealing with assets which are not delivered to the collector and which remain most of the time in the territory of the Republic of San Marino, exempt from indirect taxation. If the user is not a final consumer (operations B2B), it will be necessary to verify if there are the conditions for exemption from direct taxation.

13. CENSUS

13.1. The participants in the communal property must furnish all the necessary personal data for their census on the online site, also in order to identify the beneficiaries of the division of the final sale price. To purchase the shares involving an investment which exceeds the threshold established by the company in complete autonomy, it will be necessary to provide the necessary data for an adequate verification, as established by the norms against the recycling of money of illegal origin and the funding of terrorism.

13.2. The crediting of the final sale price for the share to which each participant in the communion has the right will be made on the current account indicated at the moment of census, or later in the case of the modification of bank details (IBAN, Swift etc.).

14. APPROVAL OF REGULATIONS

14.1. Purchase of the co-ownership share in the work of art is not considered complete without full approval of the present regulations.

15. COMPETENT COURT

15.1. Any dispute is the competence of the Court of the Republic of San Marino. Alternatively Art Shares, with the client’s agreement, may have recourse to an arbitration decision.