The citizens' capital warrant

1. Within three months of its designation, a covered undertaking shall issue to the Reserve a citizens' capital warrant.

2. The citizens' capital warrant shall entitle the Reserve, upon the first liquidity event following issuance and only upon such an event, to subscribe at nominal value for newly issued shares representing 3 % of the fully diluted capital of the covered undertaking determined immediately before that event.

3. The citizens' capital warrant shall:
(a) confer no voting rights, no rights of information beyond those provided in this Regulation and no right to participate in the management of the covered undertaking, and the shares subscribed pursuant to it shall be non-voting for as long as they are held by the Reserve;
(b) be incapable of settlement in cash or in assets other than the shares referred to in paragraph 2;
(c) be non-transferable, save to a successor of the Reserve established by Union legislative act;
(d) impose no obligation on the covered undertaking prior to a liquidity event other than the notification obligation in paragraph 5.

4. The subscription referred to in paragraph 2 shall take effect by operation of law at the completion of the liquidity event. Where the law governing the covered undertaking does not give effect to the first sentence, the covered undertaking shall take all measures necessary to procure a subscription of equivalent effect no later than the completion of the liquidity event. The dilution resulting from the subscription shall not exceed the percentage laid down in paragraph 2. A covered undertaking shall not be required to hold more than one citizens' capital warrant in respect of the same designation. The subscription shall be executed within 20 working days of the delivery of the valuation referred to in Article 6, and the shares shall be paid up in full in cash at their nominal value upon execution.

5. A covered undertaking shall notify the Reserve and the Commission of any impending liquidity event no later than the earlier of its public announcement and 30 working days before its completion.

6. Article 49, Article 68(1), (2) and (3), the first subparagraph of Article 70(2) and Article 72 of Directive (EU) 2017/1132, and any corresponding provisions of the law of a Member State conferring pre-emption rights, requiring a decision of the general meeting or requiring an expert report on consideration, shall not apply to the issuance of the citizens' capital warrant or to the subscription of shares pursuant to it. Provisions of the law of a Member State restricting the proportion, issuance conditions or characteristics of non-voting shares shall not apply to the extent that they would prevent the issuance or holding of shares pursuant to this Article.

7. The issuance, offer and subscription of shares pursuant to this Article shall not constitute an offer of securities to the public for the purposes of Regulation (EU) 2017/1129, and the admission to trading of those shares shall be exempt from the obligation to publish a prospectus under that Regulation where shares of the same class are already admitted to trading on the same regulated market.

8. The valuation of the fully diluted capital for the purposes of paragraph 2 shall be performed by an independent valuer appointed in accordance with Article 6, and shall be open to challenge before the courts in accordance with Article 7 separately from any other element of the designation or the event.