Lending Pool Establishment Terms

Status: v0.1 draft. Not in force. Counsel posture confirmed by Drew 2026-06-05; counsel review per jurisdiction continues as a parallel workstream, not a build gate. A pool is not legally constituted until all three steps in this document have been completed and recorded.

Where this sits in the Custody Framework

This document operates under Category B of the Custody Framework Charter — the escrow-only category that governs lending pool capital, loan accounts, collateral escrow, and the Circle Protection Reserve. Member vote does not apply to Category B custody; the rule is constitutional. Accounts are opened in the name of the Members' own co-operative legal form, with a multi-signature mandate held by the Lending Committee.

Category A — regular cycle contributions in single-jurisdiction Circles, which may be Member-to-member or escrow-held by Member vote — is outside this surface. Category C — Circles that cross a jurisdictional boundary — adds the escrow-only rule to all funds in those Circles; this surface inherits Category C when the Circle is cross-border.

The three steps

A lending pool comes into existence only after three required steps are recorded on the platform:

A passing establishment vote by the eligible Member base.
The opening of a dedicated, non-Treasurer-controlled multi-signature lending account in the name of the circle's / federation's own co-operative legal form.
The election of a Lending Committee to govern the pool.

Until all three are complete, the pool's status stays at pending_setup. Loan applications cannot open against a pool in pending_setup. There are no shortcuts; emergency pools are not a category that exists on this platform.

1. The establishment vote

1.1 Who is eligible to vote

L0 (circle pool): Members of the circle who are active and in good standing at the moment the proposal is filed.
L1 (affinity federation pool): Members of every circle that has joined the federation, weighted one vote per Member (not per circle), or — at the federation's election — one vote per circle with the circle's vote determined by an internal circle vote.
L2 (regional / national federation pool): Same weighting choice as L1, taken in the federation's existing governance documents at the time of the federation's establishment.

The voting weighting decision sits in the federation's bylaws; the platform records the result but does not impose either weighting.

1.2 The proposal

A proposal to establish a pool specifies:

| Field | Required content | |---|---| | Pool level | L0 | L1 | L2 | | Jurisdiction | The single jurisdiction the pool operates in (ISO 3166-1 alpha-2) | | Co-operative form | The circle's / federation's own member-constituted co-operative legal form in which the pool's multi-sig account is held. Not a third-party lender. | | Account provider | The bank or credit union (account provider / custodian only — never the lender) that custodies the dedicated multi-signature lending account | | Initial capital target | The minimum capital required before the pool can lend | | Reserve % | Floor / default 5–10% | | Loan-to-pool cap % | Floor / default 60–70% | | Per-member concentration cap % | Floor / default 25% (L0) — 18% (L1+) | | Per-circle concentration cap % | Floor / default 18% (L1+) | | Withdrawal notice period | Days / weeks — typically 30 days | | Lending Committee size | Number of seats — typically 3, 5, or 7 | | Lending Committee election method | Direct election by funders | nomination by the membership | hybrid | | Lending Committee term length | Months / years — typically 12 months |

The proposal is filed through the Town Hall surface and is visible to the Membership for at least fourteen (14) days before the vote opens.

1.3 Quorum and threshold

Quorum: at least 50% of eligible voters must cast a vote.
Threshold: at least two-thirds (66.7%) of cast votes in favour.

If quorum is not met, the vote may be re-opened with extended duration once; if it still fails to meet quorum, the proposal is withdrawn and may be refiled no sooner than ninety (90) days later.

1.4 Recording

The vote outcome is recorded on the platform's audit trail. The proposer, the time window, the eligible voter list, the quorum reached, the result, and any abstentions are immutably logged. A vote may be challenged through the Dispute Settlement Centre within fourteen (14) days of close for procedural defects (notice, eligibility, quorum calculation).

2. The dedicated account

2.1 What "dedicated" means

A separate, regulated account, opened in the name of the circle's / federation's own co-operative legal form (the Members' collective vehicle), not in the name of any individual Member, Treasurer, coordinator, committee member, or Circlworld. The account holds only this pool's capital. It is not commingled with the circle's contribution account, with another pool's account, or with any other entity's account.

2.2 Multi-signature mandate

The account's withdrawal mandate requires at least two (2) Lending Committee signatures on every disbursement. No single Committee member can move funds. The mandate is filed with the account provider and recorded on the platform.

For Committee sizes of five or more, the mandate may require a higher signature count (e.g. 3 of 5, 3 of 7) at the Committee's discretion, voted at the Committee's first meeting and ratified by the Membership.

2.3 The Treasurer is not a signatory

The circle's Treasurer (or the federation's coordinator) is not a signatory on the lending pool's account in their Treasurer capacity. They may be elected to the Lending Committee — like any other Member — and in that capacity become a Committee signatory. The role-as-Treasurer does not grant the signature.

2.4 The account provider

The account is held with:

In the UK: a bank or credit union regulated by the FCA and / or PRA — acting as account provider / custodian only — holding the account in the name of the circle's / federation's own co-operative form. A separate escrow agent may sit alongside the operating account for collateral specifically.
In Jamaica: a deposit-taking institution licensed by the Bank of Jamaica, acting as account provider / custodian only, holding the account in the name of the circle's / federation's own co-operative form.
In other jurisdictions: as documented in the Jurisdiction Disclosures at activation.

The bank or credit union named here is the account provider / custodian only. It is never the lender. The lender is the circle / federation, through its own co-operative form.

2.5 Recording

The account reference (sort code / institution code + account number; or the cooperative-society register reference where the entity holds its own account) is recorded on the platform as LendingPool.dedicatedAccountReference. The account opening is verified by the Committee on its first meeting; the verification is logged on the audit trail.

The pool's status flips from pending_setup to pending_committee only after the account is recorded and verified.

3. The Lending Committee

3.1 Election

The Committee is elected by the eligible funder base of the pool, using the election method specified in the proposal (§1.2).

The election is run by the Town Hall voting machinery. Candidates self-nominate or are nominated by Members; the nomination window is open for at least fourteen (14) days. Voting closes seven (7) days after nominations close.

3.2 Composition and roles

The Committee has the size specified in the proposal. It elects from its own number:

Chair — runs the Committee meetings, signs the published audit reports.
Secretary — keeps minutes, manages the Committee's correspondence, files the audit trail entries.
Committee Treasurer — keeps the Committee's account reconciliations, surfaces the cash position to the Membership at the published cadence.
Members — voting Committee members.

The Chair, Secretary, and Committee Treasurer roles are not the same as the circle Treasurer or the federation coordinator. They are roles internal to the Committee.

3.3 Powers

The Committee may:

Approve or decline loan applications, by recorded vote, in accordance with the platform's underwriting formula and the pool's parameters.
Authorise disbursements through the account's multi-signature mandate.
Declare loans in default and execute the Loss Waterfall.
Recommend parameter changes to the Membership (reserve %, concentration caps, withdrawal notice period).
Recommend pool suspension or wind-down to the Membership.

The Committee may not:

Move funds without the multi-signature mandate.
Approve a loan to a Committee member without that member's recusal and an explicit quorum + threshold (see §3.5).
Change pool parameters unilaterally (parameter changes require a Membership vote).
Conclude a settlement with a defaulting borrower without recording it on the audit trail and notifying the affected funders.

3.4 Term and re-election

Committee terms are the length specified in the proposal (typically 12 months). Members may be re-elected. To preserve continuity, the Committee may stagger expirations (half re-elected every six months) at its election.

A Committee member may be removed mid-term by a Membership vote with the same quorum and threshold as the establishment vote.

3.5 Conflict of interest and recusal

A Committee member who is the borrower of a loan under consideration must recuse from the deliberation and the vote.

A Committee member who has a close personal relationship with the borrower (immediate family; business partner) must disclose the relationship and may be required to recuse by the Chair.

A Committee member may not guarantee a loan they sit in deliberation on.

The Committee documents recusals in the meeting minutes.

3.6 Reporting

The Committee publishes to the Membership:

Monthly — pool capital position, lending volume, defaults, reserve position. Surfaced through the platform's automatic reporting.
Quarterly — a written report summarising the period: loans approved, loans declined, defaults declared, waterfall outcomes, parameter recommendations, Committee meeting attendance.
Annually — an audited report by a Member-appointed independent reviewer (small pools may use a Member auditor; larger pools use an external accountant).

Reports are stored on the platform and accessible to every funder. The reports are not surfaced to non-funders of the pool.

3.7 Accountability and replacement

A Committee that fails to publish reports, fails to apply the underwriting formula, or breaches the conflict-of-interest rules may be replaced by a Membership vote. The platform's audit trail provides the evidentiary basis for such a vote.

A Committee member who breaches the Committee's terms may be removed individually by a Membership vote, separately from a full Committee replacement.

4. The pool's activation

When (a) the establishment vote has passed, (b) the dedicated account is verified, and (c) the Lending Committee is elected and has held its first meeting, the pool's status flips to active. The first deposit by a funder is accepted at that point. Loan applications open.

The activation is recorded on the audit trail. A Pulse event (LENDING_POOL_ACTIVATED) fires, surfaced to the pool's funders and to platform admin.

5. The platform's role

Circlworld:

Runs the voting machinery for the establishment vote and the Committee election.
Records the dedicated account reference and verifies it has been opened in the name of the circle's / federation's own co-operative form (the verification is procedural — the platform queries the co-operative-society register / bank-verification; it does not certify the account itself).
Runs the Committee's meeting and reporting surfaces.
Maintains the audit trail.

Circlworld does not:

Approve the pool's establishment. The Membership approves.
Open the account. The account-provider bank or credit union opens the dedicated multi-signature lending account in the name of the circle's / federation's own co-operative form, under the multi-signature mandate (the account provider is not the lender).
Sit on the Committee. Committee members are Members of the pool, not Circlworld employees.

You agree to the Platform Indemnification in respect of any claim arising from the establishment process.

Reminder: v0.1 draft. The quorum, threshold, and timing constants in §1 are v0; jurisdiction-specific cooperative-society law may set higher floors. Counsel review will confirm per jurisdiction.

Lending — Pool Establishment Terms