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Executive Summary - KPMG Germany Legal Opinion

KPMG Germany has conducted a legal assessment of Devon’s loan structure and contractual framework under the applicable German regulatory requirements, with particular focus on whether Devon could be classified as conducting deposit-taking business.

Below is a summary of KPMG’s general findings and regulatory conclusions.

KPMG concludes that Devon’s Loan Agreement fulfils the German regulatory requirement of a qualified subordination, providing a solid contractual basis that ensures the Loan Amount is not unconditionally repayable.

This fulfilment is the decisive factor preventing classification as deposit‑taking under Section 1(1) sentence 2 no. 1 KWG.

Assessment based on KWG Criteria*

• Acceptance of funds – fulfilled. Devon fulfils the criterion of accepting funds.
• Funds from the public – fulfilled. Devon fulfils the criterion of receiving funds from the public.
• Qualified subordination – fulfilled. Devon fulfils the requirement of implementing a qualified subordination. Because this requirement is fulfilled, the instrument does not exhibit unconditional repayability, which is the decisive factor excluding deposit classification.
• No securitised exclusion – fulfilled. Devon fulfils the criterion that no securitised exclusion applies.
• Commercial scale / German nexus – fulfilled. Devon fulfils the criterion of operating on a commercial scale with a German nexus.

Note: The KWG criteria in Germany refer to the legal elements used by BaFin to determine whether an activity qualifies as deposit‑taking (“Einlagengeschäft”) under § 1 Abs. 1 Satz 2 Nr. 1 KWG.

Regulatory Conclusion

By fulfilling the requirement of qualified subordination, Devon ensures that the Loan Amount does not meet the unconditional repayability criterion. This intentional structure is precisely what ensures the product is not a deposit under Section 1(1) sentence 2 no. 1 KWG.

Areas for Improvement Identified by KPMG

• Enforcement wording - Section 11.4 could be tightened to avoid interpretations that weaken the subordination mechanics.
• Risk notice alignment - The “unconditional claim” wording in Section 12 could be adjusted to avoid contradicting the subordinated structure.
• Transparency of subordination - Greater prominence of the clause would strengthen investor understanding and regulatory clarity.
• Consistency across materials - All investors‑facing content must avoid implying guaranteed repayment or reduced risk.
• Economic impression - The product should not be presented in a way that resembles a safe, deposit‑like instrument.

Forward‑Looking Compliance Commitment from Devon

Devon recognises the importance of maintaining the highest industry standards in regulatory compliance. The areas identified by KPMG - including enforcement wording, risk‑notice alignment, transparency of subordination, consistency across investor materials, and economic presentation - are fully acknowledged.

Over time, Devon plans to implement these enhancements across its contractual documentation and investor‑facing materials. By progressively integrating these improvements, Devon aims to strengthen regulatory clarity, reinforce the subordinated structure, and ensure full alignment with best‑practice expectations in the European financial industry.

This continuous improvement approach reflects Devon’s long‑term commitment to robust governance, transparent communication, and regulatory excellence.