> For the complete documentation index, see [llms.txt](https://docs.nara.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.nara.io/nara-protocol/underwriting-and-investment-committee.md). # Underwriting and Investment Committee **No capital moves until a position has cleared seven knock-out gates, been scored on Nara's 42-criteria scorecard, and been approved unanimously by the three-member Investment Committee.** Every funded position is then managed under the same committee that approved it. ### The scorecard Every deal is scored against a fixed scorecard: 8 weighted pillars, 42 criteria on a 1 to 5 scale, and a 41-item document and KYC checklist. Scores are assigned only where evidence supports them. Unevidenced criteria stay open as follow-ups rather than being estimated, and N/A is excluded from the average rather than treated as zero. | Pillar | What it measures | | ---------------------------------- | ------------------------------------------------------------------------------------------------------------------------- | | Originator and sponsor quality | Operating history and realized losses, management, regulatory standing, financial strength, sponsor skin in the game | | Receivables and asset quality | Self-liquidating character, tenor, historical loss rate, dilution, days-to-collect versus stated tenor, eligibility rules | | Obligor and concentration | Who ultimately pays, portfolio granularity, single-obligor and corridor concentration | | Settlement and repayment mechanics | Lockbox and payment control, verification of underlying flows, settlement timing | | FX and corridor | Currency mismatch, hedging policy, corridor stability | | Legal recourse and structure | SPV and true sale, security, advance-rate cushion, backup servicer, enforceability | | On-chain and operational | Audited contracts, key controls, oracle and data dependencies | | Yield, liquidity and transparency | Yield versus risk, redemption terms, reporting quality | #### Rating bands | Rating | Weighted score | Action | | ---------------- | -------------- | ----------------------------------------------------------------------------- | | Investment Grade | 4.00 and above | Proceed; standard structure | | Approved | 3.00 to 3.99 | Proceed with conditions | | Elevated Risk | 1.50 to 2.99 | Requires mitigants, reserves or tighter structure before capital is committed | | Not Acceptable | Below 1.50 | Decline absent fundamental restructuring | #### Knock-out gates Any one of the following declines a deal regardless of its score. 1. No independent mechanism verifies that the underlying receivables or payment flows exist and are valid. 2. The borrower is fully pseudonymous, with no KYC'd legal entity and no enforceable off-chain recourse. 3. Circular flow: the same party is borrower, collateral source and repayment source. 4. Pooled investor capital is handled by unaudited smart contracts. 5. The originator is sole servicer with no lockbox or payment control and no independent oversight. 6. Live pooled funds are controlled by a single admin key or EOA, with no timelock and no multisig. 7. A sanctioned counterparty or corridor, or an unresolved AML or compliance red flag. ### From origination to funding | Step | Output | Gate | | ---------------------- | ------------------------------------------------------------------------------ | --------------------------------------------------------------------------------------- | | 1. Source and screen | Originator KYC; corridor, obligors and settlement structure mapped | Any knock-out stops the deal here | | 2. Underwrite | Evidence file across the eight pillars; every judgement cited | | | 3. Score and rate | Weighted score and rating | Not Acceptable is declined; Elevated Risk needs added structure to advance | | 4. IC memo | Proposed terms, key risks and open follow-ups, circulated to all three members | A Head of Credit assessment and a score above 3 / 5 are required to reach the committee | | 5. IC vote | Approve, approve with conditions, or decline | Unanimous. Any dissent returns the deal for rework or declines it | | 6. Conditions and fund | Legal, lockbox and KYC conditions cleared | Capital is released only after conditions clear | ### The Investment Committee Three members: the CEO, one co-founder, and the Head of Credit (see [Team](https://docs.nara.io/resources/team)). All three vote explicitly on every deal. Approval, including approval with conditions, must be unanimous; no member's approval is presumed. ### Live positions: monitor → act 1. **Monitor.** Pool reports, on-chain flows, obligor performance and covenant compliance, continuously. Borrower utilization and repayment timing are checked daily for active lines; the liquid reserve daily; protocol and stablecoin exposure daily or weekly; NAV and reporting at month-end with exception checks. 2. **Trigger.** An early-warning threshold is breached: concentration, dilution, delay or covenant. In direct facilities, borrowers report transaction activity regularly and may draw only against transactions, up to 80% to 90% of reported volume. A covenant breach opens a 5-day cure period during which Nara investigates. 3. **Re-underwrite.** The position is re-scored and the severity of the issue is assessed. 4. **IC decision.** Maintain, amend and extend, reduce exposure, add reserves, or exit and enforce. 5. **Execute and record.** The action is implemented and documented for the file. Breaches of allocation or concentration limits, whether passive (driven by market movement or redemptions) or active, are recorded with a remediation plan. Nara keeps a breach log so allocators can see how the book behaves under pressure. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation by asking a question. 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