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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Adv.Dev.Mkts | LSE:ADD | London | Ordinary Share | GB0001674992 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 382.25 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
TIDMADD Advance Developing Markets Trust plc Recommended proposals for the voluntary winding up of the Company and the rollover of Shareholders' interests into Advance Developing Markets Fund Limited On 25 September 2009 the Board announced proposals to redomicile Advance Developing Markets Trust plc (the "Company") through a voluntary winding up of the Company and a rollover of shareholders' interests into a newly established Guernsey fund, Advance Developing Markets Fund Limited ("ADMF"). Today, the Company is pleased to announce that it is publishing a Circular setting out further details of these proposals together with a Prospectus in connection with the proposed issue of Ordinary Shares and Subscription Shares by ADMF. The text of the Chairman's letter in the Circular is as follows: "Dear Shareholder RECOMMENDED PROPOSALS FOR THE VOLUNTARY WINDING UP OF THE COMPANY AND THE ROLLOVER OF SHAREHOLDERS' INTERESTS INTO ADVANCE DEVELOPING MARKETS FUND LIMITED 1. INTRODUCTION On 25 September 2009 your Board announced that it was considering proposals for the Company to re-domicile to Guernsey. The Board believes that the need for the Company to comply with section 842 of the Taxes Act, so as to maintain investment trust status (and thereby be exempt from any tax on capital gains), is increasingly acting as a restriction on the investments which the Company might otherwise make and thereby potentially constraining the investment returns which may otherwise be achievable by the Company. The Board believes that by re-domiciling to Guernsey the Company will have greater investment flexibility. Further, the proposed re-domicile to Guernsey will eliminate any charge to UK corporation tax in respect of investment in "non-distributing funds". This document explains the background to and effects of the Proposals. The proposed re-domicile will be effected by means of the voluntary winding-up of the Company and a scheme of reconstruction under section 110 of the Insolvency Act 1986. The day to day running of the successor vehicle will not change from that of the Company, the same executive team will remain in place, and the investment policy of the successor vehicle will be the same as that of the Company. The Scheme requires the approval of Ordinary Shareholders by the passing of all the resolutions to be proposed at the Meetings. The Board recommends Ordinary Shareholders to vote in favour of the resolutions to be proposed at the Meetings. Notices of the Meetings which are to be held on 29 October 2009 and 9 November 2009 are set out at the end of this document. 2. BACKGROUND TO THE PROPOSALS When the Company was launched in 1998, its investment policy was focused on investing in investment trusts and other closed-end funds, many of which offered opportunities to invest at significant discounts to underlying asset value. By exploiting discount anomalies the Investment Manager generated impressive returns both in relative and absolute terms. However, in the years following the launch of the Company, the available universe of closed-end emerging market funds declined, making it increasingly difficult for the Investment Manager to achieve global emerging market exposure: in some cases, markets in which the Investment Manager wished to invest were not represented at all in the universe of closed-end funds; or were represented only in global or regional funds not otherwise suitable for the Company; or were represented only in funds which the Investment Manager perceived to be unattractive because of poor management or otherwise. In 2002 the Investment Manager sought and obtained permission from the Board to invest in open-ended as well as closed-end funds: whilst open-ended funds would not generally offer opportunities to invest at discounts, the Investment Manager believes it can add value by using its expertise and knowledge of underlying markets to identify "best of breed" managers as well as negotiating competitive terms on which to invest. This would also provide more flexibility in terms of asset allocation. In its early years, the out-performance by the Company was driven primarily by exploiting discount anomalies: this remains an important factor, but latterly both asset allocation and manager selection have also become significant factors. In some cases value has also been generated by moving between closed-end and open-ended funds with similar investment remits and under common management. Since 2002, open-ended funds have become increasingly important to the Company and as at 30 September 2009 (the latest practicable date prior to the publication of this document) some 46.1 per cent. of the Company's portfolio is invested in such funds. The Company was incorporated in the UK and is resident in the UK for tax purposes. Since inception, the Directors have conducted the affairs of the Company in such a way as to ensure that the Company qualifies as an investment trust. This has meant that the Company, whilst liable for UK tax on its net income, has ordinarily had no liability for tax on capital profits. However, under UK tax legislation, where the Company invests in what are called "non-distributing funds", any profits realised by the Company on the disposal of those investments are treated for tax purposes as though they are income - and taxed accordingly: at 28 per cent., being the current rate of corporation tax. The investment trusts and other closed-end funds which the Company initially focused on are not treated as "non-distributing funds" so no tax has been payable in respect of profits realised by the Company on their disposal. However, some of the open-ended funds which have formed an increasingly important part of the Company's portfolio since 2002 may be treated as "non-distributing funds", giving rise to potentially punitive liability to UK corporation tax. Implementation of the Proposals will, as a result of the Company being placed formally into liquidation, crystallise existing unrealised gains on its investments in non-distributing funds. Based on the Company's assets held at 31 August 2009, the Company's estimated deferred tax liability at that time was GBP1.3 million. This figure assumes full utilisation of the Company's carried forward excess management expenses at that time and is subject to change (both up and down) as a result of realisations since 31 August 2009 and market movements up to the time of the commencement of the Company's liquidation. In the future, and subject to prevailing market conditions, it seems increasingly likely that gains may continue to be generated at a rate significantly in excess of the rate at which excess management expenses are generated. Accordingly, the Proposals are expected to benefit Shareholders by eliminating any further charge to UK corporation tax and will provide the Investment Manager with greater investment flexibility and the potential to enhance further the investment returns achievable. These benefits should be achieved with only a small increase in annual costs. As stated above the Company is currently approved as an investment trust in accordance with section 842 of the Taxes Act and, as a result of its status as an investment trust, it is not liable to UK corporation tax on any capital gains arising on the disposal of its investments. However, in order to obtain approval from HMRC as an investment trust for a particular accounting period, the Company must comply with the strict requirements prescribed by section 842 of the Taxes Act. These restrictions are more onerous than the restrictions which apply to the Company by virtue of its admission to the Official List and the conditions and continuing obligations contained in the Listing Rules. In particular, in order to qualify as an investment trust, the Company must comply, inter alia, with each of the following requirements of section 842 of the Taxes Act: (i) that not more than 15 per cent. of its assets may be invested in an investee company; and (ii) that its income must consist wholly or mainly of eligible investment income, thereby restricting the level of income which may arise from the use of derivatives. The Directors believe that these existing requirements are potentially constraining the investment returns which the Company might otherwise be able to achieve if it were not subject to these restrictions. In addition, the continuing need to ensure compliance with the requirements of section 842 of the Taxes Act (because of the potentially very serious consequences (including corporation tax being applied at a rate of 28 per cent. of realised capital gains), which would arise if the Company did not obtain investment trust status) takes up a significant amount of management time which could be better spent managing the existing portfolio and identifying new investments. The Board believes that the proposed re-domicile of the Company to Guernsey will provide the Investment Manager with greater investment flexibility and the potential to enhance further the investment returns achievable. 3. THE SCHEME Pursuant to the Scheme, ADMF, a Guernsey company, will be incorporated and an application will be made to the UK Listing Authority and the London Stock Exchange for the ADMF Shares to be issued in connection with the Scheme to be admitted to the Official List and to trading on the London Stock Exchange's main market. ADMF will have the same investment policy as the Company and the Company's existing executive team will remain in place. The existing investment manager will act as ADMF's investment manager on the same commercial terms as it currently manages the Company save that the relevant performance fee calculation period in respect of ADMF will be (i) the period from Admission to 31 October 2010, and (ii) thereafter each one year period ending on 31 October in each year. For the purpose of calculating any performance fees payable by ADMF to the Investment Manager the applicable high water mark will be the higher of (i) 505.2p (being the current high water mark of the Company) and (ii) the net asset value per share of ADMF at the end of the latest performance fee calculation period in respect of which a performance fee was payable by ADMF. As ADMF will not be an investment trust it will not be subject to the requirements of section 842 of the Taxes Act. If the Proposals are approved and implemented, the Company will be placed into members' voluntary liquidation and its investments and other assets, after providing for its liabilities will be transferred in specie to ADMF. Ordinary Shareholders Under the Proposals, the Company will be wound up voluntarily and a scheme of reconstruction under section 110 of the Insolvency Act 1986 will be put in place. Under the Scheme, Ordinary Shareholders will receive one ADMF Ordinary Share for each Ordinary Share held in the Company by them on the Record Date. The ADMF Ordinary Shares will be issued with substantially the same rights as those attaching to the Ordinary Shares. Further details of the rights attaching to the ADMF Ordinary Shares are set out in paragraph 5 of Part 1 of this document and in Part 6 of the accompanying Prospectus. ADMF Ordinary Shares will be admitted to the Official List and will be traded on the main market of the London Stock Exchange. Unless the Directors are satisfied that any Overseas Ordinary Shareholders can be issued ADMF Ordinary Shares pursuant to the Scheme without breaching any relevant securities laws or regulations, such Overseas Ordinary Shareholders will have their entitlement to ADMF Ordinary Shares sold in the market on their behalf immediately following the implementation of the Scheme, and the proceeds of such sale (net of associated costs) will be remitted to them. Subscription Shareholders Under the Scheme, Subscription Shareholders will receive one ADMF Subscription Share for every Subscription Share held in the Company by them on the Record Date. The ADMF Subscription Shares will be issued with substantially the same rights as those attaching to the Company's existing Subscription Shares. Further details of the rights attaching to the ADMF Subscription Shares are set out in paragraph 5 of Part 1 of this document and in Part 6 of the accompanying Prospectus. ADMF Subscription Shares will be admitted to the Official List and will be traded on the main market of the London Stock Exchange. Unless the Directors are satisfied that any Overseas Subscription Shareholders can be issued ADMF Subscription Shares pursuant to the Scheme without breaching any relevant securities laws or regulations, such Overseas Subscription Shareholders will have their entitlement to ADMF Subscription Shares sold in the market on their behalf immediately following the implementation of the Scheme, and the proceeds of such sale (net of associated costs) will be remitted to them. Further details regarding these arrangements are set out in Parts 2 and 3 of this document. 4. BENEFITS OF THE PROPOSALS TO THE COMPANY The principal benefit of the proposed re-domicile to Guernsey will be: (i) the elimination of any charge to UK corporation tax in respect of investment in "non-distributing funds" referred to under the heading "Background to the Proposal" above; and (ii) the greater investment flexibility given to the Investment Manager than is currently possible as a result of the strict requirements of section 842 of the Taxes Act referred to under the heading "Background to the Proposals" above, which will no longer have to be adhered to. The Board believes that this greater investment flexibility has the potential to enhance further the investment returns achievable. In addition, for efficient portfolio management purposes only, ADMF will be permitted to enter into contracts for differences and other derivative instruments which under the current structure are difficult to accommodate. Gains from such positions are currently considered as revenue and therefore due to the restrictions on income under section 842 of the Taxes Act, their use would represent undue exposure to the risk of a tax liability. Finally, the significant time currently spent by the executive team ensuring compliance with the requirements of section 842 of the Taxes Act will be better spent by them managing the existing portfolio and identifying new investments. 5. ADVANCE DEVELOPING MARKETS FUND LIMITED Introduction ADMF is a newly formed Guernsey incorporated closed-end company, which has been established as a successor vehicle to the Company. The Company's investment manager will act as ADMF's investment manager. ADMF will have the same investment policy, and executive team as the Company and there will be no overall change compared before to the day to day running of ADMF. It will be subject to the same investment restrictions that apply to the Company by virtue of the admission of its shares to the Official List under Chapter 15 of the Listing Rules, but it will not be subject to the more onerous investment restrictions which currently apply to the Company under section 842 of the Taxes Act. Capital structure ADMF's share capital will comprise of ordinary shares and subscription shares. ADMF Ordinary Shares The rights and characteristics of the ADMF Ordinary Shares are summarised below: Dividends The holders of ADMF Ordinary Shares shall be entitled to such dividend as may be declared by ADMF from time to time. Capital entitlement On a winding up, in the event that there are ADMF Ordinary Shares and ADMF Subscription Shares in issue (i) ADMF Ordinary Shares and ADMF Subscription Shares shall rank pari passu for the return of their paid up nominal capital; and (ii) any surplus shall be applied to the ADMF Ordinary Shares and ADMF Subscription Shares in accordance with the ADMF articles of incorporation if applicable and, if not applicable, exclusively to the ADMF Ordinary Shares pari passu. In the event that there are only ADMF Ordinary Shares in issue, such shares shall rank pari passu for the nominal capital paid up thereon and in respect of any surplus. Voting rights Holders of ADMF Ordinary Shares will be entitled to attend, speak and vote at all general meetings of ADMF. Further details of the rights attaching to the ADMF Ordinary Shares are set out in Part 6 of the accompanying ADMF Prospectus. ADMF Subscription Shares The rights and characteristics of the ADMF Subscription Shares are summarised below: Dividends The ADMF Subscription Shares will carry no entitlement to dividends declared. Capital entitlement On a return of capital on liquidation the ADMF Subscription Shares shall rank in accordance with article 5.3.3(x) of the ADMF articles of incorporation (as set out in Part 6 of the accompanying ADMF Prospectus) and paragraph 4.2.15 of Part 6 of the accompanying ADMF Prospectus. Voting rights The ADMF Subscription Shares will not carry any voting rights at general meetings of ADMF. However, ADMF will not be able to carry out certain corporate actions unless it obtains the sanction of the holders of the ADMF Subscription Shares by the passing of a special resolution at a separate meeting of the ADMF Subscription Shareholders. Separate approval of the ADMF Subscription Shareholders must be obtained in respect of any proposals which would affect their rights. This approval of the ADMF Subscription Shareholders by the passing of a special resolution at separate class meetings is required in relation to any proposal to modify, alter or abrogate the rights attaching to the ADMF Subscription Shares. Further details of the rights attaching to the ADMF Subscription Shares are set out in Part 6 of the accompanying ADMF Prospectus. Board composition I will act as chairman of ADMF. Of the other existing Board members of the Company Angus Bonsor and Terry Mahony have agreed to join the board of ADMF and James Robinson has agreed to stand down. In addition, Richard Hotchkis and John Hawkins, who are both based in Guernsey, have agreed to join the board of ADMF. These appointments satisfy the requirement for ADMF to have a majority of non-UK resident directors in order for it to be tax resident offshore. Further details of the members of the board of ADMF are set out in Part 2 of the ADMF Prospectus. I believe that the composition of the board of ADMF reflects an appropriate range of skills and experience whilst also providing a balance between the requirement for offshore directors to be appointed and our wish to provide continuity. On my own behalf and on behalf of my fellow Board members I would like to express our gratitude to James Robinson who has very ably served the Company since inception and to wish him well. Management and other service providers The Company's existing investment manager will be appointed to act as investment manager of ADMF. The current investment management agreement between the Company and the Investment Manager will be terminated upon the Scheme becoming effective and will be replaced with a new investment management agreement. The commercial terms of the new investment management agreement will be substantially the same as those contained in the existing investment management agreement, including the rights of the respective parties to terminate the agreement and also the management and performance fees payable to the Investment Manager save that the relevant performance fee calculation period in respect of ADMF will be (i) the period from Admission to 31 October 2010, and (ii) thereafter each one year period ending on 31 October in each year and for the purpose of calculating any performance fees payable by ADMF to the Investment Manager the applicable high water mark will be the higher of (i) 505.2p (being the current high water mark of the Company) and (ii) the net asset value per Share of ADMF at the end of the latest performance fee calculation period in respect of which a performance fee was payable by ADMF. Subject to the implementation of the Proposals, a performance fee may be payable by the Company in respect of the period 1 June 2009 to the date on which the Company is wound up although the Board do not currently expect to pay a performance fee by reason of the Company's Net Asset Value being below the current high water mark. The current administration and secretarial agreement between the Company and Cavendish Administration Limited will be terminated upon the Scheme becoming effective. As a Guernsey resident fund ADMF is required to appoint an administrator resident in the Channel Islands and has agreed to appoint Legis Fund Services Limited as its administrator. Under the terms of the new administration and secretarial agreement, Legis Fund Services Limited will be able to delegate its administrative duties to third parties approved by ADMF and with the approval of ADMF will delegate certain of its administrative duties to the Company's existing administrator. The commercial terms of the new administration and secretarial agreement will be substantially the same as those contained in the existing agreement. The Company's existing custodian (The Northern Trust Company) will be appointed to act as custodian of ADMF. The commercial terms of the new custodian agreement will be substantially the same as those contained in the existing agreement. Capita Registrars (Guernsey) Limited will be appointed as registrar and transfer agent to ADMF and with the consent of ADMF will retain Capita Registrars Limited as the Company's UK transfer agent to receive notices and documents of transfer from ADMF Shareholders in the United Kingdom for onward transmission to Capita Registrars (Guernsey) Limited. The existing custodian and registrar agreements will remain in force for the duration of the liquidation period (subject to such amendments as the Liquidators may agree with the Custodian and the Registrar). All the appointments referred to above are conditional on the Proposals being approved and implemented. Further details of the agreements between ADMF and their service providers are set out in Part 6 of the ADMF Prospectus. Application for listing Applications will be made for the ADMF Ordinary Shares and ADMF Subscription Shares to be issued in connection with the Scheme to be admitted to the Official List and to trading on the London Stock Exchange's main market for listed securities. It is expected that dealings in the ADMF Ordinary Shares and ADMF Subscription Shares will commence at 8.00 a.m. on 10 November 2009. Further issues and reissue of treasury shares The issue of further ADMF Ordinary Shares for cash (and/or the reissue of ADMF Ordinary Shares held in treasury) will be subject to pre-emption rights in favour of existing ADMF Ordinary Shareholders which may be disapplied by ADMF Ordinary Shareholders by way of special resolution. These pre-emption rights will not apply to the allotment of ADMF Ordinary Shares pursuant to the Scheme as those shares will not be issued for cash. Pursuant to a special resolution passed on 28 September 2009 the ADMF Directors will have authority following Admission to issue further ADMF Ordinary Shares (and/or reissue ADMF Ordinary Shares held in treasury from time to time) for cash up to an amount representing 5 per cent. of the issued ADMF ordinary share capital immediately following Admission on a non-pre-emptive basis. This authority shall expire on the conclusion of the first annual general meeting of ADMF. ADMF does not intend to issue any ADMF Subscription Shares otherwise than pursuant to the Scheme. With the exception of ADMF Ordinary Shares issued pursuant to the Scheme, no ADMF Ordinary Shares will be issued at a price less than the prevailing net asset value per ADMF Ordinary Share, unless they are first offered pro-rata to existing holders of ADMF Ordinary Shares. It is the intention of the ADMF Board that any re-sale of treasury shares would only take place at a narrower discount to the diluted net asset value per share than that at which they were bought into treasury, and in any event at a discount no greater than 5 per cent. to the prevailing diluted net asset value per share. Discount management and repurchase of shares The ADMF Directors believe it is desirable that the ADMF Ordinary Shares do not trade at a significant discount to the diluted net asset value per share. In structuring ADMF, the ADMF Directors have given consideration to the discount risk and how this may be managed. Conditionally upon Admission, and at their sole discretion, the ADMF Directors have been granted authority to buy back up to 14.99 per cent. of the ADMF Ordinary Shares in issue following Admission. ADMF's authority to make purchases of its own issued ADMF Ordinary Shares will expire at the conclusion of the annual general meeting of ADMF to be held in 2010 or, if earlier, eighteen months from the date of passing of the relevant ADMF Shareholders' resolution, namely 28 March 2011. A renewal of the authority to make purchases of ADMF Ordinary Shares will be sought from shareholders at each annual general meeting of ADMF. The timing of any purchases will be decided by the ADMF Board. Any ADMF Ordinary Shares bought back by ADMF will either be held in treasury (and may be reissued) or cancelled. The ADMF Directors intend that purchases will only be made, pursuant to this authority, through the market, for cash, at prices below the prevailing diluted net asset value per share where the ADMF Directors believe such purchases will result in an increase in the diluted net asset value per share of the remaining ADMF Ordinary Shares and to assist in narrowing any discount to the diluted net asset value per share at which such ADMF Ordinary Shares may trade. Such purchases will only be made in accordance with the Companies Law and the Listing Rules. The Listing Rules currently provide that the maximum price to be paid per share is the higher of (i) 105 per cent. of the average of the market closing value of the shares from the London Stock Exchange for the five Business Days immediately preceding the date of the relevant purchase; (ii) the price of the last independent trade; and (iii) the highest current independent bid on the trading venues where the purchase is carried out. In addition, under the articles of association of ADMF, ADMF will have the right to repurchase ADMF Subscription Shares in the market, by tender or by private treaty but such purchases will be limited to a maximum price per ADMF Subscription Share which, in the case of purchases through the market, will not exceed 5 per cent. above the average of the middle market closing quotations (from the London Stock Exchange) for the ten consecutive London Stock Exchange dealing days ending on the dealing day immediately preceding the date on which the purchase is made; and if such purchases are by tender, such tender will be available to all holders of ADMF Subscription Shares alike. All ADMF Subscription Shares purchased will be cancelled and will not be available for re-issue or resale. Life of ADMF ADMF will not have a fixed life and will be intended as a long-term investment vehicle. However, the ADMF Directors consider it desirable that ADMF Shareholders will have the opportunity to review the future of ADMF at appropriate intervals. At ADMF's annual general meeting first following the fifth anniversary of Admission, and at every fifth annual general meeting thereafter, the ADMF Directors undertake to propose an ordinary resolution that ADMF continue in existence. If the resolution is not passed then within 4 months of the vote to continue failing the ADMF Directors shall formulate and put to ADMF Shareholders proposals relating to the future of ADMF having had regard to, inter alia, prevailing market conditions and applicable regulations and legislation. Draft Alternative Investment Fund Managers Directive As noted in the section entitled "Risks associated with ADMF", a draft European Directive on Alternative Investment Fund Managers has recently been published which may impact on ADMF's investment policy. When the impact of the Directive becomes known, the ADMF Directors will consider all options available to them with the objective of enabling ADMF's assets to be managed directly or indirectly in the manner currently intended. Accounting periods The annual accounts of ADMF will be made up to 31 October in each year starting in 2010, with copies of the annual report and accounts expected to be sent to ADMF Shareholders in February 2011. It is intended that the annual general meetings of ADMF will be held in March or April of each year, the first to be held in March or April 2011. ADMF Shareholders will also receive an unaudited half yearly report covering the first six months of each financial year to 30 April. The half yearly report is expected to be sent to ADMF Shareholders in July of each year. The first half yearly report will be for the period ending 30 April 2010. ADMF's accounts will be prepared in sterling in accordance with the same accounting policies and standards as the Company's accounts and under International Financial Reporting Standards. 6. REGULATORY AND CORPORATE GOVERNANCE IMPACT ADMF will be subject to the Listing Rules (in the same way that the Company is at present) and in addition will be required to make certain annual, quarterly and other filings with the Guernsey Financial Services Commission. The City Code will apply to ADMF in the same way as it applies to the Company. ADMF will also comply with the Combined Code and the AIC Code of Corporate Governance in the same way as the Company does currently. 7. ALLOCATION OF THE COMPANY'S NET ASSETS ON LIQUIDATION On the winding-up of the Company, but before any assets are transferred to ADMF, the liquidators shall retain a fund of an amount they consider sufficient to provide for all liabilities (including tax, contingent, unknown and unascertained liabilities) of the Company. The retention in respect of unknown and unascertained liabilities is expected to be GBP200,000 and the Directors, having made enquiries, are satisfied that this is a reasonable amount to be retained for unknown and unascertained liabilities. ADMF has also executed an indemnity, conditional on the Scheme being approved in favour of the Liquidators agreeing to indemnify them in respect of such liabilities, subject to a maximum of GBP200,000. The remaining assets of the Company will be transferred to ADMF pursuant to the Transfer Agreement. To the extent that any part of the Liquidation Fund is not required, any assets remaining in the Liquidation Fund will be transferred to ADMF by the Liquidators as provided for in the Scheme. 8. INTERIM DIVIDEND There may be a requirement to pay an interim dividend to satisfy section 842 of the Taxes Act for the period from 1 June 2009 to commencement of the liquidation. If such a dividend is required, further details of any such dividend will be announced if and when appropriate. Subscription Shareholders who elect to convert their Subscription Shares into Ordinary Shares will have no entitlement to any interim dividend which is declared by the Company prior to the date of issue of the new Ordinary Shares on conversion. 9. COSTS OF IMPLEMENTATION OF THE PROPOSALS The costs and expenses relating to the Proposals to be paid by the Company, including legal and other professional costs, the costs of printing this document, any tax charge on the crystallisation of unrealised gains on the Company's investment in non-distributing funds and the costs relating to the liquidation of the Company are estimated to amount to approximately GBP1.6 million excluding VAT (the Company has provided for this amount in full). A further GBP0.9 million excluding VAT is estimated to be payable in connection with the launch of ADMF and the listing of ADMF Shares on the London Stock Exchange (including UK stamp duty payable on assets transferred to ADMF estimated to amount to GBP0.5 million (based on the value of the Company's assets held at 30 September 2009 which are subject to UK stamp duty)). This amount will be payable by ADMF and will be provided for upon its launch but if the Scheme does not proceed approximately GBP0.6 million of such costs will be borne by the Company. 10. DEALINGS IN SHARES ON THE LONDON STOCK EXCHANGE The last day for trading in the Shares on the London Stock Exchange for normal settlement (in order to enable settlement prior to the Record Date) will be 3 November 2009. As from 4 November 2009, dealings should be for cash settlement only and will be registered in the normal way if the transfer, accompanied by all requisite documents of title, is received by the Registrar by 5.00 p.m. on 6 November 2009. Transfers received after that time will be returned to the persons lodging them. The Record Date, being the date for determining which Shareholders are entitled to participate in the Scheme is the close of business on 6 November 2009. The register of Shareholders will close and the Shares will be disabled in CREST at 5.00 p.m. on 6 November 2009. Further details regarding dealings in the Shares on the London Stock Exchange are set out in paragraph 5 of Part 2 of this document. 11. OVERSEAS SHAREHOLDERS Unless the ADMF Directors are satisfied that any Overseas Ordinary Shareholders can be issued ADMF Ordinary Shares pursuant to the Scheme without breaching any relevant securities laws or regulations, such Overseas Ordinary Shareholders will have their entitlement to ADMF Ordinary Shares sold in the market on their behalf immediately following the implementation of the Scheme and the net proceeds of such sale will be remitted to them. Unless the ADMF Directors are satisfied that any Overseas Subscription Shareholders can be issued ADMF Subscription Shares pursuant to the Scheme without breaching any relevant securities laws or regulations, such Overseas Subscription Shareholders will have their entitlement to ADMF Subscription Shares sold in the market on their behalf immediately following the implementation of the Scheme and the net proceeds of such sale will be remitted to them. 12. TAXATION - ISA, SIPP AND SSAS INVESTORS A summary of the tax consequences of the Proposals for Shareholders is set out in Part 2 of this document. ADMF Shares will be eligible for inclusion within the stocks and shares component of an ISA. ADMF Shares will also qualify as an investment that may be held in a SIPP or SSAS. Accordingly, where existing Shares are held in an ISA, SIPP or SSAS, ADMF Shares received by Shareholders pursuant to the Scheme in respect of those Shares can be retained (subject to the specific terms applicable to the relevant ISA, SIPP or SSAS) within the ISA, SIPP or SSAS. 13. FURTHER INFORMATION The Proposals are described in more detail in Part 2 of this document and the terms of the Scheme are set out in Part 3 of this document. A copy of the ADMF Prospectus is enclosed with this Circular. Shareholders should read the entirety of this Circular and the ADMF Prospectus and in particular the sections headed "Risk Factors" on pages 7 to 14 of this Circular and pages 7 to 15 of the ADMF Prospectus respectively. Implementation of the Scheme is conditional, inter alia, on the passing of all the Resolutions to be proposed at the Meetings. In the event that any of the Resolutions are not passed or certain other conditions in paragraph 11 of Part 3 of this document are not satisfied the Scheme will not be implemented. 14. SHAREHOLDER MEETINGS Set out at the end of this document are notices of the following meetings: (a) the Ordinary Shareholders' Meeting; (b) the First General Meeting; and (c) the Second General Meeting. All the above meetings will be held on 29 October 2009 commencing at 12.15 p.m., save for the Second General Meeting, which will be at 12.00 p.m. on 9 November 2009. All meetings will be held at 4 More London Riverside, London SE1 2AU. Ordinary Shareholders' Meeting At the Ordinary Shareholders' Meeting a special resolution will be proposed to sanction any variation, modification, alteration or abrogation of the special rights and privileges attaching to the Ordinary Shares to be effected by the approval and implementation of the Proposals. The resolution will require the approval of at least 75 per cent. of the votes cast in respect of it. The quorum for passing the special resolution at the Ordinary Shareholders' Meeting is two or more holders of Ordinary Shares present in person or by proxy or in the case of a holder of Ordinary Shares which is a corporation by its duly authorised representative and holding or representing in aggregate at least one-third of the nominal amount paid up on the issued Ordinary Shares. If a quorum is not present, it is intended to adjourn the Ordinary Shareholders' Meeting to 11.50 a.m. on 9 November 2009. At such adjourned meeting one or more holders of Ordinary Shares present in person or by proxy or in the case of a holder of Ordinary Shares which is a corporation by its duly authorised representative, whatever the nominal amount paid up on the issued shares held by them, shall form a quorum. First General Meeting The First General Meeting will be held at 4 More London Riverside, London SE1 2AU on 29 October 2009. A special resolution will be proposed at that Meeting to amend the Company's Articles of Association for the purposes of the Scheme, to sanction the Liquidators' powers for the purposes of the Scheme, to approve the Scheme and to authorise its implementation by the Liquidators. The resolution will require the approval of at least 75 per cent. of the votes cast in respect of it. Only Ordinary Shareholders (and not Subscription Shareholders) will be entitled to attend and vote at the meeting. The Scheme will not become effective until the resolutions to be proposed at the Second General Meeting have also been passed. Second General Meeting The Second General Meeting will be held at 4 More London Riverside, London SE1 2AU on 9 November 2009. The first resolution to be considered at the Second General Meeting (which will be proposed as a special resolution) will be a resolution to wind up the Company voluntarily and appoint the Liquidators. The second resolution (also a special resolution) will authorise the Liquidators to exercise certain powers for which the express sanction of Ordinary Shareholders is required under the Insolvency Act 1986, such as paying classes of creditors in full. Each resolution to be proposed at the Second General Meeting will require the approval of at least 75 per cent. of the votes cast in respect of it. Only Ordinary Shareholders (and not Subscription Shareholders) will be entitled to attend and vote at the meeting. 15. ACTION TO BE TAKEN Before taking any action, you are recommended to read the further information set out in this document and in the accompanying ADMF Prospectus. If you are in any doubt as to the action you should take, please consult your independent professional adviser immediately. Shareholders will find enclosed with this document: (a) a yellow form of proxy for use at the Ordinary Shareholders' Meeting; (b) a pink form of proxy for use at the First General Meeting; and (c) white form of proxy for use at the Second General Meeting. Whether or not you propose to attend any or all of the relevant Meetings, in light of the quorum requirements for each Meeting, please complete the relevant forms of proxy as soon as practicable and return them by post or by hand (during normal business hours only) to Capita Registrars, at Capita Registrars, Proxy Department, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU as soon as possible and in any event so as to be received not later than 48 hours prior to the time of the relevant meeting. The completion and return of a form of proxy will not prevent an Ordinary Shareholder from attending the relevant Meeting(s) and voting in person if he or she wishes to do so. 16. CONSEQUENCES OF THE SCHEME NOT PROCEEDING If the Scheme is not implemented, the Company will continue as an investment trust in its current form and a continuation vote will be put to Shareholders at the annual general meeting of the Company to be held in 2013. 17. RECOMMENDATION The Board, which has been advised by Arbuthnot Securities, considers the Proposals to be in the best interests of Shareholders as a whole and accordingly recommends that you vote in favour of the Resolutions. In providing advice to the Directors, Arbuthnot Securities has taken into account the Directors' own commercial assessment of the Proposals. The Directors intend to vote in favour of the Resolutions to be proposed at the Meetings in respect of their own beneficial holdings of Ordinary Shares amounting in aggregate to 39,000 Ordinary Shares representing approximately 0.06 per cent. of the Ordinary Shares in issue. Yours faithfully Peter O'Connor Chairman" Expected Timetable (all references to time are to London time) Record date for interim dividend on Ordinary 23 October Shares* Latest time and date for receipt of forms of 12.15 p.m. on 27 proxy for the Ordinary Shareholder Meeting October Latest time and date for receipt of forms of 12.20 p.m. on 27 proxy for the First General Meeting October Ordinary Shareholders' Meeting** 12.15 p.m. on 29 October First General Meeting*** 12.20 p.m. on 29 October Latest time and date for receipt of notices of 1.00 p.m. on 2 exercise of conversion rights November Ordinary Shares arising on the conversion of 8.00 a.m. on 6 Subscription Shares allotted and admitted to November the Official List and to trading on the London Stock Exchange's main market Payment date for interim dividend (if any)* 6 November Record date for entitlements under the the close of business Proposals and closing of Registers on 6 November Latest time and date for receipt of forms of 12.00 p.m. on 7 proxy for the Second General Meeting November Dealings in Ordinary Shares and Subscription 7.30 a.m. on 9 Shares suspended**** November Second General Meeting 12.00 p.m. on 9 November Effective date for implementation of the Scheme 9 November and commencement of the Company's liquidation ADMF Ordinary Shares and ADMF Subscription 8.00 a.m. on 10 Shares allotted and admitted to the Official November List and dealings therein commence on the main market of the London Stock Exchange ADMF Ordinary Shares and ADMF Subscription 10 November Shares issued in uncertificated form under the Scheme credited to the CREST accounts of Shareholders entitled thereto Latest date for despatch of definitive 24 November certificates in respect of ADMF Ordinary Shares and ADMF Subscription Shares issued in certificated form pursuant to the Scheme to the persons entitled thereto * if an interim dividend is required to be paid prior to the Effective Date in order to satisfy the requirements of section 842 of the Taxes Act ** or so soon thereafter as the 2009 annual general meeting shall have been concluded or adjourned *** or so soon thereafter as the Ordinary Shareholders' Meeting shall have been concluded or adjourned **** if the Scheme becomes effective, it is expected that the listing of the Ordinary Shares and Subscription Shares will be cancelled not earlier than 10 November 2010 Capitalised terms used in this announcement will have the same meaning as in the Circular to be sent to Shareholders today unless the context requires otherwise. Copies of the Circular and the Prospectus will be available to view and download at www.pro-asset.com and will be available on request from the Company Secretary. Copies are also being been filed with the UK Listing Authority's Document Viewing Facility, which is situated at: The Financial Services Authority 25 The North Colonnade Canary Wharf London E14 5HS Enquiries: Cavendish Administration Limited 020 7490 4355 Arbuthnot Securities Limited 020 7012 2000 Alastair Moreton Hannah Pearce =--END OF MESSAGE--- This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
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