Pre-Annual General Meeting Information • Mar 23, 2023
Pre-Annual General Meeting Information
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THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in doubt as to the action you should take you are recommended to seek your own personal financial advice from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000.
Please see the Chairman's letter and the notes on the meeting at the end of this Notice concerning the venue and format of the meeting.
If you have sold or otherwise transferred all your Ordinary Shares in the Company, please send this document and the accompanying documents at once to the purchaser or transferee or to the stockbroker, bank or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.
Notice of the Annual General Meeting of the Company convened for 10.00 a.m. on Thursday, 27 April 2023 is set out in Part II of this document.
A Form of Proxy for use at the Annual General Meeting is enclosed. To be valid, the Form of Proxy must be completed and returned so as to reach the registrars by hand or by post at Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY (the "Registrars") by no later than 10.00 a.m. on Tuesday, 25 April 2023. As an alternative to completing the hard copy form, shareholders can appoint proxies electronically via www.clsholdings.com/evoting so that it is received by the Registrar by no later than 10.00 a.m. on Tuesday, 25 April 2023. CREST members can also appoint proxies by using the CREST electronic proxy appointment service and transmitting a CREST Proxy Instruction in accordance with the procedures set out in the CREST Manual so that it is received by the Registrar (under CREST participant 3RA50) by no later than 10.00 a.m. on Tuesday, 25 April 2023. The time of receipt will be taken to be the time from which the Registrar is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST.
CLS Holdings plc (the "Company") (Incorporated and registered in England with registered number 2714781)
16 Tinworth Street London SE11 5AL
Lennart Sten (Non-Executive Chairman) Anna Seeley (Non-Executive Vice Chair) Fredrik Widlund (Chief Executive Officer) Andrew Kirkman (Chief Financial Officer) Elizabeth Edwards (Non-Executive Director) Bill Holland (Non-Executive Director) Denise Jagger (Non-Executive Director) Christopher Jarvis (Non-Executive Director) Bengt Mortstedt (Non-Executive Director)
23 March 2023
Dear Shareholder,
The purpose of this circular is to give you details of the Company's Annual General Meeting ("AGM") which is to be held on Thursday, 27 April 2023 at 10.00 a.m. and the resolutions to be proposed at it. I am pleased to confirm the publication of our Company's Annual Report and Accounts for the year ended 31 December 2022 (the "Annual Report"), which can be found on the Company's website at www.clsholdings.com, or have been enclosed if you have requested a copy.
As we reported when we announced our annual results on 8 March 2023, it is your Directors' intention to propose a distribution by way of a final dividend for the year ended 31 December 2022 of 5.35 pence per share. This is subject to the passing of Resolution 4.
In accordance with the Articles, the AGM will be a physical meeting. As in previous years, voting on the resolutions to be proposed at the AGM will be conducted on a poll, rather than a show of hands. Therefore, shareholders are encouraged to vote via proxy, where possible, online at www.clsholdings.com/evoting, appointing the Chairman of the meeting as their proxy to ensure their vote is counted.
As we appreciate some shareholders may prefer not to attend, or may be unable to attend, in person, questions to the Board may be submitted in advance of the AGM by emailing questions to [email protected], or in writing addressed for the attention of the Company Secretary at our Registered Office. The last day for submitting questions is 10.00 a.m. on Tuesday, 25 April 2023 and responses which are relevant to the business of the meeting will be uploaded to our website at www. clsholdings.com. We also encourage shareholders to view the recording of the presentation of our annual results, details of which are available on our website at www.clsholdings.com/investors.
The purpose of the Annual General Meeting is to seek shareholders' approval for the Resolutions set out below.
The Companies Act 2006 (the "Act") enables us, if shareholders agree to it, to supply shareholder documents by email or by use of website access instead of posting documents to them. If you would like to receive shareholder communications in this way, please go to www.investorcentre.co.uk to sign-up. If you would like to receive documents by post, you may request this service by writing to our Registrar, Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZZ or by contacting them online at www.investorcentre.co.uk/contactus.
The AGM is to be held in the Seminar Room at Spring Mews – Fresh Student Living, 10 Tinworth Street, Lambeth, London, SE11 5AL, on Thursday, 27 April 2023 at 10.00 a.m. You will find on pages 8 to 12 of this document, the Notice convening the AGM. A form of proxy for use in connection with the AGM is enclosed with this document.
Resolutions 1 to 17 are ordinary resolutions. For these to be passed, more than half of the votes cast must be in favour of the relevant resolution. Resolutions 18 to 20 are special resolutions. For each of these to be passed, at least three quarters of the votes cast must be in favour of the resolution. I set out below further information on certain of the resolutions proposed.
Resolution 3 seeks approval of the Company's future policy on Directors' remuneration. The remuneration report for quoted companies must comprise (i) an annual remuneration report which discloses how the remuneration policy was implemented in the last financial year and (ii) a forward-looking remuneration policy which sets out the Company's future policy on Directors' remuneration. In addition to the annual advisory vote on the annual remuneration report, quoted companies are required to put their Directors' remuneration policy to a separate binding shareholders' vote at least every three years. Once the remuneration policy comes into effect, all remuneration payments and payments for loss of office must be consistent with the Company's approved remuneration policy, unless a revised remuneration policy, or an amendment to the policy, is first approved by shareholders.
The new Remuneration Policy is set out in full on pages 152 – 167 of the Directors' remuneration report and a summary of the key changes, the principal terms of the Annual Bonus Plan and proposed changes to the Long Term Incentive Plan, are set out in Part III, Appendix 1, Appendix 2 and Appendix 3 to this Circular.
Pursuant to the Board's recommendation, the authority sought from shareholders under this resolution is to declare a final dividend of 5.35 pence per ordinary share for the financial year ended 31 December 2022, of which 1.36 pence per ordinary share is to be paid as a Property Income Distribution and 3.99 pence per ordinary share as a Non-Property Income Distribution. If approved, the final dividend will be paid on 2 May 2023 to those shareholders on the Company's statutory register of members as at the close of business on 24 March 2023.
The Board notes that the UK Corporate Governance Code (the "Code"), which applies to the Company, requires that all Directors be subject to annual re-election by shareholders. Accordingly, resolutions 5 to 12 propose the re-election of each of the Directors, other than Christopher Jarvis who will retire from the Board at the conclusion of the AGM.
I can confirm to shareholders that, following a formal performance evaluation, the performance of each of the Directors continues to be effective and demonstrates commitment to their roles.
Biographies of all the Directors proposed to be re-elected, which contain specific details of their skills and experience that highlight why their contribution is, and continues to be, important to the Company's long-term sustainable success, are set out on page 7 of this Notice. Further details on Board composition can be found on pages 120 and 121 of the Annual Report.
The Company is required to comply with the provisions of the UK Listing Rules of the Financial Conduct Authority (the "Listing Rules") relating to controlling shareholders and the election or re-election of independent directors. Listing Rule 9.2.2E requires that the election or re-election of an independent director by the shareholders be approved by an ordinary resolution of the shareholders as a whole and separately approved by the non-controlling shareholders. For the purposes of the Listing Rules, certain companies directly held and beneficially owned by the Sten and Karin Mortstedt Family & Charity Trust (through Creative Value Investment Group Limited) control more than 30% of the voting rights of the Company.
CLS Holdings plc (the "Company") (Incorporated and registered in England with registered number 2714781)
This means that any resolutions for the election or re-election of any independent directors must be approved by a majority vote of both:
Therefore, resolutions 5, 9, 10 and 11 are being proposed as ordinary resolutions which all shareholders can vote on, but in addition the Company will separately count the number of votes cast by independent shareholders in favour of the resolutions (as a proportion of the total votes cast by independent shareholders cast on the resolutions) to determine whether the second threshold referred to in ii) above has been met. The Company will announce the results of those resolutions on this basis as well as announcing the results of the ordinary resolutions of all shareholders.
If a resolution to re-elect an independent director is not approved by a majority vote of both the shareholders as a whole and the independent shareholders, the Company may propose a further resolution to re-elect that director at a meeting to be held between 90 and 120 days from the date of the original vote. Therefore, if any of resolutions 5, 9, 10 and 11 are not approved by a majority of the independent shareholders at the AGM, the relevant director will be treated as having been re-elected only from the period of the date of the AGM to the earlier of:
In the event that the director's re-election is approved by a majority vote of all shareholders at a second meeting, the director will then be re-elected until the next AGM.
The Company is also required to provide certain information in relation to the proposed re-election of independent directors, being Lennart Sten, Elizabeth Edwards, Denise Jagger and Bill Holland. This includes details of any existing or previous relationship, transaction or arrangement the independent director has with the Company, its directors, any controlling shareholder or an associate of a controlling shareholder, together with a description of why the Company considers the independent directors will be effective, how it has determined their independence and the process followed for their selection. The Company:
It is proposed to authorise the Board to allot shares or grant such subscription rights as are contemplated by sections 551(1) (a) and (b) respectively of the Act up to a maximum aggregate nominal value of £3,310,090 representing approximately one-third of the issued share capital of the Company excluding treasury shares (as set out in the paragraph entitled "Further information" below). This is the maximum permitted amount under best practice corporate governance guidelines. This will replace the equivalent resolution passed at the last annual general meeting and will expire at the conclusion of the next annual general meeting or at 6.00 p.m. on 27 July 2024, whichever is the earlier. Your Directors have no present intention of exercising this authority but the Board wishes to ensure that the Company has maximum flexibility in managing the financial resources of the Company.
This Resolution seeks approval of the CLS Holdings plc 2023 Annual Bonus Plan (the "Plan"). The Remuneration Committee's rationale for the design of the Plan and its principal terms are set out in Part III, Appendix 2 to this Circular.
This Resolution seeks approval for an amendment to the rules of the CLS Holdings plc Long Term Incentive Plan. The Remuneration Committee's rationale for the proposed amendment is set out in Part III, Appendix 3 to this Circular.
The Board notes that the Pre-Emption Group published a revised Statement of Principles in November 2022, which included increased thresholds. At this time, the Board considers it appropriate to continue to only seek a general disapplication of preemption rights up to five per cent. of the Company's issued share capital, in line with the previous guidance. It is proposed to empower the Board to allot equity securities for cash without first offering them to existing shareholders in proportion to their holdings, subject to certain limits which comply with best practice corporate governance guidelines. This resolution will enable the Board, in appropriate circumstances, to allot for cash (other than in connection with a rights issue or open offer) equity securities with an aggregate nominal value of up to £496,513, being up to 19,860,520 ordinary shares of 2.5 pence each in the Company ("Ordinary Shares") and representing approximately five per cent of the issued equity share capital of the Company (excluding treasury shares) as at 23 March 2023 (being the latest practicable date prior to the publication of this document). The allotment of equity securities as referred to in this resolution includes the sale of any shares which the Company holds in treasury. The resolution also disapplies the statutory pre-emption provisions in connection with a rights issue or open offer and allows the Directors to make appropriate arrangements in relation to fractional entitlements or other legal or practical problems. This will replace the equivalent resolution passed at the last annual general meeting and will expire at the conclusion of the next annual general meeting or at 6.00 p.m. on 27 July 2024, whichever is the earlier. It is intended that in any three year period no more than seven and a half per cent of the issued share capital (excluding treasury shares) will be issued on a non-preemptive basis without prior consultation with shareholders.
This resolution is proposed so as to give your Board flexibility to take advantage of business opportunities as they arise.
It is proposed to renew the authority to make market purchases of Ordinary Shares, such authority being limited to the purchase of 10 per cent of the Ordinary Shares in issue as at 23 March 2023 (being the latest practicable date prior to the publication of this document). Shares purchased further to this authority will be cancelled, unless the Company decides otherwise, in which case they may be held as treasury shares, subject to any applicable limits. No dividends are paid on shares while held in treasury and no voting rights attach to treasury shares.
The minimum price which may be paid for any Ordinary Shares pursuant to this authority will be 2.5 pence (being an amount equal to the nominal value of an Ordinary Share). The maximum price which may be paid for any Ordinary Share is the higher of an amount equal to 5 per cent above the average of the closing middle-market quotations for the Ordinary Shares as derived from SEDOL for the five dealing days immediately preceding the day on which the purchase is made, and an amount equal to a price no higher than the higher of the price of the last independent trade and the highest current independent bid on the London Stock Exchange Trading System SETS, in each case exclusive of expenses.
The maximum per cent aggregate number of Ordinary Shares hereby authorised to be purchased is 39,721,086 Ordinary Shares (representing 10 per cent of the Ordinary Shares in issue as at 23 March 2023 (being the latest practicable date prior to the publication of this document)). This authority will expire at the conclusion of the Company's next annual general meeting, or, if earlier, at 6.00 p.m. on 27 July 2024, being 15 months from the date of the passing of this resolution.
The authority to purchase the Company's own shares will only be exercised if the Directors consider that there is likely to be a beneficial impact on earnings per Ordinary Share and that it is in the best interests of the Company at the time. The Directors have no present intention of exercising this authority.
During the year to 31 December 2022 the Company made market purchases of its own shares pursuant to a Tender Offer that completed on 16 September 2022 of 10,184,894 shares, which was in addition to its general authority to make market purchases and approved at a General Meeting of the Company on 9 September 2022.
CLS Holdings plc (the "Company") (Incorporated and registered in England with registered number 2714781)
It is proposed to seek authority from shareholders to hold general meetings (other than Annual General Meetings) on 14 clear days' notice. This is permissible under the Articles of Association of the Company and the Act. Under the Act, specific shareholder approval is required annually in order to retain this option. The Directors believe that there may be circumstances in which it will be important for the Company to be able to call meetings at such short notice. Accordingly, the Directors believe that it is important for the Company to retain this flexibility.
The Company will only use the shorter notice period where it is merited by the purpose of the meeting, the proposals are time sensitive and it would clearly be to the advantage of shareholders as a whole.
You will find enclosed with this document a Form of Proxy for use in respect of the AGM. Shareholders are encouraged to complete and sign the Form of Proxy and return it, in accordance with the instructions printed on it to Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY (the "Registrar") as soon as possible and, in any event, to arrive by no later than 10.00 a.m. on Tuesday, 25 April 2023.
As an alternative to completing the Form of Proxy, you can appoint proxies electronically via www.clsholdings.com/evoting to be received by the Registrar by no later than 10.00 a.m. on Tuesday, 25 April 2023. CREST members can also appoint proxies by using the CREST electronic proxy appointment service and transmitting a CREST Proxy Instruction in accordance with the procedures set out in the CREST Manual so that it is received by the issuer's agent (under ID 3RA50) by no later than 10.00 a.m. on Tuesday, 25 April 2023. The time of receipt will be taken to be the time from which the issuer's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST.
At 23 March 2023 (being the latest practicable date prior to the publication of this document), the issued share capital of the Company was 438,777,780 Ordinary Shares, of which 41,566,914 Ordinary Shares are held by the Company as treasury shares. As at 23 March 2023, the total number of voting rights in the Company was, therefore, 397,210,866.
At 23 March 2023, the Company operates the Performance Incentive Plan (the "Plan") which sets out share awards made to participants of Element B of the Plan and a Long-Term Incentive Plan (the "LTIP"). As at this date, there were awards outstanding under Element B of the Plan in respect of 208,505 shares and options outstanding under the LTIP in respect of 3,999,683 shares. Together, these represented 0.96 per cent of the Company's issued share capital on that date. If the authority to purchase shares set out in resolution 19 was exercised in full, the share awards would represent 1.05 per cent of the Company's issued share capital as at 23 March 2023.
The Company notes that at the 2022 AGM there were 20.57% votes against Resolution 11, the re-election of Christopher Jarvis as a Director of the Company. The Board has the considered views of shareholders and also the UK Corporate Governance Code. With this in mind, after serving for more than 14 years, Christopher Jarvis will not be standing for re-election at the 2023 AGM and will be stepping down from his position as a Director of the Company at the conclusion of the 2023 AGM. We would like to thank Christopher for his many years of service and wish him all the best in his future endeavours.
Your Directors consider that the proposals in this document are in the best interests of shareholders as a whole and unanimously recommend that shareholders vote in favour of the Resolutions proposed in the Notice as they intend to do in respect of their interest in, and/or own shareholdings of, 27,244,052 Ordinary Shares, representing approximately 6.87 per cent of the Company's issued share capital (excluding treasury shares).
Yours faithfully
Non-Executive Chairman
As at 27 March 2023 (being the latest practicable date prior to the publication of this document)
| Lennart Sten | Andrew Kirkman | |
|---|---|---|
| Independent Non-Executive Chairman | Chief Financial Officer | |
| Appointment as a Director | Appointment as a Director | |
| 1 August 2014 | 1 July 2019 | |
| Tenure | Tenure | |
| 8 years 4 months | 3 years 5 months | |
| Former roles: CEO, GE Capital Real Estate | Former roles: Finance Director, Harworth | |
| Europe. President, GE Real Estate Nordic. | Group plc. Finance Director, Viridor. | |
| CEO Fabege AB. General Counsel, GE | Chief Finance Officer, Balfour Beatty Capital. | |
| Capital Equipment Finances AB. Partner, | Global Head of Corporate Finance, Bovis | |
| Baker & McKenzie, Stockholm | Lend Lease | |
| Qualifications: Degree in Law, Stockholm University |
Qualifications: Masters in Politics, Philosophy and Economics, Oxford University. Fellow, Institute of Chartered Accountants |
|
| Experience: International property | Experience: Extensive plc, property, finance | |
| industry. Founder and CEO of Svenska | and operational experience. Non-Executive | |
| Handelsfastigheter. Board member, Interogo | Director, A2Dominion Housing Limited, a | |
| Holding AG. Chairman, Klara Bo Sverige AB | housing association | |
| Anna Seeley | Elizabeth Edwards | |
| Non-Executive Director and Vice Chair | Senior Independent Director | |
| Appointment as a Director | Appointment as a Director | |
| 11 May 2015 | 13 May 2014 | |
| Tenure | Tenure | |
| 7 years 7 months | 8 years 7 months | |
| Former roles: European Property Surveyor, | Former roles: Managing Director, Landesbank | |
| General Electric Corporation and BT Group. | Berlin London. Head of BerlinHyp London | |
| Group Property Director, CLS Holdings plc. | office. Senior positions with National | |
| Chartered Surveyor, Chestertons | Australia Bank, Westdeutsche Immobilien. | |
| Qualifications: Degree in Property | Management Consultant, PWC | |
| Valuation and Finance, City University | Qualifications: Fellow, Royal Institution of | |
| and Chartered Surveyor | Chartered Surveyors. Honours Degree in | |
| Experience: 20+ years of property industry | Estate Management, South Bank University | |
| and business experience | Experience: Extensive commercial property | |
| Fredrik Widlund Chief Executive Officer |
investment and finance expertise in the UK and Europe ( primarily Germany). Non-Executive Director, Schroders European REIT plc. Trustee, Refuge. Trustee, Central School of Ballet Warden, the St Olaves and St Saviours Schools Foundation. Past Master, Worshipful Company of Chartered Surveyors |
|
| Appointment as a Director 3 November 2014 Tenure 8 years 1 month |
||
| Former roles: Global Commercial Leader, GE Capital International. Regional CEO, GE's European Leasing businesses. Managing Director, GE Capital Real Estate. CFO, GE Capital Equipment Finance. Various positions with Royal Dutch Shell |
||
| Qualifications: Degree in Business Administration, Stockholm University |
||
| Experience: Business leadership, property and finance experience in global organisations. Trustee of Morden College, a social and housing charity |
| Appointment as a Director | 1 August 2019 |
|---|---|
| Tenure | 3 years 4 months |
Former roles: Solicitor, Slaughter and May, Director Asda Stores, Company Secretary and General Counsel Asda Group plc/Asda Wal Mart, Partner Eversheds Sutherland LLP, Chair St Giles Trust, Independent NED and SID Bellway plc
Qualifications: Law degree, Warwick University, Certificate in EU Studies Universite de Nice, Hon Doctorate of Law, Leeds Beckett University
Experience: Legal advisory (corporate finance, M&A, regulatory, compliance and governance). Retail and property sector specialism. NED and Remuneration and Nominations Committee Chair, Pool Reinsurance; Chair and Pro Chancellor University of York; Trustee National Trust
Non-Executive Director
| Appointment as a Director | 7 March 2017 |
|---|---|
| Tenure | 5 years 9 months |
Former roles: Director, CLS Holdings plc (1992–2010). Former Junior District Court Judge in Sweden
Qualifications: Degree in Law, Stockholm University
Experience: European property market and Group business. Developed and runs hotels in St Vincent & Grenadines, West Indies
Non-Executive Director
| Appointment as a Director | 20 November 2019 |
|---|---|
| Tenure | 3 years 1 month |
Former roles: Senior Partner, KPMG real estate audit practice
Qualifications: Fellow, Institute of Chartered Accountants. Degree in Economics from Durham University
Experience: Real estate, finance and audit experience. Non-Executive Director, Urban&Civic and Ground Rents Income Fund plc. Governor, Winchester College
CLS Holdings plc (the "Company") (Incorporated and registered in England with registered number 2714781)
Notice is hereby given that the Annual General Meeting of CLS Holdings plc (the "Company") will be a physical meeting held at the Seminar Room at Spring Mews – Fresh Student Living, 10 Tinworth Street, Lambeth, London, SE11 5AL, on 27 April 2023 at 10.00 a.m. for the following purposes:
so that all previous authorities of the Directors pursuant to the said section 551 be and are hereby revoked.
That the amendments to the rules of the CLS Holdings plc Long Term Incentive Plan (the "LTIP") summarised in Appendix 3 of Part III of the circular to shareholders dated 23 March 2023 of which this notice of Annual General Meeting forms Part II (the "Circular") and the amended rules of which are produced at the Meeting and for the purposes of identification initialled by the Chairman be and are hereby approved and the Directors be and are hereby authorised to do all acts and things which they may consider necessary or desirable to carry the amendments to the LTIP into effect.
and this power, unless renewed, shall expire at the conclusion of the next annual general meeting or at 6.00 p.m. on 27 July 2024, whichever is the earlier, but shall extend to the making, before such expiry, of an offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of such offer or agreement as if the authority conferred hereby had not expired.
That a general meeting of the Company other than an annual general meeting may be called on not less than 14 clear days' notice.
BY ORDER OF THE BOARD
David Fuller Company Secretary 23 March 2023
CLS Holdings plc (the "Company") (Incorporated and registered in England with registered number 2714781)
Completion of the Form of Proxy or the appointment of a proxy electronically via www.clsholdings.com/evoting or through CREST will not prevent a member from attending and voting in person.
Any member attending the AGM has the right to ask questions. The Company must cause to be answered any such question relating to the business being dealt with at the AGM but no such answer need be given if (a) to do so would interfere unduly with the preparation for the AGM or involve the disclosure of confidential information, (b) the answer has already been given on a website in the form of an answer to a question, or (c) it is undesirable in the interests of the Company or the good order of the AGM that the question be answered. To facilitate shareholder engagement, questions to the Board may be submitted in advance of the AGM by emailing questions to [email protected], or in writing addressed for the attention of the Company Secretary at our Registered Office. The last day for submitting questions is 10.00 a.m. on Tuesday, 25 April 2023 and responses which are relevant to the business of the meeting will be uploaded to our website at www.clsholdings.com. We also encourage shareholders to view the recording of the presentation of our annual results, details of which is available on our website at www.clsholdings.com/investors.
In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST message (a "CREST Proxy Instruction") must be properly authenticated in accordance with Euroclear UK & International's specifications and must contain the information required for such instructions, as described in the CREST Manual (www.euroclear.com). The message must be transmitted so as to be received by the issuer's agent (ID 3RA50), by 10.00 a.m. on Tuesday, 25 April 2023.
For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.
CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK & International does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed (a) voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001 (as amended). Please refer to the CREST Manual at www.euroclear.com.
CLS Holdings plc (the "Company") (Incorporated and registered in England with registered number 2714781)
CLS Holdings plc (the "Company") (Incorporated and registered in England with registered number 2714781)
Resolution 3 seeks approval of the Company's future policy on Directors' remuneration. The new Remuneration Policy is set out in full on pages 152 to 167 of the 2022 Directors' Remuneration Report contained in the Company's Annual Report & Accounts for the year ended 31 December 2022. In summary, the key changes to the Directors' Remuneration Policy are as follows:
The Remuneration Committee believes that these changes strengthen the alignment of executive remuneration with delivery of the business strategy and shareholder value and are in the best interests of all stakeholders.
If the proposed Directors' Remuneration Policy is approved, it will remain valid for a period of three years. Shareholder approval must be renewed at least every three years, so a Remuneration Policy will be put to shareholders again no later than the AGM in 2026.
CLS Holdings plc (the "Company") (Incorporated and registered in England with registered number 2714781)
This Appendix 2 sets out the principal terms of the CLS Holdings plc 2023 Annual Bonus Plan (the "ABP") which is being put to shareholders at the AGM for approval by Resolution 16. References in this Appendix to the Board are to the Board of directors of the Company or any duly authorised committee, normally the Remuneration Committee.
The ABP is a discretionary executive bonus plan which incorporates the Company's executive bonus scheme as well as a mechanism for the deferral of bonus into awards ("ABP Awards") over ordinary shares of the Company ("Shares"). It is proposed that the ABP will operate for the first time for the Company's financial year ending 31 December 2023 and that that the executive directors of the Company will participate in the ABP.
All employees (including executive Directors) of the Company and its subsidiaries (together, the "Group") are eligible for selection to participate in the ABP at the discretion of the Board.
Participants selected to participate in the ABP for a financial year of the Company may be eligible to receive a discretionary annual bonus subject to satisfying performance conditions and targets set for that financial year. The maximum bonus (including any part of the bonus deferred into an ABP Award) deliverable under the ABP for participants will be up to a maximum of 150 per cent of annual base salary. The Board will determine the bonus to be awarded following the end of the relevant financial year. The Board retains discretion to adjust the level of bonus awarded upwards or downwards if in its opinion the level of bonus resulting from the application of applicable performance conditions is not a fair and accurate reflection of business performance, a participant's personal performance or such other factors as the Board considers appropriate.
Except in certain circumstances, an ABP participant who ceases to be employed by or hold office with the Group before the bonus determination is made will cease to be eligible to receive a bonus. However, in the event of a participant's death or if a participant ceases to be employed or hold office with the Group by reason of their ill-health, injury, disability, redundancy, retirement with the agreement of their employer, the participant being employed by a company which ceases to be a Group company or being employed in an undertaking which is transferred to a person which is not a Group company, or in other circumstances determined at the discretion of the Board (a "Good Leaver Reason"), they will remain eligible for a bonus. The performance conditions and targets will be considered and the bonus will be deliverable in the same way and at the same time as if the individual had not ceased to be employed or hold office with the Group, unless the Board otherwise decides, although the value of the bonus will be pro-rated (unless the Board otherwise determines) to reflect the reduced period of time between the start of the financial year and the participant's cessation of employment as a proportion of that financial year.
In addition, in the event that a corporate event occurs as described below, a participant may be eligible to receive a bonus as soon as practicable after the relevant event, the amount of which shall be determined by the Board taking into account the relevant performance conditions and targets. The value of the bonus will be pro-rated to reflect the reduced period of time between the start of the financial year and the relevant corporate event as a proportion of the relevant financial year unless the Board otherwise decides.
Malus and clawback provisions apply to a bonus awarded under the ABP as described below.
The Board may determine that a proportion of a participant's annual bonus is deferred into an ABP Award. ABP Awards may take the form of (i) nil-cost options over Shares ("ABP Options"), (ii) conditional awards (i.e. conditional rights to acquire Shares) ("ABP Conditional Awards") and/or (iii) Shares which are subject to restrictions and the risk of forfeiture ("ABP Restricted Shares"). No payment is required for the grant of an ABP Award (unless the Board determines otherwise).
ABP Awards may be granted during the 42 days beginning on: (i) the date of shareholder approval of the ABP; (ii) the day after the announcement of the Company's results for any period; (iii) any day on which the Board determines that circumstances are sufficiently exceptional to justify the grant of ABP Awards at that time; or (iv) the day after the lifting of any dealing restrictions which prevented the grant of ABP Awards under (i), (ii) or (iii) above.
ABP Awards may not be granted when prevented by any dealing restrictions or after the 10th anniversary of shareholder approval of the ABP.
ABP Awards will normally vest on the third anniversary of the date of grant (or such other date or dates as the Board may determine on grant). ABP Options which have vested will normally remain exercisable following vesting for the period set by the Board not exceeding 10 years from grant.
The Board may decide at the time of payment of a cash bonus or at any time before to reduce the amount of the bonus (including to nil) and/or (b) at the vesting of an ABP Award or at any time before that the number of Shares subject to a participant's ABP Award shall be cancelled, reduced (including to nil) and/or that additional conditions shall be imposed on such basis that the Board in its discretion considers to be fair and reasonable in the following circumstances:
The Board may apply clawback to all or part of a participant's cash bonus in substantially the same circumstances as apply to malus (as described above) during the period of three years following the payment of the cash bonus to which the ABP Award relates. Clawback may be effected, among other means, by requiring the transfer of Shares, payment of cash or reduction of awards.
Except in certain circumstances, set out below, an ABP Award will lapse immediately upon a participant ceasing to be employed by or holding office with the Group.
However, if a participant so ceases for a Good Leaver Reason, their ABP Award will ordinarily vest in full (unless the Remuneration Committee otherwise determines) on the date when it would have vested if they had not so ceased to be a Group employee or director, subject to any condition imposed on the ABP Award and the operation of malus.
CLS Holdings plc (the "Company") (Incorporated and registered in England with registered number 2714781)
If a participant ceases to be a Group employee or director for a Good Leaver Reason, the Board can alternatively decide that their ABP Award will vest early when they leave. If a participant dies, their ABP Award will vest in full on the date of their death, unless the Board determines otherwise.
To the extent that ABP Options vest for a Good Leaver Reason, they may be exercised for a period of six months following vesting (or such longer period as the Remuneration Committee determines). To the extent that ABP Options vest following the death of a participant, they may normally be exercised for a period of 12 months following death (or such longer period as the Board determines).
In the event of a takeover, compulsory acquisition of Shares, scheme of arrangement, or winding-up of the Company, ABP Awards will vest in full unless the Board decides to pro rate the level of vesting to reflect the reduced period of time between grant of the ABP Award and the relevant corporate event as a proportion of the normal vesting period. The Board will determine whether or not to pro-rate based on the circumstances of the relevant event.
ABP Options which vest in the event of a takeover, scheme of arrangement, or winding-up of the Company may be exercised for a period of six months measured from the relevant event (or in the case of takeover, such longer period as the Board determines) and will otherwise lapse at the end of that period. ABP Options which vest in the event of a compulsory acquisition of Shares may be exercised during the period beginning with the date on which a notice is served under section 979 of the Companies Act 2006 and ending seven clear days before entitlement to serve such notice ceases.
In the event of a demerger, distribution or any other corporate event, the Board may determine that ABP Awards shall vest, to the extent determined by the Board. ABP Options that vest in these circumstances may be exercised during such period as the Board determines.
The Board may, in its discretion, allow ABP Awards to vest prior to and conditional upon the occurrence of any of the events set out above and an ABP Option will then lapse on the occurrence of the event if not exercised prior to the event.
If there is a corporate event resulting in a new person or company acquiring control of the Company, the Board may (with the consent of the acquiring company) alternatively decide that ABP Awards will not vest but that the unvested portion of the ABP Awards will be replaced by equivalent new awards over shares in the new acquiring company.
The Board may decide in relation to any ABP Award (other than an award of ABP Restricted Shares) that participants will receive a payment (in additional Shares and/or cash) equal in value to any dividends that would have been paid on the Shares which vest under that ABP Award by reference to the period between the time when the relevant ABP Award was granted and the time when it vested. The method used to calculate the value of dividends may assume the reinvestment of dividends and exclude or include special dividends or dividends in specie.
If there is a variation of share capital of the Company or in the event of a demerger or other distribution, special dividend or distribution, the Board may make such adjustments to ABP Awards, including the number of Shares subject to awards and the option exercise price (if any), as it considers to be fair and reasonable.
Except in relation to the award of Shares subject to restrictions, Shares issued and/or transferred under the ABP will not confer any rights on any participant until the relevant award has vested or the relevant option has been exercised and the participant in question has received the underlying Shares. Any Shares allotted when an option is exercised or an award vests will rank equally with Shares then in issue (except for rights arising by reference to a record date prior to their issue). A participant awarded Shares subject to restrictions shall have the same rights as a holder of Shares in issue at the time that the participant acquires the Shares, save to the extent set out in the agreement with the participant relating to those Shares.
At its discretion, the Board may decide to satisfy awards granted under the ABP with a payment in cash or Shares equal to any gain that a participant would have made had the relevant award been satisfied with Shares.
Awards granted under the ABP are not transferable other than to a participant's personal representatives in the event of death.
The ABP may operate over newly issued Shares, treasury Shares or Shares purchased in the market. The rules of the ABP provide that, in any period of 10 calendar years, not more than 10 per cent of the Company's issued ordinary share capital may be issued under the ABP and under any other employees' share scheme operated by the Company. In addition, the rules of the ABP provide that, in any period of 10 calendar years, not more than 5 per cent of the Company's issued ordinary share capital may be issued under the ABP and under any other discretionary executive share scheme adopted by the Company. Shares issued out of treasury under the ABP will count towards these limits for so long as this is required under institutional shareholder guidelines. In addition, awards which are renounced or lapse shall be disregarded for the purposes of these limits.
The Board may, at any time, amend the provisions of the ABP in any respect except that the prior approval of the Company in general meeting must be obtained in the case of any amendment to the advantage of participants in the ABP which is made to the provisions relating to eligibility, individual or overall limits, the persons to whom an award can be made under the ABP, the basis for determining the entitlement to and the terms of shares provided under ABP, the adjustments that may be made in the event of any variation to the share capital of the Company and/or the rule relating to such prior approval, save that there are exceptions for any minor amendment to benefit the administration of the ABP, to take account of the provisions of any proposed or existing legislation or to obtain or maintain favourable tax, exchange control or regulatory treatment for participants, the Company and/or its other Group companies. Amendments may not normally adversely affect the rights of participants except where participants are notified of such amendment and the majority of participants approve such amendment.
The Board may, at any time, establish further plans based on the ABP for overseas territories. Any such plan shall be similar to the ABP, but modified to take account of local tax, exchange control or securities laws. Any Shares made available under such further overseas plans must be treated as counting against the limits on individual and overall participation under the ABP.
The benefits received under the ABP are not pensionable.
Note: This Appendix 2 summarises the main features of the ABP, but does not form part of the ABP, and should not be taken as affecting the interpretation of the detailed terms and conditions constituting the ABP Rules. The draft rules of the ABP will be available for inspection on the National Storage Mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism from the date of sending this document. The draft rules of the ABP will also be available for inspection at the place of the AGM for at least 15 minutes before the AGM and during the Annual General Meeting.
CLS Holdings plc (the "Company") (Incorporated and registered in England with registered number 2714781)
The rules of the CLS Holdings plc Long Term Incentive Plan (the "LTIP"), which were approved by shareholders at the Company's Annual General Meeting in 2020, provide that the maximum total market value of ordinary shares of the Company that may be awarded for any relevant financial year to a participant in the LTIP will not exceed 150% of the participant's base salary.
As set out in Appendix 1 of Part III of this document, it is proposed under the Policy for Executive Directors of the Company to increase this individual annual limit to 200% of the director's base salary and in order to implement this element of the Policy, an amendment is required to the rules of the LTIP.
Resolution 17 therefore seeks shareholder approval to amend the rules of the LTIP so that the maximum total value of ordinary shares of the Company that may be awarded for any relevant year to a participant in the LTIP will not exceed 200% of their base annual salary. No other amendments to the rules of the LTIP are proposed.
The amended rules of the LTIP will be available for inspection on the National Storage Mechanism at https://data.fca.org.uk/#/ nsm/nationalstoragemechanism from the date of sending this document. The amended rules of the LTIP will also be available for inspection at the place of the AGM for at least 15 minutes before the AGM and during the AGM.
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