Pre-Annual General Meeting Information • Sep 19, 2024
Pre-Annual General Meeting Information
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THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. IT CONTAINS PROPOSALS RELATING TO THE RECONSTRUCTION AND VOLUNTARY WINDING-UP OF JPMORGAN JAPAN SMALL CAP GROWTH & INCOME PLC ON WHICH YOU ARE BEING ASKED TO VOTE AND IN RELATION TO WHICH SHAREHOLDERS HAVE THE RIGHT TO MAKE AN ELECTION. IF YOU ARE IN ANY DOUBT ABOUT THE ACTION TO BE TAKEN, YOU ARE RECOMMENDED TO SEEK YOUR OWN PERSONAL FINANCIAL ADVICE FROM AN APPROPRIATELY QUALIFIED INDEPENDENT ADVISER AUTHORISED UNDER THE FINANCIAL SERVICES AND MARKETS ACT 2000 IF YOU ARE IN THE UNITED KINGDOM, OR FROM ANOTHER APPROPRIATELY AUTHORISED INDEPENDENT FINANCIAL ADVISER IF YOU ARE IN A TERRITORY OUTSIDE OF THE UNITED KINGDOM, WITHOUT DELAY.
If you have sold or otherwise transferred all of your Ordinary Shares in JPMorgan Japan Small Cap Growth & Income PLC (the "Company" or "JSGI"), you should pass this document, together with the accompanying documents (but not any accompanying personalised Forms of Proxy or Form of Election), as soon as possible to the purchaser or transferee or to the person through whom the sale or transfer was effected for transmission to the purchaser or transferee. However, the related prospectus published by JPMorgan Japanese Investment Trust PLC (the "JFJ Prospectus") should not be forwarded to or transmitted in or into any Overseas Jurisdiction. Shareholders who are resident in, or citizens of, territories outside the United Kingdom should read the section headed "Excluded JSGI Shareholders" in Part 3 of this document.
The New JFJ Shares have not and will not be registered under the US Securities Act of 1933, as amended (the "US Securities Act"), and the New JFJ Shares may not be offered, sold, resold, pledged, delivered, assigned or otherwise transferred, directly or indirectly, into or within the United States or to, or for the account or benefit of, "U.S. persons" (as defined in Regulation S under the US Securities Act) ("US Persons"), except pursuant to an exemption from the registration requirements of the US Securities Act, and under circumstances that would not result in JFJ being in violation of the US Investment Company Act of 1940, as amended (the "US Investment Company Act"). JFJ will not be registered as an investment company under the US Investment Company Act, and JFJ Shareholders will not be entitled to the benefits of such legislation. There has not been and there will be no public offer or sale of the New JFJ Shares in the United States. The New JFJ Shares are being offered and sold solely: (i) outside the United States to persons who are not US Persons in "offshore transactions" as defined in and pursuant to Regulation S under the US Securities Act; and (ii) within the United States to, or to US Persons that are, both "qualified institutional buyers" ("QIBs") as defined in Rule 144A under the US Securities Act and "qualified purchasers" as defined in Section 2(a)(51) of the US Investment Company Act ("Qualified Purchasers"), pursuant to an exemption from the registration requirements of the US Securities Act, and that, in the case of (ii), have executed a US Investor Representation Letter.
In connection with the Scheme, US Persons that are existing holders of shares in the Company and holders in the United States ("US Shareholders") are requested (where applicable) to execute the US Investor Representation Letter annexed to the JFJ Prospectus and return it to JFJ in accordance with the instructions printed thereon.
(Incorporated in England and Wales with registered number 03916716 and registered as an investment company under section 833 of the Companies Act 2006)
Recommended proposals for the voluntary winding-up of the Company and a combination with JPMorgan Japanese Investment Trust PLC
and
The definitions used in this document are set out in Part 7 of this document.
Cavendish Capital Markets Limited ("Cavendish") is authorised and regulated in the United Kingdom by the FCA and is advising the Company and no one else in connection with the Proposals (whether or not a recipient of this document). Cavendish will not be responsible to any person other than the Company for providing the protections afforded to its customers, nor for providing advice in relation to the Proposals, the contents of this document and the accompanying documents or any other matter referred to herein or therein.
Investec Bank plc ("Investec") is authorised in the United Kingdom by the Prudential Regulation Authority and regulated by the FCA and is advising JPMorgan Japanese Investment Trust PLC ("JFJ") and no one else in connection with the Proposals (whether or not a recipient of this document). Investec will not be responsible to any person other than JFJ for providing the protections afforded to its customers, nor for providing advice in relation to the Proposals, the contents of this document and the accompanying documents or any other matter referred to herein or therein.
This document should be read in conjunction with the JFJ Prospectus relating to JFJ which has been prepared in accordance with the Prospectus Regulation Rules, approved by the FCA in accordance with section 84 of the Financial Services and Markets Act 2000, and made available to the public in accordance with the Prospectus Regulation Rules. In relation to JFJ, this document is not a prospectus and does not constitute an offer of any securities for sale or subscription. Investors should not subscribe for any New JFJ Shares referred to in this document except on the basis of information provided in the JFJ Prospectus. The JFJ Prospectus is available on JFJ's website at www.jpmjapanese.co.uk. A short document which includes some "Frequently asked questions" is available on the Company's website at: www.jpmjapansmallcapgrowthandincome.co.uk.
The Proposals described in this document are conditional, among other things, on Shareholder approval. Notices of the First General Meeting, to be held at 10.00 a.m. on 10 October 2024, and the Second General Meeting, to be held at 10.00 a.m. on 24 October 2024, in each case at 60 Victoria Embankment, London, EC4Y 0JP, are set out at the end of this document.
All Shareholders are encouraged to vote in favour of the Resolutions to be proposed at the General Meetings and, if their Ordinary Shares are not held directly, to arrange for their nominee to vote on their behalf. Forms of Proxy for use in conjunction with the General Meetings are enclosed. To be valid for use at the General Meetings, the Forms of Proxy must be completed and returned in accordance with the instructions printed thereon to the receiving agent, Computershare Investor Services PLC (the "Receiving Agent") at The Pavilions, Bridgwater Road, Bristol, BS99 6AH as soon as possible, but in any event so as to be received no later than 48 hours (excluding nonworking days) before the time of the relevant meeting. Alternatively, you may appoint a proxy or proxies electronically by visiting www.investorcentre.co.uk/eproxy and following the instructions. Proxies submitted via www.investorcentre.co.uk/eproxy must be transmitted so as to be received by the Receiving Agent no later than 48 hours (excluding non-working days) before the time of the relevant meeting.
Shareholders who hold their Ordinary Shares in uncertificated form (i.e. in CREST) may vote using the CREST electronic voting service in accordance with the procedures set out in the CREST Manual (please also refer to the accompanying notes to the notices of the General Meetings set out at the end of this document). In addition, institutional investors may be able to appoint a proxy electronically via the Proxymity platform. Proxies submitted via a designated voting platform (such as CREST or Proxymity) for the General Meetings must be transmitted so as to be received by the Receiving Agent as soon as possible and, in any event, no later than 48 hours (excluding nonworking days) before the time of the relevant meeting.
Shareholders who hold Ordinary Shares in certificated form will also find enclosed with this document a Form of Election for use in connection with the Proposals. To be valid, Forms of Election must be completed and returned to the Receiving Agent, Computershare Investor Services PLC, Corporate Actions Projects, Bristol BS99 6AH so as to arrive as soon as possible and, in any event, not later than 1.00 p.m. on 11 October 2024. Shareholders who hold their Ordinary Shares in uncertificated form will not receive a Form of Election and should elect in accordance with the instructions contained in the section of this document titled "Ordinary Shares held in uncertificated form (that is, in CREST)", which can be found in Part 3 of this document.
Neither the United States Securities and Exchange Commission (the "SEC") nor any securities supervisory authority of any state or other jurisdiction in the United States has approved or disapproved the Scheme or reviewed it for its fairness, nor have the contents of this document or any other documentation relating to the Scheme been reviewed for accuracy, completeness or fairness by the SEC or any securities supervisory authority in the United States. Any representation to the contrary is a criminal offence in the United States.
The Scheme is being implemented subject to United Kingdom disclosure requirements which are different from certain United States disclosure requirements. In addition, US Shareholders should be aware that this document has been prepared in accordance with a UK format and style, which differs from the US format and style. In particular, parts of this document contain information concerning the Scheme required by UK disclosure requirements which may be material and may not have been summarised elsewhere in the document. Furthermore, the Scheme will be subject to other procedural requirements, including with respect to withdrawal rights, settlement procedures and timing of payments that are different from those applicable under US domestic tender offer procedures and law.
The New JFJ Shares are not, and will not be, listed on a US securities exchange and JFJ is not subject to the periodic reporting requirements of the US Securities Exchange Act of 1934, as amended (the "US Exchange Act") and is not required to, and does not, file any reports with the SEC. The Scheme is not subject to the disclosure and other procedural requirements of Regulation 14D under the US Exchange Act.
The Scheme may be a taxable transaction for US federal income tax purposes and under applicable US state and local, as well as foreign and other tax laws. Each US Shareholder is urged to consult their independent professional adviser immediately regarding the tax consequences of making a decision regarding the Scheme.
It may be difficult for US Shareholders to enforce their rights and any claim arising out of the US federal securities laws, since JFJ is located in a foreign country, and all of its officers and directors are citizens and residents of jurisdictions outside the United States. US Shareholders may not be able to sue a foreign company or its officers or directors in a foreign court for violations of US securities laws. Further, it may be difficult to compel a foreign company and its affiliates to subject themselves to a US court's judgement. Whether located in the United States or elsewhere, US Shareholders will receive any cash consideration in Pounds sterling.
Dated 19 September 2024
| Clause Heading |
Page |
|---|---|
| SUMMARY OF ACTION TO BE TAKEN BY SHAREHOLDERS | 5 |
| EXPECTED TIMETABLE | 7 |
| PART 1 – LETTER FROM THE CHAIR | 8 |
| PART 2 – FURTHER INFORMATION ON JFJ AND THE COMBINED TRUST | 18 |
| PART 3 – FURTHER DETAILS OF THE PROPOSALS | 24 |
| PART 4 – THE SCHEME | 32 |
| PART 5 – RISK FACTORS | 40 |
| PART 6 – ADDITIONAL INFORMATION | 43 |
| PART 7 – DEFINITIONS | 45 |
| NOTICE OF FIRST GENERAL MEETING | 52 |
| NOTICE OF SECOND GENERAL MEETING | 57 |
Full details of the action to be taken by Shareholders are set out in the section of Part 1 of this document titled "Action to be taken by Shareholders" which can be found on pages 14 to 16 of this document, the section of Part 3 of this document titled "Elections", and in the instructions on the Forms of Proxy, the Form of Election, and the US Investor Representation Letter (as applicable). You should read this whole document when deciding what action to take. The attention of Excluded JSGI Shareholders is drawn to the section headed "Excluded JSGI Shareholders" in Part 3 of this document.
| 1. | To vote on the Proposals | |||
|---|---|---|---|---|
| Complete and return the PURPLE Form of Proxy for the First General Meeting so as to be received as soon as possible, but in any event no later than 10.00 a.m. on 8 October 2024. |
||||
| AND | ||||
| Complete and return the BLUE Form of Proxy for the Second General Meeting so as to be received as soon as possible, but in any event no later than 10.00 a.m. on 22 October 2024. |
||||
| OR | ||||
| Alternatively you may appoint a proxy or proxies electronically by submitting via www.investorcentre.co.uk/eproxy. Proxies submitted via www.investorcentre.co.uk/eproxy must be transmitted so as to be received by the Registrars no later than 48 hours (excluding non working days) before the time of the relevant General Meeting. |
||||
| OR | ||||
| Shareholders who hold their Ordinary Shares in uncertificated form (i.e. in CREST) may vote using the CREST electronic voting service in accordance with the procedures set out in the CREST Manual. In addition, institutional investors may be able to appoint a proxy electronically via the Proxymity platform. Proxies submitted via a designated voting platform (such as CREST or Proxymity) for the General Meetings must be transmitted so as to be received by the Registrars no later than 48 hours (excluding non-working days) before the time of the relevant General Meeting. |
||||
| 2. | To make an Election | |||
| (a) | To elect to rollover into JFJ (the "Rollover Option") in full | |||
| No Form of Election should be completed or TTE Instruction submitted. However, Shareholders should nevertheless vote on the Proposals, as set out above. |
||||
| (b) | To elect for the Cash Option (limited in aggregate to 25 per cent. of the issued Ordinary Shares) |
|||
| If you hold your Ordinary Shares in certificated form (that is, not in CREST): | ||||
| You MUST complete the accompanying Form of Election in accordance with the instructions contained therein so as to be received as soon as possible, but in any event no later than 1.00 p.m. on 11 October 2024. OR |
||||
| If you hold your Ordinary Shares in uncertificated form (that is, in CREST): | ||||
| You MUST send a TTE Instruction in respect of any Ordinary Shares for which you wish to make an Election for the Cash Option no later than 1.00 p.m. on 11 October 2024. |
If you have any questions relating to the completion and return of your Forms of Proxy and/or the Form of Election, please contact the Receiving Agent's shareholder helpline between 8.30 a.m. and 5.30 p.m. (UK time) Monday to Friday (except public holidays in England and Wales) on +44 (0)370 707 4040 (the "Shareholder Helpline"). Network providers' costs may vary. Calls to the Shareholder Helpline from outside the UK will be charged at the applicable international rates. Different charges may apply to calls from mobile telephones and calls may be recorded and randomly monitored for security and training purposes. The Shareholder Helpline can only provide information regarding the completion of Forms of Proxy and/or the Form of Election and cannot provide you with financial, tax, investment or legal advice.
Only Shareholders who hold Ordinary Shares as at 6.00 p.m. on 11 October 2024 are able to elect for the Cash Option in respect of those Ordinary Shares. The extent to which a Shareholder elects for the Cash Option is a matter for each Shareholder to decide and will be influenced by their own individual financial and tax circumstances and investment objectives. Shareholders should seek advice from their own independent financial adviser.
To the extent that an Excluded JSGI Shareholder would otherwise receive New JFJ Shares under the Scheme, either because no Election, or a partial Election, for the Cash Option was made or because an Excess Application for the Cash Option is scaled back in accordance with the Scheme, then such New JFJ Shares will be sold by the Liquidators in the market and the net proceeds paid to the relevant Excluded JSGI Shareholder in accordance with paragraph 15.1 of Part 4.
IF YOU ARE NOT AN EXCLUDED JSGI SHAREHOLDER AND YOU WISH TO RECEIVE NEW JFJ SHARES IN RESPECT OF YOUR ENTIRE HOLDING OF SHARES IN THE COMPANY, YOU NEED TAKE NO ACTION AND DO NOT NEED TO COMPLETE THE FORM OF ELECTION OR SEND A TTE (TRANSFER TO ESCROW) INSTRUCTION. HOWEVER, SHAREHOLDERS SHOULD NEVERTHELESS VOTE ON THE PROPOSALS, AS SET OUT ABOVE.
| 2024 | |
|---|---|
| Date of this document | 19 September |
| Publication of JFJ Prospectus | 19 September |
| Date of declaration of pre-liquidation interim dividend | On or around 1 October |
| Latest time and date for receipt of proxy appointments in respect of the First General Meeting |
10.00 a.m. on 8 October |
| First General Meeting | 10.00 a.m. on 10 October |
| JFJ general meeting | 11.00 a.m. on 10 October |
| Ex dividend date for the pre-liquidation interim dividend to Shareholders |
10 October |
| Record date for the pre-liquidation interim dividend to Shareholders |
11 October |
| Latest time and date for receipt of Forms of Election and TTE Instructions |
1.00 p.m. on 11 October |
| Record date for entitlements under the Scheme | 6.00 p.m. on 11 October |
| Ordinary Shares disabled in CREST (for settlement) | close of business on 11 October |
| Trading in JSGI Shares on the London Stock Exchange suspended |
14 October |
| Pre-liquidation interim dividend paid to Shareholders | 21 October |
| Calculation Date | close of business on 21 October |
| Latest time and date for receipt of proxy appointments in respect of the Second General Meeting |
10.00 a.m. on 22 October |
| Reclassification of the Ordinary Shares | 8.00 a.m. on 23 October |
| Suspension of listing of Reclassified Shares | 7.30 a.m. on 24 October |
| Second General Meeting | 10.00 a.m. on 24 October |
| Effective Date for implementation of the Scheme | 24 October |
| Appointment of Liquidator | 24 October |
| Announcement of the results of Elections, the JSGI Rollover FAV per Share, the JSGI Cash FAV per Share and the JFJ FAV per Share |
24 October |
| CREST accounts credited with, and dealings commence in, New JFJ Shares |
8.00 a.m. on 25 October |
| Cheques and electronic payments despatched to Shareholders who elect for the Cash Option and CREST accounts credited with cash |
week commencing 4 November |
| Certificates despatched in respect of New JFJ Shares | By 8 November |
| Cancellation of listing of Reclassified Shares | as soon as practicable after the Effective Date |
Note: All references to time in this document are to UK time. Each of the times and dates in the above expected timetable (other than in relation to the General Meetings) may be extended or brought forward. If any of the above times and/or dates change, the revised time(s) and/or date(s) will be notified to Shareholders by an announcement through a Regulatory Information Service.
(Incorporated in England and Wales with registered number 03916716 and registered as an investment company under section 833 of the Companies Act 2006)
Directors: Alexa Henderson ("Chair") Martin Shenfield Tom Walker
Registered Office: 60 Victoria Embankment London EC4Y 0JP
19 September 2024
Dear Shareholders
On 31 July 2024 the Board announced that it had agreed heads of terms with JPMorgan Japanese Investment Trust PLC ("JFJ") in respect of a proposed combination of the Company with JFJ to form a combined entity (the "Combined Trust") to be managed by the current investment manager of both companies, JPMorgan Asset Management (UK) Limited (the "Investment Manager"), and JFJ's lead portfolio managers, Nicholas Weindling and Miyako Urabe, investing in accordance with JFJ's existing investment objective and policy.
The Board and the Investment Manager believe that the outlook for Japanese equities remains compelling with a combination of improving economic fundamentals, structural transformation and corporate governance reforms. The Board believes that the Combined Trust will represent a very attractive way to invest in this opportunity. The Combined Trust would have net assets of up to approximately £1.0 billion, depending on the uptake of the Cash Option, and an estimated ongoing charges ratio of 0.62 per cent. As such, the Board believes the Combined Trust will continue to offer access to the compelling investment opportunity in Japan, led by Nicholas Weindling and Miyako Urabe and the substantial JPMorgan investment team based locally in Japan. Pending completion of the proposed combination, Miyako Urabe will remain lead portfolio manager, alongside Xuming Tao, of JSGI.
The combination will be effected by way of a scheme of reconstruction and members' voluntary winding up of the Company under section 110 of the Insolvency Act (the "Scheme") and the issue of New JFJ Shares to Shareholders who have elected, or are deemed to have elected, to roll over their investment into the Combined Trust (the "Proposals").
The recommended Proposals have been structured with a view to avoiding any costs of the Proposals falling on continuing shareholders in the Combined Trust, and to reduce the overall ongoing charges ratio of the Combined Trust. This will be achieved through a contribution to costs from the Manager to support the Scheme when the recommended Proposals become effective. In addition, the Manager has agreed to reduce the management fees payable by the Combined Trust and to waive the termination fees that would otherwise be payable by the Company to the Manager on termination of the Company's management agreement with the Manager.
The purpose of this document is to explain the Proposals and their rationale and expected benefits, the actions required to be taken in order for them to be implemented, and to convene the General Meetings to seek the required Shareholder approvals. The expected timetable associated with the Proposals is provided on page 7 of this document.
Pursuant to the Scheme, JSGI will be put into liquidation and its assets split notionally into three pools in respect of: (i) the interests of continuing Shareholders who elect, or are deemed to elect, to roll over into the Combined Trust (the "Rollover Pool"); (ii) the interests of Shareholders who elect for the Cash Option (the "Cash Pool"); and (iii) a provision sufficient to meet any current and future, actual and contingent liabilities of JSGI, including repayment of JSGI's existing loan facility (the "Liquidation Pool").
Under the Scheme, Shareholders will be entitled to elect to receive cash in respect of part or all of their shareholding, subject to an aggregate limit of 25 per cent. of the Company's issued share capital (excluding shares held in treasury) at a 2 per cent. discount to the JSGI Residual FAV less the costs of realising the assets required to create the Cash Pool (the "Cash Option"). New JFJ Shares will be issued as the default option under the Scheme in the event that either no election, or a partial election, for the Cash Option is made by a Shareholder or because an election for the Cash Option is scaled back in accordance with the Scheme (the "Rollover Option").
The Scheme will be implemented on a formula asset value ("FAV") to FAV basis. FAVs for the purposes of the Scheme will be calculated in accordance with JFJ's and JSGI's normal accounting policies and will take into account the adjustments outlined below. FAVs will be calculated based on the NAVs (cum income, debt at fair value, if applicable) of the respective companies, on the Calculation Date.
The JSGI residual formula asset value ("JSGI Residual FAV") shall be equal to the gross assets of JSGI as at the Calculation Date less: (i) the value of the cash and other assets appropriated to the Liquidation Pool (which includes any assets attributable to any Dissenting Shareholders); and (ii) any dividend which has been declared as at the Calculation Date but not paid to Shareholders, and not accounted for in the JSGI NAV, but excluding any adjustment for the JPMorgan Costs Contribution; plus (iii) an amount equal to any costs relating to the realignment of the JSGI portfolio in relation to the Proposals already incurred.
The JSGI Cash Pool FAV shall be equal to the JSGI Residual FAV multiplied by the proportion of the issued share capital of Company electing for the Cash Option to the Company's issued share capital (excluding shares held in treasury) minus: (i) 2 per cent. (the "Cash Option Discount"); and (ii) the costs incurred in realising portfolio assets to create the Cash Pool (the "Cash Pool Realisation Costs").
The JSGI Cash FAV per Share shall equal the JSGI Cash Pool FAV divided by the number of Shares in respect of which Shareholders have elected for the Cash Option, subject to an aggregate limit of 25 per cent. of the Company's issued share capital (excluding shares held in treasury).
The JSGI Rollover Pool FAV shall be equal to the JSGI Residual FAV multiplied by the proportion of the issued share capital of the Company not electing for the Cash Option to the Company's issued share capital (excluding shares held in treasury): (i) plus an amount reflecting the benefit of the JPMorgan Costs Contribution to the Company (being equal to the fixed costs of the Proposals payable by the Company); (ii) less the portfolio realignment costs, including both disposals and acquisitions, whether already incurred or estimated and still to be incurred, as part of the transaction by JSGI and JFJ and either before or after the Effective Date, but excluding the Cash Pool Realisation Costs (the "Realignment Costs"); and (iii) plus an amount equal to the aggregate value of the Cash Option Discount, capped at the value of the Realignment Costs. Any remaining benefit from the Cash Option Discount, after the application of the cap, will be for ongoing shareholders in the Combined Trust.
The JSGI Rollover FAV per Share shall equal the JSGI Rollover Pool FAV divided by the number of Shares in respect of which Shareholders have elected, or are deemed to have elected, for the Rollover Option.
The JFJ FAV shall be equal to the net assets of JFJ as at the Calculation Date: (i) less any direct transaction costs not already incorporated into the JFJ NAV; (ii) plus an amount reflecting the benefit of the JPMorgan Costs Contribution to JFJ (being equal to the fixed costs of the Proposals payable by JFJ); and (iii) plus an amount equal to any costs relating to the realignment of the JFJ portfolio in relation to the transaction already incurred.
The JFJ FAV per Share shall be equal to the JFJ FAV divided by the issued share capital of JFJ (excluding shares held in treasury).
Shareholders who elect (or are deemed to have elected) for the Rollover Option shall have New JFJ Shares issued to them based on the ratio of the JSGI Rollover FAV per Share to the JFJ FAV per Share, multiplied by the number of Shares in respect of which they have elected, or are deemed to have elected, for the Rollover Option.
Save in respect of the JPMorgan Costs Contribution, each of JFJ and JSGI intends to bear its own costs incurred in relation to the transaction which will be reflected in the FAV for each company. JSGI will bear the costs of portfolio realignment, including those costs incurred, or expected to be incurred, in realising assets and reinvesting in new assets for the Combined Trust. The Combined Trust will pay any FCA/LSE listing fees in connection with the issue of New JFJ Shares.
JPMorgan has agreed to waive any termination fees payable under its investment management agreement with the Company which will terminate upon completion of the transaction.
The choice between the options available under the Proposals will be a matter for each Shareholder to decide and will be influenced by their investment objectives and by their personal, financial and tax circumstances. Accordingly, Shareholders should, before deciding what action to take, read carefully all the information in this document and in the JFJ Prospectus which is available at www.jpmjapanese.co.uk. Summary information on JFJ (and the Combined Trust) is set out below and in Part 2 of this document. The JFJ Prospectus should be read alongside, but does not form part of, this document. A short document which includes some "Frequently asked questions" is available on the Company's website at: www.jpmjapansmallcapgrowthandincome.co.uk.
The Directors believe that the Proposals will have the following benefits for Shareholders:
months ended 31 March 2024 and the Company's OCR of 1.20 per cent. for its financial year ended 31 March 2024.
JFJ is a closed-ended investment company incorporated in England and Wales on 2 August 1927 with registered number 00223583. It is an investment company as defined by section 833 of the Companies Act and operates as an investment trust within the meaning of Chapter 4 of Part 24 of the Corporation Tax Act 2010.
JPMorgan Funds Limited (the "Manager"), a company authorised and regulated by the FCA, will continue to be appointed as alternative investment fund manager to the Combined Trust. The Manager delegates the provision of investment management services to an affiliate, JPMorgan Asset Management (UK) Limited (the "Investment Manager"), with the day-to-day investment management activity conducted in Tokyo by JPMorgan Asset Management (Japan) Limited. The Manager is a wholly-owned subsidiary of JPMorgan Chase & Co. which, through other subsidiaries, also provides marketing, banking, dealing, secretarial and custodian services to JFJ.
The Combined Trust's investment objective and investment policy are set out in Part 2 of this document and in the JFJ Prospectus.
The board of the Combined Trust currently comprises six directors and it is expected that Tom Walker will join the JFJ Board as its seventh member on completion of the Scheme.
Please note that neither the Board (other than Tom Walker in his capacity as a prospective director of JFJ) nor the Company takes any responsibility for the contents of the JFJ Prospectus. The JFJ Board takes no responsibility for the content of this document.
Implementation of the Proposals is subject to a number of conditions, including:
If any condition is not satisfied, the Proposals will not become effective, the Company will not proceed with the winding-up and instead will continue in existence. In these circumstances, the Directors will reassess the options available to the Company at that time.
Under the Scheme:
Ahead of the Effective Date, the Company's portfolio will be realigned in the most cost-effective manner to ensure that the Company has sufficient cash to fund the Liquidation Pool, including repayment of JSGI's existing loan facility, and the Cash Pool and has assets suitable for transfer to JFJ, taking account of JFJ's investment policy.
On or shortly after the Calculation Date, the Board, in consultation with the proposed liquidators, shall finalise the division of the Company's assets into three separate and distinct pools (the Liquidation Pool, the Cash Pool and the Rollover Pool). After allocating cash and other assets to the Liquidation Pool to meet all known and unknown liabilities of the Company and other contingencies, including the costs of the Proposals agreed to be borne by the Company, the Liquidator's retention and the entitlements of any Dissenting Shareholders, there shall be appropriated to the Cash Pool and the Rollover Pool the remaining assets of the Company in the manner described in paragraph 3 of Part 4 of this document.
For illustrative purposes only, had the Calculation Date been close of business on the Latest Practicable Date and assuming that no Shareholders exercise their right to dissent from participation in the Scheme, after deduction of the Company's pre-liquidation interim dividend to be declared on or around 1 October 2024 and assuming that the maximum amount is elected for the Cash Option:
The above figures are for illustrative purposes only and do not represent forecasts. The JSGI Rollover FAV per Share, JFJ FAV per Share and JSGI Cash FAV per Share and Shareholders' entitlements under the Scheme may materially change up to the Effective Date as a result of, inter alia, changes in the value of investments, the Realignment Costs and the Cash Pool Realisation Costs. For further details of the Scheme, please refer to Part 4 of this document.
Subject as noted below, if the Scheme is implemented, each of JSGI and JFJ have agreed to bear their own costs associated with the Proposals.
The fixed costs of the Scheme payable by the Company are expected to be approximately £617,000 inclusive of VAT which, for the purposes of this calculation, is assumed to be irrecoverable where applicable. The estimate of the Company's costs excludes the Liquidators' retention to cover unknown liabilities (estimated at £100,000) and does not take account of any dealing costs which will be incurred by the Company in disposing of assets in order to repay its existing debt facilities or to fund the Cash Option and the Liquidation Pool. The Liquidators' retention will be retained by the Liquidators to meet any unknown or unascertained liabilities of the Company. To the extent that some or all of the Liquidators' retention remains when the Liquidators decide to close the liquidation, this will be returned to Shareholders that were on the Register as at the Record Date.
The Manager has undertaken to make a contribution to JFJ equal to the total fixed costs of the transaction of each of JFJ and JSGI (the "JPMorgan Costs Contribution"), contingent on the transaction being fully implemented and subject to JPMorgan agreeing the costs being incurred. For the avoidance of doubt, the following costs shall not constitute fixed costs of the transaction for the purposes of calculating the JPMorgan Costs Contribution: (i) any costs of the realignment and/or realisation are separate to these costs and apportioned to the transaction as described on page 9; (ii) any realignment costs, stamp duty, SDRT or other transaction tax incurred by JFJ for the acquisition of the Rollover Pool, which costs shall be borne solely by JFJ, but which, for the avoidance of doubt, will not be reflected in the JFJ FAV; and (iii) listing fees in respect of the listing of the New JFJ Shares issued in connection with the Scheme, which costs shall be borne by JFJ, but which, for the avoidance of doubt, will not be reflected in the JFJ FAV.
The financial value of the JPMorgan Costs Contribution will be credited against the costs of the Proposals as described above to the benefit of continuing shareholders (which excludes, to the extent of their actual participation in the Cash Option, those Shareholders who elect for the Cash Option).
The amount of the JPMorgan Costs Contribution may, at the option of JPMorgan, be deducted from the amounts payable by JFJ to JPMorgan under the terms of its investment management agreement with JFJ.
JPMorgan has also agreed to waive any termination fees payable under its investment management agreement with JSGI which will terminate upon completion of the transaction.
In the event that implementation of the Scheme does not proceed each party will bear its own costs, save that JPMorgan has agreed to make a contribution to cover some of JFJ's costs in certain prescribed circumstances.
Under its current dividend policy, the Company aims to pay, in the absence of unforeseen circumstances, a regular quarterly dividend equal to 1 per cent. of the Company's NAV on the last business day of the preceding financial quarter, being the end of March, June, September and December. Over the year this approximates to 4 per cent. of the average NAV. These dividends are paid from other reserves and fluctuate in line with any rise or fall in the Company's NAV. As an investment trust, the Company is not permitted to retain more than 15 per cent. of its income in any accounting period. If the Scheme is successful, this condition must be met in the shortened accounting period commencing on 1 April 2024 and ending on the Effective Date. In order to meet this requirement, the Company proposes to pay an interim dividend to Shareholders on the Register as at 11 October 2024. The Ordinary Shares are expected to go ex-dividend on 10 October 2024. The expected payment date for the dividend is 21 October 2024.
The Company has a Yen 4.0 billion two-year revolving credit facility with ING Bank which is due for renewal in December 2024. It is proposed that this facility will not transfer to JFJ and will be cancelled and repaid prior to the liquidation of the Company.
Shareholders are strongly urged to read carefully the risk factors contained in Part 2 of this document which sets out the material risks known to the Directors at the date of this document in relation to the Proposals. Shareholders are also strongly urged to read the section containing risk factors in the JFJ Prospectus.
Shareholders are advised to read carefully the section headed "UK Taxation" in paragraph 7 of Part 3 of this document which sets out a general guide to certain aspects of current UK tax law and HMRC published practice as at the date of this document.
Please note that nothing in this document constitutes tax advice. Shareholders are strongly advised to consult their own professional advisers as to their tax position.
The implementation of the Proposals will require two general meetings of the Company. The notices convening the First General Meeting (to be held at 10.00 a.m. on 10 October 2024) and the Second General Meeting (to be held at 10.00 a.m. on 24 October 2024) are set out at the end of this document.
The Resolutions to be proposed at the General Meetings, on which all Shareholders may vote, are as follows:
The resolutions to be considered at the First General Meeting (which will be proposed as special resolutions) will, if passed, approve the terms of the Scheme and associated amendments to the Articles set out in Part 4 of this document, authorise the Liquidators to enter into and give effect to the Transfer Agreement with JFJ, purchase the interests of any dissentients to the Scheme and authorise the Liquidators to apply to cancel the listing of the Ordinary Shares with effect from such date as the Liquidators may determine.
Each Resolution will require at least 75 per cent. of the votes cast in respect of it, whether in person or by proxy, to be voted in favour in order for it to be passed. The Scheme will not become effective unless and until, inter alia, the Resolution to be proposed at the Second General Meeting has also been passed.
At the Second General Meeting, a special resolution will be proposed which, if passed, will place the Company into liquidation, appoint the Liquidators and agree the basis of their remuneration, instruct the Company Secretary to hold the books to the Liquidators' order and provide the Liquidators with appropriate powers to carry into effect the amendments to the Articles made at the First General Meeting. The Resolution to be proposed at the Second General Meeting is conditional upon the passing of the Resolutions at the First General Meeting, the JFJ Share Allotment Authority being passed, the approval of the FCA and the London Stock Exchange of the Admission of the New JFJ Shares to listing in the closedended investment funds category of the Official List and to trading on the Main Market of the LSE, respectively, and the Directors and the JFJ Directors resolving to proceed with the Scheme.
The Resolution will require at least 75 per cent. of the votes cast in respect of it, whether in person or by proxy, to be voted in favour in order for it to be passed.
Before taking any action, Shareholders are recommended to read the further information set out in this document and in the JFJ Prospectus.
The default option under the Scheme is to receive New JFJ Shares meaning that Shareholders who do not make a valid Election for the Cash Option in respect of all of their Ordinary Shares, or whose elections for the Cash Option are scaled back in accordance with the Scheme, will be deemed to have elected for New JFJ Shares in respect of such holding. If you wish to receive New JFJ Shares in respect of all of your Ordinary Shares, there is no need to complete and return a Form of Election (which you will receive if you hold your Ordinary Shares in certificated form) or to submit a TTE Instruction (if you hold your Ordinary Shares in uncertificated form).
If you wish to receive cash in respect of all or part of your holding of Ordinary Shares, you must either complete and return a Form of Election or submit a TTE Instruction (depending on how your Ordinary Shares are held) in respect of the number of Ordinary Shares for which you wish to receive cash. You will be deemed to have elected to receive New JFJ Shares in respect of the remainder of your holding.
Full details of the action to be taken by Shareholders in respect of their Elections are set out in the section of Part 3 of this document titled "Elections".
All Shareholders are encouraged to vote in favour of the Resolutions to be proposed at the General Meetings and, if their Ordinary Shares are not held directly, to arrange for their nominee to vote on their behalf.
Shareholders are requested to complete and return proxy appointments to the Receiving Agent by one of the following means:
In each case, the proxy appointments must be received by the Receiving Agent as soon as possible and, in any event, no later than 10.00 a.m. on 8 October 2024 in respect of the First General Meeting and no later than 10.00 a.m. on 22 October 2024 in respect of the Second General Meeting.
Completion and return of proxy appointments will not prevent you from attending and voting in person at the General Meetings should you wish to do so.
If any of the Resolutions to be proposed at the General Meetings are not passed, the Proposals will not proceed and the Company will not be wound up. In these circumstances, the Board will reassess the options available to the Company at that time.
The attention of Excluded JSGI Shareholders is drawn to the paragraph titled "Excluded JSGI Shareholders" in Part 3 of this document.
Overseas Shareholders will not receive a copy of the JFJ Prospectus unless they have satisfied the Directors and the JFJ Directors that they are entitled to receive and hold New JFJ Shares without breaching any relevant securities laws and without the need for compliance on the part of the Company or JFJ with any overseas laws, regulations, filing requirements or the equivalent. Sanctions Restricted Persons shall not receive a copy of the JFJ Prospectus.
To the extent that an Excluded JSGI Shareholder is entitled to and would otherwise receive New JFJ Shares under the Scheme, either because no Election, or a partial Election, for the Cash Option was made or because an Excess Application for the Cash Option is scaled back in accordance with the Scheme, then such New JFJ Shares will be issued to the Liquidators as nominees for the relevant Excluded JSGI Shareholder and sold by the Liquidators in the market (which shall be done by the Liquidators without regard to the personal circumstances of the relevant Excluded JSGI Shareholder and the value of the Ordinary Shares held by the relevant Excluded JSGI Shareholder) and the net proceeds of such sale (after deduction of any costs incurred in effecting such sale) will be paid: (i) to the relevant Excluded JSGI Shareholder entitled to them as soon as reasonably practicable, and in any event no later than 10 Business Days after the date of sale, save that entitlements of less than £5.00 per Excluded JSGI Shareholder will be retained in the Liquidation Pool; or (ii) in respect of Sanctions Restricted Persons at the sole and absolute discretion of the Liquidators and will be subject to applicable laws and regulations.
US Shareholders that do not provide a US Investor Representation Letter will be treated as Excluded JSGI Shareholders. US Shareholders should see the paragraph titled "Notice to US JSGI Shareholders" on page 59 of the JFJ Prospectus.
Subject to certain exceptions described herein, no action has been taken or will be taken in any jurisdiction other than the UK where action is required to be taken to permit the distribution of this document and/or the JFJ Prospectus. Accordingly, such documents may not be used for the purpose of, and do not constitute, an offer or solicitation by anyone in any jurisdiction or in any circumstances in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation.
Any US Shareholder (or any persons acting for the account or benefit of such US Shareholder) receiving this document is requested to execute the US Investor Representation Letter annexed to the JFJ Prospectus and return it to JFJ and Investec.
If a US Shareholder does not execute and return a US Investor Representation Letter any New JFJ Shares to which such US Shareholder is entitled and which such US Shareholder would otherwise receive under the Scheme will be issued to the Liquidators as nominees for the relevant US Shareholder and sold by the Liquidators in the market (which shall be done by the Liquidators without regard to the personal circumstances of the relevant US Shareholder and the value of the Ordinary Shares held by the relevant US Shareholder) and the net proceeds of such sale (after deduction of any costs incurred in effecting such sale) will be paid to the relevant Ineligible US Shareholder entitled to them as soon as reasonably practicable, and in any event no later than 10 Business Days after the date of sale, save that entitlements of less than £5.00 per US Shareholder will be retained in the Liquidation Pool. US Shareholders who have any questions regarding the submission of the US Investor Representation Letter may call the Registrar, Computershare Investor Services PLC on +44 (0)370 707 1416. Please note that the Registrar cannot give any advice on how US Shareholders should complete the US Investor Representation Letter. Such persons are encouraged to seek their own advice should they have any questions regarding the completion of the US Investor Representation Letter.
Non-US Shareholders are deemed to represent to the Company and JFJ that they are located outside of the United States and are not US Persons (and are not acting for the account or benefit of a US Person).
The Board, which has been advised by Cavendish, considers the Proposals and the Resolutions to be proposed at the General Meetings to be in the best interests of Shareholders as a whole. In providing its advice, Cavendish has taken into account the commercial assessment of the Board.
Accordingly, the Board unanimously recommends Shareholders to vote in favour of the Resolutions, as the Directors intend to do in respect of their own beneficial holdings, which total 39,265 Ordinary Shares (representing 0.07 per cent. of the Company's total voting rights) as at the Latest Practicable Date. Each of the Directors intends to elect for the Rollover Option in relation to their own holding of Ordinary Shares.
The Board cannot, and does not, give any advice or recommendation to Shareholders as to whether, or as to what extent, they should elect for any of the options under the Proposals. The choice between the options available under the Proposals will be a matter for each Shareholder to decide and will be influenced by their individual investment objectives and by their personal, financial and tax circumstances. Accordingly, Shareholders should, before deciding what action to take, read carefully all the information in this document and in the JFJ Prospectus.
Shareholders who are in any doubt as to the contents of this document or the JFJ Prospectus or as to the action to be taken should seek their own personal financial advice from an appropriately qualified independent financial adviser authorised under FSMA. Shareholders who are in any doubt as to their tax position or who may be subject to tax in any jurisdiction other than the UK are strongly advised to consult their own professional advisers.
Yours sincerely
Alexa Henderson
Chair
Any investment in JFJ will be governed by the JFJ Prospectus which is available at www.jpmjapanese.co.uk. Accordingly, Shareholders are required to read the JFJ Prospectus and in particular the risk factors contained therein. Neither the Board (other than Tom Walker in his capacity as a prospective director of JFJ from the Effective Date) nor the Company takes any responsibility for the contents of the JFJ Prospectus.
JFJ is a closed-ended investment company incorporated on 2 August 1927 in England and Wales with registered number 00223583 and registered as an investment company under section 833 of the Act. JFJ carries on business as an investment trust within the meaning of Chapter 4 of Part 24 of the Corporation Tax Act 2010, as amended.
As at the Latest Practicable Date, JFJ had 143,427,039 ordinary shares in issue (excluding treasury shares), a market capitalisation of approximately £770 million, a Net Asset Value (with debt at fair value) of approximately £875.06 million and a Net Asset Value per share of 610.11 pence.
Applications will be made to the FCA and the London Stock Exchange for the New JFJ Shares to be issued pursuant to the Scheme to be admitted to listing in the closed-ended investment funds category of the Official List of the FCA and to trading on the Main Market.
JPMorgan Funds Limited (the "Manager"), a company authorised and regulated by the FCA, will continue to be appointed as alternative investment fund manager to the Combined Trust. The Manager delegates the provision of investment management services to an affiliate, JPMorgan Asset Management (UK) Limited (the "Investment Manager"), with the day-to-day investment management activity conducted in Tokyo by JPMorgan Asset Management (Japan) Limited, a fellow investment management subsidiary and an affiliate of JPMorgan Chase Bank. The Manager is a wholly-owned subsidiary of JPMorgan Chase Bank which, through other subsidiaries, also provides marketing, banking, dealing, secretarial and custodian services to JFJ.
JFJ and the Manager have entered into an investment management agreement pursuant to which the Manager has been given responsibility, subject to the overall supervision of the Board, for active discretionary investment management of JFJ's portfolio in accordance with its investment objective and policy, which it has delegated to the Investment Manager by way of a group delegation agreement. JFJ has consented to the Manager delegating its portfolio management responsibilities to the Investment Manager.
The Manager is also responsible for the day-to-day administration of JFJ, including but not limited to liaising with its depositary and calculating its NAV on a daily basis (or at such other intervals as may be agreed with JFJ from time to time).
JFJ's portfolio managers, Nicholas Weindling and Miyako Urabe, will continue to be responsible for the management of the portfolio of the Combined Trust following the successful completion of the Scheme. Biographies of the portfolio managers are set out below:
Nicholas Weindling: Nicholas Weindling, managing director, is a country specialist for Japan equities and a member of the Japan team within the Emerging Markets and Asia Pacific Equities team based in Tokyo. Nicholas has 22 years of industry experience, having joined J.P.Morgan in 2006 from Baillie Gifford in Edinburgh, where he worked initially as a UK large cap analyst and latterly as a Japanese equities investment manager. Nicholas obtained a BA (Honours) in History from Cambridge University.
Miyako Urabe: Miyako Urabe, executive director, is also a country specialist for Japan equities and a member of the Japan team within the Emerging Markets and Asia Pacific Equities team based in Tokyo. Miyako has 16 years of industry experience, having joined J.P. Morgan in 2013 from Credit Suisse Securities Equity Sales desk in Tokyo as an Asia ex-Japan specialist. She began her career at Morgan Stanley MUFG Securities covering Japan and Asia ex-Japan. Miyako obtained a Bachelors degree in Economics from Keio University, Japan.
| 1 year | 3 years | 5 years | 10 years | 10 years p.a. |
|
|---|---|---|---|---|---|
| JFJ NAV* | 19.8% | -10.0% | 31.8% | 173.1% | 10.6% |
| TOPIX TR GBP | 14.3% | 16.3% | 34.2% | 131.8% | 8.8% |
| Relative JFJ NAV** | 4.8% | -22.6% | -1.8% | 17.8% | 1.7% |
* Cum income, debt at fair value
** Cum income, debt at fair value (calculated on a geometric basis)
Source: JPMorgan and Morningstar, as at 31 August 2024
As at 17 September 2024, the JFJ portfolio comprised 53 investments, with an aggregate unaudited value of approximately £951 million. The information in this section, which has not been audited, has been sourced from information supplied by the Investment Manager.
As at 17 September 2024, JFJ's top 15 investments, representing over 50 per cent. of the value of the JFJ portfolio were as follows:
| Security description | Percentage of value of total JFJ portfolio (%) |
|---|---|
| HITACHI LTD | 6.51 |
| ASICS CORP | 5.20 |
| TOKIO MARINE HOLDINGS INC | 4.59 |
| KEYENCE CORP | 4.58 |
| ITOCHU CORP | 4.56 |
| SHIN-ETSU CHEMICAL CO LTD | 3.95 |
| HOYA CORP | 3.64 |
| SEVEN & I HOLDINGS CO LTD | 3.53 |
| ADVANTEST CORP | 3.47 |
| SECOM CO LTD | 3.03 |
| NINTENDO CO LTD | 2.80 |
| JAPAN EXCHANGE GROUP INC | 2.72 |
| RECRUIT HOLDINGS CO LTD | 2.71 |
| NIPPON SANSO HOLDINGS CORP | 2.63 |
| SOFTBANK GROUP CORP | 2.48 |
| 56.40 |
As at 17 September 2024, the breakdown of the JFJ portfolio by sector (shown on a geared basis) was:
| Sector | Percentage of value of total Portfolio (%) |
|---|---|
| Electric Appliances | 24.47 |
| Chemicals | 11.81 |
| Information & Communication | 10.84 |
| Services | 9.32 |
| Other Products | 9.15 |
| Precision Instruments | 8.87 |
| Wholesale Trade | 6.86 |
| Retail Trade | 6.08 |
| Insurance | 5.26 |
| Transportation Equipment | 4.78 |
| Other Financing Business | 3.11 |
| Other | 11.05 |
| Cash | -11.6 |
The Manager and the Investment Manager expect that the composition of the JFJ portfolio of the enlarged Company following the successful completion of the Scheme will be substantially similar to the JFJ portfolio as disclosed in this document and the JFJ Prospectus.
JFJ's investment objective and policy are as follows:
JFJ's objective is to provide JFJ Shareholders with capital growth from investment in Japanese companies.
In order to achieve the investment objective and to seek to manage risk, JFJ invests in a diversified portfolio of quoted Japanese companies, or securities providing an indirect investment in Japan. The Investment Manager seek to focus on quality growth stocks with strong future growth prospects, which means that, within some broad portfolio risk limits, JFJ's portfolio is likely to differ materially from the Benchmark Index (the Tokyo Stock Exchange Index) with net dividends reinvested, expressed in sterling terms) as the Investment Manager will usually avoid companies and sectors that face structural issues even if they are a large constituent of the Benchmark Index. The JFJ portfolio usually has a significant exposure to the domestic Japanese economy, with selective exposure to overseas earnings. The Investment Manager does not hedge the JFJ portfolio against foreign currency risk.
The JFJ Board determines JFJ's capital structure and gearing policy with input from the Manager. The JFJ Board's gearing policy is that JFJ will remain invested in the range of 5 per cent. net cash to 20 per cent., under normal market conditions. JFJ makes use of both long and short-term borrowings to increase returns.
The JFJ Board has set no minimum or maximum limits on the number of investments in the JFJ portfolio but it is a relatively concentrated JFJ portfolio consisting typically of between 50 and 100 investments.
The JFJ Board seeks to manage JFJ's risk by imposing various investments limits and restrictions.
These limits and restrictions may be varied by the JFJ Board at any time at its discretion. Compliance with the JFJ Board's investment restrictions and guidelines is monitored continuously by the Manager and reported to JFJ Board on a monthly basis. The Manager also has internal guidelines in relation to investment concentration.
No material change will be made to the investment policy without the prior approval of the FCA and JFJ Shareholders by ordinary resolution.
In respect of JFJ's portfolio the Investment Manager maintains a bottom-up, unconstrained investment approach that seeks out the very best Japanese companies with excellent long-term outlooks. Specifically, the Investment Manager focuses on high-grade companies with strong balance sheets and leading competitive positions. The Investment Manager favours companies with persistent pricing power, which are well-positioned to continue to grow and prosper, largely regardless of the macroeconomic environment. Performance is judged against a benchmark, that is the Tokyo Stock Exchange Index ("TOPIX" or the "Benchmark Index") with net dividends reinvested, expressed in sterling terms.
Stock selection is the most important part of the investment process, as it normally provides the greater part of the Investment Manager's added value to performance of the portfolio. The Investment Manager is supported in this process by JPMorgan Asset Management's well-resourced investment team on the ground in Tokyo, and by JPMorgan's extensive team of analysts, both in Japan and globally.
Stock selection is a two-stage process, first allocating a strategic classification, followed by valuation analysis.
The Investment Manager assigns a strategic classification to each company, derived from deskbased research and company meetings. The highest rating is 'Premium', followed by 'Quality', and then 'Standard', a categorisation previously called 'Trading', but renamed to better capture the features of the stocks in this category. When assigning these ratings, in addition to assessing companies on fundamentals such as balance sheet strength, free cash flow, market position and growth prospects, the Investment Manager also considers governance issues, as well as potential risks arising from financially material environmental, social and governance (ESG) considerations. Within the investable universe of more than 3,000 Japanese companies, the Investment Manager ascribes a Standard classification to around 75% of the Benchmark Index, whereas well over 80% of the portfolio companies are rated Premium or Quality.
Having understood the opportunity and risks around a company, the research analysts then value that opportunity through a valuation framework analysis to derive the Five Year expected return of a stock, an indication of its relative attractiveness to other stocks under coverage. An annualised Five Year Expected Return for a company is evaluated through three sources of return: earnings growth, dividends, and change in valuation.
Positions in the JFJ portfolio are driven by the Investment Manager's highest conviction ideas; therefore the JFJ portfolio is usually overweight Premium and Quality stocks.
3 At the date of this document, the JFJ Board has given approval for contracts for differences to be utilised for gearing purposes.
The Investment Manager's bottom-up, unconstrained approach means the JFJ portfolio can, and does, look very different from the Benchmark Index.
JFJ is managed to produce capital growth and not to produce any particular level of dividend and therefore the level of its dividend will vary. JFJ currently has a policy of paying out the majority of revenue available each year. The dividend reflects the available revenue for distribution each year and accordingly there are likely to be fluctuations year on year. For the year ended 30 September 2023, JFJ paid a dividend of 6.5 pence per share.
JFJ intends to conduct its business so as to continue to satisfy the conditions to retain approval as an investment trust under section 1158 of the Corporation Tax Act. In accordance with regulation 19 of the Investment Trust Tax Regulations, JFJ does not (except to the extent permitted by those regulations) intend to retain more than 15 per cent. of its income (as calculated for UK tax purposes) in respect of an accounting period.
The JFJ Board has noted that the Company has paid an enhanced dividend since 2018. Following completion of the Proposals, the board of the Combined Trust intends to undertake a review of JFJ's dividend policy, including consulting with JFJ's major shareholders.
The JFJ Board monitors the discount to NAV at which JFJ Shares trade. It believes that for the JFJ Shares to trade close to NAV over the long term, the focus must remain on consistent, strong investment performance over the key one, three, five and ten-year timeframes, combined with effective marketing and promotion of JFJ.
The JFJ Board recognises that a widening of, and volatility in, JFJ's discount is seen by some investors as a disadvantage of investments trusts. The JFJ Board has restated its commitment to seek a stable discount or premium over the long run, commensurate with investors' appetite for Japanese equities and JFJ's various attractions, not least the quality of the investment team, the investment process and the resultant strong long-term performance. Over the 12 months to the latest practicable date prior to the publication of the JFJ prospectus, JFJ has repurchased 7,605,000 shares, 5.04 per cent. of the opening number of shares.
JFJ Shares are only repurchased at a discount to the prevailing Net Asset Value, which increases JFJ's Net Asset Value per JFJ Share on the remaining shares.
The JFJ directors have been granted authority at the annual general meeting held in 2024 to purchase in the market up to 22,202,751 JFJ Shares. As at the latest practicable date prior to the publication of the JFJ Prospectus, JFJ has purchased 4,690,000 shares pursuant to this authority. JFJ expects to seek a renewal of this authority at each annual general meeting.
All share repurchases will be conducted in accordance with the Companies Act and the UK Listing Rules. JFJ Shareholders and prospective JFJ Shareholders should note that such repurchases of JFJ Shares by JFJ are entirely discretionary and no expectation or reliance should be placed on the Directors exercising such discretion on any one or more occasions.
JFJ Shares repurchased by JFJ may be cancelled or held in treasury (or a combination of both). Any shares held in treasury may be subsequently cancelled or sold for cash. The sale of shares from treasury will be subject to the Companies Act and the provisions relating to the rights of preemption contained therein to the extent not disapplied. Further, such sales will not, unless authorised by JFJ Shareholders, be at a price per JFJ Share which would be less (after taking account of all commissions, costs and expenses of such sale) than the Net Asset Value per JFJ Share at the relevant time plus issue expenses.
The JFJ Board is proposing an amendment to the JFJ Articles at the JFJ General Meeting to introduce a provision requiring a continuation vote to be proposed to JFJ Shareholders as an ordinary resolution at the annual general meeting of JFJ to be held in 2029 and, if passed, at every fifth annual general meeting thereafter.
If any such resolution is not passed, the JFJ Board shall, at a general meeting to be held within six months of the date on which such resolution is not passed, put forward proposals to JFJ Shareholders for the reconstruction, reorganisation or winding-up of JFJ.
Subject to resolution 2 to be proposed at the JFJ General Meeting being passed, the JFJ Articles will be amended to include a new article which will introduce the right for JFJ to seek information from its JFJ Shareholders to comply with any legislative or regulatory obligations to which it is subject and furthermore to permit the JFJ Board to require a compulsory transfer of JFJ Shares by a JFJ Shareholder should that JFJ Shareholder subject JFJ to onerous legislative or regulatory obligations.
The existing annual management fee payable by JFJ to the Manager is calculated on a tiered basis by reference to its Net Asset Value, as follows:
If JFJ invests in funds managed or advised by the Manager, or any of its associated companies, those investments are excluded from the calculation of the annual management fee.
With effect from 1 October 2024, and conditional on the Scheme becoming effective, the Manager's investment management agreement with JFJ shall be amended such that the existing management fee shall be reduced to a tiered fee structure by reference to its Net Asset Value on the following basis:
The Manager has agreed to make the JPMorgan Costs Contribution to the costs of the Scheme pursuant to which the Manager may elect to waive its entitlement to be paid its management fee with effect from Admission until such time as the value of such waived management fee equals the JPMorgan Costs Contribution.
The JFJ Board consists of Stephen Cohen, Anna Dingley, Sally Duckworth, Lord Jonathan Kestenbaum, Sally Macdonald and George Olcott and, conditional on the Scheme becoming effective and with effect from Admission, it is expected that Tom Walker will join the board of the Combined Trust as its seventh member. Further details relating to the JFJ Board members are set out in the JFJ Prospectus.
Further details of JFJ, the New JFJ Shares and the proposals for the Combined Trust are set out in the JFJ Prospectus.
Subject to the passing of the Resolutions (and satisfaction of the other conditions of the Scheme, full details of which are set out in paragraph 14 of Part 4 of this document), the Company will be placed into members' voluntary liquidation and the Scheme will take effect from the Effective Date.
On the Calculation Date, or as soon as practicable thereafter, the Board shall appropriate to the Liquidation Pool such of the cash and other assets of the Company estimated by the Board in consultation with the Liquidators to be sufficient to meet all known and unknown liabilities of the Company and other contingencies, including the costs of the Proposals agreed to be borne by the Company, the Liquidator's retention and the entitlements of any Dissenting Shareholders. Further details of the Liquidation Pool are set out in paragraph 3.2 of Part 4 of this document.
The balance of the cash, undertaking and other assets of the Company will be allocated to the Rollover Pool and the Cash Pool in the manner described in paragraph 3.2 of Part 4 of this document, each of which will represent the respective entitlements of Shareholders to either New JFJ Shares or cash in accordance with the Elections made, or deemed to have been made, under the Scheme.
On the Effective Date, the cash, undertaking and other assets of the Company comprising the Rollover Pool shall be transferred to JFJ. In consideration for the transfer of the Rollover Pool to JFJ under the Transfer Agreement, the relevant numbers of New JFJ Shares will be allotted to the Liquidators who will renounce the New JFJ Shares in favour of the Shareholders who elect or are deemed to have elected for the Rollover Option (save that New JFJ Shares issued in favour of Excluded JSGI Shareholders shall be held by the Liquidators as the nominees for the relevant Excluded JSGI Shareholders).
Shortly following the Effective Date, the Liquidators will distribute the cash held in the Cash Pool to the Shareholders who have elected for the Cash Option in accordance with their respective entitlements under the Scheme.
To the extent that any part of the Liquidation Pool, including the Liquidator's retention, is not subsequently required to discharge the Company's liabilities, it will be distributed in cash to the Shareholders shown on the Register at the Record Date, at the conclusion of the liquidation.
A Shareholder holding Ordinary Shares in uncertificated form who wishes to make an Election for the Cash Option in respect of all or part of their holding of Ordinary Shares, should take (or procure to be taken) the action set out below to transfer (by means of a TTE Instruction) the number of Ordinary Shares for which they wish to make an Election for the Cash Option, specifying Computershare in its capacity as a CREST receiving agent under its participant ID (referred to below) as the escrow agent, as soon as possible and, in any event, so that the TTE Instruction is received no later than 1.00 p.m. on 11 October 2024.
If you hold Ordinary Shares in CREST but under different member account IDs, you should submit a separate TTE Instruction in respect of each member account ID.
If you are a CREST sponsored member, you should refer to your CREST sponsor before taking any action. Your CREST sponsor will be able to confirm details of your participant ID and the member account ID under which your Ordinary Shares are held. In addition, only your CREST sponsor will be able to send the TTE Instruction to Euroclear in relation to your Ordinary Shares.
To make an Election in respect of the Cash Option you should send (or, if you are a CREST sponsored member, procure that your CREST sponsor sends) a TTE Instruction to Euroclear, which must be properly authenticated in accordance with Euroclear's specification and which must contain the following details:
(a) the ISIN number for the Ordinary Shares. This is GB0003165817;
After settlement of the TTE Instruction, you will not be able to access the Ordinary Shares concerned in CREST for any transaction or for charging purposes, notwithstanding that they will be held by Computershare Investor Services PLC as your escrow agent until completion or lapsing of the Scheme.
You are recommended to refer to the CREST Manual published by Euroclear for further information on the CREST procedures outlined above.
You should note that Euroclear does not make available special procedures in CREST for any particular corporate action. Normal system timings and limitations will therefore apply in connection with a TTE Instruction and its settlement. You should therefore ensure that all necessary action is taken by you (or by your CREST sponsor) to enable a TTE Instruction relating to your Ordinary Shares to settle prior to 1.00 p.m. on 11 October 2024. In connection with this, you are referred in particular to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
Shareholders who hold their Ordinary Shares in certificated form (i.e. not in CREST) who wish to make an Election for the Cash Option in respect of all or part of their holding of Ordinary Shares should complete and sign the enclosed personalised Form of Election and insert in Box 2 the total number of Ordinary Shares they wish to elect for the Cash Option, and return the Form of Election using the relevant enclosed reply-paid envelope (for use within the UK only) to the Receiving Agent by post to Computershare Investor Services PLC, Corporate Actions Projects, Bristol BS99 6AH as soon as possible but, in any event, so as to be received not later than 1.00 p.m. on 11 October 2024. Forms of Election, once submitted, will be irrevocable without the consent of the Directors.
Shareholders are entitled to elect for the Cash Option in respect of more than 25 per cent. of their individual holdings of Ordinary Shares (the "Basic Entitlement", such excess amount being an "Excess Application"). However, if aggregate Elections are made for the Cash Option which exceed 25 per cent. of the issued Ordinary Shares (excluding Ordinary Shares held in treasury) as at the Calculation Date, Shareholders who have made an Election for the Cash Option in excess of their Basic Entitlement shall have their Excess Applications scaled back in a manner which is, as near as practicable, pari passu and pro rata among all Shareholders who have made such Excess Applications.
Applications will be made by JFJ to the FCA and the London Stock Exchange for the New JFJ Shares to be admitted to listing in the closed-ended investment funds category of the Official List and to trading on the Main Market of the London Stock Exchange, respectively. If the Scheme becomes effective, it is expected that the New JFJ Shares will be so admitted and that the first day of dealings will be 25 October 2024.
New JFJ Shares will be issued in registered form and may be held in either certificated or uncertificated form. Shareholders who held their Ordinary Shares in certificated form at the Record Date and who have elected (or are deemed to have elected) for New JFJ Shares will receive their New JFJ Shares in certificated form. It is expected that share certificates in respect of such New JFJ Shares will be despatched to the Shareholders entitled thereto by 8 November 2024.
Shareholders who held their Ordinary Shares in uncertificated form at the Record Date and who have elected (or are deemed to have elected) for New JFJ Shares will receive their New JFJ Shares in uncertificated form on 25 October 2024, although JFJ reserves the right to issue such securities in certificated form. In normal circumstances, this right is only likely to be exercised in the event of an interruption, failure or breakdown of CREST or of the facilities or system operated by the JFJ Registrar in connection with CREST. JFJ will procure that instructions are given to credit the appropriate stock accounts in the CREST system with the relevant entitlements to New JFJ Shares in uncertificated form.
Fractional entitlements to New JFJ Shares will not be issued pursuant to the Scheme and entitlements will be rounded down to the nearest whole number. No cash payment shall be made or returned in respect of any fractional entitlements which will be retained for the benefit of JFJ.
Cheques in respect of the Cash Entitlements due to Shareholders who elect for cash are expected to be despatched to them in the week commencing 4 November 2024. It is expected that Shareholders who hold their Ordinary Shares in CREST will receive their Cash Entitlements through CREST in the week commencing 4 November 2024.
To the extent that a Shareholder already holds JFJ Shares at the Record Date (and the JFJ Registrar is able to match such holdings), any mandates and instructions in relation to those existing JFJ Shares will also apply to any New JFJ Shares received by that Shareholder under the terms of the Scheme. If you do not wish any mandates and other instructions, including communications preferences that you have given to the Company, to apply to your New JFJ Shares, please contact Computershare on the Shareholder Helpline before the Record Date to amend or withdraw such mandates or instructions.
Existing certificates in respect of Ordinary Shares will cease to be of tradable value following suspension of dealings in the Ordinary Shares.
All documents and remittances dispatched to or from Shareholders or their appointed agents in connection with the Proposals will be despatched at Shareholders' own risk.
The issue of New JFJ Shares to persons resident in or citizens of jurisdictions outside the UK may be affected by the laws of the relevant jurisdiction. Such Shareholders should inform themselves about and observe any legal requirements in the relevant jurisdiction. In particular:
(e) no offer is being made, directly or indirectly, under the Scheme, in or into by the use of mails, or by means of instrumentality (including, without limitation, facsimile, or transmission, telex or telephone) of interstate or foreign commerce, or of any facility in a national securities exchange, of, Australia, Canada, Japan, the Republic of South Africa or any EEA member state, or their respective territories or possessions.
It is the responsibility of Shareholders with registered addresses outside the UK to satisfy themselves as to the observance of the laws of the relevant jurisdiction in connection with the issue of New JFJ Shares, including the obtaining of any governmental or exchange control or other consents which may be required, the compliance with any other necessary formalities which need to be observed and the payment of any issue, transfer or other taxes or duties due in such jurisdiction. Shareholders who are subject to taxation outside the UK should consult their independent financial adviser as soon as possible.
To the extent that an Excluded JSGI Shareholder is entitled to and would otherwise receive New JFJ Shares under the Scheme, either because no Election, or a partial Election, for the Cash Option was made or because an Excess Application for the Cash Option is scaled back in accordance with the Scheme, such New JFJ Shares will be issued to the Liquidators as nominees on behalf of such Excluded JSGI Shareholder who will arrange for such shares to be sold promptly by a market maker (without regard to the personal circumstances of the relevant Excluded JSGI Shareholder and the value of the Ordinary Shares held by the relevant Excluded JSGI Shareholder). The net proceeds of such sale (after deduction of any costs incurred in effecting such sale) will be paid: (i) to the relevant Excluded JSGI Shareholder entitled to them as soon as reasonably practicable, and in any event no later than 10 Business Days after the date of sale, save that entitlements of less than £5.00 per Excluded JSGI Shareholder will be retained in the Liquidation Pool; or (ii) in respect of Sanctions Restricted Persons, at the sole and absolute discretion of the Liquidators and will be subject to applicable laws and regulations.
Overseas Shareholders will not receive a JFJ Prospectus unless they have satisfied the JFJ Directors that they are entitled to receive and hold New JFJ Shares without breaching any relevant securities laws and without the need for compliance on the part of the Company or JFJ with any overseas laws, regulations, filing requirements or the equivalent. Sanctions Restricted Persons will not receive the JFJ Prospectus.
The New JFJ Shares are being offered and sold solely (i) outside the United States to persons who are not US Persons in "offshore transactions" as defined in and pursuant to Regulation S under the US Securities Act; and (ii) within the United States to, or to US Persons that are, both "qualified institutional buyers" as defined in Rule 144A under the US Securities Act and "qualified purchasers" as defined in Section 2(a)(51) of the US Investment Company Act pursuant to an exemption from the registration requirements of the US Securities Act, and that, in the case of (ii), have executed a US Investor Representation Letter.
There are significant restrictions on the purchase and resale of the New JFJ Shares by persons that are located in the United States, that are US Persons, or who hold New JFJ Shares for the account or benefit of US Persons and on the resale of New JFJ Shares to any person who is located in the United States or to, or for the account or benefit of, a US Person. If in the future an initial purchaser, as well as any subsequent holder, decides to offer, sell, transfer, assign or otherwise dispose of the New JFJ Shares, they may do so only: (i) outside the United States in an "offshore transaction" complying with the provisions of Regulation S under the US Securities Act to a person not known by the transferor to be a US Person, by pre-arrangement or otherwise; or (ii) to JFJ or a subsidiary thereof.
The Scheme is being implemented subject to United Kingdom disclosure requirements which are different from certain United States disclosure requirements. In addition, US Shareholders should be aware that this document has been prepared in accordance with a UK format and style, which differs from the US format and style. In particular, parts of this document contain information concerning the Scheme required by UK disclosure requirements which may be material and may not have been summarised elsewhere in the document. Furthermore, the Scheme will be subject to other procedural requirements, including with respect to withdrawal rights, settlement procedures and timing of payments that are different from those applicable under US domestic tender offer procedures and law.
The New JFJ Shares are not, and will not be, listed on a US securities exchange and JFJ is not subject to the periodic reporting requirements of the US Exchange Act and is not required to, and does not, file any reports with the SEC. The Scheme is not subject to the disclosure and other procedural requirements of Regulation 14D under the US Exchange Act.
The Scheme may be a taxable transaction for US federal income tax purposes and under applicable US state and local, as well as foreign and other tax laws. Each US Shareholder is urged to consult their independent professional adviser immediately regarding the tax consequences of the Scheme.
It may be difficult for US Shareholders to enforce their rights and any claim arising out of the US federal securities laws, since JFJ is located in a foreign country, and all of its officers and directors are citizens and residents of jurisdictions outside the United States. US Shareholders may not be able to sue a foreign company or its officers or directors in a foreign court for violations of US securities laws. Further, it may be difficult to compel a foreign company and its affiliates to subject themselves to a US court's judgement.
Whether located in the United States or elsewhere, US Shareholders will receive any cash consideration in Pounds sterling.
Any US Shareholder (or any persons acting for the account or benefit of such US Shareholder) receiving this document is requested to execute the US Investor Representation Letter annexed to the JFJ Prospectus and return it to JFJ and Investec. If a US Shareholder does not execute and return a US Investor Representation Letter, any New JFJ Shares to which such US Shareholder is entitled and which such US Shareholder would otherwise receive under the Scheme will be issued to the Liquidators as nominees for the relevant US Shareholder and sold by the Liquidators in the market (which shall be done by the Liquidators without regard to the personal circumstances of the relevant US Shareholder and the value of the Ordinary Shares held by the relevant US Shareholder) and the net proceeds of such sale (after deduction of any costs incurred in effecting such sale) will be paid to the relevant US Shareholder entitled to them as soon as reasonably practicable, and in any event no later than 10 Business Days after the date of sale, save that entitlements of less than £5.00 per US Shareholder will be retained in the Liquidation Pool. US Shareholders who have any questions regarding the submission of the US Investor Representation Letter may call the Registrar, Computershare Investor Services PLC on +44 (0)370 707 4040. Please note that the Registrar cannot give any advice on how US Shareholders should complete the US Investor Representation Letter. Such persons are encouraged to seek their own advice should they have any questions regarding the completion of the US Investor Representation Letter.
Non-US Shareholders are deemed to represent to the Company and JFJ that they are located outside of the United States and are not US Persons (and are not acting for the account or benefit of a US Person).
Provided that a Shareholder does not vote in favour of the Resolutions to be proposed at the First General Meeting, such Shareholder may, within seven days of the passing of the Resolutions at the First General Meeting, express their dissent to the Liquidators in writing at the registered office of the Company and require the Liquidators to purchase the Shareholder's interest in the Company. The Liquidators will retain an amount of cash, securities and other assets of the Company in the Liquidation Pool which the Liquidators believe is sufficient to purchase the Ordinary Shares of the Dissenting Shareholders at the realisation value, this being an estimate of the amount a Shareholder would receive per Ordinary Share in an ordinary winding up of the Company if all assets of the Company had to be realised and distributed to Shareholders after repayment of the liabilities of the Company. The realisation value of an Ordinary Share is expected to be below the unaudited cumincome Net Asset Value per Share and the Liquidators may not purchase the interests of Dissenting Shareholders until all other liabilities of the Company have been settled and HMRC has confirmed that it has no objections to the closure of the liquidation. Dissenting Shareholders should note that it may take an extended period of time for the liquidation process to end and for their Ordinary Shares to be purchased by the Liquidators.
Investment trusts are required to report the tax residence of their shareholders. Subject to the Scheme becoming effective, those Shareholders of the Company that are not already on the register of JFJ and who hold their New JFJ Shares in certificated form may be sent a document along with their new share certificate in the enlarged JFJ which those Shareholders should complete and return to JFJ or its agent.
The information set out below are a general guide to certain aspects of current UK taxation applicable to the Company and its Shareholders who are resident only in the UK for tax purposes and, in the case of an individual, domiciled or deemed domiciled for UK tax purposes solely in the UK. The comments only apply to Shareholders who are the absolute beneficial owners of their Shares and who hold their Shares as an investment. Accordingly, this information may not relate to certain categories of Shareholders, such as dealers in securities, collective investment schemes, insurance companies and persons acquiring their Shares in connection with their employment, who may be taxed differently. The information is based on existing UK taxation law and HMRC published practice (which may not be binding on HMRC) in force as at the date of this document, which are subject to change (possibly with retrospective effect). The information is given by way of general guide only and does not constitute legal or tax advice to any person.
This document does not address the US federal income tax or any other non-UK tax considerations applicable to the Proposals, including an investment in the New JFJ Shares. Each Shareholder should consult its own tax advisers regarding the US federal income tax consequences or any other consequences under any applicable local tax laws.
Shareholders are advised to consult their professional advisers as to their tax position in relation to the Proposals.
The Company has obtained approval from HMRC as satisfying the conditions for approval as an investment trust under section 1158 of the Corporation Tax Act 2010 and Chapter 1 of Part 2 of the Investment Trust (Approved Company) (Tax) Regulations 2011.
The Proposals should not prejudice the ability of the Company to retain its investment trust status in respect of the current accounting period, which will end on the day immediately preceding the Effective Date if the Company is placed into members' voluntary liquidation on that day. Furthermore, the proposed method of winding up the Company and the scheme of reconstruction is such that pursuant to regulations 15 and 16 of the Investment Trust (Approved Company) (Tax) Regulations 2011, the Company should remain eligible to be treated as an investment trust for the accounting period which includes the date on which its assets are sold and/or transferred by the Liquidators pursuant to the Transfer Agreement. Accordingly, the transfer of the Company's assets held within the Rollover Pool and the realisation of the Company's assets held within the Cash Pool and the Liquidation Pool under the Scheme should not give rise to a liability to UK taxation of chargeable gains for the Company. However, there can be no absolute assurance that investment trust status will be preserved and the absence of such status in any accounting period would mean the Company would be liable to pay UK taxation on its chargeable gains (net of any allowable losses) in that period.
For the purposes of UK taxation of chargeable gains, a Shareholder should not be regarded as having disposed of their Ordinary Shares on the reclassification of the Ordinary Shares into Ordinary Shares with "A" rights and Ordinary Shares with "B" rights (as relevant). Instead, the Shareholder should be regarded as having acquired the Reclassified Shares at the same time and for the same aggregate base cost as their original holding of Ordinary Shares.
Where a Shareholder's Ordinary Shares are reclassified into both Ordinary Shares with "A" rights and Ordinary Shares with "B" rights, the Shareholder's base cost in their original holding of Ordinary Shares should be apportioned by reference to the respective market values of the Ordinary Shares with "A" rights and Ordinary Shares with "B" rights received, as at the time the Reclassified Shares are first listed.
Shareholders who receive cash under the Scheme pursuant to the Cash Option should be regarded as having made a disposal of their Ordinary Shares with "B" rights on the distribution of cash by the Liquidators and may be subject to UK taxation of chargeable gains depending on the particular circumstances of the Reclassified Shareholder concerned.
The Company has been advised that the exchange of Ordinary Shares with "A" rights for New JFJ Shares pursuant to the Rollover Option should constitute a scheme of reconstruction for the purposes of the UK taxation of chargeable gains, and that such exchange should not constitute a disposal of the Ordinary Shares with "A" rights for the purposes of the UK taxation of chargeable gains. Instead, the New JFJ Shares issued pursuant to the Rollover Option should be treated as replacing the Ordinary Shares with "A" rights for which they were exchanged and should be treated as having been acquired at the same time and for the same base cost as those Ordinary Shares with "A" rights are treated as having been acquired.
Any subsequent disposal of the New JFJ Shares may result in the holder of those New JFJ Shares realising a chargeable gain or allowable loss for the purposes of UK taxation of chargeable gains, depending on the holder's particular circumstances.
As provided for in paragraph 9 of Part 4 of this document, any remaining balance in the Liquidation Pool after the discharge of the Company's liabilities will be distributed in cash to the Shareholders on the Register on the Record Date.
To the extent that Shareholders receive such a distribution from the Liquidation Pool in respect of their Ordinary Shares with "A" rights or "B" rights, the amount received will generally be treated as consideration for a disposal of their shares. This is subject to an exception for certain "small" capital distributions which, if applicable, may instead allow the Shareholder to treat the base cost attributable to their relevant shares as reduced by the amount of the small capital distribution (to the extent it does not exceed the base cost).
Shareholders who hold, alone or together with persons connected with the, more than 5 per cent of the Ordinary Shares in issue should note that an application for clearance has been submitted to HMRC pursuant to section 138 of the TCGA that the treatment described above under "Rollover Option" is not to be prevented, by virtue of section 137(1) of the TCGA, from applying to them. The application also seeks confirmation that HMRC will not seek to confirm that no counteraction notice under section 698 of the Income Tax Act 2007 or section 746 of Corporation Tax Act 2010 will be served in respect of the Proposals.
On Liquidators purchasing the Ordinary Shares of a Dissenting Shareholder, the purchase price paid for their Ordinary Shares will not exceed that which the Dissenting Shareholder would receive on a straightforward winding up of the Company. A Dissenting Shareholder who receives such a cash payment will be treated as disposing of the relevant Ordinary Shares and may, depending on that Shareholder's particular circumstances, realise a chargeable gain for the purposes of UK taxation of chargeable gains.
New JFJ Shares are eligible for inclusion in an ISA or SIPP. Accordingly, where Ordinary Shares currently held within an ISA or SIPP are exchanged for New JFJ Shares pursuant to the Rollover Option, those New JFJ Shares can generally be retained within the ISA or SIPP, subject to the specific terms applicable to the ISA or SIPP. Similarly, where cash is received pursuant to the Cash Option in respect of Ordinary Shares held within an ISA or SIPP, that cash may also generally be retained within the ISA or SIPP.
It is not expected that any UK stamp duty or SDRT will be payable by the Company or the Shareholders in relation to the liquidation of the Company or on the receipt by Shareholders of New JFJ Shares under the Rollover Option. UK stamp duty and SDRT may be incurred by the Company in relation to the realignment of the Company's investment portfolio prior to the Effective Date and by JFJ in relation to the transfer of chargeable assets within the Rollover Pool, in addition to other non-UK transfer taxes that may be payable. Non-UK transfer taxes may also be payable by the Company on the transfer of the assets comprising the Rollover Pool to JFJ.
Words and expressions defined in Part 7 of this document have the same meanings when used in this Scheme. Save as otherwise provided in this Part 4, any Ordinary Shares held by persons who validly exercise their rights under section 111(2) of the Insolvency Act shall be disregarded for the purposes of this Part 4 and shall be treated as if those Ordinary Shares were not in issue.
in each case including any VAT in respect thereof; and
Combined Trust, as the Company, acting by its proposed Liquidators in consultation with the other parties to the Transfer Agreement, shall determine as being suitable for the purpose, and so as not to cause any infringement of the investment objective and investment policy of JFJ.
paragraphs (a) and (b) above) as at the Relevant Time shall be valued at their actual amount less such provision for diminution of value (including provisions for bad or doubtful debts or discount to reflect the time value of money) as may be determined by the Directors;
In this paragraph 4.1, the "Relevant Time" means the time and date at which any calculation of value is required by the Scheme to be made. The Directors shall consult with the Liquidators in making determinations pursuant to this paragraph 4.1.
On the Effective Date, or as soon as practicable thereafter, the Liquidators shall procure that there shall be delivered to JFJ (or its nominee) particulars of the undertaking, cash and other assets comprising the Rollover Pool in accordance with the terms of the Transfer Agreement and a list, certified by the Receiving Agent, of the names and addresses of each holder of Reclassified Shares with "A" rights and the number of Reclassified Shares with "A" rights held by each of them.
Cash Entitlements payable to the holders of Reclassified Shares with "B" rights shall be distributed by the Liquidators, through the Receiving Agent and pursuant to the Scheme, in cash to each such holder who has elected for the Cash Option in proportion to its respective holding of Reclassified Shares with "B" rights.
8.1 In consideration for the transfer of the Rollover Pool to JFJ in accordance with paragraph 6 above, the New JFJ Shares shall be issued to holders of Ordinary Shares with "A" rights on the basis that the number of such shares to which each such holder is entitled shall be determined in accordance with the following formula (rounded down to the nearest whole number of JFJ Shares):
Number of JFJ Shares = AxC B
where:
On or following the Effective Date, the Liquidation Pool shall be applied by the Company (acting through the Liquidators) in discharging the liabilities of the Company. The remaining balance of the Liquidation Pool, if any, shall be distributed in cash by the Liquidators pursuant to the Scheme, to all Shareholders (excluding Ordinary Shares held in treasury) (in each case being those Shareholders on the Record Date in proportion to their respective holdings of Ordinary Shares on the Record Date) provided that if any such amount payable to any Shareholder is less than £5.00, it shall not be paid to Shareholders but instead shall be retained by the Company and sent to charity. The Liquidators will also be entitled to make interim payments to Shareholders in proportion to their holdings of Ordinary Shares. The Liquidators shall only make such distribution if there is sufficient cash available and if the Liquidators are of the view that it is cost effective to make an interim distribution. For these purposes, any Ordinary Shares held by Dissenting Shareholders will be ignored.
For the purposes of the Forms of Election, the provisions of which form part of the Scheme:
The provisions of the Scheme will have effect subject to such non-material modifications or additions as the Directors and the parties to the Transfer Agreement may from time to time approve in writing.
The Company, the Directors, the Liquidators, the Manager, the Investment Manager, the JFJ Directors and JFJ shall be entitled to act and rely, without enquiry, on any information furnished or made available to them or any of them (as the case may be) in connection with the Scheme and the Transfer Agreement, including, for the avoidance of doubt, any certificate, opinion, advice, valuation, evidence or other information furnished or made available to them by the Company, the Directors (or any of them), the Manager, the Investment Manager, JFJ, the JFJ Directors (or any of them), or the Receiving Agent, auditors, bankers, managers, custodians or other professional advisers, and no such person shall be liable or responsible for any loss suffered as a result thereof by the Company, any Shareholder, JFJ or any JFJ Shareholder.
Nothing in the Scheme or in any document executed under or in connection with the Scheme will impose any personal liability on the Liquidators or either of them save for any liability arising out of any negligence, fraud, bad faith, breach of duty or wilful default by the Liquidators in the performance of their duties and this will, for the avoidance of doubt, exclude any such liability for any action taken by the Liquidators in accordance with the Scheme, the Transfer Agreement or any act which the Liquidators do or omit to do at the request of JFJ.
15.1 Any New JFJ Shares allotted to the Liquidators and which would otherwise be issued to an Excluded JSGI Shareholder pursuant to the Scheme will instead be issued to the Liquidators as nominees on behalf of such Excluded JSGI Shareholder who will arrange for such shares to be sold promptly by a market maker (without regard to the personal circumstances of the relevant Excluded JSGI Shareholders and the value of the Ordinary Shares held by the relevant Excluded JSGI Shareholders), in circumstances in which the Liquidators and/or JFJ acting reasonably consider that notwithstanding that Excluded JSGI Shareholder's entitlement to such New JFJ Shares under the Scheme, any such issue of New JFJ Shares to that Shareholder would or may involve a breach of the securities laws or regulations of any jurisdiction, or if the Liquidators and/or JFJ reasonably believes that the same may violate any applicable legal or regulatory requirements or may require JFJ to become subject to additional regulatory requirements (to which it would not be subject but for such issue) and the Liquidators and/or JFJ, as the case may be, have not been provided with evidence reasonably satisfactory to them that the relevant Excluded JSGI Shareholders are permitted to hold New JFJ Shares under any relevant securities laws or regulation of such overseas jurisdictions (or that JFJ would not be subject to any additional regulatory requirements to which it would not be subject but for such issue). The net proceeds of such sales (after deduction of any costs incurred in effecting such sales) will be paid: (i) to the relevant Excluded JSGI Shareholders entitled to them within 10 Business Days of the date of sale, save that entitlements of less than £5.00 per Excluded JSGI Shareholder will be retained in the Liquidation Pool; and (ii) in respect of Sanctions Restricted Persons at the sole and absolute discretion of the Liquidators and will be subject to applicable laws and regulations.
The risks referred to below are the material risks known to the Directors at the date of this document which the Directors believe Shareholders should consider prior to deciding how to cast their votes on the Resolutions. Any investment in the Combined Trust (pursuant to the Scheme or otherwise) will be governed by the JFJ Prospectus and the JFJ Articles. Shareholders are strongly urged to read the JFJ Prospectus, and, in particular the section containing the risk factors contained therein. Shareholders in any doubt as to the contents of this document or as to what action to take, should consult an appropriately qualified independent adviser without delay.
Implementation of the Proposals is conditional, among other things, upon the Resolutions being passed at the General Meetings and the passing of the JFJ Share Allotment Authority at the JFJ General Meeting. In the event that any of the conditions of the Proposals is not met, the Proposals will not be implemented. The Directors may then consider alternative options for the future of the Company, which may result in additional costs being incurred.
In advance of the Effective Date, the Directors intend that the Company (or its agents) will have, to the extent practicable, realised or realigned the business carried on by the Company in order to repay its existing debt facilities, fund the Cash Option and fund the Liquidation Pool. If the Scheme fails to proceed, a portion of the Company's portfolio may therefore be held as assets which may need to be reinvested or realigned and in a rising market the loss of gearing would be a drag on returns and the portfolio will no longer be geared. As a result, the Company may incur additional reinvestment or realignment costs if the Scheme does not proceed and such costs will be borne by the Company.
Shareholders' illustrative entitlements set out in Part 1 of this document should not be regarded as forecasts. The JSGI Rollover FAV per Share, the JFJ FAV per Share and the JSGI Cash FAV per Share and Shareholders' entitlements under the Proposals may materially change up to the Effective Date as a result of, inter alia, changes in the value of investments.
If a Shareholder wishes to elect for more than their Basic Entitlement under the Cash Option and total Elections for the Cash Option made by all Shareholders are greater than 25 per cent. of the total issued Ordinary Shares (excluding Ordinary Shares held in treasury) at the Calculation Date, then such Shareholder's Excess Election will be scaled back resulting in such Shareholder (other than an Excluded JSGI Shareholder) receiving New JFJ Shares instead of cash in respect of part of their holding of Ordinary Shares.
The Liquidators will offer to purchase the holdings of any Dissenting Shareholders at the realisation value, this being an estimate of the amount a Shareholder would receive per Ordinary Share in an ordinary winding up of the Company if all of the assets of the Company had to be realised and distributed to Shareholders. The realisation value of an Ordinary Share is expected to be below the unaudited cum-income NAV per Share and the Liquidators may not purchase the interests of Dissenting Shareholders until all other liabilities of the Company have been settled and HMRC has confirmed that it has no objections to the closure of the liquidation.
Any investment in the New JFJ Shares issued by the Combined Trust will be governed by the JFJ Prospectus and the JFJ Articles. Shareholders should read the full text of the JFJ Prospectus, including the section containing risk factors.
An investment in the Combined Trust will involve exposure to those risks normally associated with investment in shares. Shares in the Combined Trust are designed to be held over the long-term and may not be suitable as short-term investments. The value of an investment in the Combined Trust and the income derived from it, if any, may go down as well as up. There can be no guarantee that any appreciation in the value of the Combined Trust's investments will occur and investors may not get back the full value of their investment. There can be no guarantee that the investment objective of the Combined Trust will be achieved or provide the returns sought.
The past performance of JFJ and of JPMorgan is not a guide to future performance of the Combined Trust. An investment in the Combined Trust is suitable only for investors who are capable of evaluating the risks of such an investment and who have sufficient resources to bear any loss which might result from such an investment (which may be equal to the whole amount invested).
The performance of the Combined Trust will be substantially dependent on the performance of the securities held within its portfolio. The Combined Trust's portfolio is comprised primarily of quoted Japanese companies, the market price of which may dramatically decline. If the market price of an equity investment in the portfolio declines, this could have an adverse effect on the value of the portfolio, the Combined Trust's financial condition, results of operations and prospects, with a consequential adverse effect on the returns to shareholders and the market value of JFJ Shares.
The Combined Trust may use gearing to seek to enhance investment returns. The use of borrowings may increase the volatility of the NAV and may reduce returns when asset values fall.
The Combined Trust will have a board of non-executive directors and no employees. The Combined Trust will therefore be dependent on the skills and experience of the Investment Manager to manage its investments. If the Investment Manager ceases to act as the Combined Trust's investment manager or if key personnel cease to remain with the Investment Manager or be involved in the management of the Combined Trust's portfolio, there is no assurance that suitable replacements will be found. If this occurs there may be an adverse effect on the performance of the Combined Trust's portfolio and the value of the JFJ Shares.
JFJ is a closed-ended vehicle. Accordingly, Shareholders will have no right to have their New JFJ Shares repurchased at any time. Shareholders wishing to realise their investment in the Combined Trust will therefore generally be required to dispose of their New JFJ Shares in the market. Although the New JFJ Shares will be listed in the closed-ended investment funds category of the Official List and admitted to trading on the Main Market, there can be no guarantee that a liquid market in the JFJ Shares will exist or be maintained. Accordingly, Shareholders may be unable to realise their New JFJ Shares at the quoted market price (or at the prevailing NAV per New JFJ Share).
The price of shares in an investment trust is determined by the interaction of supply and demand for such shares in the market as well as the NAV per share. The share price can therefore fluctuate and may represent a discount or premium to the NAV per JFJ Share. This discount or premium is itself variable as conditions for supply and demand for New JFJ Shares change. This can mean that the JFJ Share price can fall when the NAV per share rises, or vice versa.
Comments in this document relating to the taxation of Shareholders are based on current UK taxation law and HMRC published practice, which are subject to change (possibly with retrospective effect). The information in this document relating to UK taxation law and HMRC published practice is given by way of general summary and does not constitute legal or tax advice to Shareholders. The Board has been advised that the Scheme should be treated as a scheme of reconstruction for the purposes of UK taxation of capital gains. A submission has been made by the Company to HMRC under section 138 of the TCGA to seek clearance that section 136 of the TCGA will not be prevented from applying to the Scheme by virtue of section 137(1) of the TCGA. This submission also seeks clearance that no counteraction notice under section 698 of the Income Tax Act 2007 or under section 746 of the Corporation Tax Act 2010 should be served in respect of the transaction. Clearance from HMRC is still pending as at the date of this document.
However, a subsequent sale or transfer of JFJ Shares may constitute a disposal for UK tax purposes and may, depending on a Shareholder's particular circumstances, give rise to a liability to UK taxation.
The Directors have been advised that the proposed method of winding up the Company and the scheme of reconstruction is such that the Company should remain eligible to be treated as an investment trust for the accounting period which includes the date on which its assets are sold and/ or transferred by the Liquidators pursuant to the Transfer Agreement. Accordingly, the transfer of the Company's assets held within the Rollover Pool and the realisation of the Company's assets held within the Cash Pool and the Liquidation Pool under the Scheme should not give rise to a liability to UK corporation tax for the Company. However, there can be no absolute assurance that investment trust status will be preserved and the absence of such status in any accounting period would mean the Company would be liable to pay UK corporation tax on its chargeable gains (net of allowable losses) in that period.
Provided that the Scheme is approved by Shareholders and becomes effective, the Company (acting through the Liquidators) will enter into the Transfer Agreement with the Liquidators and JFJ pursuant to the Scheme. The Transfer Agreement is, at the date of this document, in a form agreed between the Company, the Liquidators and JFJ. The Transfer Agreement provides for the transfer of the cash, undertaking and other assets of the Company comprising the Rollover Pool to JFJ (or its nominee), in consideration for the allotment of New JFJ Shares to the Liquidators (as nominees for the Shareholders entitled to them), such shares to be renounced by the Liquidators in favour of the holders of Reclassified Shares with "A" rights on the basis referred to in paragraph 8 of Part 4 of this document.
The Transfer Agreement excludes certain liability on the part of the Liquidators for entering into or carrying into effect the Transfer Agreement, save for customary carve-outs.
The Transfer Agreement will be available for inspection as stated in paragraph 4 below.
The Scheme is a reconstruction to which section 111(2) of the Insolvency Act applies. Under section 111(2) any Shareholder who does not vote in favour of the Resolutions to approve the Scheme to be proposed at the First General Meeting may, within seven days of the passing of the Resolutions at the First General Meeting, express their dissent in writing to the proposed Liquidators at the registered office of the Company for the attention of the proposed Liquidators. If Dissenting Shareholders validly exercise their rights under section 111(2) of the Insolvency Act in respect of more than 5 per cent. of, in aggregate, the issued Ordinary Share capital of the Company, the Directors (or a duly authorised committee thereof) have discretion under the Scheme to decide that the Scheme should not proceed.
The Liquidators may, at their discretion, abstain from implementing the Scheme or else purchase the interest(s) of the Dissenting Shareholder(s). The purchase price for such Dissenting Shareholders' Ordinary Shares will not exceed that which the Dissenting Shareholder(s) would receive on a straightforward winding-up of the Company and may only be paid once all liabilities have been settled or provided for to the Liquidators' satisfaction.
Copies of the following documents will be available for inspection during normal business hours on any day (Saturdays, Sundays and public holidays excepted) at the registered office of the Company until the Effective Date:
The Articles of Association of the Company (including the articles of association of the Company containing the full terms of the amendments proposed to be made) will be available at the First General Meeting for at least 15 minutes prior to and during that meeting. The proposed amended articles of association will also be available for inspection on the Company's website from the date of this document.
19 September 2024
The following definitions apply throughout this document unless the context otherwise requires:
| "A" rights | the rights attaching to Ordinary Shares in respect of which the holders have made or are deemed to have made valid Elections for the Rollover Option; |
|---|---|
| Admission | the admission of the New JFJ Shares issued pursuant to the Scheme to listing in the closed-ended investment funds category of the Official List and to trading on the Main Market becoming effective; |
| Articles or Articles of Association |
the articles of association of the Company; |
| "B" rights | the rights attaching to Ordinary Shares in respect of which the holders have made valid Elections for the Cash Option; |
| Basic Entitlement | subject to the Scheme becoming effective in accordance with its terms, the entitlement of each Shareholder to elect for, and have accepted in full an election for, the Cash Option in respect of up to 25 per cent. by number of its holding of Ordinary Shares as at the Calculation Date, rounded down to the nearest whole share; |
| Board or Directors | the board of directors of the Company; |
| Business Day | a day on which the London Stock Exchange is open for business; |
| Calculation Date | the time and date to be determined by the Directors and the JFJ Directors (but expected to be close of business on 21 October 2024), at which the value of the Company's assets and liabilities will be determined for the creation of the Liquidation Pool, the Cash Pool and the Rollover Pool, and at which the JSGI Residual FAV, the JSGI Rollover Pool FAV, the JSGI Rollover FAV per Share, the JFJ FAV per Share, the JSGI Cash Pool FAV and the JSGI Cash FAV per Share will be calculated for the purposes of the Scheme; |
| Cash Entitlement | in respect of any Shareholder who elects for the Cash Option and to the extent that Election is accepted, an amount equal to such Shareholder's proportional entitlement to the Cash Pool pursuant to the Scheme; |
| Cash Option | the option for Shareholders to elect to receive cash under the terms of the Scheme, as described in this document; |
| Cash Option Discount | 2 per cent.; |
| Cash Pool | the pool of cash attributable to the Reclassified Shares with "B" rights; |
| Cash Pool Realisation Costs | the costs incurred by the Company in realising portfolio assets to create the Cash Pool; |
| Cavendish | Cavendish Capital Markets Limited, a limited liability company incorporated in England and Wales with company number 06198898, whose registered office is at 1 Bartholomew Close, London, England, EC1A 7BL; |
| certificated or in certificated form |
a share that is not in uncertificated form; |
| Combined Trust | the enlarged JFJ following completion of the Proposals; |
| Companies Act | the Companies Act 2006, as amended from time to time; |
| Company or JSGI | JPMorgan Japan Small Cap Growth & Income PLC; |
|---|---|
| Company Secretary | JPMorgan Funds Limited; |
| CREST | the computerised settlement system operated by Euroclear which facilitates the transfer of title to shares in uncertificated form; |
| CREST Manual | the compendium of documents entitled "CREST Manual" issued by Euroclear from time to time; |
| Dissenting Shareholder | a Shareholder who has validly dissented from the Scheme pursuant to section 111(2) of the Insolvency Act; |
| EEA | the European Economic Area; |
| Effective Date | the date on which the Scheme becomes effective, which is expected to be 24 October 2024; |
| Election | the choice made by a Shareholder for the Rollover Option and/or the Cash Option pursuant to the Scheme (including, where the context so permits, a deemed choice for the Rollover Option) and any reference to "elect" or "election" shall, except where the context requires otherwise, mean "elect, or deemed to elect" or "election or deemed election", respectively; |
| Euroclear | Euroclear UK & International Limited in its capacity as the operator of CREST; |
| Excess Application | that portion of an Election by a Shareholder for the Cash Option that exceeds that Shareholder's Basic Entitlement; |
| Excluded JSGI Shareholders | (i) Overseas Shareholders unless they have satisfied the Directors and the JFJ Directors that they are entitled to receive and hold New JFJ Shares without breaching any relevant securities laws and without the need for compliance on the part of the Company or JFJ with any overseas laws, regulations, filing requirements or the equivalent; (ii) Sanctions Restricted Persons; and (iii) US Shareholders that do not return the US Investor Representation Letter; |
| FAV | formula asset value; |
| Financial Conduct Authority or FCA |
the United Kingdom Financial Conduct Authority or any successor entity or entities; |
| First General Meeting | the general meeting of the Company convened for 10.00 a.m. on 10 October 2024 (or any adjournment thereof) notice of which is set out from page 51 of this document; |
| Form of Election | the personalised form of election for use by Shareholders holding their Ordinary Shares in certificated form; |
| Form(s) of Proxy | the personalised form(s) of proxy for use by Shareholders in connection with the General Meetings; |
| FSMA | the Financial Services and Markets Act 2000, as amended; |
| General Meeting | the First General Meeting or the Second General Meeting, as the context may require and "General Meetings" means the First General Meeting and the Second General Meeting; |
| HMRC | HM Revenue & Customs; |
| Insolvency Act | the Insolvency Act 1986, as amended; |
| Investment Manager | JPMorgan Asset Management (UK) Limited, a private limited company incorporated in England and Wales with registered number 01161446 and having its registered office at 25 Bank Street, Canary Wharf, London E14 5JP; |
| ISA | an individual savings account maintained in accordance with the UK Individual Savings Account Regulations 1998, as amended from time to time; |
|---|---|
| Investec | Investec Bank PLC, a public limited company incorporated in England and Wales with registered number 00489604 and having its registered office at 30 Gresham Street, London EC2V 7QP; |
| JFJ | JPMorgan Japanese Investment Trust PLC; |
| JFJ Articles | the articles of association of JFJ; |
| JFJ Board or JFJ Directors | the board of directors of JFJ; |
| JFJ FAV | shall be equal to the net asset value of JFJ (cum-income, debt at fair value) as at the Calculation Date (i) less any direct transaction costs not already incorporated into the JFJ NAV; (ii) plus an amount reflecting the benefit of the JPMorgan Costs Contribution to JFJ (being equal to the fixed costs of the Proposals payable by JFJ); and (iii) plus an amount equal to any costs relating to the realignment of the JFJ portfolio in relation to the transaction already incurred; |
| JFJ FAV per Share | the JFJ FAV divided by the number of JFJ Shares in issue (excluding treasury shares) at the Calculation Date (expressed in pence) and rounded down to six decimal places; |
| JFJ General Meeting | the general meeting of JFJ convened for 11.00 a.m. on 10 October 2024 (or any adjournment thereof) to consider, amongst other things, the adoption of the JFJ Share Allotment Authority; |
| JFJ KID | the key information document prepared in relation to the JFJ Shares; |
| JFJ Prospectus | the prospectus dated 19 September 2024 relating to the issue and Admission of New JFJ Shares pursuant to the Scheme; |
| JFJ Registrar | Computershare Investor Services PLC; |
| JFJ Share Allotment Authority | the resolution to be proposed at the JFJ General Meeting granting the JFJ Directors the authority to allot New JFJ Shares pursuant to the Scheme; |
| JFJ Shareholders | holders of shares in JFJ; |
| JFJ Shares | the ordinary shares of 25 pence each in the capital of JFJ; |
| JPMorgan | the Manager and/or the Investment Manager and/or their affiliates, as the context requires; |
| JPMorgan Costs Contribution | the commitment by the Manager to make a contribution to the costs of the Proposals, as described and defined in Part 1 of this document; |
| JSGI Cash FAV per Share | the JSGI Cash Pool FAV divided by the total number of Reclassified Shares with "B" rights (expressed in pence) and rounded down to six decimal places; |
| JSGI Cash Pool FAV | the JSGI Residual FAV multiplied by the proportion of Reclassified Shares with "B" rights to the total number of Reclassified Shares (excluding shares held in treasury), minus (i) the Cash Option Discount and (ii) the Cash Pool Realisation Costs; |
| JSGI Residual FAV | shall be equal to the gross assets of JSGI as at the Calculation Date less: (i) the value of the cash and other assets appropriated to the Liquidation Pool (which includes any assets attributable to any Dissenting Shareholders); and (ii) any dividend which has been declared by the Company as at the Calculation Date but not |
paid to Shareholders, and not accounted for in the JSGI NAV, but excluding any adjustment for the JPMorgan Costs Contribution; plus (iii) an amount equal to any costs relating to the realignment of the JSGI portfolio in relation to the transaction already incurred;
| Qualified Purchaser | a "qualified purchaser" as defined in section 2(a)(51)(A) of the US Investment Company Act; |
|
|---|---|---|
| Realignment Costs | the before |
portfolio realignment costs, including both disposals and acquisitions, whether already incurred or estimated and still to be incurred as part of the Proposals by either JSGI or JFJ and either or after the Effective Date but, in the case of JSGI, excluding the Cash Pool Realisation Costs; |
| Receiving Agent or Registrar | Computershare Investor Services PLC; | |
| Reclassified Shareholders | holders of Reclassified Shares; | |
| Reclassified Shares | Ordinary Shares with "A" rights or "B" rights arising as a result of the Proposals; |
|
| Record Date | 6.00 p.m. on 11 October 2024 (or such other date as determined at the sole discretion of the Directors), being the record date for determining Shareholders' entitlements under the Scheme; |
|
| Register | the register of members of the Company; | |
| Regulation S | Regulation S under the US Securities Act; | |
| Regulatory Information Service | the regulatory information service provided by the London Stock Exchange; |
|
| Relevant Time | has the meaning given to it in paragraph 4.1 of Part 4 of this document; |
|
| Resolutions | the special resolutions to be proposed at the General Meetings, or any of them, as the context may require; |
|
| Rollover Option | the option for Shareholders to elect to receive New JFJ Shares under the terms of the Scheme, as described in this document; |
|
| Rollover Pool | Scheme | the pool of cash and other assets to be established under the to be transferred to JFJ pursuant to the Transfer Agreement; |
| Sanctions Authority | each of: | |
| (i) | the United States government; | |
| (ii) | the United Nations; | |
| (iii) | the United Kingdom; | |
| (iv) | the European Union (or any of its member states); | |
| (v) | any other relevant governmental or regulatory authority, institution or agency which administers economic, financial or trade sanctions; or |
|
| (vi) | the respective governmental institutions and agencies of any of the foregoing including, without limitation, the Office of Foreign Assets Control of the US Department of the Treasury, the United States Department of State, the United States Department of Commerce and His Majesty's Treasury; |
|
| Sanctions Restricted Person | each person or entity: | |
| (i) | that is organised or resident in a country or territory which is the target of comprehensive country sanctions administered or enforced by any Sanctions Authority; or |
|
| (ii) | that is, or is directly or indirectly owned or controlled by a person that is, described, or designated in (i) the current "Specially Designated Nationals" list (which as of the date |
| hereof can be found at https:// sanctionslist.ofac.treas.gov/ Home/SdnList); and/or (ii) the current "Consolidated list of persons, groups and entities subject to EU financial sanctions" (which as of the date hereof can be found at: https://data.europa.eu/data/datasets/ consolidated-list-of persons-groups-and-entities-subject-to- eu-financial sanctions?locale=en; or (iii) the current "Consolidated list of financial sanctions targets in the UK" (which as at the date hereof can be found at https:// sanctionssearchapp.ofsi.hmtreasury.gov.uk/; or |
|
|---|---|
| (iii) that is otherwise the subject of or in violation of any sanctions administered or enforced by any Sanctions Authority, other than solely by virtue of their inclusion in: (i) the current "Sectoral Sanctions Identifications" list (which as of the date hereof can be found https://ofac.treasury.gov/sanctions-list search-list-tool) (the "SSI List"), (ii) Annexes 3, 4, 5 and 6 of Council Regulation No. 833/2014 (the "EU Annexes"), or (iii) any other list maintained by a Sanctions Authority, with similar effect to the SSI List or the EU Annexes; |
|
| Scheme | the proposed scheme of reconstruction and voluntary winding-up of the Company under section 110 of the Insolvency Act, as set out in Part 4 of this document; |
| SDRT | UK stamp duty reserve tax; |
| SEC | the United States Securities and Exchange Commission; |
| Second General Meeting | the general meeting of the Company convened for 10.00 a.m. on 24 October 2024 (or any adjournment thereof), notice of which is set out from page 56 of this document; |
| Shareholders | holders of Ordinary Shares; |
| sterling or £ | Pounds sterling, the lawful currency of the UK; |
| TCGA | the UK Taxation of Chargeable Gains Act 1992; |
| Transfer Agreement | the agreement for the transfer of the cash and other assets comprising the Rollover Pool from the Company to the JFJ pursuant to the Scheme to be dated on the Effective Date between the JFJ, the Company and the Liquidators, a summary of which is set out in paragraph 1 of Part 6 of this document; |
| TTE Instruction | transfer to escrow instruction (as described in the CREST Manual); |
| UK | the United Kingdom of Great Britain and Northern Ireland; |
| UK Listing Rules | the UK listing rules made by the Financial Conduct Authority under FSMA; |
| uncertificated or in uncertificated form |
recorded on the Register as being held in uncertificated form in CREST and title to which, by virtue of the Regulations, may be transferred by means of CREST; |
| US Exchange Act | the US Securities Exchange Act of 1934, as amended; |
| US Investment Company Act | the US Investment Company Act of 1940, as amended; |
| US Investor Representation Letter |
a representation letter that can be completed by US Shareholders that are both Qualified Purchasers and QIBs, the form of which is annexed to the JFJ Prospectus; |
| US Person | a "U.S. person" as defined in Regulation S under the US Securities Act; |
| US Securities Act | the United States Securities Act of 1933, as amended; |
|---|---|
| US Shareholder | a Shareholder who is located in the United States or is a US Person; and |
| VAT | UK value added tax. |
(Incorporated in England and Wales with registered number 03916716 and registered as an investment company under section 833 of the Companies Act 2006)
Notice is hereby given that a general meeting of the Company will be held at 60 Victoria Embankment, London, EC4Y 0JP at 10.00 a.m. on 10 October 2024 for the purpose of considering and, if thought fit, passing the following resolutions, both of which will be proposed as special resolutions:
"Every reference in these Articles to shares or Ordinary Shares shall be construed as a reference to the ordinary shares of £0.10 each in the capital of the Company which are designated as shares with either "A" rights or "B" rights as set out in Article 4.4 below. Notwithstanding anything to the contrary in these Articles, each class of share will have attached to it the respective rights and privileges and be subject to the respective limitations and restrictions set out in Articles 4.4 and 166.2";
(b) the insertion of the following as a new Article 4.4: "Words and expressions defined in the circular to shareholders of the Company dated 19 September 2024 (the "Circular") shall bear the same meanings in this Article 4.4, save where the context otherwise requires.
The rights attaching to the shares with "A" rights and the shares with "B" rights shall be identical to each other, save that in a winding up of the Company in the circumstances set out in the Circular, notwithstanding anything to the contrary in these Articles:
"Subject to the special rights set out in Article 4.4 above and Article 166.2 below, for all other purposes the shares with "A" rights and shares with "B" rights shall continue to be ordinary shares with the rights attaching to ordinary shares and the Articles shall be construed accordingly."
much of the property and assets of the Company as will be so transferred to JFJ in accordance with the Transfer Agreement and with the Scheme;
"Notwithstanding the provisions of these Articles, upon the winding-up of the Company in connection with the scheme (the "Scheme") set out in Part 4 of the circular to shareholders of the Company dated 19 September 2024 (the "Circular"), the Liquidators of the Company will give effect to the Scheme and will enter into and give effect to the transfer agreement with JFJ (as duly amended where relevant), a draft of which was tabled at the general meeting of the Company convened for 10 October 2024 by a notice attached to the Circular, in accordance with the provisions of this Article and Article 4.4 and the holders of Ordinary Shares will be entitled to receive New JFJ Shares and/or cash, in each case in accordance with the terms of the Scheme. The definitions in the Circular have the same meanings in this Article 166.2, save where the context otherwise requires."; and
2.4 the definitions contained in the Circular have the same meanings in this Resolution.
Registered office: 60 Victoria Embankment London EC4Y 0JP
By Order of the Board JPMorgan Funds Limited Company Secretary
Dated: 19 September 2024
These notes should be read in conjunction with the notes on the Form of Proxy.
(Incorporated in England and Wales with registered number 03916716 and registered as an investment company under section 833 of the Companies Act 2006)
Notice is hereby given that a general meeting of the Company will be held at 60 Victoria Embankment, London, EC4Y 0JP, at 10.00 a.m. on 24 October 2024 for the purpose of considering and, if thought fit, passing the following resolution, which will be proposed as a special resolution:
That (provided that the Directors shall not have resolved, prior to the date of this meeting (or any adjournment thereof) to abandon the Scheme):
Registered office: 60 Victoria Embankment London EC4Y 0JP
By Order of the Board JPMorgan Funds Limited Company Secretary
Dated: 19 September 2024
These notes should be read in conjunction with the notes on the Form of Proxy.
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