Pre-Annual General Meeting Information • Mar 30, 2023
Pre-Annual General Meeting Information
Open in ViewerOpens in native device viewer
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this document or as to what action to take, you should immediately seek personal financial advice from your stockbroker, bank manager, solicitor, accountant or any other independent professional adviser authorised under the Financial Services and Markets Act 2000 if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser in your own jurisdiction.
If you have sold or transferred all your Ordinary Shares, please forward this document immediately, to your stockbroker, bank or other agent through whom the sale or transfer was effected for onward transmission to the purchaser or transferee. However, such documents should not be forwarded or transmitted in or into any jurisdiction in which such act would constitute a violation of the relevant laws in such jurisdiction. If you sell or transfer or have sold or transferred only part of your holding of Ordinary Shares you should retain this document and consult your stockbroker, bank or other agent through whom the sale or transfer was effected.
(incorporated and registered in England and Wales under company registration number 02286034)
and
Proposed rectification of the Relevant Dividends
and
Proposed Related Party Transactions
and
Notice of General Meeting
This document should be read as a whole. Your attention is drawn to the Letter from the Chairman of Braemar Plc which is set out in Part III of this document and includes a recommendation that you vote in favour of the Capital Reduction Resolutions to be proposed at the General Meeting referred to below.
Notice of a General Meeting of the Company to be held at the Company's offices at One Strand, Trafalgar Square, London, WC2N 5HR at 10.00 a.m. on 18 April 2023 is set out in Part VI of this document. To be valid, a Form of Proxy must be completed and returned as soon as possible and in any event so as to be received by Equiniti, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA as soon as possible but, in any event, so as to arrive no later than 10:00 a.m. on 14 April 2023. Completion and posting of the Form of Proxy will not prevent a Shareholder from attending and voting in person at the General Meeting.
No person has been authorised to give any information or make any representation other than those contained in this document and, if given or made, such information or representation must not be relied on as having been so authorised. The delivery of this document shall not, under any circumstances, create any implication that there has been no change in the affairs of the Company since the date of this document or that the information in it is correct as at any subsequent time.
Investec Bank plc ("Investec" or the "Sponsor"), is authorised by the Prudential Regulation Authority ("PRA") and regulated in the United Kingdom by the Financial Conduct Authority and PRA, is acting exclusively for the Company and no one else in connection with the arrangements described in this document and will not regard any other person (whether or not a recipient of this Circular) as a client in relation to the arrangements described in this document and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in relation to the arrangements or any other matter referred to in this document.
Investec nor any of its affiliates accepts any responsibility whatsoever and makes no representations or warranty, express or implied, for or in respect of the contents of this document, including, but not limited to, its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company, or the arrangements described in this document, and nothing contained in this document is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or the future. Investec and its respective affiliates accordingly disclaim, to the fullest extent permitted by law, all and any liability whether arising in tort, contract or otherwise which they might otherwise have in respect of this document or any such statement.
The information included herein is based on information available as at the date of this document and, except as requested by the FCA or required by the Listing Rules, the Prospectus Regulation Rules, the Disclosure Guidance and Transparency Rules as appropriate, or any other applicable law, will not be updated.
| PART I: EXPECTED TIMETABLE OF PRINCIPAL EVENTS | 4 |
|---|---|
| PART II: DEFINITIONS | 5 |
| PART III: LETTER FROM THE CHAIRMAN | 7 |
| PART IV: BACKGROUD TO THE RECTIFICATION OF RELEVANT DIVIDENDS | 13 |
| PART V: ADDITIONAL INFORMATION | 16 |
| PART VI: NOTICE OF GENERAL MEETING | 19 |
| APPENDIX I: SHAREHOLDERS DEED OF RELEASE | 23 |
| APPENDIX II: DIRECTORS DEED OF RELEASE | 25 |
| Publication of this document | 29 March 2023 |
|---|---|
| Latest time and date for receipt of Forms of Proxy for the General Meeting |
10 a.m. on 14 April 2023 |
| General Meeting | 10 a.m. on 18 April 2023 |
| Expected date of initial directions hearing of the Court | 28 April 2023 |
| Expected date of Court Hearing to confirm the Capital Reduction | 9 May 2023 |
| Expected effective date for the Capital Reduction | 10 May 2023 |
The expected dates for the confirmation of the Capital Reduction by the Court and the Capital Reduction becoming effective are based on provisional dates that have been obtained for the required Court hearings of the Company's application. These provisional hearing dates are subject to change and dependent on the Court's timetable.
The timetable assumes that there is no adjournment of the General Meeting. If there is an adjournment, all subsequent dates are likely to be later than those shown.
References in this document are to London times unless otherwise stated.
The following definitions apply throughout this document and the accompanying Form of Proxy unless the context otherwise requires:
| "Act" | Companies Act 2006; |
|---|---|
| "B Ordinary Share Issue" | the issue of one B Ordinary Share for each one Ordinary Share held by each Shareholder, as described in this document; |
| "B Ordinary Shares" | the shares in the capital of the Company to be created by the B Ordinary Share Issue, where the nominal value of such shares is equal to the sum that is obtained by dividing the number of B Ordinary Shares to be issued into £19,754,926; |
| "Board" or "Directors" | the directors of the Company or any duly appointed committee thereof; |
| "Capital Redemption Reserve" | the capital redemption reserve of the Company; |
| "Capital Redemption Reserve Reduction" | the cancellation of the full amount outstanding to the credit of the Capital Redemption Reserve; |
| "Capital Reduction" | the proposed cancellation of the Company's Capital Redemption Reserve and Share Premium Account, and the Merger Reserve Reduction pursuant to the Resolutions as set out in the Notice of General Meeting; |
| "Capital Reduction Record Time" | 6.00 p.m. on the date immediately preceding the date of the Court Hearing; |
| "Capital Reduction Resolutions" | the resolutions (as set out in full in the Notice of General Meeting at resolutions 1 to 5 (inclusive)) to be proposed at the General Meeting in relation to the proposed Capital Redemption Reserve Reduction, Share Premium Account Reduction and Merger Reserve Reduction; |
| "Company" or "Braemar" | Braemar Plc, a company incorporated in England and Wales with registered number 02286034 and having its registered office at One Strand, Trafalgar Square, London England WC2N 5HR; |
| "Court" | the High Court of Justice in England and Wales; |
| "Court Hearing" | the hearing by the Court to confirm the Capital Reduction; |
| "Court Order" | the order of the Court confirming the Capital Reduction; |
| "CREST" | the relevant system (as defined in the CREST Regulations) in respect of which Euroclear UK & International Limited is the Operator (as defined in the CREST Regulations); |
| "CREST Regulations" | the Uncertificated Securities Regulations 2001 (as amended); |
| "Directors' Deed of Release" | as defined in paragraph 4.2.3 of Part IV; |
| "Dividend Rectification Resolutions" | the resolutions (as set out in full in the Notice of General Meeting at resolutions 6, 7 and 8) to be proposed at the General Meeting to ratify the accounting entries in respect of unlawful dividends such that profits are appropriated, to ratify and approve the entry into the Shareholders' Deed of Release and to ratify and approve the entry into the Directors' Deed of Release; |
| "Effective Date" | the date of the Court Order; |
| "FCA Handbook" | the FCA's Handbook of Rules and Guidance; |
| "Financial Conduct Authority" or "FCA" | the Financial Conduct Authority of the United Kingdom; |
| "Form of Proxy" | the form of proxy accompanying this document relating to the General Meeting; |
| "FSMA" | the Financial Services and Markets Act 2000, as amended; |
| "General Meeting" | the general meeting of the Company, notice of which is set out at the end of this document and including any adjournment(s) thereof; |
|
|---|---|---|
| "Group" | the Company and its subsidiaries and subsidiary undertakings (in each case as defined in the Act); |
|
| "Investec" | Investec Bank plc, authorised and regulated by the FCA and approved under section 88 of the FSMA as a Sponsor; |
|
| "Listing Rules" | the listing rules made by the FCA under Part VI of FSMA (as set out in the FCA Handbook), as amended; |
|
| "Merger Reserve" | the merger reserve of the Company; | |
| "Merger Reserve Reduction" | the capitalisation of £19,754,926 of the amount standing to the credit of the Company's merger reserve by issuing B Ordinary Shares in the capital of the Company and thereafter the cancellation of such B Ordinary Shares; |
|
| "Notice of General Meeting" | the notice of General Meeting, set out in Part VI of this document; | |
| "Ordinary Shares" | ordinary shares of 10 pence each in the capital of the Company; | |
| "Proposals" | (i) the appropriation of the distributable profits of the Company to the payment of each of the Relevant Dividends; (ii) the waiver of the claims against the Relevant Directors and Recipient Shareholders pursuant to resolutions 7 and 8 set out in the Notice of General Meeting; and (iii) the approval and ratification of the entry into each of the Directors' Deed of Release and the Shareholders' Deed of Release, all as set out in the Dividend Rectification Resolutions. |
|
| "Recipient Shareholder" | a shareholder in the Company in receipt of a Relevant Dividend; | |
| "Registrars" | Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA; |
|
| "Related Party Resolutions" | resolutions numbered 7 and 8 set out in the Notice of General Meeting; | |
| "Relevant Directors" | all the past and current directors of the Company who were directors at the time a Relevant Dividend was made, being; (i) James Gundy; (ii) Tristram Simmonds; (iii) Nicholas Stone; (iv) Nigel Payne; (v) Elizabeth Gooch; (vi) Joanne Lake; (vii) Lesley Watkins; and (viii) Stephen Kunzer. |
|
| "Relevant Dividends" | the unlawful dividends detailed in paragraph 3.1 of Part IV of this document; | |
| "Resolutions" | the Capital Reduction Resolutions and the Dividend Rectification Resolutions set out in full in the Notice of General Meeting; |
|
| "Shareholders" | holders of Ordinary Shares; | |
| "Shareholders' Deed of Release" | as defined in paragraph 4.2.2 of Part IV; | |
| "Share Premium Account" | the share premium account of the Company; | |
| "Share Premium Account Reduction" | the cancellation of the full amount standing to the credit of the Share Premium Account; and |
|
Braemar Plc
(incorporated and registered in England and Wales under company registration number 02286034)
Nigel Payne (Non-executive Chairman) One Strand James Gundy (Chief Executive Officer) Trafalgar Square Nicholas Stone (Chief Financial Officer) London Tristram Simmonds (Chief Operating Officer) England Elizabeth Gooch (Non-executive Director) WC2N 5HR Joanne Lake (Non-executive Director)
To Shareholders
Dear Shareholder,
29 March 2023
and
and
and
I am writing to provide you with details of a proposal to enhance the Company's ability to return value to Shareholders in the future and to address the payment of unlawful dividends that have been identified as part of an exercise which has been undertaken by the Company to increase the Group's capacity to pay future dividends.
This document also provides the details of a General Meeting that will be held at One Strand, Trafalgar Square, London WC2N 5HR at 10 a.m. on 18 April 2023 to consider the Resolutions that will be put to Shareholders to approve them.
The purpose of this document is to provide you with information about the Capital Reduction, the proposed rectification of Relevant Dividends and the related party transaction and to explain why the Board considers all the Resolutions to be in the best interests of the Company and its Shareholders as a whole and unanimously recommends that you vote in favour of the Capital Reduction Resolutions to be proposed at the General Meeting. Given the interests of the Board in the Dividend Rectification Resolutions, and as required by the Listing Rules, the Board are unable to take part in the consideration of the matters dealt with by the Dividend Rectification Resolutions and therefore cannot recommend that shareholders vote in favour of the Dividend Rectification Resolutions but do recommend that shareholders vote on them. Shareholders should note that, unless:
the payment of unlawful dividends will not be rectified, and the Company will have potential claims against Shareholders and Relevant Directors.
If Resolution 7 set out in the Notice of General Meeting is not approved, then the Company has a potential right to make claims against the Recipient Shareholders for recovery of the payment of the Relevant Dividends. There is no certainty as to the amounts that could be recovered if the Company sought to pursue these potential claims.
If Resolution 8 set out in the Notice of General Meeting is not approved, then the Company has a potential right to bring claims against the Relevant Directors in relation to the payment of the Relevant Dividends. There is no certainty as to the amounts that could be recovered if the Company sought to pursue these potential claims.
Part II of this document contains definitions of words and terms that have been used throughout it. Please refer to Part II as you review this document.
Under the Act, a company may, with the sanction of a special resolution passed by its shareholders and confirmation of the Court, reduce or cancel its share capital, share premium account, capital redemption reserve and other reserves. It may then apply the sums resulting from such reduction to its distributable reserves. These sums may then be treated as distributable for the purposes of making future returns to Shareholders.
The Company currently has:
The Act requires that if a company issues shares at a premium to the nominal value of those shares for cash or otherwise, a sum equal to the aggregate amount of or value of the premiums must be transferred to the company's share premium account. A share premium account can only be used in very limited circumstances. The Company intends to reduce the Share Premium Account in full.
The Company currently has a Capital Redemption Reserve which arose as a result of the accounting treatment applicable to a number of historical share buy backs (and associated cancellations of shares). The Company plans to reduce the Capital Redemption Reserve in full.
In certain circumstances such as where shares are issued in consideration for the acquisition of shares in another company, instead of creating a share premium, an amount is credited to the merger reserve. The Merger Reserve arose principally in 2001 in relation to the acquisitions of Braemar Shipbrokers Limited and Braemar Tankers Limited. Further additions to the Merger Reserve arose in respect of Naves and Atlantic Brokers.
The Share Premium Account and the Capital Redemption Reserve are statutory reserves in respect of which the Court has the power to sanction the reduction or cancellation. The Merger Reserve is a non-statutory reserve which cannot be reduced in the same way as the Share Premium Account and Capital Redemption Reserve. It is therefore proposed to capitalise £19,754,926 standing to the credit of the Merger Reserve by applying £19,754,926 in paying up in full new B Ordinary Shares of £0.10 each.
The B Ordinary Shares will be allotted and issued on the Business Day prior to the day of the Court Hearing, credited as fully paid, to the persons holding Ordinary Shares as at the Capital Reduction Record Time, on the basis of six B Ordinary Shares for each Ordinary Share held by Shareholders.
The B Ordinary Shares will not be admitted to trading on the London Stock Exchange, or any other market or stock exchange. It is a condition of issue of the B Ordinary Shares that no share certificates will be issued in respect of them. The B Ordinary Shares will have extremely limited rights and will not carry any rights to participate in the profits of the Company and have no rights to participate in the capital of the Company except on a winding up. The B Ordinary Shares will be transferable, but no market will exist for them and it is anticipated that the Court will confirm at the Court Hearing that they may be cancelled the day after they are issued.
The Capital Reduction, if approved, will provide the Company with the flexibility to continue with its existing progressive dividend policy and will allow the rectification of certain unlawful dividends which have been paid as described in paragraph 3 and Part IV of this document.
In December 2022 the Company commenced a project to research options for increasing the distributable reserves available to the Company in order to support the Group's stated progressive dividend policy.
The initial focus was on short term options that would increase the distributable reserves as at 28 February 2023 in order to allow a final dividend recommendation with the publication of year end results later in 2023.
A review of these short-term identified that charges taken to retained earnings in recent years for the impairment of the value of certain preference shares held by the Company represented unrealised losses and could therefore potentially be excluded from the calculation of distributable reserves.
Whilst reviewing the possibility that the impairment losses could be determined as unrealised losses for the purpose of measuring distributable reserves, a broader review of other gains and losses that had been recorded in retained earnings in recent years was carried out. This review identified certain gains that had been recorded regularly relating to share-based payments charges.
The gains in question arose when shares were awarded to employees of other group companies and the cost of those shares was debited to the cost of investment of those group companies and credited to retained earnings. This is an accounting practice that has been ongoing within the Company since the introduction of IFRS 2 in 2005. The only way therefore that those gains could be considered to be realised is if the group companies concerned had been sold. The consequence of this is that a significant balance within retained earnings (that was not previously identified as created by unrealised gains) was incorrectly used by the Company in the calculation of its distributable reserves. This means that the Company has therefore paid several dividends between 2016 and 2023 without having sufficient distributable reserves from which to lawfully pay such dividends.
Details of the Relevant Dividends are set out below:
| Payment date and type of dividend payment (interim or final) | Amount per ordinary share | Total aggregate amount of dividend paid |
|---|---|---|
| FY 2016 – Interim dividend – 18 December 2015 | 9.0 pence | £2,659,000 |
| FY 2017 – Final dividend – 29 July 2016 | 17.0 pence | £5,020,000 |
| FY 2017 – Interim dividend – 16 December 2016 | 9.0 pence | £2,838,000 |
| FY 2019 – Final dividend – 27 July 2018 | 10.0 pence | £3,076,000 |
| FY 2019 – Interim dividend – 14 December 2018 | 5.0 pence | £1,540,000 |
| FY 2020 – Final dividend – 26 July 2019 | 10.0 pence | £3,064,000 |
| FY 2020 – Interim dividend – 13 December 2019 | 5.0 pence | £1,566,000 |
| FY 2022 – Final dividend – 1 September 2021 | 5.0 pence | £1,482,000 |
| FY 2022 – Interim dividend – 16 December 2021 | 2.0 pence | £627,000 |
| FY 2023 – Final dividend – 14 October 2022 | 7.0 pence | £2,017,000 |
| FY 2023 – Interim dividend – 4 January 2023 | 4.0 pence | £1,158,000 |
| Total aggregate value | £25,047,000 |
Part IV of this document sets out details of how the Relevant Dividends are unlawful as well as the proposals for rectification.
The consequence of such dividends being paid otherwise than in accordance with the Act is that the Company may have a claim against all shareholders (former or present) who received any such dividends (up to the maximum value of cumulative dividends received by each shareholder) as well as a claim against all Directors (former or present, individually or in aggregate) who approved the declaration and payment of such dividends, up to the total aggregate value of £25,047,000.
The Group entered into deeds of release with related parties in connection with another dividend rectification process, relating to the Company's 1 September 2021 final dividend and 16 December 2021 interim dividend (shown above). In that instance, the Company identified that it had not properly prepared and filed unaudited interim accounts at Companies House, as required by the Companies Act 2006, prior to declaring and paying distributions to shareholders in respect of the Company's 1 September 2021 final dividend and 16 December 2021 interim dividend, and therefore sought to rectify that administrative oversight. Such dividend rectification was announced by the Company on 27 July 2022, classified as a smaller related party transaction pursuant to LR 11.1.10 R, and was approved by the Company's shareholders on 6 October 2022. However, as the Company has since identified through its analysis of historical IFRS 2 accounting treatment (as described above) that it did not in fact have sufficient distributable reserves at the time (and therefore that the filing of unaudited interim accounts at Companies House alone did not appropriately address the issue), and accordingly the dividend rectification was invalid and/or ineffectual and it is therefore necessary to redo this rectification.
Accordingly, the Company has entered into the Shareholders' Deed of Release and the Directors' Deed of Release. The consequence of the entry into these deeds by the Company is that the Company will be unable to make any claims against: (a) the recipient Shareholders; and (b) the Directors and former Directors, in each case in respect of the payment of the Relevant Dividends otherwise than in accordance with the Act.
The entry by the Company into the Directors' Deed of Release will constitute a related party transaction (as defined in the Listing Rules). This is because each of the Relevant Directors (comprising persons who are, or were within the last 12 months, directors of the Company) is deemed to be a related party under LR 11.1.4 R and they will be released from any liability to repay any amounts of the Relevant Dividends pursuant to the Directors' Deed of Release (as applicable). Therefore, Resolution 8 will seek the specific approval of the Company's shareholders for the entry into the Directors' Deed of Release as related party transactions in accordance with the requirements of the Listing Rules.
The technical issues identified in this paragraph and Part IV of this document in respect of the Relevant Dividends are of a historical nature and there is no change to the financial outlook of the Company as a consequence.
The Company has taken appropriate steps and has the necessary procedures in place to avoid the payment of any further unlawful dividends. In this regard the Company took steps to strengthen its financial reporting resources during 2022, including the hiring of a new experienced financial controller. A project, also utilising external consultants, to assess approaches to improve the distributable reserves position of Braemar Plc, led to the discovery of the current situation, resulting in the process that is now being undertaken. In future periods, more detailed reconciliations of opening to closing distributable reserves will be undertaken in order to identify unrealised gains and profits relating to the accounting treatment arising from the application of IFRS2 or any other accounting standard will be maintained to ensure there is no repeat of the identified error.
Accordingly, we do not believe any further remedial action is required. For avoidance of doubt, the Company continues to deem its procedures, systems and controls to be sufficient to enable it to comply with its obligations under the listing rules, disclosure requirements, transparency rules and corporate governance rules, and in particular its obligations under LR 10 and LR 11 as well as its requirement to make timely and accurate disclosure to the market.
As a result of the Company's stated desire to continue with its existing progressive dividend policy, and in order to rectify the declaration and payment of unlawful dividends, the Company must undertake the Capital Reduction to provide it with the necessary distributable reserves.
In addition to the approval by Shareholders of the Capital Reduction Resolutions, the Capital Reduction requires the approval of the Court. Accordingly, following the General Meeting, an application will be made to the Court in order to confirm and approve the Capital Reduction.
In providing its approval of the Capital Reduction, the Court may require measures to be put in place for the protection of creditors (including contingent creditors) of the Company whose debts remain outstanding on the relevant date, except in the case of creditors who have consented to the Capital Reduction. Such creditor protection measures may include seeking the consent of the Company's creditors to the Capital Reduction or the provision by the Company to the Court of an undertaking to deposit a sum of money into a blocked account created for the purpose of discharging the non-consenting creditors of the Company or an undertaking to treat as undistributable for the time being certain sums representing the realisation of "hidden value" in the balance sheet as at the Effective Date.
It is anticipated that the initial directions hearing in relation to the Capital Reduction will take place on 28 April 2023, with the final Court Hearing taking place on 9 May 2023 and the Capital Reduction becoming effective on the following day, following the necessary registration of the Court Order at Companies House.
There will be no change in the number of Ordinary Shares in issue (or their nominal value) following the implementation of the Capital Reduction and no new share certificates will be issued as a result of the Capital Reduction. The Capital Reduction itself will not involve any distribution or repayment of capital or share premium by the Company and will not reduce the underlying net assets of the Company. The distributable reserves arising on the Capital Reduction will, subject to the discharge of any undertakings required by the Court as explained above, support the Company's ability to pay dividends should circumstances in the future make it desirable to do so and appropriation of profits to ratify relevant accounting entries.
Shareholders should note that if, for any reason, the Court declines to approve the Capital Reduction, the Capital Reduction will not take place. The Board reserves the right to abandon or to discontinue (in whole or in part) the application to the Court in the event that the Board considers that the terms on which the Capital Reduction would be (or would be likely to be) confirmed by the Court would not be in the best interests of the Company and/or its Shareholders as a whole. The Board has undertaken a thorough and extensive review of the Company's liabilities (including contingent liabilities) and considers that the Company will be able to satisfy the Court that there is no real likelihood that any creditor of the Company would be prejudiced by the Capital Reduction.
The Notice of General Meeting is set out in Part VI of this document.
The General Meeting will take place at the Company's offices at One Strand, Trafalgar Square, London WC2N 5HR at 10 a.m. on 18 April 2023. At the General Meeting, the Resolutions set out in Part VI of this document will be proposed to Shareholders.
The Resolutions will be passed if 75% or more of the votes cast (in person or by proxy) at the General Meeting are in favour of the Resolutions.
The Resolutions, which are special resolutions, are summarised below:
Resolution 1 – this a resolution to approve, subject to confirmation of the Court, the cancellation of the Share Premium Account.
Resolution 2 – this is a resolution to approve, subject to confirmation of the Court, the cancellation of the Capital Redemption Reserve.
Resolutions 3, 4 and 5 – these resolutions provide authority to the directors to allot and issue the B Ordinary Shares, describe the rights attaching to the B Ordinary Shares and propose that the B Ordinary Shares created by the B Ordinary Share Issue be cancelled.
Resolution 6 – this is a resolution that, subject to the passing of resolutions 1 – 5 (inclusive) and the Capital Reduction becoming effective, distributable profits of the Company be appropriated to the relevant accounting periods during which the Relevant Dividends were declared and paid.
Resolution 7 – this is a resolution that is conditional upon the passing of resolutions 1 to 6 (inclusive) that releases and waives all claims which the Company may have in respect of the Relevant Dividends against previous and current shareholders and their successors in title and ratifies and authorises the entry into the Shareholders' Deed of Release by the Company.
Resolution 8 – this is a resolution that is conditional upon the passing of resolutions 1 to 6 (inclusive) that releases and waives all claims which the Company may have in respect of the Relevant Dividends against the directors (current and former and their personal representatives and successors in title) at the time of declaration and payment of each respective Relevant Dividend and ratifies and authorises the entry into the Directors' Deed of Release by the Company.
The following comments are intended as a general guide only and relate only to certain UK tax consequences of the Reduction of Capital. The comments are based on current legislation and HM Revenue & Customs published practice, both of which are subject to change, possibly with retrospective effect. These comments deal only with Shareholders who are resident for taxation purposes in the UK, who are the absolute beneficial owners of the Ordinary Shares and who hold them as an investment and not in a trading account ("UK Shareholders"). They do not deal with the position of certain classes of Shareholders, such as dealers in securities, insurance companies, collective investment schemes or persons regarded as having obtained their Ordinary Shares by reason of employment.
The Share Premium Reduction should not have any consequences for UK Shareholders for the purposes of UK taxation of chargeable gains ("CGT"), UK income tax or UK corporation tax.
The Capital Redemption Reserve Reduction should not have any consequences for UK Shareholders for the purposes of UK CGT, UK income tax or UK corporation tax.
On the basis that the B Ordinary Shares will be treated as being paid up for "new consideration" received by the Company, the B Ordinary Share Issue should not give rise to any liability for UK income tax (or corporation tax on income) in a UK Shareholder's hands. For CGT purposes, the B Ordinary Share Issue should be treated as a "reorganisation", so that a UK Shareholder should not be treated as making a disposal of their Ordinary Shares for CGT purposes upon receipt of the B Ordinary Shares. Instead, the B Ordinary Shares should be treated as the same asset, acquired at the same time, as their Ordinary Shares. On a disposal of B Ordinary Shares or Ordinary Shares by a UK Shareholder for CGT purposes, a UK Shareholder's base cost in their Ordinary Shares would be apportioned between their B Ordinary Shares and their Ordinary Shares based on their respective market values at the date that the B Ordinary Shares or Ordinary Shares are disposed of.
It is likely that the market value of the B Ordinary Shares will be £nil for the duration of their existence. This is because the B Ordinary Shares will have no voting rights or rights to income; will have no market on which they can be traded; and it is anticipated that they will be cancelled for no payment on the day immediately following the date of their issue. Consequently, the issue of the B Ordinary Shares should not impact the base cost of the Ordinary Shares. The reduction of capital effected by the cancellation of the B Ordinary Shares should be treated for CGT purposes as a further "reorganisation" so that a UK Shareholder should not be treated as making a disposal of their Ordinary Shares or B Ordinary Shares for CGT purposes. Instead, the Ordinary Shares held by the UK Shareholder after the cancellation of the B Ordinary Shares should be treated as the same asset, acquired at the same time, as their holding of Ordinary Shares and B Ordinary Shares prior to the cancellation which, as described above, should in turn be treated as the same asset, acquired at the same time, as their original holding of Ordinary Shares.
Accordingly, following the B Share Issue and the cancellation of the B Shares, UK Shareholders should be left in the same position for CGT purposes as they were in originally before the B Ordinary Share Issue and cancellation of B Ordinary Shares. Even if (contrary to the preceding paragraph) the cancellation of the B Ordinary Shares were treated as a disposal for CGT purposes, provided that the market value of the B Ordinary Shares is £nil for the duration of their existence which, for the reasons described above, seems likely to be the case, there should be no adverse CGT consequences for UK Shareholders. There should be no chargeable gain (or allowable loss) on the cancellation of the B Ordinary Shares, and the UK Shareholder's base cost in their Ordinary Shares should be the same as it was originally before the B Ordinary Share Issue and cancellation of B Ordinary Shares.
No stamp duty or stamp duty reserve tax will be payable on the Reduction of Capital, including the B Ordinary Shares Issue and the cancellation of the B Ordinary Shares.
Shareholders can appoint a proxy electronically using the link www.sharevote.co.uk – Details of how to appoint a proxy in this way are set out on pages 21 to 22 of this document. Alternatively, you may request a hard copy Form of Proxy directly from our Registrar, Equiniti. Details of how to request, and complete, a hard copy Form of Proxy are set out on pages 21 to 22 of this document. To be valid, a Form of Proxy must be returned as soon as possible and so as to be received by the Registrars by not later than 10 a.m. on 14 April 2023.
The completion and return of the Form of Proxy will not prevent you from attending and voting at the General Meeting in person.
In accordance with current best practice and to ensure voting accurately reflects the views of Shareholders, it will be proposed at the General Meeting that voting on the Resolutions will be conducted by poll vote rather than by a show of hands and the relevant procedures will be explained at the General Meeting.
If you wish to ask a question relating to the business of the General Meeting in advance, please submit your questions to [email protected], please include in your email: the shareholder's full name, number of shares held and telephone contact details.
The Board consider all the Resolutions to be in the best interests of the Company and its Shareholders as a whole and the Board unanimously recommend that you vote in favour of the Capital Reduction Resolutions to be proposed at the General Meeting, as they intend to do in respect of their aggregate shareholdings, of 1,153,370 Ordinary Shares representing approximately 3.5% of the Ordinary Shares in issue at the date of this document.
Given the interests of the Board in the Dividend Rectification Resolutions, and as required by the Listing Rules, the Board are unable to take part in the consideration of the matters dealt with by the Dividend Rectification Resolutions and therefore cannot recommend that shareholders vote in favour of the Dividend Rectification Resolutions but do recommend that shareholders vote on them. However, the Board believes, having been advised by Investec in its capacity as the Company's sponsor, that (i) the waiver of claims against the Relevant Directors pursuant to the Related Party Resolutions and (ii) the entry into the Directors' Deed of Release are fair and reasonable so far as the Shareholders are concerned.
As none of the Board are deemed to be independent for the purposes of the Dividend Rectification Resolutions, the Relevant Directors are precluded, and have undertaken to abstain, from voting on the Dividend Rectification Resolutions. The Relevant Directors have also undertaken to take all reasonable steps to ensure that their associates abstain from voting.
Yours faithfully
Nigel Payne Non-executive Chairman
12 Braemar Plc Notice of General Meeting
3.1. The issues discovered and referred to at paragraphs 1.4 and 1.5 above affect the following dividends paid by the Company and result in each of the Relevant Dividends being made otherwise than in accordance with the Act:
| Date and type of dividend payment (interim or final) | Amount per ordinary share | Total aggregate amount of dividend paid |
|---|---|---|
| FY 2016 – Interim dividend – 18 December 2015 | 9.0 pence | £2,659,000 |
| FY 2017 – Final dividend – 29 July 2016 | 17.0 pence | £5,020,000 |
| FY 2017 – Interim dividend – 16 December 2016 | 9.0 pence | £2,838,000 |
| FY 2019 – Final dividend – 27 July 2018 | 10.0 pence | £3,076,000 |
| FY 2019 – Interim dividend – 14 December 2018 | 5.0 pence | £1,540,000 |
| FY 2020 – Final dividend – 26 July 2019 | 10.0 pence | £3,064,000 |
| FY 2020 – Interim dividend – 13 December 2019 | 5.0 pence | £1,566,000 |
| FY 2022 – Final dividend – 1 September 2021 | 5.0 pence | £1,482,000 |
| FY 2022 – Interim dividend – 16 December 2021 | 2.0 pence | £627,000 |
| FY 2023 – Final dividend – 14 October 2022 | 7.0 pence | £2,017,000 |
| FY 2023 – Interim dividend – 4 January 2023 | 4.0 pence | £1,158,000 |
| Total aggregate value | £25,047,000 |
3.2.The issues set out above only affect the Relevant Dividends and do not affect any other dividends declared or paid by the Company.
3.1. The interests of the related parties in paragraph 2.1 above in the Ordinary Shares as at 27 March 2023 (being the last practical date before the date of this document) as follows:
| Name | Number of Ordinary Shares held | Percentage of voting rights (% - rounded to 2 decimal places) |
|---|---|---|
| James Gundy | 772,165 | 2.35 |
| Tristram Simmonds | 348,447 | 1.06 |
| Nicholas Stone | 14,500 | 0.04 |
| Stephen Kunzer | 10,000 | 0.03 |
| Nigel Payne | 8,258 | 0.03 |
Nicholas Stone, Tristram Simmonds and James Gundy have awards under the Company's Company Share Option Plan ("CSOP"), Long Term Incentive Plan ("LTIP") and the Deferred Share Benefit Plan ("DBP"). Details of their interests are set out below:
| Director | Share Options | Exercise Price (£) | Date of Grant | Vesting Date | Expiry Date |
|---|---|---|---|---|---|
| Nicholas Stone | 24,650 | 1.22 | 9 July 2020 | 9 July 2023 | 9 July 2030 |
| Tristram Simmonds | 3,412 | 3.175 | 16 February 2023 | 30 June 2025 | 16 February 2033 |
| James Gundy | 24,650 | 1.22 | 9 July 2020 | 9 July 2023 | 9 July 2030 |
| Number of Ordinary | |||||
|---|---|---|---|---|---|
| Director | Shares under award | Exercise Price (£) | Date of Grant | Vesting Date | Expiry Date |
| 2018 LTIP | |||||
| James Gundy | 33,294 | – | 29 October 2018 | 26 May 2021 | 29 October 2028 |
| 2019 LTIP | |||||
| Nicholas Stone | 36,653 | – | 1 July 2019 | 26 August 2022 | 1 July 2029 |
| James Gundy | 166,200 | – | 1 July 2019 | 26 August 2022 | 1 July 2029 |
| 2020 LTIP | |||||
| Nicholas Stone | 156,250 | – | 24 July 2020 | 28 February 2023 | 24 July 2030 |
| James Gundy | 218,750 | – | 24 July 2020 | 28 February 2023 | 24 July 2030 |
| 2021 LTIP | |||||
| Nicholas Stone | 88,495 | – | 14 June 2021 | 14 June 2026 | 14 June 2031 |
| James Gundy | 300,884 | – | 14 June 2021 | 13 June 2024 | 14 June 2031 |
| 2023 LTIP | |||||
| Tristram Simmonds | 259,516 | – | 16 February 2023 | 30 June 2025 | 16 February 2033 |
| James Gundy | 164,360 | – | 16 February 2023 | 30 June 2025 | 16 February 2033 |
| Number of Ordinary | ||||
|---|---|---|---|---|
| Director | Shares under award | Exercise Price (£) | Date of Grant | Vesting Date |
| 2020 DBP | ||||
| Nicholas Stone | 28,245 | – | 9 July 2020 | 9 July 2023 |
| Tristram Simmonds | 34,511 | – | 9 July 2020 | 9 July 2023 |
| James Gundy | 386,195 | – | 9 July 2020 | 9 July 2023 |
| 2021 DBP | ||||
| Nicholas Stone | 25,398 | – | 8 June 2021 | 8 June 2024 |
| Tristram Simmonds | 26,315 | – | 8 June 2021 | 8 June 2024 |
| James Gundy | 169,925 | – | 8 June 2021 | 8 June 2024 |
| 2023 DBP | ||||
| Nicholas Stone | 1,537 | – | 16 February 2023 | 30 June 2025 |
| Tristram Simmonds | 14,505 | – | 16 February 2023 | 30 June 2025 |
| James Gundy | 66,484 | – | 16 February 2023 | 30 June 2025 |
4.1. Each of Nicholas Stone, Tristram Simmonds and James Gundy being executive directors of the Company, has entered into a service contract with the Company. Each service contract can be terminated on six months written notice by either party. The Company may, in their sole discretion, terminate the employment immediately and make a payment in lieu of notice, equivalent to six months salary less income tax and national insurance contributions. The annual salaries of the executive directors are set out in the table below. The salaries are reviewed annually, with no obligation on the Company to increase each salary.
| Directors | Position | Effective Date of Service Agreement | Annual Salary FY 22/23 |
|---|---|---|---|
| James Gundy | Group Chief Executive Officer | 10 November 2020 | £475,000 |
| Tristram Simmonds | Chief Operating Officer | 21 July 2021 | £375,000 |
| Nicholas Stone | Chief Financial Officer | 11 December 2018 (and amended 21 July 2021) | £250,000 |
4.2.The executive directors are expected to devote the whole of their working time, attention and abilities to the performance of their duties. The executive directors will receive the following benefits under the terms of their service agreements:
4.3.Nigel Payne, Elizabeth Gooch and Joanne Lake are non-executive directors of the Company and so have not entered into service contracts but are instead engaged pursuant to letters of appointment dated 6 April 2021, 21 July 2021 (as amended on 29 March 2022) and 2 February 2022 respectively, each for a term of approximately three years until the conclusion of that year's annual general meeting ("AGM"). Each appointment can be terminated on one month's written notice by either party.
5.1. In so far as is known by the Company, as at the date of this document, the following persons were interested, directly or indirectly in three percent or more of the voting rights attached to the Ordinary Shares:
| Name | Number of Shares | % of Issued Share Capital | |
|---|---|---|---|
| Braemar Plc ESOP (London) | 3,804,630 | 11.56 | |
| Hargreaves Lansdown Asset Mgt (Bristol) | 2,282,880 | 6.93 | |
| Interactive Investor (Glasgow) | 2,198,553 | 6.68 | |
| Rock (Nominees) Limited (London) | 2,117,121 | 6.43 | |
| Vidacos Nominees Limited (London) | 1,372,985 | 4.17 | |
| Barclays Wealth (London) | 1,208,249 | 3.67 | |
| HSBC Global Custody Nominee (UK) Limited (London) | 1,000,172 | 3.04 |
Investec has given and has not withdrawn its written consent to the inclusion in this document of the references to its name in the form and context in which they are given.
Notice is given that a General Meeting of Braemar Plc ("the Company") will be held at the Company's offices at One Strand, Trafalgar Square, London, WC2N 5HR at 10.00 a.m. on 18 April 2023 for the following business which will be proposed as special resolutions. Voting on all resolutions will be by way of a poll.
| Date and type of dividend payment (interim or final) | Amount per ordinary share | Total aggregate amount of dividend paid |
|---|---|---|
| FY 2016 – Interim dividend – 18 December 2015 | 9.0 pence | £2,659,000 |
| FY 2017 – Final dividend – 29 July 2016 | 17.0 pence | £5,020,000 |
| FY 2017 – Interim dividend – 16 December 2016 | 9.0 pence | £2,838,000 |
| FY 2019 – Final dividend – 27 July 2018 | 10.0 pence | £3,076,000 |
| FY 2019 – Interim dividend – 14 December 2018 | 5.0 pence | £1,540,000 |
| FY 2020 – Final dividend – 26 July 2019 | 10.0 pence | £3,064,000 |
| FY 2020 – Interim dividend – 13 December 2019 | 5.0 pence | £1,566,000 |
| FY 2022 – Final dividend – 1 September 2021 | 5.0 pence | £1,482,000 |
| FY 2022 – Interim dividend – 16 December 2021 | 2.0 pence | £627,000 |
| FY 2023 – Final dividend – 14 October 2022 | 7.0 pence | £2,017,000 |
| FY 2023 – Interim dividend – 4 January 2023 | 4.0 pence | £1,158,000 |
| Total aggregate value | £25,047,000 |
(each being a "Relevant Dividend" and together, the "Relevant Dividends") and together having a total aggregate sum not exceeding £25,047,000 be and are authorised, each by reference to the same record date as the original accounting entries for the Relevant Dividends.
Registered office One Strand Trafalgar Square London WC2N 5HR
By Order of the Board
Rebecca-Joy Wekwete Company Secretary Dated 29 March 2023
For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the Company's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.
BRAEMAR PLC (registered number 02286034) whose registered office is at One Strand, Trafalgar Square, London, WC2N 5HR ("Company") in favour of certain of the current and former Directors of the Company (or the personal representatives and their successors in title (as appropriate) of his or her estate if such director or former director is deceased).
(A) The board of directors of the Company has become aware of certain technical errors in respect of the Company's procedures for the payment of the following dividends (the "Relevant Dividends"):
| Date and type of dividend payment (interim or final) | Amount per ordinary share |
Total aggregate amount of dividend paid |
|---|---|---|
| FY 2016 - Interim dividend - 18 December 2015 | 9.0 pence | £2,659,000 |
| FY 2017 - Final dividend - 29 July 2016 | 17.0 pence | £5,020,000 |
| FY 2017 - Interim dividend - 16 December 2016 | 9.0 pence | £2,838,000 |
| FY 2019 - Final dividend - 27 July 2018 | 10.0 pence | £3,076,000 |
| FY 2019 - Interim dividend - 14 December 2018 | 5.0 pence | £1,540,000 |
| FY 2020 - Final dividend - 26 July 2019 | 10.0 pence | £3,064,000 |
| FY 2020 - Interim dividend - 13 December 2019 | 5.0 pence | £1,566,000 |
| FY 2022 - Final dividend - 1 September 2021 | 5.0 pence | £1,482,000 |
| FY 2022 - Interim dividend - 16 December 2021 | 2.0 pence | £627,000 |
| FY 2023 - Final dividend - 14 October 2022 | 7.0 pence | £2,017,000 |
| FY 2023 - Interim dividend - 4 January 2023 | 4.0 pence | £1,158,000 |
| Total aggregate value | £25,047,000 |
successors in title or assigns for corporate members) and approving the execution of a Deed Poll in favour of the Recipient Shareholders in order to effect the same;
g. subject to the passing of resolutions dealing with matters at (a) to (e) (inclusive) and the Share Capital Reduction becoming effective, waive and release any and all claims which the Company has or may arising out of or in connection with the approval, declaration and/or payment of the Relevant Dividends against all directors (present and former) of the Company at the time of declaration and payment of each respective Relevant Dividend (or the personal representatives and their successors in title (as appropriate) and approve the execution of this Deed Poll in favour of the directors in order to effect the same; sub-paragraphs (D) (a) to (g) (inclusive), together (the "Resolutions").
THIS DEED POLL WITNESSES as follows:
Subject to the passing of the Resolutions and the Share Capital Reduction becoming effective, the Company hereby irrevocably waives and releases all Directors (present or former) of the Company who acted as Directors at the time of declaration and/or payment of a Relevant Dividend (or their personal representatives and their successors in title (as appropriate) of his or her estate if such directors are deceased) from any and all liability that any of them has or may have to the Company and all claims and demands the Company has or may have against each of them, including, without limitation, any derivative action from or on behalf of shareholders of the Company, in connection with the declaration, making and payment of all or part of the Relevant Dividends.
This Deed Poll is governed by English law. Any non-contractual obligations arising out of or in connection with this deed poll shall be governed by English law.
IN WITNESS of which this deed poll has been executed and has been delivered on the date which appears on page 1.
EXECUTED as a DEED POLL by BRAEMAR PLC acting by two Directors or a Director and its Secretary:
Dire Secretary
BRAEMAR PLC (registered number 02286034) whose registered office is at One Strand, Trafalgar Square, London, WC2N 5HR England, EC4Y 0DT ("Company") in favour of the Recipient Shareholders (as defined below).
(A) The board of directors of the Company has become aware of certain technical errors in respect of the Company's procedures for the payment of the following dividends (the "Relevant Dividends"):
| Date and type of dividend payment (interim or final) | Amount per ordinary share |
Total aggregate amount of dividend paid |
|---|---|---|
| FY 2016 - Interim dividend - 18 December 2015 | 9.0 pence | £2,659,000 |
| FY 2017 - Final dividend - 29 July 2016 | 17.0 pence | £5,020,000 |
| FY 2017 - Interim dividend - 16 December 2016 | 9.0 pence | £2,838,000 |
| FY 2019 - Final dividend - 27 July 2018 | 10.0 pence | £3,076,000 |
| FY 2019 - Interim dividend - 14 December 2018 | 5.0 pence | £1,540,000 |
| FY 2020 - Final dividend - 26 July 2019 | 10.0 pence | £3.064.000 |
| FY 2020 - Interim dividend - 13 December 2019 | 5.0 pence | £1,566,000 |
| FY 2022 - Final dividend - 1 September 2021 | 5.0 pence | £1,482,000 |
| FY 2022 - Interim dividend - 16 December 2021 | 2.0 pence | £627,000 |
| FY 2023 - Final dividend - 14 October 2022 | 7.0 pence | £2,017,000 |
| FY 2023 - Interim dividend - 4 January 2023 | 4.0 pence | £1,158,000 |
| Total aggregate value | £25,047,000 |
payment of the Relevant Dividends against all directors (present and former) of the Company at the time of declaration and payment of each respective Relevant Dividend (or the personal representatives and their successors in title (as appropriate) and approve the execution of a Deed Poll in favour of the directors in order to effect the same: sub-paragraphs (D) (a) to (h) (inclusive), together (the "Resolutions").
THIS DEED POLL WITNESSES as follows:
Subject to passing the Resolutions and the Share Capital Reduction becoming effective, the Company hereby irrevocably waives and releases each of the Recipient Shareholders (or their personal representatives and their successors in title if they are deceased and/or the successors in title or assignees for corporate members) from any and all liability that any such Recipient Shareholder (or their personal representatives and their successors in title if they are deceased and/or the successors in title or assignees for corporate members) has or may have to the Company and all claims and demands the Company has or may have against each of them in connection with receipt by them of all or part of the Relevant Dividends.
This Deed Poll is governed by English law. Any non-contractual obligations arising out of or in connection with this deed poll shall be governed by English law.
IN WITNESS of which this deed poll has been executed and has been delivered on the date which appears on page 1.
EXECUTED as a DEED POLL by BRAEMAR PLC acting by two Directors or a Director and its Secretary:
Director
Secretary
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.