Prospectus • Oct 20, 2014
Prospectus
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SECURITIES NOTE with Application Form
British Smaller Companies VCT plc ("BSC") British Smaller Companies VCT2 plc ("BSC2")
20 October 2014
2014/15 and 2015/16 tax years
Transforming small businesses bscfunds.com
This document, the Registration Document and the Summary, which together comprise the Prospectus relating to BSC and BSC2 (together "the VCTs"), have been prepared in accordance with the Prospectus Rules made by the Financial Conduct Authority pursuant to Part VI of the Financial Services and Markets Act 2000 ("FSMA"), and have been approved by and filed with the Financial Conduct Authority.
The Shares in issue at the date of this document are listed on the premium segment of the Official List and traded on the London Stock Exchange's main market for listed securities. An application has been made to the UK Listing Authority for the Offer Shares to be admitted to the premium segment of the Official List and will be made to the London Stock Exchange for the Offer Shares to be admitted to trading on its main market for listed securities. It is expected that such admission will become effective and that dealings in the Ordinary Shares will commence within 10 business days of their allotment.
Each of the Directors of the VCTs, whose names are set out on page 19 of this document, and the VCTs accept responsibility for the information contained in the Prospectus. To the best of the knowledge of the Directors and the VCTs (who have taken all reasonable care to ensure that such is the case) the information contained in the Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information.
The Offers are not being made, directly or indirectly, in or into the United States, Canada, Australia, Japan or the Republic of South Africa, or their respective territories or possessions, and documents should not be distributed, forwarded or transmitted in or into such territories. The Offer Shares have not been and will not be registered under the United States Securities Act 1933 (as amended) and may not be offered, sold or delivered, directly or indirectly, in or into the United States, Canada, Australia, Japan or the Republic of South Africa.
Howard Kennedy Corporate Services LLP (the "Sponsor"), which is authorised and regulated by the Financial Conduct Authority (reference no. 523524), is acting for the VCTs in connection with the Offers, and is not advising any other person or treating any other person as a customer in relation to the Offers and will not be responsible to any such person for providing the protections afforded to customers of the Sponsor (subject to the responsibilities and liabilities imposed by FSMA and the regulatory regime established thereunder) or for providing advice in connection with the Offers. The Sponsor does not give any representation, warranty or guarantee that the VCTs will qualify as Venture Capital Trusts or that Investors will obtain any tax relief in respect of their investment.
(Incorporated and registered in England and Wales under the Companies Act 1985 with Registered Number 03134749)
and
(Incorporated and registered in England and Wales under the Companies Act 1985 with Registered Number 04084003)
The 2014/2015 Offers will close at 11.00 am on Saturday 4 April 2015 and the 2015/2016 Offers will close at 11.00 am on Thursday 30 April 2015 (or such later date to which the Directors extend the 2015/2016 Offers, but no later than 19 October 2015) or earlier should the Offers become fully subscribed. The terms and conditions of application are set out on pages 40 to 42 of the Securities Note and are followed by an Application Form for use in connection with the Offers. The Offers are not being underwritten and are not subject to reaching a minimum level of subscription. If the Offers are oversubscribed, they may be increased by a further £10 million at the discretion of the Boards up to a maximum of £40 million funds raised, in aggregate.
The whole of this document should be read. Your attention is drawn to the "Risk factors" set out on page 4 of this document.
| Part 1: Introduction | Page | |
|---|---|---|
| 1.1 | Risk factors | 4 |
| 1.2 | Recent regulatory changes | 5 |
| 1.3 | Forward looking statements | 5 |
| 1.4 | Timetable, Key Offer Information, Special Terms and Costs of the Offers | 6 |
| Part 3: Key Investment Highlights | |||||
|---|---|---|---|---|---|
| Page | Page | ||||
| 13 | Strong historical performance | 3.6 | 10 | Attraction of Venture Capital Trusts | 3.1 |
| 15 | Distributable reserves | 3.7 | British Smaller Companies VCTs – | 3.2 | |
| 15 | Well diversified and mature portfolio | 3.8 | 10 | investment highlights | |
| 17 | Tax benefits to Investors | 3.9 | 11 | Successful private equity fund manager | 3.3 |
| 17 | Providing improved liquidity and buy-back policy | 3.10 | 11 | Consistent track record of successful realisations | 3.4 |
| 11 | Strong demand for investment in the UK regions | 3.5 | |||
| Page | Page | ||||
|---|---|---|---|---|---|
| 4.1 | Introduction to the Offers | 18 | 4.7 | Pricing of the Offers | 21 |
| 4.2 | Investment policy | 18 | 4.8 | Charges | 22 |
| 4.3 | Co-investment policy | 18 | 4.9 | The Offers and minimum and maximum | |
| 4.4 | The Investment Team | 18 | subscription | 23 | |
| 4.5 | Directors | 19 | 4.10 | Documents available for inspection | |
| 4.6 | Costs of the Offers | 20 | and Prospectus | 24 |
| Part 5: Additional Information | Page 25 |
|---|---|
| Part 6: Taxation | Page 31 |
| Part 7: Definitions | Page 33 |
| Part 8: Terms and Conditions of the Dividend Re-investment Schemes | Page 37 |
| Part 9: Terms and Conditions of Application | Page 40 |
| Part 10: Notes on Application Form and Application Form | Page 43 |
Page
The VCTs and the Directors consider the following risks to be material to each VCT's Shares. Additional risks and uncertainties currently unknown to the VCTs and the Directors (such as changes in legal, regulatory or tax requirements), or which the VCTs and the Directors currently believe are immaterial to each VCT's Shares, may also have a materially adverse effect on the trading price of the Shares. Material risks relating to the VCTs are set out in the Registration Document.
Potential Investors should not place undue reliance on forward looking statements. This Securities Note includes statements that are (or may be deemed to be) "forward looking statements", which can be identified by the use of forward looking terminology including terms such as "believes", "continues", "expects", "intends", "may", "will", "would", "should" or, in each case, their negative or other variations or comparable terminology. These forward looking statements include matters that are not historical facts. Forward looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward looking statements contained in this Securities Note, based on past trends or activities, should not be taken as a representation that such trends or activities will continue in the future. These statements will be updated as and when required by the Prospectus Rules, the Listing Rules and the DTRs, as appropriate.
| Offers open | 20 October 2014 |
|---|---|
| 1.00% Loyalty Bonus period | 20 October 2014 to 31 December 2014 |
| 0.75% Loyalty Bonus period | 1 January 2015 to 28 March 2015 |
| 0.50% New Investor Bonus period | 20 October 2014 to 28 March 2015 |
| First allotment* | 6 January 2015 |
| Second allotment* | 2 February 2015 |
| Third allotment* | 2 March 2015 |
| Fourth allotment* | 30 March 2015 |
| Fifth allotment (CREST Holders)* | 1 April 2015 |
| Fifth allotment (Non-CREST Holders)* | 4 April 2015 |
| Final allotment** | 30 April 2015 |
| Dealings commence | 10 Business Days following allotment |
| Share and tax certificates issued | Within 10 Business Days of allotment |
| Offers close** | 2014/15 CREST Offers 11.00 am 1 April 2015 |
| 2014/15 Offers: 11.00 am 4 April 2015 | |
| 2015/16 CREST Offers 11.00 am 29 April 2015 | |
| 2015/16 Offers: 11.00 am 30 April 2015 |
* At the Directors' discretion, they may make earlier allotments should it be deemed appropriate. Investors wishing both to subscribe to the 2014/2015 Offers and for their Offer Shares to be admitted directly to the CREST system should submit their application by 11.00 am on Thursday 1 April 2015.
** The Offers will close earlier than stated if they are fully subscribed or at the Directors' discretion. The Directors reserve the right to extend the closing date of the 2015/16 Offers to a date not later than 19 October 2015.
| £30 million Offers* |
|---|
| Minimum investment |
| Maximum investmen |
£30 million Offers* £18,000,000 £12,000,000 Minimum investment £6,000 across both VCTs and tax years Maximum investment £200,000 across both VCTs and tax years
* If the Offers are oversubscribed, they may be increased at the discretion of the VCTs up to a maximum of £40 million funds raised in aggregate. The maximum to be raised would be £24,000,000 for BSC and £16,000,000 for BSC2 on the basis that the over allotment facility is used in full and an allocation of 60 per cent to BSC and 40 per cent to BSC2.
BSC BSC2
Intermediaries offering advice and direct applications
5th Floor Valiant Building 14 South Parade Leeds West Yorkshire LS1 5QS
20 October 2014
Dear Investor
In the 12 months to 30 June 2014 and in the subsequent period to the date of this document, BSC and BSC2 (together "the VCTs") have experienced a high level of demand for investment funds, investing a total of £29.2 million including nine new investments. With the market for new investment continuing to be buoyant, we are delighted to be writing to you in connection with new Offers to raise £30 million of investment funds, which will enable the VCTs to continue to take advantage of the high level and quality of investment opportunities available.
The participation by BSC and BSC2 in the Offers is conditional on the approval by its Shareholders of Resolution 1 and Resolutions 1, 2, 4, 5 and 7 to be proposed at their respective General Meetings. Subject to the Offers becoming unconditional and remaining open for both VCTs, Investors have the option to invest in either VCT or a combination of the two. If no preference is given, Investor's subscriptions will be allocated 60% to BSC and 40% to BSC2. Subscription monies received from an Applicant who has chosen that those monies are allocated to a VCT for which the Offers do not become unconditional, or to a VCT for which the Offers have closed, will be returned to the Applicant. In all other cases, if the Offers do not become unconditional for either VCT, or if the Offers have closed for either VCT, subscription monies will be allocated to the other VCT.
The key highlights of the Offers are set out below:
The objective of both VCTs is to achieve an increasing dividend over time whilst preserving the capital value.
This is based on dividends paid by each VCT over that period, the Indicative Offer Prices less 30% income tax relief and assuming a 60:40 investment allocation between BSC and BSC2.
The Investment Adviser, YFM Private Equity Limited ("YFM"), is a subsidiary of YFM Equity Partners LLP and has over 30 years' experience investing in fast-growing UK businesses and has been managing and advising Venture Capital Trusts since 1996.
The VCTs invest predominantly in established unquoted businesses across a broad range of sectors in the UK regions, where the Investment Adviser believes there are good prospects for significantly expanding the size of those businesses, making them attractive for potential buyers or a stock market listing. For example the 23 investments in unquoted companies realised over the last ten years generated a total return of 2.7x cost.
30% income tax relief on the value of the Offer Shares subscribed for, providing they are held for a minimum of five years. Dividends and capital gains from Venture Capital Trusts are also tax-free.
Opportunity for Investors to compound their returns through the tax efficient re-investment of dividends.
Each of the VCTs has a current policy of buying back Shares in the market at a discount of no more than 10 per cent to the latest published Net Asset Value, subject to liquidity, applicable rules and regulations and market conditions.
Following the closing of the Offers we are pleased to announce that the cost caps (see page 22) for each VCT will be reduced from 3.25 per cent per annum of Net Asset Value to 2.9 per cent per annum.
In order to invest please read the Prospectus in full (this document, the Registration Document and the Summary together constitute the Prospectus and can be found at bscfunds.com) and complete the Application Form which is attached at the end of this Securities Note. Please contact your authorised financial adviser if you have any questions regarding making an investment. For any questions regarding the application, please contact Tracey Nice at YFM on 0113 261 6478 or [email protected]. However no investment advice can be given by YFM, and if you are in any doubt please consult your independent financial adviser.
We look forward to welcoming new Shareholders and thank all our existing Shareholders for their continued support.
Yours faithfully
Helen Sinclair Chairman British Smaller Companies VCT plc
Richard Last Chairman British Smaller Companies VCT2 plc
The completed Application Form in respect of the Offers should be sent by post (in the reply paid envelope provided) or delivered by hand to:
Capita Asset Services Corporate Actions The Registry 34 Beckenham Road, Beckenham, Kent BR3 4TU
The Venture Capital Trust market has evolved and developed over recent years, with a combination of factors contributing to the increased attractiveness of the asset class:
Note: The above benefits assume that an Investor and the Venture Capital Trusts qualify for all applicable tax reliefs.
Objective of paying attractive and rising dividends and capital preservation.
3 Source YFM (Comparison of publically available total return information (Net Asset Value plus cumulative dividends) for the top performing generalist Venture Capital Trusts – based on their latest available year-end data).
1 Based on the aggregate dividends paid by the VCTs expressed as a percentage of the Indicative Offer Price, net of 30% income tax relief, assuming an investment split of 60:40 between BSC and BSC2.
2 YFM Private Equity ("YFM") is the investment adviser to BSC and BSC2 and is a wholly owned subsidiary of YFM Equity Partners LLP.
YFM has a 30-year history of investing in growing businesses and has been managing and advising Venture Capital Trusts since 1996. Since 30 September 2013 YFM has been owned by its management team led by David Hall who has been responsible for the VCTs since 2003. YFM invests in businesses across a broad range of sectors where it believes there are good prospects for significantly expanding the size of those businesses, making them attractive for potential buyers or a stock market listing. YFM benefits from:
The 23 investments in unquoted companies realised over the last 10 years generated a total return of 2.7x cost, with over half of the exits producing a return of 2.5x cost or higher. For each of these investments, the chart below across both VCTs shows year of exit, cost versus proceeds and return as a multiple of investment cost.
Past performance of the VCTs is no guarantee of future returns and may not be repeated
The improved economic climate has increased the demand for equity investment funds provided by Venture Capital Trusts. In the 12 months to 30 June 2014 and in the subsequent period to the date of this document the VCTs have:
The improved economic climate has increased the demand for equity investment funds provided by Venture Capital Trusts. In the 12 months to 30 June 2014 and in the subsequent period to the date of this document the VCTs have
The map below shows the geographical and sector diversification of the current investment portfolio and the last 9 new investments:
The table below sets out the historical average annual dividend paid and yield for the ten years to 30 June 2014.
| Indicative Offer Price after 30% |
Average annual tax free dividend |
Average annual tax | Gross equivalent yield3 free yield based on |
|||
|---|---|---|---|---|---|---|
| tax relief1 | paid | Indicative Offer Price2 | 40% taxpayer | 45% taxpayer | ||
| British Smaller Companies VCT plc | 71.2p | 7.1p5 | 10.0% | 13.4% | 14.4% | |
| British Smaller Companies VCT2 plc | 44.3p | 4.2p | 9.5% | 12.6% | 13.7% | |
| Blended (60% BSC, 40% BSC2)4 | 57.3p | 5.6p | 9.8% | 13.0% | 14.1% |
1 The returns shown are based on the Indicative Offer Price, applicable to Investors applying direct or through an Intermediary offering advice, where the Investor pays the fee for advice received directly to that Intermediary. This equates to 101.75p for BSC and 63.25p for BSC2 and a blended Indicative Offer Price of 81.80p, assuming Investors were to split their investment 60% BSC and 40% BSC2, multiplied by 70% to reflect the income tax relief of 30%. The Indicative Offer Price for Investors applying through an execution only broker is calculated subject to a different Offer Costs Percentage and thus the yield for such Investors will be lower than that shown here. Whatever the route of application, Investors should note they will pay the Allotment Offer Price and reclaim the tax relief separately.
2 The average annual tax free yields for the ten years to 30 June 2014 are 10.0% for BSC, 9.5% for BSC2 and 9.8% for a blended investment split 60:40 between the two VCTs (being a 7.1p cash dividend divided by 71.2p for BSC, a 4.2p cash dividend divided by 44.3p for BSC2 and a 5.6p cash dividend divided by 57.3p for a blended investment, in all cases assuming the Indicative Offer Price in note 1 less 30% income tax).
3 The gross equivalent yield for a 40% and 45% taxpayer is the yield on a UK dividend (before income tax) that would result in a net yield of 10.0% for BSC, 9.5% for BSC2 and 9.8% for a blended investment split as calculated above.
4 Investors in the Offers can choose which VCT to invest in but if no preference is made an investment will be split 60:40 between BSC and BSC2 respectively.
5 Including the special dividend of 18p per Share paid in August 2011 following the partial realisation of GO Outdoors. Excluding this payment the average dividend and annual tax free yield would have been 5.3p and 7.4% respectively and the blended average dividend and annual tax free yield would have been 4.7p and 8.2% respectively.
The table below sets out the total return for the ten years to 30 June 2014.
| Net cost 1 | NAV at 30 June 2014 |
Total return to date2 |
Increase over net cost |
IRR3 | |
|---|---|---|---|---|---|
| British Smaller Companies VCT plc | 45.8p | 102.0p | 168.6p | 268.1% | 20.0% |
| British Smaller Companies VCT2 plc | 57.5p | 63.2p | 104.7p | 82.1% | 11.7% |
1 Net cost is based on an Indicative Offer Price being calculated as the Net Asset Value at 30 June 2004, adjusted for offer costs and the initial tax relief applicable at that time of 40%.
2 Total return to date is cumulative dividends paid in the period plus the 30 June 2014 Net Asset Value in pence per Share.
3 IRR is the unaudited annual rate of return that equates the net cost at the date of the original investment with the value of subsequent dividends and the latest Net Asset Value per Share.
Since December 2005, BSC and BSC2 have operated a common investment strategy. The returns from the subsequent offers for each VCT are set out in the table below.
| BSC | Net cost 1 | NAV at 30 June 2014 |
Total return to date2 |
Increase over net cost |
IRR3 |
|---|---|---|---|---|---|
| Tax year of offer | |||||
| 2005/06 | 59.7p | 102.0p | 162.3p | 171.9% | 16.7% |
| 2006/07 & 2007/08 | 71.8p | 102.0p | 157.8p | 119.8% | 14.5% |
| 2007/08 & 2008/09 | 74.4p | 102.0p | 152.8p | 105.4% | 15.3% |
| 2009/10 & 2010/11 | 68.1p | 102.0p | 142.8p | 109.7% | 24.6% |
| 2010/11 & 2011/12 | 89.6p | 102.0p | 136.5p | 52.3% | 18.3% |
| 2011/12 | 69.8p | 102.0p | 113.5p | 62.6% | 26.9% |
| 2012/13 & 2013/14 | 67.0p | 102.0p | 108.5p | 61.9% | 50.9% |
| 2013/14 & 2014/15 | 70.5p | 102.0p | 102.0p | 44.7% | N/A 4 |
| BSC2 | Net cost 1 | NAV at 30 June 2014 |
Total return to date2 |
Increase over net cost |
IRR3 |
|---|---|---|---|---|---|
| Tax year of offer | |||||
| 2009/10 & 2010/11 | 54.1p | 63.2p | 82.7p | 52.9% | 12.2% |
| 2010/11 & 2011/12 | 49.2p | 63.2p | 78.7p | 60.0% | 18.2% |
| 2011/12 | 49.4p | 63.2p | 74.7p | 51.2% | 23.4% |
| 2012/13 & 2013/14 | 47.6p | 63.2p | 70.2p | 47.5% | 39.7% |
| 2013/14 & 2014/15 | 47.6p | 63.2p | 65.7p | 38.0% | N/A 4 |
1 Net cost is the offer price for the relevant tax year less the income tax relief available to investors at the time of the offer.
2 Total return to date is cumulative dividends paid plus the 30 June 2014 Net Asset Value in pence per Share.
3 IRR is the unaudited annual rate of return that equates the net cost at the date of the original investment with the value of subsequent dividends and the latest Net Asset Value per Share. The initial income tax relief was 40% from April 2004 to 5 April 2006 and 30% thereafter.
4 The IRR has not been included for the 2013/14 and 2014/15 tax years because it relates to a six month period which makes the calculation meaningless.
Distributable reserves of £16.57 million (BSC) and £13.43 million (BSC2) at 30 June 2014, which will be available subject to filing of the half year accounts to 30 September 2014 for BSC, will be increased by amounts available for distribution of £24.72 million and £12.21 million respectively once the next set of annual accounts for each VCT have been filed.
The VCTs invest across a broad range of sectors, with the current split set out in the table below.
| % of venture capital investments by value | |||
|---|---|---|---|
| BSC | BSC2 | Combined | |
| Software, IT and Telecommunications | 13 | 23 | 16 |
| Business Services | 29 | 25 | 28 |
| Manufacturing and Industrial Services | 27 | 23 | 26 |
| Retail and Brands | 24 | 15 | 21 |
| Healthcare | 7 | 14 | 9 |
| Total | 100 | 100 | 100 |
The average holding period for the 23 unquoted investments realised by the VCTs since 2004 was seven years. Holding periods vary from investment to investment, but the determining factor is based on maximising the return from each investment, with a minimum target return for each investment of 2-2.5 times cost. The table below sets out the age profile of the combined portfolio of investments. The average holding period of the investment portfolio is almost five years.
| % of venture capital investments | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Less than 3 years | 3-5 years | 5-7 years | More than 7 years | Total | |||||
| Combined | 44 | 20 | 5 | 31 | 100 |
Investment portfolios as at 30 June 2014 are summarised below:
| Unquoted Investments Sector Description |
BSC | BSC2 | Total | % of net | |||||
|---|---|---|---|---|---|---|---|---|---|
| Cost* | Valuation | Cost* | Valuation | Cost* | Valuation | assets by value |
|||
| GO Outdoors Limited: gooutdoors.co.uk |
Retail & Brands | UK's biggest outdoor stores | 215 | 6,473 | – | – | 215 | 6,473 | 6.1% |
| DisplayPlan Holdings Limited: displayplan.com |
Business Services | Retail display consultancy | 975 | 3,830 | 525 | 2,062 | 1,500 | 5,892 | 5.6% |
| Intelligent Office UK Ltd: intelligentofficeuk.com |
Business Services | Support services | 2,934 | 2,934 | 1,956 | 1,956 | 4,890 | 4,890 | 4.6% |
| President Engineering Group Ltd: pegl.co.uk |
Manufacturing & Industrial |
Specialist engineering products |
700 | 4,371 | – | – | 700 | 4,371 | 4.1% |
| Gill Marine Holdings Limited: gillmarine.com |
Retail & Brands | Technical sailing clothing | 2,500 | 2,500 | 1,870 | 1,870 | 4,370 | 4,370 | 4.1% |
| Mangar Health Limited: mangar.co.uk |
Manufacturing & Industrial Healthcare equipment | 2,460 | 2,460 | 1,640 | 1,640 | 4,100 | 4,100 | 3.9% | |
| Waterfall Services Limited: waterfall-services.co.uk |
Business Services | Contract catering services | 100 | 3,164 | 26 | 792 | 126 | 3,956 | 3.7% |
| Seven Technologies Holdings Limited: seventechnologies.co.uk |
Software, IT & Telecomms | Surveillance and cyber security |
1,984 | 1,984 | 1,238 | 1,238 | 3,222 | 3,222 | 3.0% |
| GTK (UK) Limited: gtk.co.uk |
Manufacturing & Industrial Electrical components | 1,650 | 1,650 | 1,084 | 1,084 | 2,734 | 2,734 | 2.6% | |
| Leengate Holdings Limited: leengatevalves.co.uk |
Manufacturing & Industrial Industrial valves | 1,401 | 1,401 | 934 | 934 | 2,335 | 2,335 | 2.2% | |
| Macro Art Limited: macroart.co.uk |
Business Services | Digital printer | 1,260 | 1,260 | 840 | 840 | 2,100 | 2,100 | 2.0% |
| Deep-Secure Ltd: deep-secure.com |
Software, IT & Telecomms | Cyber security software | 1,000 | 1,287 | 500 | 644 | 1,500 | 1,931 | 1.8% |
| Callstream Group Limited: callstream.com |
Software, IT & Telecoms | Telecom solutions | 415 | 771 | 415 | 771 | 830 | 1,542 | 1.5% |
| Bagel Nash Group Limited: bagelnash.com |
Retail & Brands, Manufacturing |
Bagel bar operator and manufacturer |
1,157 | 918 | 771 | 613 | 1,928 | 1,531 | 1.4% |
| Insider Technologies (Holdings) Limited: insidertech.co.uk |
Software, IT & Telecomms | Payment and system monitoring |
1,170 | 880 | 780 | 587 | 1,950 | 1,467 | 1.4% |
| Largest 15 unquoted venture capital investments | 19,921 | 35,883 | 12,579 | 15,031 | 32,500 | 50,914 | 48.0% | ||
| Other unquoted venture capital investments | 4,817 | 4,704 | 4,431 | 3,230 | 9,248 | 7,934 | 7.5% | ||
| Total unquoted venture capital investments | 24,738 | 40,587 | 17,010 | 18,261 | 41,748 | 58,848 | 55.5% | ||
| Total quoted venture capital investments | 2,622 | 3,731 | 2,160 | 2,402 | 4,782 | 6,133 | 5.8% | ||
| Total venture capital investments | 27,360 | 44,318 | 19,170 | 20,663 | 46,530 | 64,981 | 61.3% | ||
| Fixed income securities | 2,405 | 2,390 | – | – | 2,405 | 2,390 | 2.3% | ||
| Total investments | 29,765 | 46,708 | 19,170 | 20,663 | 48,935 | 67,371 | 63.6% | ||
| Current assets | – | 19,904 | – | 18,667 | – | 38,571 | 36.4% | ||
| Net assets | 29,765 | 66,612 | 19,170 | 39,330 | 48,935 | 105,942 | 100.0% |
* Original cost less repayments and the cost of part realisations
The principal tax reliefs, which are available on a maximum annual subscription of £200,000, are set out below:
| £ | |
|---|---|
| Cost of investment | 10,000 |
| 30% income tax relief | (3,000) |
| Net cost of investment | 7,000 |
| Initial value of investment: | |
| Subscription | 10,000 |
| Assumed issue cost | (300) |
| Net asset share attributable to initial investment | 9,700 |
| Initial uplift in value of investment | +2,700 |
| Initial uplift % | +39% |
This is only a brief summary on the current UK tax position of Venture Capital Trust investors. Further details are provided in Part 6. Investors are recommended to consult with their independent financial adviser as to the taxation consequences of their investment in a Venture Capital Trust. In addition, the availability of tax reliefs depends on the VCTs maintaining their Venture Capital Trust qualifying status.
Both VCTs want to create some liquidity in the secondary market and to facilitate this they operate an active Share buy-back policy whereby Shares are bought back at a small discount to Net Asset Value. This policy and the rate of discount applied to Shares bought back are regularly reviewed. The current discount rate applied by both VCTs is targeted to be no more than 10%.
The Offers are seeking to raise £30 million, in aggregate, through the issue of new Ordinary Shares in each of the VCTs. If the Offers are oversubscribed, they may be increased at the discretion of the VCTs by a further £10 million. Investors will have the option to invest in either of the VCTs or a combination of the two and if no preference is given, each Investor's subscription will be allocated 60% to BSC and 40% to BSC2. The Offers are conditional upon the approval by Shareholders of the Offer Agreement at the General Meetings.
The investment policy of each VCT is to create a portfolio that blends a mix of businesses operating in traditional industries with those that offer opportunities in the application and development of innovation. Investing across a range of companies and sectors reduces exposure to particular markets and individual companies.
To this end the VCTs will invest in UK businesses across a broad range of sectors including Software, IT and Telecommunications, Retail and Brands, Business Services, Manufacturing and Industrial Services and Healthcare and these investments will primarily be in established unquoted companies (including those quoted on AIM and ISDX), which meet the definition of a Qualifying Investment so as to maintain the VCT's Venture Capital Trust status. Although the majority of investments will normally be in equity, preference shares and loan stock may be subscribed for to enhance the security of the portfolio and to achieve a balance of income and capital growth with regard to the VCT Regulations.
The VCTs have first choice of all investment opportunities requiring up to £4.5 million of equity. Amounts above £4.5 million may be allocated one third to YFM's institutional co-investment fund and two thirds to the VCTs. Where there are opportunities for the VCTs to co-invest with each other the proposed basis for allocation is 60% to BSC and 40% to BSC2. The Board of each of the VCTs and the co-investment fund has the discretion as to whether to take up their allocation in such co-investment opportunities.
The Directors of the VCTs, all of whom are non-executive, are as follows:
Helen Sinclair (Chairman) has an MA in Economics from the University of Cambridge and an MBA from INSEAD Business School. After working in investment banking Helen spent nearly 8 years at 3i plc focusing on MBOs and growth capital investments. She later co-founded Matrix Private Equity Partners Limited (now Mobeus) in early 2000 raising Mobeus Income & Growth 2 VCT plc (formerly Matrix e-Ventures VCT plc). She subsequently became managing director of Matrix Private Equity Partners Limited before moving to take on a portfolio of non-executive director roles in 2005. She is currently a non-executive director of The Income & Growth VCT plc, Mobeus Income & Growth 4 VCT plc, Spark Ventures plc and Downing One VCT plc and chairs the investment committees of the Third Sector Loan Fund and the Community Investment Fund, both part of Social & Sustainable Capital LLP.
Philip Cammerman has an engineering degree from Imperial College and an MBA from Stanford University. He has over twenty years of industrial experience in engineering and technology orientated industries and has worked in both the USA and the UK. He has spent the last 26 years in the venture capital industry and was chairman of YFM Private Equity and a director of YFM Group (Holdings) Limited until he retired in April 2008. He has been responsible for a wide range of venture capital deals in a variety of industries including software, computer maintenance, engineering, printing, safety equipment, design and textiles. He is a non-executive director of Pressure Technologies plc and Hargreave Hale AIM VCT 2 plc and a number of smaller private businesses.
Edward Buchan is a Fellow of the Institute of Chartered Accountants in England and Wales, starting his career with Deloitte before moving to Hill Samuel Bank Limited where he became Head of Corporate Finance and a member of the Bank Executive Committee. He subsequently joined Close Brothers Corporate Finance Limited and then West LB Panmure, specialising in the transport and logistics industry sectors. He is currently a senior adviser in corporate finance at Edmond De Rothschild Securities and is a non-executive director of Wallem Group Limited, an international ship management and shipping services company based in Hong Kong.
Richard Last (Chairman) is a Fellow of the Institute of Chartered Accountants in England and Wales with substantial experience in the IT software and services sectors, and is chairman and non-executive director of Servelec Group plc, which is listed on the main market of the London Stock Exchange. He is also a chairman and non-executive director of Gamma Communications plc (a telecoms company), Lighthouse Group plc (a financial services group) and Arcontech Group plc (a financial software business) and a non-executive director of Corero Network Security plc, all AIM listed. In addition he is a director of a number of private companies including APD Communications Limited (an IT company), Learn Solutions Limited (an online tutoring business), both of which he is chairman of, and Waste Management Solutions Limited (a waste logistics business).
Robert Pettigrew has more than 20 years experience in the development of emerging businesses and, in particular, the commercial exploitation of new technologies. He co-founded The Generics Group of companies (renamed Sagentia) in 1986, which is one of the country's leading technology consulting and investment groups and was a key member of the team that took the company public in December 2000. He retired from The Generics Group at the end of 2002 to pursue independent investment activities. He currently is an investor-director and non-executive chairman of Sunamp Limited and Odos Imaging Limited and non-executive director of Acal Energy Limited and Nightingale-EOS Limited.
Peter Waller is an experienced chairman and director with extensive UK and international executive experience in the IT technology, software and services sector. He initially worked with IBM and Hitachi then with Spring plc, at that time one of the UK's largest recruitment and training businesses. He is currently chairman of KeyPoint Technologies (UK) Limited, director and founder of Turnberry Management Company Limited and non-executive director of BCS Learning & Development Limited. For the past decade Peter has worked as a board member with a succession of early stage and early growth private and public companies. His particular skills are in sales and marketing and working with companies to develop successful sales growth strategies.
The present aggregate shareholdings of the Directors in the VCT of which they are directors are as follows:
| BSC | Present aggregate Shareholding |
|---|---|
| Name | |
| Helen Sinclair | 17,004 |
| Edward Buchan | 12,231 |
| Philip Cammerman | 67,975 |
| BSC2 | Present aggregate Shareholding |
|---|---|
| Name | |
| Richard Last | 126,882 |
| Robert Pettigrew | 58,759 |
| Peter Waller | 25,979 |
Further details of the Directors can be found in the Registration Document.
Under rules introduced on 1 January 2013, Financial Advisers are no longer permitted to receive commission from providers of investment products. Remuneration for their services now has to come from their clients through Adviser Charges. These rules do not apply to authorised intermediaries who do not offer advice to their clients (sometimes known as execution only brokers), who will continue to be able to receive commission, subject to any future changes in the rules and regulations.
The VCTs will apply a different Offer Costs Percentage depending on which of these two categories the Intermediary falls into. For applications through execution only brokers, the VCTs will pay the Investment Adviser a fee of 5.0 per cent of the relevant gross funds raised. For applications through Financial Advisers or for direct applications the VCTs will pay the Investment Adviser a fee of 3.0 per cent of the relevant gross funds raised. This represents a 0.5 per cent reduction in Offer costs compared to last year's offers. The above fees are subject to the approval by Shareholders of the Offer Agreement at the General Meetings.
The initial costs of the Offers are, therefore, made up of an initial fee borne by the VCTs (calculated by applying the Offer Costs Percentage to each Applicant's gross subscription proceeds) plus an Adviser Charge borne by the Applicant (where applicable). The Investment Adviser will be liable for all other initial costs and expenses arising from the Offers, including the Bonus Shares and any permissible initial Intermediary commission payable (save for trail commission, for which the VCTs will be responsible).
The number of Offer Shares issued to an Investor depends on the level of the Adviser Charge agreed with their Intermediary, their entitlement to Loyalty Bonus Shares or New Investor Bonus Shares and whether their Intermediary chooses to waive any commission (if applicable).
Applications from existing Shareholders in the VCTs (or their spouses or civil partners) received and accepted on or before Wednesday 31 December 2014 will attract additional Offer Shares equivalent to 1.0 per cent of the amount subscribed in each VCT. Applications received and accepted after Wednesday 31 December 2014 but on or before Saturday 28 March 2015 will attract additional Offer Shares equivalent to 0.75 per cent of the amount subscribed in each VCT. The cost of the Loyalty Bonus Shares will be met by the Investment Adviser and will not, therefore, be an additional charge to the VCTs.
Applications from Investors who are not existing Shareholders in the VCTs received and accepted on or before Saturday 28 March 2015 will attract additional Offer Shares equivalent to 0.5 per cent of the amount subscribed in each VCT. The cost of the New Investor Bonus Shares will be met by the Investment Adviser and will not, therefore, be an additional charge to the VCTs.
The VCTs have agreed to facilitate the payment of one off Adviser Charges, by accepting instructions from an Investor to deduct the amount of the fee agreed by them with their Financial Adviser, from the amount they send to the relevant VCT. Ongoing fees to Intermediaries will not be facilitated by the VCTs. Investors who wish the relevant VCT to facilitate the payment of a fee in this manner are required to specify the amount of the charge in Part (i) of Section 5 of the Application Form, and the Adviser Charge will be paid to the relevant Financial Adviser on behalf of the Applicant from an equivalent amount due to the Applicant from the relevant VCT. The Investor will be issued fewer Offer Shares (to the equivalent value of the Adviser Charge) through the pricing formula set out below. Where the Adviser Charge stated on the Application Form is inclusive of VAT, the Investor may remain liable for the VAT element thereof.
Income tax relief should still be available on the total amount subscribed, before deduction of Adviser Charges, subject to VCT Regulations and personal circumstances.
Initial commission may be payable by the VCTs (although the Investment Adviser ultimately bears the cost for such commissions) in respect of Applications received through execution only brokers. Those Intermediaries who are permitted to receive commission will usually receive an initial commission of 2.0% of the amount invested by their clients under the Offers. Provided that the VCTs agree to pay trail commission, the Intermediary continues to act for the Investor and the Investor continues to be the beneficial owner of the Offer Shares, subject to applicable laws and regulations the Intermediary can be paid total trail commission of up to 3.0% in aggregate of their client Investors' gross subscriptions over a period of up to six years as agreed with the Investment Adviser. Trail commission will be paid annually (commencing in 2016) by the relevant VCT.
Where initial commission is payable, the Intermediary may agree to waive all or part of the initial commission in respect of an application. If this is the case, additional Offer Shares will be allotted to the Investor at the relevant Offer Price for each VCT and the waived commission will be used to satisfy the subscription price of such additional Offer Shares. Execution only brokers must indicate on the Application Form the basis on which they wish to receive their commission.
As the VCTs are currently trading, in order to be fair to both existing and new Shareholders, Offer Shares will be allotted by reference to the Net Asset Values of the existing Ordinary Shares. The Offer Prices will be calculated by the Investment Adviser by reference to the most recently published Net Asset Values as at the date of allotment, adjusted for any dividend declared and in respect of which no adjustment has been made to that Net Asset Value (a "Dividend") and for the costs of the Offers (rounded up to the nearest 0.25 pence).
The number of Offer Shares to be issued to each Applicant in each VCT will be calculated based on the following pricing formula (rounded down to the nearest whole Offer Share):
Income tax relief should be available on the total amount subscribed, subject to VCT Regulations and personal tax circumstances.
The Indicative Offer Price for BSC is 103.75p for applications through execution only brokers and 101.75p for applications through Financial Advisers or for direct applications. The Indicative Offer Price for BSC2 is 64.5p for applications through execution only brokers and 63.25p for Applications through Financial Advisers or for direct applications. The Allotment Offer Price will not exceed or be less than the price as determined by the above formula.
The Indicative Offer Prices are calculated based on the latest reported Net Asset Values as at the date of this document being 30 June 2014, adjusted for dividends declared and subsequently paid and the costs of the Offers.
On 1 August 2014 BSC paid a final dividend in respect of the year ended 31 March 2014 of 3.5 pence per share. On 7 October 2014 BSC2 paid an interim dividend in respect of the year ended 31 December 2014 of 2.0 pence per share.
The Investment Adviser is entitled to receive an annual investment advisory fee, payable quarterly in advance and calculated at half yearly intervals as set out below. The Investment Adviser may charge arrangement fees, in line with industry practice, to companies in which it invests and it, not the VCTs, is responsible for all costs incurred on transactions which do not proceed to completion.
| BSC Terms | Half Yearly/Yearly Interval |
|---|---|
| 2.0% of Net Assets | 31 March/30 September |
| BSC2 Terms | Half Yearly/Yearly Interval |
| 2.50% of Net Assets up to £16 million | 31 December/30 June |
| 1.25% of Net Assets over £16 million and up to £26.667 million | |
| 2.00% over £26.667 million1 |
1 The Net Asset Value at 30 June 2014 is £39.3 million and therefore the overall advisory fee equates to 2%.
The Investment Adviser also provides secretarial and administrative services to both VCTs for annual fees at a current level of £59,133 and £60,054 (subject to annual adjustment in line with RPI) for BSC and BSC2 respectively.
In line with normal Venture Capital Trust practice, the Investment Adviser is entitled to receive a performance related incentive fee paid in cash. For BSC, the Investment Adviser will receive an incentive payment equal to 20 per cent of the amount by which dividends paid in the relevant accounting period exceed 4.0 pence per Share (increasing in line with RPI), subject to cumulative shortfalls (currently £nil) in any prior accounting period being made up. As at 31 March 2014, the adjusted target was 4.7 pence per Share, and the calculation was verified by BSC's auditers. The incentive payment is also conditional upon the average Net Asset Value being not less than 94.0 pence per Share in the relevant accounting period, as adjusted for the impact of share issues and buy backs. The adjusted Net Asset Value per Share at 31 March 2014 was 92.8 pence per Ordinary Share.
With effect from 1 April 2014 the amount of the incentive payment paid to the Investment Adviser for any one year shall, when taken with all other relevant costs, ensure that the total expenses of each VCT in any financial year is no greater than five per cent of its net asset value at the end of the financial year (as adjusted for all realised gains that have been distributed during that year (the "Total Expenses Ratio")). Any unpaid incentive payment will be carried over to subsequent financial years and be included in the calculation of the Total Expenses Ratio. Further details are given on page 44 of the Registration Document.
For BSC2, the Investment Adviser will receive an amount (satisfied by the issue of Shares) equivalent to 20 per cent of the amount by which the cumulative dividends paid as at the last business day in December in any year plus the middle market quotation per Share exceeds 120 pence per Share on that same day, multiplied by the number of Shares in issue and the Shares under option (if any). These subscription rights are exercisable in the ratio 95:5 between the Investment Adviser and Chord Capital Limited. Further details are given on page 45 of the Registration Document.
Following the closing of the Offers, expected to be on 30 April 2015, the Total Expenses Ratio for each VCT, excluding any performance related fees, VAT and trail commission payable to Intermediaries, will be capped at 2.9 per cent of their respective Net Assets as at the relevant financial year end, a reduction from 3.25 per cent in the previous year. Any costs above this level are borne by the Investment Adviser, by way of a reduction in its fees.
Those Intermediaries who are permitted to receive commission will receive total trail commission from the relevant VCT of up to 3.0 per cent (over a period of up to six years) of the amount invested by their clients under the Offers as agreed with the Investment Adviser for so long as regulations permit.
The Offers are to raise up to £30 million in aggregate and if they are oversubscribed they may be increased by a further £10 million at the discretion of the VCTs up to a maximum of £40 million funds raised, in aggregate. In the event that applications are received in excess of the maximum subscription under the Offers, the Directors reserve the right to use their absolute discretion in the allocation of successful applications. The results of the Offers will be announced through a Regulatory Information Service within 3 Business Days of the closing of the Offers.
The maximum proceeds for the VCTs before issue costs are estimated to be £24 million for BSC and £16 million for BSC2, subject to raising in aggregate a maximum of £40 million and assuming that the proceeds are split as to 60:40 between BSC and BSC2. The maximum amount payable by the VCTs in respect of the Offers will be 5.0 per cent, as set out in paragraph 4.6 above and, therefore, the maximum costs and net proceeds on the above assumptions will be £1.2 million and £22.8 million respectively for BSC and £0.8 million and £15.2 million respectively for BSC2. The Offers are structured so as to allow Investors to invest in both the 2014/2015 and 2015/2016 tax years. The number of Offer Shares to be issued to Applicants will be calculated in accordance with the pricing formula set out on page 21. The Offers are not underwritten and there is no minimum subscription level for the Offers to proceed. Multiple applications are permitted. The maximum net proceeds, on the basis that the Offers are fully subscribed, the costs of the Offers are 3.0 per cent and subscriptions are split as per the default allocation set out in the paragraph below will be £17.46 million for BSC and £11.64 million for BSC2, assuming £30 million is raised under the Offers, and £23.28 million for BSC and £15.52 million for BSC2 assuming £40 million is raised under the Offers.
The minimum application per Investor under the Offers is £6,000 across both VCTs (before any Adviser Charges that the Applicant may be liable to pay to their financial Intermediary) which can be allocated across the 2014/2015 and 2015/2016 tax years if desired. The participation by BSC and BSC2 in the Offers is conditional on the approval by its Shareholders of Resolution 1 and Resolutions 1, 2, 4, 5 and 7 to be proposed at their respective General Meetings. Subject to the Offers becoming unconditional and remaining open for both VCTs, Applicants are free to choose how the entire subscription is allocated and if Applicants do not wish to exercise that choice the subscription will be allocated 60 per cent to BSC and 40 per cent to BSC2. Subscription monies received from an Applicant who has chosen that those monies are allocated to a VCT for which the Offers do not become unconditional, or to a VCT for which the Offers have closed, will be returned to the Applicant. In all other cases, if the Offers do not become unconditional for either VCT, or if the Offers have closed for either VCT, subscription monies will be allocated to the other VCT.
Applications in excess of £6,000 may be made for any higher amount in multiples of £1,000, subject to availability. There is no maximum investment although tax reliefs are only available on a maximum investment of £200,000 per individual in Venture Capital Trusts in any one tax year. A husband and wife can each invest up to £200,000 in any one tax year with each enjoying the tax reliefs.
An application has been made to the UK Listing Authority for the Offer Shares to be admitted to the premium segment of the Official List. It is expected that such admission will become effective and that dealings in the Ordinary Shares will commence within ten Business Days of their allotment. The Offer Shares will be created under the Act, issued on a fully paid up basis and in registered form and temporary documents of title will not be issued. Evidence of title will be through possession of a share certificate in the Shareholder's name. Alternatively, the Shares may be held in an account through the CREST system. The Offer Shares will be transferable in both certificated and uncertificated form. The VCTs will apply for the Offer Shares to be admitted to CREST and it is expected that the Offer Shares will be so admitted, and accordingly enabled for settlement in CREST, as soon as practicable after Admission has occurred. Upon receipt of their new share certificate(s), Shareholders wishing to dematerialise their shares into CREST should contact their broker who can advise on the CREST stock deposit procedure. Share and tax certificates are expected to be posted to Shareholders within ten Business Days of each allotment. The ISIN of the BSC Ordinary Shares is GB0001403152. The ISIN of the BSC2 Ordinary Shares is GB0005001796.
The Offers may not be withdrawn after dealings in the Offer Shares have commenced. In the event of any requirement for either of the VCTs to publish a supplementary prospectus, Applicants who have yet to be entered into that VCT's register of members will be given two days to withdraw from their subscription. Applicants should note, however, that such withdrawal rights are a matter of law that is yet to be tested in the courts of England and Wales and Applicants should, therefore, rely on their own legal advice in this regard. In the event that notification of withdrawal is given by post, such notification will be effected at the time the Applicant posts such notification rather than at the time of receipt by the VCT.
The Offers open on 20 October 2014 and will close no later than 11.00 am on Saturday 4 April 2015 in relation to the 2014/2015 Offers and 11.00 am on Thursday 30 April 2015 in relation to the 2015/2016 Offers (or such later date to which the Directors extend the 2015/2016 Offers but no later than 19 October 2015) or earlier should the Offers become fully subscribed. At the Directors' discretion, they may make earlier allotments should it be deemed appropriate. Details of such allotments will be announced through a Regulatory Information Service provider by no later than the Business Day following the allotment.
Copies of the following documents are available for inspection at the VCTs' registered office (below) and at the offices of Howard Kennedy at 19 Cavendish Square, London W1A 2AW, during normal business hours on any weekday (Saturdays and public holidays excepted) while the Offers remain open:
A copy of the Prospectus has been submitted to the National Storage Mechanism and is available to the public for viewing online at the following web site address: http://www.hemscott.com/nsm.do. Copies of the Prospectus may also be obtained, free of charge, whilst the Offers remain open, from the registered office of the VCTs.
Registered Office: 5th Floor, Valiant Building, 14 South Parade, Leeds LS1 5QS
Investment Services Manager T: 0113 261 6478 E: [email protected] W: bscfunds.com
The Articles of the VCTs (for the purpose of this Part 5 section 1 the "Companies" and each a "Company") include the following details of the rights attaching to the Offer Shares:
The Company may in a General Meeting, by ordinary resolution, declare dividends in accordance with the respective rights of the members, provided that no dividend shall be payable in excess of the amount recommended by the Directors. The Directors may pay such interim dividends as appear to them to be justified. No dividends or other monies payable in respect of a share shall bear interest as against the Company. There are no fixed dates on which entitlement to dividend arises. The Directors may with the sanction of an ordinary resolution of the Company offer the shareholders the right to elect to receive shares credited as fully paid instead of cash in respect of the whole or part of a dividend.
All dividends unclaimed for a period of twelve years after being declared or becoming due for payment shall be forfeited and shall revert to the Company.
Subject to any disenfranchisement as provided in paragraph 1(g) below and subject to any special terms as to voting on which any shares may be issued, on a show of hands or by proxy every member present in person (or, being a corporation, present by a duly authorised representative) shall have one vote and on a poll every member present in person or by proxy shall have one vote for every share of which he is the holder.
Whenever the capital of the Company is divided into different classes of shares, the rights attached to any class may (unless otherwise provided by the terms of issue of that class) be varied or abrogated with the sanction of a special resolution passed at a separate meeting of such holders.
The shares are in registered form and are freely transferable. All transfers of shares in certified form must be effected by a transfer in writing in any usual form or any other form approved by the Directors. The instrument of transfer of a share shall be executed by or on behalf of the transferor and, in the case of a partly paid share, by or on behalf of the transferee. All transfers of shares which are in uncertificated form may be effected by means of a relevant system. The Directors may refuse to register any transfer of a partly-paid share, provided that such refusal does not prevent dealings taking place on an open and proper basis, and may also refuse to register any instrument of transfer unless:
On a winding-up any surplus assets will be divided amongst the holders of the shares according to the respective number of shares held by them and in accordance with the provisions of the Act, subject to the rights of any shares which may be issued with special rights or privileges. The Articles provide that the liquidator may, with the sanction of a special resolution and any other sanction required by the Act, divide amongst the members in specie the whole or any part of the assets of the Company in such manner as he may determine.
If any member or other person appearing to be interested in shares of the Company is in default in supplying within 14 days after the date of service of a notice requiring such a member or other person to supply the Company in writing all or any such information as is referred to in Section 793 of the 2006 Act, the Directors may, for such period as the default shall continue, impose restrictions upon the relevant shares. The restrictions available are the suspension of voting or other rights conferred by membership in relation to meetings of the Company in respect of the relevant shares and, additionally, in the case of a shareholder representing at least 0.25 per cent by nominal value of any class of shares of the Company then in issue, the withholding of payment of any dividends on, and the restriction of transfer of, the relevant shares.
A typical Investor for whom the Offers are designed is a UK income tax payer aged 18 or over, who is professionally advised, with an investment range of between £6,000 and £200,000, who may already have a portfolio of non-Venture Capital Trust investments such as unit trusts/OEICS, investment trusts and direct shareholdings in listed companies, who is willing to invest over the medium to long term and who, having regard to the risk factors set out at the front of this document, considers the investment policy of the VCTs to be attractive (that is to say an investment policy with potential returns and associated risks that may be higher than investment in the FTSE All-Share Index). This may include retail, institutional and sophisticated investors and high net-worth individuals.
No person receiving a copy of this document in any territory other than the UK may treat the same as constituting an offer or invitation to him to subscribe for or purchase Offer Shares unless, in such territory, such offer or invitation could lawfully be made. It is the responsibility of any person outside the UK wishing to make an application to satisfy himself as to the full observance of the laws of the relevant territory in connection therewith, including obtaining any requisite governmental or other consents, observing any other formalities required to be observed in such territory and paying any issue, transfer or other taxes required to be paid in such territory. No action has been taken to permit the distribution of this document in any jurisdiction outside the UK where such action is required to be taken. All Applicants under the Offers will be required to warrant that they are not a US person as defined under the United States Securities Act 1933, nor a resident of Canada, Australia, Japan, or the Republic of South Africa.
expire on the conclusion of the annual general meeting of BSC to be held in 2016 (unless renewed, varied or revoked by BSC in a general meeting). All previous authorities to allot given to the directors, other than the authority granted pursuant to resolution 13 (authority to allot shares in respect of the dividend re-investment scheme) at the Annual General Meeting of BSC held on 19 July 2013, be and are hereby revoked provided that such revocation shall not have retrospective effect.
(ii) By a special resolution passed on 19 May 2014 in addition to the existing authorities (to the extent unused) given to the directors at the General Meeting on 18 February 2014 pursuant to resolution 3 the directors were empowered in accordance with section 570(1) of the Act during the period commencing on the passing of this resolution and expiring, unless renewed, varied or revoked by BSC2, on the later of the conclusion of BSC2's next annual general meeting or the expiry of 15 months following the passing of this resolution, to allot equity securities (as defined in Section 560 of the Act) for cash pursuant to the general authority conferred upon the directors in resolution (i) above, or by way of a sale of treasury shares, as if section 561 of the Act did not apply to such allotment provided that this power is limited to the allotment of equity securities in BSC2 up to an aggregate nominal amount of £464,436 representing approximately 10 per cent of the issued share capital of BSC2 as at 28 March 2014 (excluding treasury shares), but so that this authority shall allow BSC2 to make offers or agreements before the expiry of such powers and the directors may allot equity securities in pursuance of such offers or agreements as if the powers conferred hereby had not so expired. This power applies in relation to a sale of shares which is an allotment of equity securities by virtue of Section 560(2) of the Act as if in this resolution the words "pursuant to the general authority conferred upon the directors in resolution (i) above" were omitted. This revokes the authority granted at the Annual General Meeting on 20 May 2013 pursuant to resolutions 8 and 9, provided that this resolution shall not have the effect of revoking that authority with retrospective effect.
(iii) By a special resolution passed on 19 May 2014 that in substitution for any existing authority but without prejudice to the exercise of any such power prior to the date hereof, the directors were generally and unconditionally authorised to make one or more market purchases (within the meaning of section 693(4) of the Act) of ordinary shares of 10 pence in the capital of BSC2 provided that:
The following Resolutions will be proposed at the General Meeting.
during the period commencing on the passing of this Resolution and expiring on the later of 15 months from the date hereof or the next annual general meeting of the Company (unless previously revoked, varied or extended by the Company in general meeting), but so that this authority shall allow the Company to make before the expiry of this authority offers or agreements which would or might require Shares to be allotted, or rights to subscribe for or to convert any security into Shares to be granted, after such expiry and that all previous authorities given to the Directors be and they are hereby revoked, provided that such revocation shall not have retrospective effect.
(3) THAT the Directors be and are hereby generally and unconditionally authorised in accordance with Section 551 of the Act to exercise all the powers of the Company to allot shares in the Company in connection with the dividend re-investment scheme up to an aggregate nominal amount of £876,763 representing approximately 14 per cent of the share capital in issue as at 20 October 2014 (excluding treasury shares) during the period commencing on the passing of this Resolution and expiring on the fifth anniversary of this Resolution (unless previously revoked, varied or extended by the Company in general meeting), but so that this authority shall allow the Company to make before the expiry of this authority offers or agreements which would or might require shares to be allotted after such expiry and that all previous authorities given to the Directors to allot shares in connection with the dividend re-investment scheme be and they are hereby revoked, provided that such revocation shall not have retrospective effect.
(i) the Offers;
(ii) an offer of securities by way of a rights issue;
but so that this authority shall allow the Company to make offers or agreements before the expiry and the Directors may allot equity securities in pursuance of such offers or agreements as if the powers conferred hereby had not so expired. This power applies in relation to a sale of Shares which is an allotment of equity securities by virtue of Section 560(2) of the Act as if in the first paragraph of this Resolution the words "pursuant to the general authority conferred upon the Directors in resolution (1) above" were omitted;
(5) THAT the Directors be and are hereby empowered in accordance with section 570(1) of the Act during the period commencing on the passing of this Resolution and expiring on the fifth anniversary of this Resolution (unless previously revoked, varied or extended by the Company in general meeting), to allot equity securities (as defined in Section 560 of the Act) for cash pursuant to the general authority conferred upon the Directors in Resolution (2) above as if section 561 of the Act did not apply to any such allotment provided that this power is limited to the allotment of equity securities in connection with the dividend re-investment scheme up to an aggregate nominal amount of £876,763 representing approximately 14 per cent of the share capital in issue as at 20 October 2014 (excluding treasury shares) but so that this authority shall allow the Company to make offers or agreements before the expiry and the Directors may allot equity securities in pursuance of such offers or agreements as if the powers conferred hereby had not so expired.
The maximum number of Offer Shares, assuming a subscription of £40,000,000, an Indicative Offer Price per Share of 101.75p and of 63.25p for BSC and BSC2 respectively and an allocation of 60 per cent to BSC and 40 per cent to BSC2, will be 23,587,224 for BSC and 25,296,443 for BSC2. This represents a dilution to existing Shareholders of 26.5 per cent in BSC and 28.8 per cent in BSC2. Assuming a subscription of £30,000,000 and the Offer Prices and allocation set out above, the maximum number of Offer Shares will be 17,690,418 for BSC and 18,972,332 for BSC2, representing a dilution to existing Shareholders of 21.3 per cent in BSC and 23.3 per cent in BSC2.
BSC is of the opinion that its working capital is sufficient for its present requirements, that is for at least 12 months from the date of this document.
BSC2 is of the opinion that its working capital is sufficient for its present requirements, that is for at least 12 months from the date of this document.
Neither VCT has any indebtedness, whether guaranteed, unguaranteed, secured, unsecured, direct or contingent as at the date of this document nor do the Boards have any intention to incur such indebtedness in the foreseeable future.
The capitalisation of the VCTs, extracted from the unaudited interim management account information (for BSC) and the unaudited interim financial report (for BSC2) for the period to 30 June 2014, is set out in the table below.
| Shareholders equity | BSC £000 |
BSC2 £000 |
|---|---|---|
| Share capital | 6,803 | 6,411 |
| Share premium | 26,811 | 13,736 |
| Revenue reserve | 673 | 350 |
| Capital reserve* | 16,150 | 13,376 |
| Investment holding gains (losses) | 15,954 | (158) |
| Other reserves** | 221 | 5,615 |
| Total | 66,612 | 39,330 |
* includes special reserve, realised capital reserve and treasury reserve
** includes capital redemption reserve, treasury reserve, merger reserve (BSC2 only)
On 8 October 2014 court orders were granted in respect of the cancellation of the VCTs' share premium accounts (£26.81 million for BSC and £13.55 million for BSC2) and the credits arising will be transferred to the capital reserve of the relevant VCT. Save in this regard there has been no material change to the capitalisation of the VCTs since 30 June 2014.
All third party information in the Prospectus has been identified as such by reference to its source and in each instance has been accurately reproduced and, so far as the VCTs are aware and are able to ascertain from information published by the relevant party, no facts have been omitted which would render the reproduced information inaccurate or misleading.
The City Code on Takeovers and Mergers (the "City Code") applies to each VCT. Under Rule 9 of the City Code, if:
the acquiror and, depending on the circumstances, his concert parties, would be required (except with the consent of the Panel on Takeovers and Mergers) to make a cash offer for the outstanding shares in the company at a price not less than the highest price paid for any interests in its shares by the acquiror or his concert parties during the previous 12 months. Under sections 974 – 991 of the Act, if an offeror acquires or contracts to acquire (pursuant to a takeover offer) not less than 90 per cent of the shares (in value and by voting rights) to which such offer relates it may then compulsorily acquire the outstanding shares not assented to the offer. It would do so by sending a notice to holders of outstanding shares telling them that it will compulsorily acquire their shares and then, six weeks later, it would execute a transfer of the outstanding shares in its favour and pay the consideration to the company, which would hold the consideration on trust for the holders of outstanding shares. The consideration offered to the holders whose shares are compulsorily acquired under the Act must, in general, be the same as the consideration that was available under the takeover offer. In addition, pursuant to Section 983 of the Act, if an offeror acquires or agrees to acquire not less than 90 per cent of the shares (in value and by voting rights) to which the offer relates, any holder of shares to which the offer relates who has not accepted the offer may require the offeror to acquire his shares on the same terms as the takeover offer. The offeror would be required to give any holder of shares notice of his right to be bought out within one month of that right arising. Sell-out rights cannot be exercised after the end of the period of three months from the last date on which the offer can be accepted or, if later, three months from the date on which the notice is served on the holder of shares notifying them of their sell-out rights. If a holder of shares exercises his/her rights, the offeror is bound to acquire those shares on the terms of the takeover offer or on such other terms as may be agreed.
Individuals who subscribe for Offer Shares must be aged 18 or over to qualify for the tax reliefs outlined below.
An investor subscribing up to £200,000 in any tax year for eligible shares in a Venture Capital Trust will be entitled to claim income tax relief on the investment, in the year in which the investment is made, at the rate of 30 per cent for investments in the tax years 2014/15 and 2015/16, although this relief will be withdrawn if either the Shares are disposed of within five years or an investor takes out a loan which would not have been made, or would not have been made on the same terms, save for the acquisition of such Shares. Relief is restricted to the amount which reduces the investor's income tax liability to nil. However, tax credits on dividends are notional and cannot be repaid and, therefore, investors should take this into account when calculating the value of the income tax relief. HMRC has confirmed that the Ordinary Shares are eligible Venture Capital Trust shares for the purposes of this section. There are restrictions on the ability to claim income tax relief on subscription for shares in a Venture Capital Trust after 5 April 2014 where the investor has disposed of shares (other than to a spouse) in the same Venture Capital Trust within six months of the date of subscription whether before or after.
An investor who subscribes for or acquires ordinary shares in a Venture Capital Trust will not be liable for UK income tax on dividends paid by the Venture Capital Trust in respect of investments of up to a maximum of £200,000 in any one tax year. Dividends carry a tax credit at the rate of one-ninth of the net dividend which is not repayable and which cannot be utilised in any other way. The income received by the Venture Capital Trust will usually constitute either interest (on which the Venture Capital Trust may be subject to tax) or a dividend from a UK company (on which the Venture Capital Trust would not be subject to tax). The Venture Capital Trust's income, reduced by the payment of tax (if applicable), can then be distributed tax-free to investors who benefit from this dividend relief.
A disposal by an individual investor of his shares in a Venture Capital Trust will give rise to neither a chargeable gain nor an allowable loss for the purposes of UK capital gains tax. This relief is also limited to disposals of shares acquired within the £200,000 limit described above.
(i) If a company which has been granted approval or provisional approval as a Venture Capital Trust subsequently fails to comply with the conditions for approval, Venture Capital Trust status may be withdrawn or treated as never having been given. The exemptions from corporation tax and capital gains will not apply to any gains realised by the Venture Capital Trust after this time.
(ii) For investors, the withdrawal of Venture Capital Trust status may (depending upon the timing of such withdrawal) result in:
If an investor dies within five years of making an investment in a Venture Capital Trust, the transfer of shares on death is not treated as a disposal and, therefore, the initial income tax relief is not withdrawn. However, the shares will become part of the deceased's estate for inheritance tax purposes.
Provided a number of conditions are met, the beneficiary of any Venture Capital Trust shares will be entitled to tax free dividends and will not pay capital gains tax on any disposal, but will not be entitled to any initial income tax relief.
Transfers of shares in a Venture Capital Trust between spouses are not deemed to be a disposal and therefore all tax reliefs will be retained.
Non resident investors, or investors who may become non resident, should seek their own professional advice as to the consequences of making an investment in a Venture Capital Trust, as they may be subject to tax in other jurisdictions.
No stamp duty or (unless shares in a Venture Capital Trust are issued to a nominee for a clearing system or a provider of depository receipts) stamp duty reserve tax will be payable on the issue of such shares. The transfer on the sale of shares would normally be subject to ad valorem stamp duty or (if an unconditional agreement to transfer such shares is not completed by a duly stamped transfer within two months) stamp duty reserve tax generally, in each case at the rate of 50p for every £100 or part of £100 of the consideration paid. Such duties would be payable by a person who purchases such shares from the original subscriber.
Any subsequent purchaser of existing shares in a Venture Capital Trust, as opposed to a subscriber for new shares, will not qualify for income tax relief on investment but may benefit from dividend relief and from capital gains tax relief on the disposal of their shares.
This is only a brief summary of the current law concerning the tax position of individual investors in a Venture Capital Trust. Any potential Investor in doubt as to the taxation consequences of an investment in a Venture Capital Trust should consult an appropriately qualified professional adviser.
In this document the following words and expressions have the following meanings:
| "Act" | the Companies Act 2006, as amended from time to time; |
|---|---|
| "Admission" | the admission of the Offer Shares or New Ordinary Shares to a premium listing on the Official List and to trading on the London Stock Exchange's main market for listed securities; |
| "Adviser Charge(s)" | the fee(s) payable to an Intermediary, agreed with the Investor for the provision of a personal recommendation or related services in relation to an investment in Offer Shares, and detailed on the Application Form; |
| "AIM" | the Alternative Investment Market of the London Stock Exchange; |
| "Allotment Offer Price" | the price of the Offer Shares calculated based on the latest reported NAV as at the allotment date; |
| "Annual Running Costs" | the annual costs incurred by the relevant VCT in the ordinary course of its business (including irrecoverable VAT); |
| "Applicant(s)" | an Investor(s) who applies to subscribe for Offer Shares; |
| "Application Form" | form of application for Offer Shares set out at the end of this document; |
| "Articles" | the articles of association of either VCT (as amended from time to time); |
| "Board(s)" or "Directors" | the directors of the relevant VCT at the date of this document; |
| "Bonus Shares" | Loyalty Bonus Shares and New Investor Bonus Shares; |
| "BSC" | British Smaller Companies VCT plc; |
| "BSC2" | British Smaller Companies VCT2 plc; |
| "Business Day" | a day (excluding Saturday and Sunday and public holidays in England and Wales) when the banks are generally open for business in London; |
| "Capita Asset Services" | a trading name of Capita Registrars Limited, whose details are given on page 5 of the Registration Document; |
| "Circular" | the circular issued to the Shareholders dated 20 October 2014; |
| "CREST" | relevant system (as defined in the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755)) for the paperless settlement of transfers and the holding of shares in uncertificated form which is administered by Euroclear UK & Ireland Limited (registered number 2878738); |
| "Dealings" | Buying, selling, subscribing for or underwriting of securities in the VCTs or offering or agreeing to do so, either as principal or agent; |
| "Directors" or "Board(s)" | the directors of the relevant VCT at the date of this document; |
| "DRIS" or "Scheme(s)" | "Dividend Re-investment Scheme(s)", the respective dividend re-investment scheme established for each VCT; | |||
|---|---|---|---|---|
| "DTRs" | the Disclosure and Transparency Rules made by the FCA under Part VI of FSMA; | |||
| "Election Date" | the day by which Mandate Forms must be received by Capita Asset Services, as announced by the VCTs as the applicable deadline for the dividend concerned and expected to be at least 10 Business Days before the payment date of a dividend which is to be re-invested; |
|||
| "FCA" | the Financial Conduct Authority, or its successor; | |||
| "Financial Adviser" | an authorised intermediary offering investment advice to his client; | |||
| "FSMA" | Financial Services and Markets Act 2000, as amended from time to time; | |||
| "General Meetings" | the general meeting of BSC to be held on 3 December 2014 (or any adjournment thereof) and the general meeting of BSC2 to be held on 3 December 2014 (or any adjournment thereof) (and each a "General Meeting"), both to be held at 4 Cavendish Square, London W1G 0PG; |
|||
| "HMRC" | HM Revenue & Customs; | |||
| "Howard Kennedy" | Howard Kennedy Corporate Services LLP; | |||
| "Indicative Offer Price" | the price of the Offer Shares as at the date of this document, as set out on pages 21 and 22; | |||
| "Intermediary (ies)" | an authorised firm who signs the Application Form and whose details are set out in Section 6 of that document; |
|||
| "Investment Adviser" or "YFM Private Equity" or "YFM" |
YFM Private Equity Limited, registered number 02174994, in its position as the FCA authorised and regulated subsidiary of YFM Equity Partners; |
|||
| "Investment Team" | those persons whose details are set out on page 18 under the heading "The Investment Team"; |
|||
| "Investor(s)" | an individual(s) who subscribes for Offer Shares; | |||
| "ISDX" | the trading facility operated by ICAP Securities and Derivatives Exchange Limited; | |||
| "ITA" | Income Tax Act 2007, as amended from time to time; | |||
| "IFRS" | International Financial Reporting Standards; | |||
| "Listing Rules" | listing rules issued by the UK Listing Authority, as amended from time to time; | |||
| "London Stock Exchange" | London Stock Exchange plc; | |||
| "Loyalty Bonus" | percentage applied to the subscriptions of Applicants who are existing Shareholders in Venture Capital Trusts managed by the Investment Adviser (or civil partners of such Shareholders), as detailed on page 20, and resulting in the allotment of Loyalty Bonus Shares; |
|||
| "Loyalty Bonus Shares" | the additional Shares to be issued to Applicants who fulfil the criteria to receive a Loyalty Bonus; |
| "Mandate Form" | the mandate form in a form provided by the VCTs which enables non-CREST Shareholders to participate in the DRIS; |
||||
|---|---|---|---|---|---|
| "Net Assets" | the aggregate of the gross assets of the relevant VCT including assets represented by any principal monies borrowed by the relevant VCT less all current liabilities of the relevant VCT (other than any principal monies borrowed); |
||||
| "Net Asset Value(s)" or "NAV" | net asset value per Ordinary Share; | ||||
| "New Investor Bonus" | the percentage applied to the subscriptions of Applicants who are not existing Shareholders in Venture Capital Trusts managed by the Investment Adviser, as detailed on page 20, and resulting in the allotment of New Investor Bonus Shares; |
||||
| "New Investor Bonus Shares" | the additional Offer Shares to be issued to Applicants who fulfil the criteria to receive a New Investor Bonus; |
||||
| "2014/2015 Offers" | the offers for subscription of Ordinary Shares to a value not exceeding £40 million, in respect of the tax year 2014/2015, details of which are set out in this document; |
||||
| "2015/2016 Offers" | the offers for subscription of Ordinary Shares to a value not exceeding £40 million, in respect of the tax year 2015/2016, details of which are set out in this document; |
||||
| "Offer Agreement" | an offer agreement dated 20 October 2014 as set out in paragraph 4.1 on page 43 of the Registration Document; |
||||
| "Offers" | the 2014/2015 Offers and the 2015/2016 Offers; | ||||
| "Offer Costs Percentage" | the costs of the Offers as a percentage of subscription proceeds, as set out on page 20; | ||||
| "Offer Shares" | Shares to be issued under the Offers; | ||||
| "Official List" | the Official List of the UK Listing Authority; | ||||
| "Ordinary Shares" or "Shares" | ordinary shares of 10p each in the capital of the relevant VCT; | ||||
| "Participating Shareholder(s)" | those Shareholders who elect to participate in the Scheme; | ||||
| "Pricing Formula" | the pricing formula relating to the Offer as set out on page 21 of this document; | ||||
| "Prospectus" | the Securities Note, the Registration Document and the Summary, which together describe the Offers in full; |
||||
| "Prospectus Rules" | prospectus rules made under Part VI of FSMA; | ||||
| "Qualifying Company" | an unquoted (including AIM-traded) company carrying on a qualifying trade wholly or mainly in the UK satisfying the conditions in Chapter 4 of Part 6 ITA. A summary of these requirements is given in Part III of the Registration Document; |
||||
| "Qualifying Holdings" or "Qualifying Investments" |
shares in, or securities of, a Qualifying Company held by a Venture Capital Trust which meets the requirements described in Chapter 4 of Part 6 ITA; |
||||
| "Qualifying Investor(s)" | an individual who subscribes for or acquires shares in a Venture Capital Trust and satisfies the conditions of eligibility for tax relief available to investors in a Venture Capital Trust; |
| "Receiving Agent" | Capita Asset Services; |
|---|---|
| "Record Date" | the date set out in the dividend procedure timetable published by the London Stock Exchange plc by which a Shareholder must hold Ordinary Shares to be entitled to a dividend declared by the relevant VCT; |
| "Registrar" | Capita Asset Services, a trading name of Capita Registrars Limited; |
| "Registration Document" | the registration document dated 20 October 2014, which has been prepared in accordance with the Prospectus Rules in connection with the Offers; |
| "Regulatory Information Service" or "RIS" |
a regulatory information service that is on the list of regulatory information services maintained by the FCA; |
| "Resolutions" | the resolutions of the relevant VCT to be proposed at the General Meetings; |
| "RPI" | UK Index of Retail Prices; |
| "Scheme" or "DRIS" or "Dividend Re-investment Scheme" |
the dividend re-investment scheme of the relevant VCTs, the terms and conditions of which are set out in Part 8 of this document (as amended from time to time); |
| "Securities Note" | this document dated 20 October 2014, which has been prepared in accordance with the Prospectus Rules in connection with the Offers; |
| "Shareholder(s)" | holder(s) of Ordinary Shares; |
| "Shares" or "Ordinary Shares" | ordinary shares of 10p each in the capital of the relevant VCT; |
| "Statutes" | the "Companies Acts" as defined in Section 2 of the Act; |
| "Summary" | the summary of the Offers dated 20 October 2014, which has been prepared in accordance with the Prospectus Rules in connection with the Offers; |
| "UK Listing Authority" | the FCA acting in its capacity as the competent authority under the FSMA; |
| "VAT" | value added tax; |
| "VCTs" | each of BSC and BSC2 and VCT means either one of them as the context requires; |
| "Venture Capital Trust" | a venture capital trust as defined in Section 259 Income Taxes Act 2007; |
| "VCT Regulations" | The Venture Capital Trust (Winding Up and Mergers) (Tax) Regulations 2004, as amended from time to time; |
| "YFM Equity Partners" | YFM Equity Partners LLP, registered number OC384467. |
If a Shareholder buys Ordinary Shares on or after the ex-dividend date for any relevant dividend, that Shareholder will not be entitled to receive that dividend in respect of those Ordinary Shares.
Application to join the Scheme can be made at any time. If you hold your Shares in certificated form this can be done by returning a completed Mandate Form so as to be received by the VCT's registrars Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU by no later than 5.00pm on the Election Date of a dividend which is to be re-invested. Mandate Forms received by that time on an Election Date shall be effective in relation to the dividend to which the Election Date relates and any future dividends in respect of which the Directors offer a dividend re-investment alternative. Mandate Forms received after 5.00pm on an Election Date shall not be effective in relation to the dividend to which the Election Date relates but shall be effective in respect of any future dividends in respect of which the Directors offer a dividend re-investment alternative. Please note that no acknowledgement of receipt of Mandate Forms will be issued by the VCTs or by Capita Asset Services.
Shareholders who hold their Ordinary Shares in CREST can only elect to receive relevant dividends in the form of New Ordinary Shares by use of the CREST Dividend Election Input Message. A CREST Dividend Election Input Message must be received by 5.00pm on the Election Date for the relevant dividend to be effective. Shareholders holding their Ordinary Shares through CREST should note that any election made to participate in the Scheme via a CREST Dividend Election Input Message will only apply to the dividend in question and not to any subsequent dividends in respect of which the Directors offer a dividend re-investment alternative. Such Shareholders will need to make a separate election using the CREST Dividend Election Input Message each time the Directors offer a dividend re-investment alternative for a particular dividend.
In the event that Admission does not become effective, Mandate Forms and/or CREST Dividend Election Input Messages will be disregarded in respect of the dividend and the full cash dividend will be paid as soon as possible in the usual way.
No person receiving a Mandate Form and/or the CREST Dividend Election Input Message in any territory other than the United Kingdom may treat it as constituting an invitation to him or her unless in the relevant territory such an invitation could lawfully be made to him or her without complying with any registration or other legal requirements. It is the responsibility of the Shareholder outside the United Kingdom wishing to elect to receive New Ordinary Shares to satisfy himself or herself as to the full observance of the laws of the relevant territory in connection with the Offer, including obtaining any governmental or other consents which may be necessary and observing any other formalities requiring to be observed in such territory.
(g) agree that the monies returnable to you may be retained pending clearance of your remittance and any verification of identity which is, or which the VCTs or the Receiving Agent may consider to be, required by the Money Laundering Regulations 2007 and that such monies will not bear interest;
(h) agree that, having had the opportunity to read the Prospectus, you are deemed to have had notice of all information and statements concerning the VCTs and the Offer Shares contained therein;
Before making an application to acquire Offer Shares you are strongly recommended to consult and obtain advice from an appropriate financial intermediary authorised under FSMA. It is essential that you complete all parts of the Application Form in accordance with the instructions in these notes. Please send the completed Application Form, together with your cheque(s) or banker's draft(s) by post, or deliver it by hand, to Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU. If you have any questions on how to complete the Application Form please contact YFM on 0113 261 6478 or, [email protected] in the first instance or call Capita Asset Services on 0800 181 4729 (freephone). Lines are open between 9 am–5.30 pm, Monday to Friday excluding public holidays. Alternatively please speak to your Financial Adviser.
The following notes should be read in conjunction with the Application Form and the Terms and Conditions of Application.
Please indicate at the top right whether you or your spouse or civil partner is an existing shareholder in a Venture Capital Trust advised by YFM.
Insert in box 1 in BLOCK CAPITALS your full name, permanent address, daytime and evening telephone numbers, date of birth, National Insurance number and, if you have one, your email address.
Insert (in figures) in Column A the total amount you wish to invest under the Offers in respect of the 2014/15 tax year for each VCT (state nil if appropriate). Where the allocation is to be split 60% into BSC and 40% into BSC2, the top box in row 1 should be completed. Where the allocation is to be split in a different way, or where allocation is to be invested into just one VCT, rows 2 and/or 3 should be completed and the total amount being invested should be inserted in row 4. Insert (in figures) in Column B the amount you wish to invest under the Offers in respect of the 2015/16 tax year for each VCT (state nil if appropriate). Insert (in figures) in Column C the total of Columns A and B. This is the total amount you are applying for under the Offers.
Please note that the minimum investment for Offer Shares is a combined total of £6,000 across both VCTs and tax years. You may apply for Offer Shares in any or both of the VCTs in either one or both tax years, so long as the total value of the Offer Shares applied for is not less than £6,000. The maximum investment on which tax reliefs on investments in Venture Capital Trusts is available is £200,000 in each of the 2014/15 and 2015/16 tax years.
Payment can be made by electronic transfer, cheque or banker's draft. Your payment must relate solely to this application. If you wish to pay by electronic transfer please telephone 0800 181 4729 (freephone). Lines are open between 9 am–5.30 pm, Monday to Friday excluding public holidays. Please reference your payment with your initials followed by your telephone number as entered in Section 1 of the Application Form.
To pay by cheque or banker's draft please attach a cheque or banker's draft to the Application Form for the exact amount shown in row 4 of Column C. Your cheque(s) or banker's draft(s) must be made payable to Capita Registrars Limited re: BSC – Offer Acc and crossed "A/C Payee only". Your payment must relate solely to this application. Cheques may be presented for payment on receipt. Subscription forms accompanied by a post-dated cheque will not be processed until the cheque can be presented and will not be treated as being received by the Receiving Agent until that date. Your Application Form will be acknowledged by Capita Asset Services.
Your electronic transfer, cheque or banker's draft must be drawn in sterling on an account with a United Kingdom or European Union regulated credit institution, and which is in the sole or joint name of the Applicant and must bear, if a cheque, the appropriate sort code in the top right-hand corner.
The right is reserved to reject any application in respect of which the Applicant's electronic transfer, cheque or banker's draft has not been cleared on first presentation. Any monies returned will be sent through the post at the risk of the persons entitled thereto by cheque crossed "A/C payee only" in favour of the Applicant without interest.
If the application is for £12,000 or more and payment is not by means of a cheque on an account in the name of the Applicant, please supply:
(a) an Identity Verification Certificate from your authorised Intermediary
or
No money laundering verification is required to be enclosed if the application is for less than £12,000 or if payment is by means of a cheque drawn on an account in the name of the Applicant (provided that (a) the cheque includes details of the Applicant's bank account or building society account (as applicable) and (b) the cheque is drawn on an account with a UK or European Union authorised bank or credit institution). Please note, however, that the VCTs and the Receiving Agent may, in their absolute discretion, require Money Laundering verification and that Money Laundering verification will be required by introducing Financial Advisers.
The dividends paid by the VCTs can be taken as cash. Section 3 of the Application Form allows you to indicate whether you would like to have them paid directly into your bank account. Dividends paid by cheque will be sent to the Shareholder's registered address using the standard mail delivery at the Shareholder's own risk if Section 3 is not completed. The VCTs' Registrar will charge administration fees for re-issuing cheques.
Payment to your bank account: in order to facilitate the payment of dividends on any shares held in the VCTs directly to your bank or building society account, please tick the relevant box in Section 3 of the Application Form and provide your bank or building society details in the space provided. Dividends paid directly into your account will be paid in cleared funds on the dividend payment date. Your bank or building society statement will identify details of the dividends as well as the dates and amounts paid.
If you wish to participate in the Dividend Re-investment Scheme having first read and understood the terms and conditions of the Scheme on pages 37 to 39, please then tick the appropriate box in section 4.
Please tick the relevant box to identify the type of investment you are making – Advised, Execution-only, or Direct. Intermediaries on advised investments are entitled to payment of Adviser Charges as agreed with their clients. Please insert the agreed fee in the box as a sum of money. The number of Offer Shares issued to the Applicant will be reduced by the amount of the Adviser Charge. The Adviser Charge is inclusive of VAT, if applicable.
Intermediaries who are entitled to receive commission or an Adviser Charge should complete and sign this section, giving their full name and address, telephone number and details for their authorisation under FSMA. The right is reserved to withhold payment of commission or Adviser Charges if the VCTs are, at their sole discretion, not satisfied that the agent is so authorised and entitled, or consider that payment of such commission is or may be in breach of any applicable rules or regulations. In order for commission or Adviser Charges to be paid by BACS, please complete the relevant boxes.
If someone other than the Applicant named in Section 1 signs on the Applicant's behalf, such signatory must ensure that the declaration given on behalf of such Applicant is correct.
Leave blank if you wish to receive a share certificate in respect of your investment. If you require your Shares to be issued electronically to a CREST account, please complete the boxes.
Please detach the Application Form from this document before you begin. You will find it is easier this way to refer to the Notes on pages 43 to 45 and to ensure you provide the correct information.
If you have any questions on how to complete the Application Form, please contact YFM details (below) in the first instance or call Capita Asset Services on 0800 181 4729 (freephone). Lines are open between 9 am–5.30 pm, Monday to Friday excluding public holidays. Alternatively speak to your Financial Adviser.
Investment Services Manager T: 0113 261 6478 E: [email protected] W: bscfunds.com
YFM Equity Partners, 5th Floor, Valiant Building, 14 South Parade, Leeds LS1 5QS
Please pin or staple cheque or banker's draft here British Smaller Companies VCT plc and British Smaller Companies VCT2 plc
Application Form
British Smaller Companies VCT plc &
Personal details
Are you an existing Sharehol Please use BLOCK CAPITALS
Title and full name Permanent address Tel no (day) Date of birth
I am applying for Offer Shares as follows:
British Smaller Companies VCT plc
British Smaller Companies VCT2 plc
as appropriate and row 4.
£££ British Smaller Companies VCT2 plc
(i) If you wish your allocation to be split 60% BSC, 40% BSC2 then please complete rows 1 and 4 and the split will be calculated (ii) If you wish to invest in just BSC or just BSC2, or you wish to invest in both but a different split than 60:40, complete row 2 and/or row 3
£££
£££ £££
The closing date for the 2014/15 Offers will be 11.00 am on 4 April 2015 and for the 2015/16 Offers will be 11.00 am on 30 April 2015 (unless extended or fully subscribed earlier). If you post this form you are recommended to use first class post and allow at least four days for delivery. Your completed application form, together with your cheque(s) or banker's draft(s) made payable to Capita Registrars Limited re: BSC – Offer Acc should be posted to: Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU.
der or spouse or civil partner of an existing Shareholder? Y
Tel no (evening)
Column C 2015/16 tax year
1 Page
Min £6,000
Min £6,000 Min £6,000
The closing date for the 2014/15 Offers will be 11.00 am on 4 April 2015 and for the 2015/16 Offers will be 11.00 am on 30 April 2015 (unless extended or fully subscribed earlier). If you post this form you are recommended to use first class post and allow at least four days for delivery.
Your completed application form, together with your cheque(s) or banker's draft(s) made payable to Capita Registrars Limited re: BSC – Offer Acc should be posted to: Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU.
Are you an existing Shareholder or spouse or civil partner of an existing Shareholder? Y N
| Please use BLOCK CAPITALS | ||
|---|---|---|
| Title and full name | ||
| Permanent address | ||
| Postcode | ||
| Tel no (day) | Tel no (evening) | |
| Date of birth | National Insurance No. |
| Column A 2014/15 tax year |
Column B 2015/16 tax year |
Column C Total |
|
|---|---|---|---|
| 1. British Smaller Companies VCT plc & British Smaller Companies VCT2 plc |
£ | £ £ |
Min £6,000 |
| 2. British Smaller Companies VCT plc | £ | £ £ |
|
| 3. British Smaller Companies VCT2 plc | £ | £ £ |
|
| 4. TOTAL | £ | £ £ |
Min £6,000 |
| Min £6,000 |
(i) If you wish your allocation to be split 60% BSC, 40% BSC2 then please complete rows 1 and 4 and the split will be calculated automatically.
(ii) If you wish to invest in just BSC or just BSC2, or you wish to invest in both but a different split than 60:40, complete row 2 and/or row 3 as appropriate and row 4.
| Payment method: Please choose one of |
Cheque/Banker's draft | Please attach to the top of page 1 of this Application Form. Cheques should be made payable to Capita Registrars Limited re: BSC – Offer Acc and be crossed A/C Payee only. |
|---|---|---|
| Electronic transfer | If you wish to pay by electronic transfer it is important that you contact Capita Asset Services on 0800 181 4729 (freephone. Lines are open between 9 am–5.30 pm, Monday to Friday excluding public holidays) for the bank account details. |
If you would like your dividends to be paid directly into your bank or building society please provide your details below. If you wish to participate in the Dividend Re-investment Scheme go straight to Section 4.
Please provide your bank or building society details below. The VCTs cannot accept responsibility if any details provided by you are incorrect.
| Account Name Name of Bank or Building Society |
Account No. (please quote all digits and zeros) |
|---|---|
| Branch | Sort Code |
| Branch Address | |
| Postcode |
(i) Advised: You have been advised on this investment by an Intermediary – please complete the Adviser Charge box below, if applicable, and ensure Section 6 is completed by your Intermediary. Please sign and date Section 7.
If you have agreed an Adviser Charge with your Intermediary and request that the VCTs pay that fee, please insert the fee amount in this box. Please note that the number of Offer Shares issued to you will be reduced by the Adviser Charge. This payment is inclusive of VAT, if applicable. £
Page 2
| Contact name | |
|---|---|
| (for administration) | |
| Intermediary name | |
| Firm name | |
| Address | |
| Postcode | Tel No. |
| FCA No. |
| Category of Intermediary | |
|---|---|
| Execution only basis (tick box): | |
| Advice provided (tick box): | |
| Tick this box if the Adviser Charge stated in Section 5 has been agreed with your client and complies with COBS 6.1A of the FCA Handbook. |
| For execution only applications | |
|---|---|
| Please tick this box if you wish all initial commission to be waived and re-invested. | |
| If you wish to waive and re-invest part of the initial commission please enter the relevant % in the box | % |
Please provide details of your bank or building society account so that any initial or trail commission or the Adviser Charge (as applicable) can be paid via BACS.
| Account Name Name of Bank or Building Society |
Account No. (please quote all digits and zeros) |
|---|---|
| Branch | Sort Code |
| Branch Address | |
| Postcode | |
| Email address for commission statements |
|
| Signed | Position |
The VCTs, the Sponsor, the Receiving Agent and YFM Private Equity do not accept responsibility if any details provided by you are incorrect.
BY SIGNING THIS FORM I HEREBY DECLARE THAT: (i) I have read the enclosed terms and conditions of application of the Prospectus dated 20 October 2014 and agree to be bound by them; (ii) I will be the beneficial owner of the Offer Shares in British Smaller Companies VCT plc and/or British Smaller Companies VCT2 plc issued to me pursuant to this application; (iii) I have agreed the above Adviser Charge (if any) with my Intermediary and request that the VCTs pay that fee; (iv) I understand that if the Adviser Charge includes VAT, I may remain liable for the VAT element thereof, even where arrangements have been made to make and pay the deduction mentioned above and (v) to the best of my knowledge and belief, the particulars I have given to British Smaller Companies VCT plc and/or British Smaller Companies VCT2 plc are correct.
By signing this form on behalf of the individual whose details are shown above, I make a declaration (on behalf of such individual) on the terms of sub-paragraphs (i) to (v) above.
HM Revenue & Customs may inspect this Application Form. It is a serious offence to make a false declaration. The VCTs, the Sponsor, the Receiving Agent and YFM Private Equity do not accept responsibility if any details provided by you are incorrect.
| Signature | Date | / | / | |
|---|---|---|---|---|
Complete this box only if you require your Shares to be issued electronically to a CREST account.
| CREST Participant ID | ||
|---|---|---|
| CREST Member Account ID | ||
| Participant name | ||
| Participant address | ||
| Participant postcode | ||
| Contact name for CREST queries | ||
| Contact telephone | ||
| Signed by Investor | ||
| The VCTs, the Sponsor, the Receiving Agent and YFM Private Equity do not accept responsibility if any details provided by you |
are incorrect.
Your completed application form, together with your cheque(s) or banker's draft(s) made payable to Capita Registrars Limited re: BSC – Offer Acc should be posted to: Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU.
Any queries please contact
Tracey Nice Investment Services Manager T: 0113 261 6478 E: [email protected] W: bscfunds.com
British Smaller Companies VCT plc and British Smaller Companies VCT2 plc
The closing date for the 2014/15 Offers will be 11.00 am on 4 April 2015 and for the 2015/16 Offers will be 11.00 am on 30 April 2015 (unless extended or fully subscribed earlier). If you post this form you are recommended to use first class post and allow at least four days for delivery.
Your completed application form, together with your cheque(s) or banker's draft(s) made payable to Capita Registrars Limited re: BSC – Offer Acc should be posted to: Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU.
Are you an existing Shareholder or spouse or civil partner of an existing Shareholder? Y N
| Please use BLOCK CAPITALS | ||
|---|---|---|
| Title and full name | ||
| Permanent address | ||
| Postcode | ||
| Tel no (day) | Tel no (evening) | |
| Date of birth | National Insurance No. |
| Column A 2014/15 tax year |
Column B 2015/16 tax year |
Column C Total |
|
|---|---|---|---|
| 1. British Smaller Companies VCT plc & British Smaller Companies VCT2 plc |
£ | £ £ |
Min £6,000 |
| 2. British Smaller Companies VCT plc | £ | £ £ |
|
| 3. British Smaller Companies VCT2 plc | £ | £ £ |
|
| 4. TOTAL | £ | £ £ |
Min £6,000 |
| Min £6,000 |
(i) If you wish your allocation to be split 60% BSC, 40% BSC2 then please complete rows 1 and 4 and the split will be calculated automatically.
(ii) If you wish to invest in just BSC or just BSC2, or you wish to invest in both but a different split than 60:40, complete row 2 and/or row 3 as appropriate and row 4.
| Payment method: Please choose one of |
Cheque/Banker's draft | Please attach to the top of page 1 of this Application Form. Cheques should be made payable to Capita Registrars Limited re: BSC – Offer Acc and be crossed A/C Payee only. |
|---|---|---|
| Electronic transfer | If you wish to pay by electronic transfer it is important that you contact Capita Asset Services on 0800 181 4729 (freephone. Lines are open between 9 am–5.30 pm, Monday to Friday excluding public holidays) for the bank account details. |
If you would like your dividends to be paid directly into your bank or building society please provide your details below. If you wish to participate in the Dividend Re-investment Scheme go straight to Section 4.
Please provide your bank or building society details below. The VCTs cannot accept responsibility if any details provided by you are incorrect.
| Account Name Name of Bank or Building Society |
Account No. (please quote all digits and zeros) |
|---|---|
| Branch | Sort Code |
| Branch Address | |
| Postcode |
(i) Advised: You have been advised on this investment by an Intermediary – please complete the Adviser Charge box below, if applicable, and ensure Section 6 is completed by your Intermediary. Please sign and date Section 7.
If you have agreed an Adviser Charge with your Intermediary and request that the VCTs pay that fee, please insert the fee amount in this box. Please note that the number of Offer Shares issued to you will be reduced by the Adviser Charge. This payment is inclusive of VAT, if applicable. £
Page 2
| Contact name | |
|---|---|
| (for administration) | |
| Intermediary name | |
| Firm name | |
| Address | |
| Postcode | Tel No. |
| FCA No. |
| Category of Intermediary | |
|---|---|
| Execution only basis (tick box): | |
| Advice provided (tick box): | |
| Tick this box if the Adviser Charge stated in Section 5 has been agreed with your client and complies with COBS 6.1A of the FCA Handbook. |
| For execution only applications | |
|---|---|
| Please tick this box if you wish all initial commission to be waived and re-invested. | |
| If you wish to waive and re-invest part of the initial commission please enter the relevant % in the box | % |
Please provide details of your bank or building society account so that any initial or trail commission or the Adviser Charge (as applicable) can be paid via BACS.
| Account Name Name of Bank or Building Society |
Account No. (please quote all digits and zeros) |
|---|---|
| Branch | Sort Code |
| Branch Address | |
| Postcode | |
| Email address for commission statements |
|
| Signed | Position |
The VCTs, the Sponsor, the Receiving Agent and YFM Private Equity do not accept responsibility if any details provided by you are incorrect.
BY SIGNING THIS FORM I HEREBY DECLARE THAT: (i) I have read the enclosed terms and conditions of application of the Prospectus dated 20 October 2014 and agree to be bound by them; (ii) I will be the beneficial owner of the Offer Shares in British Smaller Companies VCT plc and/or British Smaller Companies VCT2 plc issued to me pursuant to this application; (iii) I have agreed the above Adviser Charge (if any) with my Intermediary and request that the VCTs pay that fee; (iv) I understand that if the Adviser Charge includes VAT, I may remain liable for the VAT element thereof, even where arrangements have been made to make and pay the deduction mentioned above and (v) to the best of my knowledge and belief, the particulars I have given to British Smaller Companies VCT plc and/or British Smaller Companies VCT2 plc are correct.
By signing this form on behalf of the individual whose details are shown above, I make a declaration (on behalf of such individual) on the terms of sub-paragraphs (i) to (v) above.
HM Revenue & Customs may inspect this Application Form. It is a serious offence to make a false declaration. The VCTs, the Sponsor, the Receiving Agent and YFM Private Equity do not accept responsibility if any details provided by you are incorrect.
| Signature | Date | / | / | |
|---|---|---|---|---|
Complete this box only if you require your Shares to be issued electronically to a CREST account.
| CREST Participant ID | ||
|---|---|---|
| CREST Member Account ID | ||
| Participant name | ||
| Participant address | ||
| Participant postcode | ||
| Contact name for CREST queries | ||
| Contact telephone | ||
| Signed by Investor | ||
| The VCTs, the Sponsor, the Receiving Agent and YFM Private Equity do not accept responsibility if any details provided by you |
are incorrect.
Your completed application form, together with your cheque(s) or banker's draft(s) made payable to Capita Registrars Limited re: BSC – Offer Acc should be posted to: Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU.
Any queries please contact
Tracey Nice Investment Services Manager T: 0113 261 6478 E: [email protected] W: bscfunds.com
British Smaller Companies VCT plc and British Smaller Companies VCT2 plc
British Smaller Companies VCT plc ("BSC") British Smaller Companies VCT2 plc ("BSC2")
5th Floor, Valiant Building 14 South Parade Leeds LS1 5QS
Telephone 0113 244 1000 Email [email protected]
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