Pre-Annual General Meeting Information • Jun 17, 2016
Pre-Annual General Meeting Information
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THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the action you should take, you are recommended to seek your own personal financial advice from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser (who in the United Kingdom should be authorised under the Financial Services and Markets Act 2000).
If you have sold or otherwise transferred all your holding of Ordinary Shares in HICL Infrastructure Company Limited, please send this document, together with the attached Form of Proxy, as soon as possible, to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was effected, for delivery to the purchaser or transferee. If you have sold any part of your holding of Ordinary Shares in HICL Infrastructure Company Limited, please contact your stockbroker, bank or other agent through whom the sale or transfer was effected immediately.
(an authorised closed-ended investment company incorporated in Guernsey with limited liability and with registered number 44185)
This document should be read as a whole. Your attention is drawn to the letter from your Chairman which is set out on pages 3 to 8 of this Document and which recommends that you vote in favour of each of the resolutions to be proposed at the Annual General Meeting to be held at 4.00 p.m. on Tuesday 19 July 2016.
Your attention is also drawn to the Notice of Annual General Meeting which is set out on pages 9 to 12 of this document.
Proxy Forms for the Annual General Meeting must be received by the Company's Receiving Agent and UK Transfer Agent, Capita Asset Services, PXS 1, 34 Beckenham Road, Beckenham, Kent, BR3 4TU by no later than 4.00 p.m. on Friday 15 July 2016.
The Company is a Guernsey domiciled authorised closed-ended investment scheme pursuant to Section 8 of the Protection of Investors (Bailiwick of Guernsey) Law, 1987, as amended and Rule 6.02 of the Authorised Closed-Ended Investment Scheme Rules 2008. Neither the Guernsey Financial Services Commission nor the States of Guernsey Policy Council has taken any responsibility for the financial soundness of the Company or for the correctness of any of the statements made or opinions expressed with regard to it in this document.
| LETTER FROM THE CHAIRMAN 3 | |
|---|---|
| NOTICE OF ANNUAL GENERAL MEETING 10 | |
| FORM OF PROXY 14 |
(an authorised closed-ended investment company incorporated in Guernsey with limited liability and with registered number 44185)
Ian Russell (Chairman) 1, Le Truchot Sarah Evans St Peter Port Sally-Ann Farnon Guernsey John Hallam Channel Islands Frank Nelson GY1 1WD Graham Picken Christopher Russell
Directors: Registered Office:
16 June 2016
Dear Shareholder
This document should be read in conjunction with the Annual Report and Consolidated Financial Statements of HICL Infrastructure Company Limited (the "Company") for the year ended 31 March 2016 (the "Annual Report") which can be found on the Company's website (www.hicl.com), under the Investor Relations - Reports & Publications - Results & Updates section. The purpose of this document is to provide you with information relating to the following business to be considered and resolutions to be put to shareholders at the Annual General Meeting to be held at the offices of Aztec Group, East Wing, Trafalgar Court, Les Banques, St Peter Port, Guernsey at 4.00 p.m. on Tuesday 19 July 2016 (the "2016 AGM").
The Notice convening the 2016 AGM and setting out the resolutions to be proposed is set out on pages 9 to 12 of this document.
The ordinary business proposed for the 2016 AGM comprises the consideration of and, if thought fit, the passing of ordinary resolutions to:
2017 (resolution 8; see section entitled "Directors' Remuneration Report" below); and
• approve the re-appointment of KPMG Channel Islands Limited as auditors of the Company and to authorise the Board to set the remuneration of the auditors (resolutions 9 and 10, respectively).
In accordance with the Company's Articles of Incorporation, each of the five continuing Directors and the newly appointed Director (see details below) is seeking re-election. As previously notified, Graham Picken and John Hallam will be retiring as Directors on 30 June 2016 and so are not standing for re-election.
On 1 June 2016, the Company announced the Board had appointed Simon Holden as a Director of the Company, effective from 1 July 2016. This appointment was made following a comprehensive search carried out by a third party recruitment consultant.
The biographical details of the five continuing Directors are contained within the Company's Annual Report.
Mr Holden's biographical details are as follows:
Simon Holden is a Guernsey resident and has more than 15 years of experience in private equity investment and portfolio company operations roles. Working initially with Candover Investments and latterly Terra Firma Capital Partners since 2008, Simon has completed a number of successful buyouts and held a number of Board-level operational roles alongside the executive teams of portfolio companies. He left Terra Firma in late 2015 to take up a limited number of independent directorships of alternative investment funds, and fiduciary and trading company clients.
Simon graduated from the University of Cambridge with an MEng and MA (Cantab) in Manufacturing Engineering, holds the IMC and is a member of the States of Guernsey's GIFA, NED Forum and IP Commercial Group. He has no other listed company directorships.
The Directors' remuneration report is set out in the Company's Annual Report. It includes the Directors' remuneration policy as well as details regarding the current and proposed remuneration of the Directors, extracts of which are set out below in the 'Directors' Remuneration' section.
All Directors of the Company are non-executive and are paid a fixed annual remuneration for routine business of the Company. In addition, fixed fees are paid for additional corporate work.
The most recent external review of the Directors' remuneration was undertaken in February 2015. An independent professional consultant, Trust Associates, was appointed and their recommendations, which were set out in the Annual Report & Consolidated Financial Statements for the year ended 31 March 2015, and approved by shareholder resolution at the AGM on 21 July 2015, were adopted for the year ended 31 March 2016.
As part of the February 2015 report, Trust Associates remarked that generally fees should be increased by a moderate amount each year, rather than being held steady for a few years, with the need to then increase them sharply to bring them back into line. A further recommendation was that the Remuneration Committee should review how the sector is developing each year, including a review of the fees paid in the sector by competitors, and make decisions on fee levels in light of then-current information.
In accordance with Trust Associates' recommendations, the Remuneration Committee reviewed board remuneration across the sector during the year, and this formed the basis of the following recommendations for routine business for the 2016-17 year:
The applicable premium to the base Directors' fee for each of the latter four roles is calibrated to recognise the additional responsibility involved in performance of the task. In particular, as concerns the Chairman of the Board, the premium is in recognition not only of the considerable greater weight of responsibility but also his involvement in a number of meetings with shareholders and potential investors each year, as well as hosting events on behalf of the Company.
In addition, the Committee re-affirmed that the current practice, that the Director (or, in the case of the reported period, Directors on a pro rata basis) who also acts as director of the two Luxembourg subsidiary company boards and receives an additional £5,000 annually for such role, was appropriate and should therefore continue.
For comparative purposes the table below sets out the Directors' remuneration approved and paid for the year to 31 March 2016 as well as proposed for the year ending 31 March 2017.
| Role | Fees | Fees |
|---|---|---|
| (YE 31 March 2017) | Proposed | Approved and Paid |
| (YE 31 March 2017) | (YE 31 March 2016) | |
| Chairman | £67,000 | £64,000 |
| Audit Committee Chair | £49,000 | £44,500 |
| Risk Committee Chair | £45,000 | £42,500 |
| Senior Independent Director (SID) | £45,000 | £40,500 |
| Director (inc. Lux Cos) | £46,000 | £43,500 |
| Director | £41,000 | £38,500 |
| Director | £41,000 | £38,500 |
| Totals | £334,000 | £312,000 |
The roles of SID and Chair of Audit Committee were performed by Mr J Hallam at the start of the year ended 31 March 2016. Following the changes during the year, in anticipation of Mr J Hallam's retirement on 30 June 2016, the roles are now split and Mr F Nelson is the SID and Mrs S Evans is the Audit committee chair.
As last year the fees approved/proposed relate to the roles performed, and not to individuals per se. In light of the changes in roles resulting from succession planning in the year ended 31 March 2016, Directors accrued a blended entitlement to the fees attributable to the above roles, pro rated based on the time each Director performed in respect of each position, as set out below:
| Total remuneration | ||
|---|---|---|
| paid | ||
| Director | (YE 2016) | |
| Mr I Russell | £41,958 | |
| Mrs S Evans | £47,083 | |
| Mrs S Farnon | £41,167 | |
| Mr J Hallam | £42,333 | |
| Mr F Nelson | £38,667 | |
| Mr G Picken | £61,875 | |
| Mr C Russell | £38,917 | |
| TOTAL | £312,000 |
As in previous years, should the Company require Directors to work on specific corporate actions such as further equity raising (other than scrip dividend alternative or tap issues), then this is remunerated appropriately as determined by the Remuneration Committee. In the year to 31 March 2016, apart from additional fees for the Luxembourg subsidiaries work (undertaken by Mrs S Evans and Mr C Russell) as noted above, no such additional fees were paid.
The proposed recommendation for the year ending 31 March 2017 is for aggregate Directors' fees (including the LuxCo fee) to be approximately 0.0151% of the Company's market capitalisation as at 31 March 2016. The comparative figure for the year to 31 March 2016 was 0.0159% which Trust Associates confirmed was, in percentage terms, towards the low end of the range for investment companies.
The total fees paid to Directors in the year were within the annual fee cap of £450,000 which was approved by shareholders at the AGM on 21 July 2015. The Remuneration Committee considers that this cap remains adequate at present to permit the moderate adjustments that may be necessary for subsequent years and to provide contingency for any additional fees associated with non-routine business.
The Board has approved the proposals of the Remuneration Committee set out above and is seeking shareholder approval of the Directors Remuneration Report and the proposed Directors' Remuneration Policy.
The special business proposed for the 2016 AGM comprises the consideration of and, if thought fit, the passing of the following resolutions:
Based on the historical take-up of scrip dividends, shareholders are requested to approve, by way of ordinary resolution, the renewal of the authority to provide shareholders with the opportunity to elect to receive future dividends wholly or partly in the form of new Ordinary Shares in the Company rather than cash. Providing such an alternative enables shareholders to increase their holdings of Ordinary Shares in the Company without incurring dealing costs and in a tax efficient manner. The advantage to the Company is that it is able to retain cash which would otherwise be paid out as dividends.
Whilst shareholders will need to take their own advice, election by certain shareholders to receive a distribution by way of scrip dividend may be advantageous to them.
Shareholders are requested to approve, by way of ordinary resolution, the authority for the Company to make market acquisitions of its own Ordinary Shares up to a maximum of 14.99 per cent of the Ordinary Shares in issue as at the date of passing of the resolution (this equates to 208,125,129 Ordinary Shares as at the date of the notice of the 2016 AGM).
The authority will expire at the conclusion of next year's annual general meeting or 18 months after the passing of the resolution (whichever is earlier) and, as previously stated by the Company, it is presently intended that a resolution for the renewal of such authority will be proposed at each subsequent annual general meeting of the Company.
The Board would consider holding as treasury shares any Ordinary Shares which the Company acquires pursuant to the authority provided by this resolution (subject to the 10 per cent. limit on the Company holding Ordinary Shares in treasury in accordance with Guernsey Companies Law).
It is currently envisaged that Ordinary Shares acquired and held in treasury following any buyback will be used to support liquidity in the Company's Ordinary Shares. Any sales out of treasury will only be made at a price per Ordinary Share equal to or greater than the price per Ordinary Share paid by the Company and in accordance with the UK Listing Rules and subject to dis-application authority too.
At the AGM of the Company held on 21 July 2015, shareholders renewed the Board's authority to allot Ordinary Shares for cash without first offering them to existing shareholders on a pro rata basis. Such authority expires at the earlier of the 2016 AGM or 15 months after the AGM of 21 July 2015. Shareholders are requested to approve, by way of special resolution, the renewal of the current authority until the earlier of the next AGM or 15 months from the passing of this resolution.
The number of Ordinary Shares which may be so allotted under such authority is limited to the number of Ordinary Shares representing 10 per cent. of the Ordinary Shares in issue as at the date of the notice of the 2016 AGM (this equates to 138,842,647 Ordinary Shares). This will allow the Company to continue to issue Ordinary Shares at a premium to the prevailing net asset value per Ordinary Share when there is sufficient demand for the Company's Ordinary Shares, and thereby to help to manage any share premium.
A number of provisions under Guernsey Companies Law have been amended in recent times. The Board is proposing various changes to the Company's Articles in order to reflect those amendments and to bring the Articles into line with current market practice, while at the same time seeking to maintain a level of regulation and corporate governance broadly commensurate with that of a UK-incorporated investment trust.
Resolution 14 proposes that the new form of the Articles be adopted with immediate effect.
The key proposed changes are as follows:
While Guernsey law no longer places any restriction upon the length of time for which an authority to issue shares may remain valid, the equivalent provisions under UK law prohibit that authority exceeding a period of five years. It is therefore proposed that an equivalent restriction be included in the new form of the Company's Articles.
• Information from shareholders – a new Article has been included making explicit the obligation upon shareholders to comply with Rule 5 of the Disclosure and Transparency Rules of the London Stock Exchange. (Rule 5 requires a shareholder to notify the Company of an acquisition or disposal of shares in the Company which takes that shareholder's voting rights
through a relevant disclosure threshold.) New wording is also being included giving the directors the power to request any information from shareholders which may be required in order for the Company to comply with its obligations under FATCA (the foreign account tax regime of the United States) and the OECD's Common Reporting Standard.
A copy of the proposed new form of the Articles, together with a comparison version showing how it differs from the existing form of the Articles, are available for inspection at the registered office of the Company and at the offices of InfraRed Capital Partners (in the latter case, until the conclusion of the Annual General Meeting). Copies of these documents will also be available for inspection at the place of the Annual General Meeting for at least 15 minutes before the Meeting commences and until the Meeting concludes.
It is proposed that the amendments to the Articles will be effected by adoption of the new Articles.
You will find attached at the end of this document a Form of Proxy. You are invited to complete and return the Form of Proxy as soon as possible in accordance with the written instructions, whether or not you propose to attend the 2016 AGM in person. The Form of Proxy should be lodged with the Company's Receiving Agent and UK Transfer Agent, Capita Asset Services, PXS 1, 34 Beckenham Road, Beckenham, Kent, BR3 4TU, so as to be received not later than 4.00 p.m. on Friday 15 July 2016. Shareholders may appoint more than one proxy provided that each proxy is appointed to exercise rights attaching to different Ordinary Shares. Completing and returning the Form of Proxy will not prevent you from attending the 2016 AGM and voting in person, should you wish to do so. Any proxy need not be a member of the Company.
The Directors are unanimously of the opinion that the resolutions to be proposed at the 2016 AGM are in the best interests of shareholders as a whole and the Board recommends that you vote in favour of each of the resolutions.
Yours faithfully,
Ian Russell CBE Chairman
(an authorised closed-ended investment company incorporated in Guernsey with limited liability and with registered number 44185)
NOTICE IS HEREBY GIVEN that the Annual General Meeting of HICL INFRASTRUCTURE COMPANY LIMITED (the "Company") will be held at the offices of Aztec Group, East Wing, Trafalgar Court, Les Banques, St Peter Port, Guernsey at 4.00 p.m. on Tuesday 19 July 2016 (the "2016 AGM"), to consider and, if thought fit, pass the following resolutions.
The Directors propose a renewal of the annual approval that offers shareholders the opportunity to take future dividends wholly or partly in the form of new Ordinary Shares in the Company rather than cash.
The Directors propose in the following resolution to permit the Company to make market acquisitions and to arrange tender offers of Ordinary Shares within certain conditions. This resolution succeeds the authority which was granted at last year's annual general meeting and which expires on the date of the 2016 AGM.
The Directors propose a partial disapplication of the pre-emption rights in order to allow the Company to issue new Ordinary Shares. This is seeking re-approval for the disapplication which was approved at the AGM held on 21 July 2015 and allows the Company to issue Ordinary Shares at a premium to current net asset value per share by way of tap issues.
The Directors propose that the Articles be amended and restated to incorporate recent amendments to Guernsey Companies Law and to bring them into line with current market practice.
Chairman be and are hereby approved and adopted as the new articles of incorporation of the Company in substitution for and to the exclusion of the existing articles of incorporation of the Company.
References to the Prospectus in this document refer to the Company's New Ordinary Shares prospectus dated 26 February 2013, available from the Company's website (www.hicl.com).
By Order of the Board
16 June 2016
Registered Office 1, Le Truchot St Peter Port, Guernsey GY1 1WD Channel Islands
(v) The revocation notice must be received by 4.00 p.m. on Friday 15 July 2016. If you attempt to revoke your proxy appointment but the revocation is received after the time specified then, subject to the paragraph directly below, your proxy appointment will remain valid.
(vi) Appointment of a proxy does not preclude you from attending the meeting and voting in person. If you have appointed a proxy and attend the meeting in person, your proxy appointment will automatically be terminated.
CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service may do so for the Annual General Meeting to be held on Tuesday 19 July 2016 and any adjournment(s) thereof by utilising the procedures described in the CREST Manual. CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.
In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST message (a "CREST Proxy Instruction") must be properly authenticated in accordance with CRESTCo's specifications and must contain the information required for such instructions, as described in the CREST Manual. The message must be transmitted so as to be received by the issuer's agent (RA10) by the latest time(s) for receipt of proxy appointments specified in the notice of meeting. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST.
CREST members and, where applicable, their CREST sponsors or voting service providers should note that CRESTCo does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.
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