Regulatory Filings • Jan 11, 2018
Regulatory Filings
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Transforming small businesses bscfunds.com
The chart below shows the increase in Total Return for the Company since 2012.
In the nine months to 30 September 2017 the Company paid dividends totalling 3.0p per Share. This represents a yield of 5.0 per cent of the NAV at the beginning of the year.
In the nine months to 30 September 2017 the Company's Total Return has increased by 1.2p per Share to 113.4p per Share an increase of 2.0 per cent on the NAV at the beginning of the year.
The chart below shows the average internal rate of return ("IRR") of the Company over 3, 5 and 10 year periods to 31 December 2016.
*Dividend Re-Investment Scheme
Past performance of the Company or other funds managed or advised by the Investment Adviser is not a reliable indicator of the future performance of the Company and may not be repeated.
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. IF YOU ARE IN ANY DOUBT AS TO WHAT ACTION YOU SHOULD TAKE, YOU ARE RECOMMENDED TO CONSULT A PERSON AUTHORISED UNDER THE FINANCIAL SERVICES AND MARKETS ACT 2000 ("FSMA") WHO SPECIALISES IN ADVISING ON THE ACQUISITION OF SHARES AND OTHER SECURITIES.
VENTURE CAPITAL TRUSTS ("VCTS") ARE A PARTICULAR TYPE OF INVESTMENT COMPANY. THEY WERE ESTABLISHED BY THE UK GOVERNMENT WITH THE INTENTION OF ENCOURAGING INVESTMENT IN SMALLER, OR "VENTURE", UK COMPANIES. INVESTMENT IN VCTS IS HIGH-RISK AND FOR THE LONG-TERM. WHEN CONSIDERING AN INVESTMENT IN BRITISH SMALLER COMPANIES VCT2 PLC ("THE COMPANY"), POTENTIAL INVESTORS SHOULD CONSULT THEIR FINANCIAL OR OTHER ADVISER(S). PLEASE SEE THE RISKS ASSOCIATED WITH INVESTING IN THE COMPANY PRINTED ON PAGES 5 TO 7.
This Document is issued by the Company and approved for issue as a financial promotion for the purposes of section 21 of the FSMA by YFM Private Equity Limited ("YFM"), which is authorised and regulated by the Financial Conduct Authority ("FCA") ref. no. 122120.
In approving this Document as a financial promotion YFM has confirmed that this Document complies with the FCA's financial promotion rules, that it is acting solely for the Company and no one else and that it will not be responsible to anyone other than the Company for providing the protections afforded to YFM's clients or for providing financial advice in relation to the subject of this Document, other than as required by the rules and regulations of the FCA.
No person other than YFM and RAM Capital has been authorised to issue any advertisement or give any information or make any representations in connection with this Offer, other than those contained in this Document and, if issued, given or made, such advertisements, information or representations must not be relied upon as having been authorised by the Company and/or YFM. RAM Capital is promoting the Offer and is acting exclusively for YFM. The Company has one market maker in its Shares.
| Letter from the Chairman | 3 |
|---|---|
| Expected Timetable and Offer Statistics | 4 |
| Risk Factors | 5 |
| Forward Looking Statements | 7 |
| Part I - The Offer | 8 |
| Part II - The Company | 11 |
| Part III - Investment Policy | 14 |
| Part IV - The Investment Adviser | 15 |
| Part V - Taxation Considerations | 16 |
| Definitions | 20 |
| Terms and Conditions of Subscription | 23 |
| Notes on how to complete the Subscription Form | 27 |
| Subscription Form | 33 |
| Investment Adviser and Service Providers | 37 |
Richard Last (Chairman) 5th Floor Robert Pettigrew Valiant Building Peter Waller 14 South Parade
Directors: Registered Office Leeds LS1 5QS www.bscfunds.com 11 January 2018
Dear Shareholder/Investor
I am delighted to offer Existing Shareholders priority until 2 February 2018 to invest in a top up Offer for the Company. After this date, if not fully subscribed, new Investors will also be able to apply for New Shares under the Offer.
Since the changes to the VCT rules in November 2015 the Company has focussed on investing in businesses that are at an earlier stage of their development and investments have largely consisted of equity instruments, rather than loans. The recent Budget reaffirmed the Government's commitment to VCTs but also introduced more restrictive requirements around the use of loan structures, whereby loans will have to be unsecured and the returns achievable from them will be restricted.
Additionally there have been restrictions in the ability to take actions where initial plans are not met which further increases the risks around VCT investments.
These changes mean that returns are likely to become more volatile with a greater dependency on the timing of the sale of investments.
Some of the changes are intended to restrict the level of capital preservation/asset-backed investment and HMRC believe that this will significantly reduce the time taken to grant advance assurances for Qualifying Investments. It is hoped that this will enable a higher level of conversion from the Investment Adviser's strong pipeline of potential investments.
The Company is seeking to raise up to £4,400,000, before expenses, this being approximately the sterling equivalent of €5,000,000, the maximum amount allowed under the Prospectus Rules as at the date of this Document without the issue of a full prospectus. The funds raised under the Offer will be utilised by the Company in accordance with its investment policy, to maintain liquidity and to enable payment of costs.
Amounts subscribed by Investors under the Offer will be used to purchase New Shares and will enable them to participate in the investment returns of the Company's existing investment portfolio following the allotment of the New Shares.
Assuming 7,409,278 New Shares are issued at an illustrative Offer Price of 59.385p (as set out on page 9) the New Shares will comprise approximately 7.4 per cent of the current Shares in issue. Please note that only Subscription Forms returned by post, or delivered by hand to the Receiving Agent, will be accepted. To afford the greatest opportunity for Investors to subscribe for the Offer, the minimum individual Subscription has been set at £3,000.
Investors will be allocated New Shares on a first-come, first-served basis. In order to maximise the opportunity for Investors to subscribe for New Shares in the Company, the Directors, and directors of the Investment Adviser, will only subscribe for New Shares if the Offer is not fully subscribed before, and therefore remains open beyond, 2 February 2018.
Potential Investors should consult their professional or Financial Advisers before deciding whether and, if so, how much they should invest under the Offer. Should you have any questions concerning the Subscription procedures please contact Tracey Nice at YFM on 0113 261 6478 or [email protected] or the Receiving Agents, Link Asset Services, on 0800 181 4729. However, no investment, financial or tax advice can be given by YFM or Link Asset Services and if you are in any doubt you should consult your independent Financial Adviser.
Please note that YFM, RAM Capital and Link Asset Services act only for the Company and not for any Investor under the Offer and will not be responsible to the Investors for providing the protections afforded to their clients.
I very much look forward to welcoming your participation and thank you for your continued support.
Yours faithfully
Richard Last Chairman
| Offer opens to Existing Shareholders | 11 January 2018 |
|---|---|
| Exclusivity period for Existing Shareholders ends | 2 February 2018 |
| Offer open to new Investors* | 3 February 2018 |
| Offer closes** | 11.00 a.m. 5 April 2018 |
| First and final allotment** | 5 April 2018 |
| Dealings in New Shares commence | within ten Business Days of allotment |
| Definitive Share certificates dispatched | within ten Business Days of allotment |
* In order to maximise the opportunity for Investors to subscribe for New Shares in the Company, the Directors, and directors of the Investment Adviser, will only subscribe for New Shares if the Offer is not fully subscribed before, and therefore remains open beyond, 2 February 2018.
**The Board may close the Offer earlier than the date stated above if it is fully subscribed by an earlier date. The Board further reserves the right to accept valid Subscription Forms and to allot and arrange for the listing of New Shares in respect of Subscriptions received on or prior to the closing date of the Offer as the Board sees fit, which may not be on the dates stated above.
The number of New Shares to be allotted in the Offer will be determined by the Offer Price as set out below.
The Offer Price at which the New Shares will be allotted in respect of the Offer will be calculated on the basis of the following formula (the "Pricing Formula") as set out on page 8.
In summary:
For direct Subscriptions or through a Financial Adviser:
Latest published NAV per Ordinary Share at the time of allotment (adjusted for any subsequent dividends paid or payable for which the new Shareholder is not eligible) divided by 0.975 (to allow for the costs of the Offer).
For Subscriptions through an execution only platform or broker:
Latest published NAV per Ordinary Share at the time of allotment (adjusted for any subsequent dividends paid or payable for which the Subscriber is not eligible) divided by 0.9559 (to allow for the costs of the Offer).
| Minimum individual Subscription under the Offer | £3,000 |
|---|---|
| Costs of the Offer: | |
| Direct Subscriptions or through a Financial Adviser | 2.5 per cent |
| Subscriptions through an execution only platform or broker | 4.5 per cent |
| Expected net proceeds of the Offer (assuming costs of the Offer of 4.5 per cent) | £4,202,000 |
The Board draws the attention of potential Investors to the following risk factors which may affect the Company, the New Shares and VCTs generally. The profile of a typical Investor for whom Shares are designed is a retail Investor, who is a UK income tax payer aged 18 or over with an investment range of between £3,000 and £200,000 and who is looking for exposure to unquoted companies whilst receiving income through a dividend stream. Any decision by an Investor to invest in the Company should be based on consideration of this Document as well as the latest publicly available information on the Company. An investment in the Company is only suitable for Investors who are capable of evaluating the risks and merits of such investment and who have sufficient resources to bear any loss which might result from such investment. An investment in the Company involves risks that could lead to a loss of all or a substantial portion of such investment.
An investment in the Company should be regarded as long-term in nature and is not suitable for all individuals, particularly with regard to the five year period for which Investors must hold their New Shares to retain the initial income tax relief. The tax treatment of an investment in the Company depends on the individual circumstances of each Investor. The tax rules or their interpretation in relation to an investment in the Company and/or rates of tax may change during the life of the Company and can be retrospective. Potential Investors should consult their professional advisers before deciding whether and, if so, how much they invest in New Shares.
The following risks are those material risks of which the Board is aware. Additional risks which are not presently known to the Board, or that the Board currently deems immaterial, may also have an effect on the Company's business, financial condition or results of operations.
The market price of the New Shares may not fully reflect their underlying Net Asset Value. The value of an investment in the Company, and the income derived from it, may go down as well as up and an Investor may not get back the full amount invested, even taking into account the available tax reliefs.
Although the existing Shares have been (and it is anticipated that the New Shares will be) admitted to the Official List and are (or will be) traded on the London Stock Exchange's market for listed securities, the secondary market for VCT shares is generally illiquid. Therefore, there may not be a liquid market for the Shares, which may be partly attributable to the fact that the initial income tax relief is not available for VCT shares generally bought in the secondary market and because VCT shares usually trade at a discount to their NAV, the price of the Shares may be volatile and Shareholders may find it difficult to realise their investment. An investment in the Company should, therefore, be considered as a long-term investment.
The past performance of the Company or other funds managed or advised by the Investment Adviser is not a reliable indicator of the future performance of the Company. The value of the Shares depends on the performance of the Company's underlying assets.
There can be no guarantee that the Company's investment objective will be achieved or that suitable investment opportunities will be available.
An investment in unquoted companies, by its nature, involves a higher degree of risk than investment in companies traded on the main market for listed securities of the London Stock Exchange. In particular, smaller companies often have limited product lines, markets or financial resources and may be dependent for their management on a smaller number of key individuals.
The Company's investments may be difficult to realise. The market for stock in smaller companies is often less liquid than for stock in larger companies, bringing with it potential difficulties in acquiring, valuing, and disposing of such stock.
Full information for determining the value or the risks to which unquoted companies are exposed may also not be available.
The Company's portfolio currently includes a small number of shares traded on AIM. The fact that a share is traded on AIM does not guarantee its liquidity. The spread between the buying and selling price of such shares may be wide and thus the price used for valuation may not be achievable. The valuation of the Company's portfolio and opportunities for realisation may also depend on stock market conditions.
Any change of governmental, economic, fiscal, monetary, or political policies, or in particular current government spending reviews and cuts, could materially affect, directly or indirectly, the operation of the Company and/or the performance of the Company (and the portfolio of companies in which it invests) and the value of and returns from securities and/or its ability to achieve or maintain VCT status.
The information in this Document is based on existing legislation, including taxation legislation. The tax reliefs described are those currently available. The tax rules, or their interpretation in relation to an investment in the Company and/or rates of tax, may change during the life of the Company and can be retrospective. The value of tax reliefs depends on the personal circumstances of the Investor, who should consult their own tax advisers before making an investment.
The Company intends to manage its affairs in respect of each accounting period so as to obtain and thereafter maintain approval as a VCT. However, there can be no guarantee that the Company will be able to maintain its VCT status. If the Company fails to maintain approval as a VCT before Qualifying Investors have held their Shares for five years, the income tax relief obtained on the amount subscribed in the Company will have to be repaid by such Investors. In addition, dividends paid in an accounting period where VCT status is lost will become taxable and a liability to capital gains tax may arise on any subsequent disposal of Shares. Where approval as a VCT is not maintained the Company will also lose its exemption from capital gains tax. If at any time VCT status is lost, Dealings in the Shares will normally be suspended until such time as the Company has published proposals either to continue as a VCT or to be wound up.
The disposal of New Shares within five years of their issue will result in some or all of the 30 per cent income tax relief available on investment becoming repayable. On this basis, investing in New Shares should be considered a long-term investment. From 6 April 2014 the availability of income tax relief on a subscription for shares issued in a VCT is restricted where the subscription is "linked" to a sale of shares in the same VCT. For these purposes, linked means i) the sale of shares in the VCT was conditional on the subscription for shares in the same VCT (or vice versa) or ii) the subscription and sale are within six months of each other (irrespective of which comes first). If the subscription is "linked", the amount on which the upfront income tax relief can be claimed will be reduced by the amount of consideration of any linked sales. In addition, if a VCT makes a payment to its shareholders in relation to shares issued on or after 6 April 2014, which amounts to a repayment of share capital (including the payment of a dividend or a distribution), other than for the purpose of redeeming or repurchasing such shares, before the end of the third accounting period following the accounting period in which the shares were issued, the VCT status of the Company will be withdrawn.
Investors should be aware that since 18 November 2015 there is a maximum age limit for companies receiving investments from VCTs (generally seven years from first commercial sale), and a maximum amount of State Aid Risk Finance which a company can receive over its lifetime (£12 million, or £20 million for Knowledge Intensive Companies). There are further restrictions on the use of VCT funds received by investee companies. These changes may mean that there are fewer opportunities for investment, and that the Company may not necessarily be able to provide further investment funds for companies already in its portfolio. From 6 April 2016, a VCT can only invest in Qualifying Holdings or in certain specified liquid assets.
Investments by VCTs are regarded as state aid. Where the European Commission believes that state aid has been provided which is not in accordance with the State Aid Risk Finance guidelines, they may require that the UK government recovers that state aid. There is currently no mechanism in place for this, but recovery may be from the investee company, the VCT or the VCT's investors.
Changes in legislation concerning VCTs, in particular in relation to Qualifying Holdings and qualifying trades, may limit the number of Qualifying Investment opportunities, reduce the level of returns which would otherwise have been achievable, increase the risk profile of future investments or result in the Company not being able to meet its objectives.
Following publication in August 2017 by HM Treasury of "Financing Growth in Innovative Firms", and the results of its "Patient Capital Review" which considered the effectiveness of schemes such as VCTs in relation to patient capital, the Chancellor of the Exchequer, in his Autumn Budget on 22 November 2017, announced certain changes to the rules relating to VCTs. The proposed legislation was set out in the Finance Bill (No. 2) 2017-19, published on 1 December 2017 and Guidance Notes were issued by HMRC and HM Treasury on 4 December 2017.
One of the changes is that the question of whether a company's investments can be considered as Qualifying Investments for VCT purposes will be considered by HMRC using a "principles based approach" known as the "risk-to-capital condition". Applications to HMRC for advance assurance in this regard ("Advance Assurance Applications") will, from 4 December 2017, be considered in the light of this new principles based approach.
The proposed legislative changes referred to above are not yet law and (subject to an immediate change of HMRC practice adopting the principles based approach to Advance Assurance Applications) are subject to consultation in respect of the Guidance Notes, and parliamentary scrutiny, process and approval in respect of the Finance Bill (No. 2) 2017-19 but could, if implemented, impact the level of demand and competition for investment in the target markets of the Company.
Subscribers must subscribe a minimum of £3,000 under the Offer (before any Adviser Charges are deducted) and, thereafter, in multiples of £1,000.
The New Shares will rank pari passu with existing Shares. There is no maximum amount a Subscriber may subscribe for under the Offer. However, prior to subscribing to the Offer, Subscribers may wish to consider the annual VCT allowance of £200,000 per Qualifying Investor, as detailed in Part V of this Document, and the acquisition of other shares (including shares issued under a DRIS) in all VCTs that they may have made during the current tax year.
For direct Subscriptions or through a Financial Adviser:
The number of New Shares to be allotted under the Offer will be determined by dividing the Subscription amount (less Adviser Charge if applicable) by the appropriate Offer Price which will be calculated on the basis of the following Pricing Formula:
For Subscriptions through an execution only platform or broker:
The number of New Shares to be allotted under the Offer will be determined by dividing the Subscription amount (plus any commission waived by the Intermediary) by the appropriate Offer Price which will be calculated on the basis of the following Pricing Formula:
The number of New Shares to be issued under the Offer will be rounded down to the nearest whole number (fractions of New Shares will not be allotted). If there is a surplus of funds from a Subscription amount, the balance will be returned (without interest) in the form of a cheque made payable to the Subscriber sent to the address shown on the Subscription Form; save where the amount is less than £2.00, in which case it will be retained by the Company. Share and tax certificates will be sent to the Subscriber at the address shown on the Subscription Form.
As at the date of this Document the most recently published (unaudited) NAV was 57.9p, being the unaudited NAV as at 30 September 2017, which was announced on 30 November 2017.
The maximum amount to be raised under the Offer is £4,400,000. For illustrative purposes, assuming New Shares are issued at an illustrative Offer Price of 59.385p (as set out on page 9), the maximum number of New Shares that will be issued under the Offer is 7,409,278 New Shares (although the actual number of New Shares that will be issued will depend on the Offer Price which could be higher or lower than the illustrative Offer Price of 59.385p).
The Board may close the Offer earlier than the date stated on page 4. The Board further reserves the right to accept a Subscription Form and to allot and arrange the listing of New Shares in respect of Subscriptions received on or prior to the closing date of the Offer as the Board sees fit, which may not be on the dates stated on page 4.
An illustration of the application of the Pricing Formula based on the most recently published (unaudited) NAV at 30 September 2017 (57.9p) is set out below.
| Unaudited | Illustrative | Illustrative |
|---|---|---|
| NAV per | Offer Price* | Offer Price* |
| Share as at | direct or through | execution only |
| 30 September 2017 | a Financial Adviser | platform or broker |
| 57.9p | 59.385p | 60.571p |
*The example Offer Prices shown above are for illustrative purposes only as the NAV may be different for the purposes of calculating the actual Offer Prices applicable to the allotment of New Shares under the Offer (which may be higher or lower than in the examples above).
Set out below is an illustration of the number of New Shares that would be allotted for a Subscription of £10,000, based on the illustrative Offer Prices above. Where applicable these examples assume a Facilitated Fee of 2 per cent or commission waived by an execution only broker or platform of 2 per cent.
| Direct or through a Financial Adviser (no Facilitated Fee) |
Through a Financial Adviser (Facilitated Fee 2%) |
Execution only platform or broker, no commission waived by an Intermediary |
Execution only platform or broker, 2% commission waived by an Intermediary |
|
|---|---|---|---|---|
| Amount subscribed | £10,000 | £10,000 | £10,000 | £10,000 |
| Facilitated Fee | - | (£200) | - | - |
| Commission waived by the Intermediary | - | - | - | £200 |
| £10,000 | £9,800 | £10,000 | £10,200 | |
| Illustrative Offer Price as set out above | 59.385p | 59.385p | 60.571p | 60.571p |
| Illustrative number of New Shares to be allotted |
16,839 | 16,502 | 16,509 | 16,839 |
The Investment Adviser will, in respect of the services provided pursuant to the Offer, receive a fee of 2.5 per cent of the gross proceeds of the Offer in respect of Subscriptions received either direct or through a Financial Adviser; or 4.5 per cent of the gross proceeds of the Offer for Subscriptions received through an execution only platform or broker. Out of this fee, the Investment Adviser will pay all costs associated with the Offer, on behalf of the Company. The Investment Adviser will, therefore, be responsible for all costs associated with the Offer. Assuming the costs of the Offer are 4.5 per cent of the gross proceeds of the Offer, the net proceeds of the Offer would be £4,202,000 if the Offer is fully subscribed.
Initial commissions may be payable by the Company (although the Investment Adviser ultimately bears the costs for such commissions) in respect of Subscriptions received through execution only brokers. Those Intermediaries that are permitted to receive commission will receive an initial commission of 2 per cent of the amount invested by their clients under the Offer.
Where initial commission is payable the Intermediary may agree to waive all or part of the initial commission in respect of a Subscription. If this is the case, the commission waived will be added to the amount subscribed and New Shares will be allotted to the Investor at the relevant Offer Price. Execution only brokers must indicate on the Subscription Form the basis on which they wish to receive their commission.
The Company has 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 Company. Ongoing fees to Intermediaries will not be facilitated by the Company. Investors who wish the Company 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 Subscription Form, and the Adviser Charge will be paid to the relevant Financial Adviser on behalf of the Subscriber from an equivalent amount due to the Subscriber from the Company. The Investor will be issued fewer New Shares (to the equivalent value of the Adviser Charge) as set out on page 9. Where the Adviser Charge stated on the Subscription 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.
The Company currently conducts its affairs so that the Shares can be recommended by Financial Advisers or Intermediaries to ordinary retail Investors in accordance with the FCA's rules in relation to non-mainstream investment products and intends to continue to do so for the foreseeable future. The FCA's restrictions which apply to non-mainstream investment products do not apply to the Shares because they are shares in a VCT which, for the purposes of the FCA rules relating to non-mainstream investment products, are excluded securities and may be promoted to ordinary retail Investors without restriction.
A blank Subscription Form is attached at the end of this Document together with explanatory notes.
Subscriptions under the Offer will be accepted on a first-come first-served basis, subject always to the discretion of the Directors. Subscribers are encouraged to submit their Subscription Forms early in order to be confident that their Subscription will be successful.
Subscriptions accompanied by a post-dated cheque will not be accepted. Multiple Subscriptions under the Offer from the same Subscriber will be processed in order of receipt. The Company may, in its absolute discretion, reject Subscriptions if cheques do not clear on first presentation.
The Terms and Conditions of Subscription for the New Shares under the Offer are set out on pages 23 to 25 of this Document. By signing the Subscription Form, Subscribers will be declaring that they have read the Terms and Conditions of Subscription and agree to be bound by them. Prior to completing a Subscription Form, Subscribers are advised to read the notes on how to complete the Subscription Form on pages 27 to 32 of this Document.
Please send all completed Subscription Forms to:
Link Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Kent BR3 4TU.
YFM and Link Asset Services are acting exclusively for the Company and for no one else in relation to the Offer. Apart from the responsibilities and liabilities, if any, which may be imposed on YFM and Link Asset Services by FSMA or the regulatory regime established thereunder, YFM, RAM Capital and Link Asset Services will not be responsible to anyone else other than the Company for providing the protections afforded to their clients or for advising any other persons in relation to the Offer or any transaction contemplated in or by this Document. RAM Capital is promoting the Offer and is acting exclusively for YFM and for no one else in relation to the Offer.
YFM, RAM Capital and Link Asset Services are not providing investment, financial or tax advice in relation to the Offer.
The Company is a tax-efficient listed company which aims to achieve long-term investment returns for private investors. Funds raised under the Offer will be utilised by the Company in accordance with its published investment policy, to maintain liquidity and to enable payment of costs without reducing the overall amounts currently available for investment. The Company co-invests with British Smaller Companies VCT plc ("BSC") and other funds managed/ advised by YFM.
The Company's investment policy 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. The changes to the VCT legislation in November 2015 and those announced in the November 2017 budget mean that there is greater emphasis on opportunities focussing on the application and development of innovation in their particular markets.
To this end the Company 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 unquoted UK companies which meet the definition of a Qualifying Investment, in order to maintain the Company's VCT status. It is anticipated that the majority of these businesses will be reinvesting their profits for growth and the investments will, therefore, comprise mainly equity instruments.
Together with BSC, the Company has first choice of all investment opportunities received and appraised by the Investment Adviser that meet the criteria of Qualifying Investments that require up to £4.5 million of equity and the basis for allocation is 40 per cent to the Company and 60 per cent to BSC. The Board has the discretion as to whether to take up their allocation in such co-investment opportunities. The replacement capital element of any investment will be provided by other funds managed/advised by YFM.
The Company was established in 2000 and as at 30 September 2017 had an unaudited NAV of £58.6 million, equivalent to 57.9p per Share. As at the same date the Company had investments in 35 unquoted companies and 6 quoted companies. A summary of the unaudited investment portfolio as at 30 September 2017 is shown below:
Set out below is the Total Return on each fundraising round per Share and the Total Return if a Shareholder had participated in the Company's DRIS. The Total Return comprises the (unaudited) NAV at 30 September 2017 and the cumulative dividends paid since the respective offers.
| Tax Years | Offer Price Pence |
Unaudited Net asset value at 30 September 2017 Pence |
Cumulative dividends paid since fundraising Pence |
Total Return including fundraising Pence |
Overall return excl. tax relief with participation in the DRIS Pence |
|---|---|---|---|---|---|
| 2000/01 & 2001/02 | 100.0 | 57.9 | 55.5 | 113.4 | 132.8 |
| 2001/02 & 2002/03 | 100.0 | 57.9 | 55.5 | 113.4 | 132.8 |
| December 2005 issue of shares | |||||
| on acquisition of British Smaller | |||||
| Technology Companies | 69.0 | 39.8 | 37.2 | 77.0 | 125.6 |
| 2009/10 & 2010/11 | 77.3 | 57.9 | 33.5 | 91.4 | 100.0 |
| 2010/11 & 2011/12 | 70.3 | 57.9 | 29.5 | 87.4 | 94.2 |
| 2012 | 70.5 | 57.9 | 25.5 | 83.4 | 88.5 |
| 2012/13 & 2013/14 | 68.0 | 57.9 | 21.0 | 78.9 | 82.5 |
| 2013/14 & 2014/15 | 68.0 | 57.9 | 16.5 | 74.4 | 76.7 |
| 2014/15 & 2015/16 | 65.0 | 57.9 | 12.0 | 69.9 | 71.2 |
| 2015/16 | 63.0 | 57.9 | 7.5 | 65.4 | 66.0 |
Past performance of the Company or other funds managed or advised by the Investment Adviser is not a reliable indicator of the future performance of the Company and may not be repeated.
The Directors are committed to a policy of regular and open communication with Shareholders and this is expressed not only through the statutory interim and final reports, but also through Investor updates for the intervening quarters, Investor workshops, annual general meetings and Shareholder surveys that occur from time to time.
The Company buys back its Shares if, in the opinion of the Board, a repurchase of its Shares would be in the best interests of the Shareholders as a whole. The Board seeks to buy back Shares at a discount of up to 5 per cent of the most recently published NAV. Any purchase of Shares will be made subject to the Listing Rules and will be made within the guidelines established from time to time by the Board. There can be no guarantee that the Company will be able to maintain its Share buy-back policy and future Share buy-backs, if any, will depend, amongst other things, on market circumstances at the time. The policy is subject to periodic approval of the Shareholders. The Company purchased 1,460,605 Shares under this buy-back policy in the period from 1 January 2017 to the date of this Document (year to 31 December 2016: 417,743) for an aggregate consideration of £813,543 (2016: £240,697).
The Company's annual running costs, including the Investment Adviser's fees, and the costs incurred by the Company in the ordinary course of business (but excluding any performance fees payable to the Investment Adviser (see page 15), VAT and trail commission) are capped at 2.9 per cent of NAV, any excess being met by the Investment Adviser by way of a reduction in future fees. Further details of the fees paid to the Investment Adviser are set out on page 15 of this Document.
The Company's annual running costs for the year ended 31 December 2016 were £1.4 million, equal to 2.5 per cent of NAV.
The Board has managed, and intends to continue to manage, the affairs of the Company in order that it complies with the legislation applicable to VCTs. In this regard, the Company has retained Philip Hare & Associates LLP to advise on its VCT status. The Company has continued to conduct its affairs so as to comply with section 274 of the Tax Act for its current financial year and intends to continue to do so for subsequent periods. However, there can be no guarantee that VCT status will be maintained and Investors' attention is drawn to Part V of this Document.
The investment policy of the Company is as follows:
The Company's investment policy 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. The changes to the VCT legislation in November 2015 and those announced in the November 2017 budget mean that there is greater emphasis on opportunities focussing on the application and development of innovation in their particular markets.
The Company invests in UK businesses across a broad range of sectors including but not limited to Software, IT and Telecommunications, Business Services, Manufacturing and Industrial Services, Retail and Brands and Healthcare in VCT qualifying and certain non-qualifying unquoted companies.
The Company funds the investment programme out of its own resources and has no borrowing facilities for this purpose.
Together with BSC, the Company has first choice of all investment opportunities received and appraised by the Investment Adviser that meet the criteria of Qualifying Investments that require up to £4.5 million of equity and the basis for allocation is 40 per cent to the Company and 60 per cent to BSC. The Board has the discretion as to whether to take up their allocation in such co-investment opportunities. The replacement capital element of any investment will be provided by other funds managed/advised by YFM.
Pending investment in Qualifying Holdings, surplus cash is primarily held in interest bearing instant access and, where permissible, short-notice bank accounts.
The Company's investment policy is designed to ensure that the Company continues to qualify and is approved as a VCT by HMRC. The current VCT conditions, amongst others, state that the Company may not invest more than 15 per cent by value of its investments, calculated in accordance with section 278 of the Tax Act ("VCT Value"), in a single company or group of companies and must have at least 70 per cent of its investments by VCT Value throughout the period in shares and securities comprised in Qualifying Holdings. From 1 January 2020, this will be 80 per cent for the Company. At least 70 per cent by VCT Value of Qualifying Holdings must be in "eligible shares", which are ordinary shares which have no preferential rights to assets on a winding up and no rights to be redeemed, but may have certain preferential rights to dividends. At least 10 per cent of each Qualifying Investment must be in eligible shares.
The companies in which investments are made must have no more than £15 million of gross assets at the time of investment to be classed as a Qualifying Holding.
Additionally the Finance (No. 2) Act 2015 and the Finance Act 2016 have imposed some further conditions in respect of investments, including those regarded as non-Qualifying Investments. These include:
YFM has advised or managed the British Smaller Companies VCTs since the incorporation of BSC in 1995. As at 30 September 2017 (being the latest date for which unaudited published NAVs are available for both the British Smaller Companies VCTs) the combined (unaudited) Net Assets of the British Smaller Companies VCTs was £143 million. YFM has offices in Birmingham, Leeds, London, Manchester and Sheffield. At the date of this Document YFM and YFM Equity Partners have a total staff of 28, of which 15 are engaged in finding, investing in and advising on investments to the British Smaller Companies VCTs and other clients.
The annual advisory fee payable to the Investment Adviser is 2.5 per cent of the Net Assets up to £16.0 million, 1.25 per cent of Net Assets in excess of £16.0 million and up to £26.667 million and 2.0 per cent of Net Assets in excess of £26.667 million. Based on the Company's unaudited Net Assets of £58.6 million as at 30 September 2017, this equated to £1,172,000 per annum. This is calculated half yearly at 30 June and 31 December. Consequently, there will be no fee payable until 1 July 2018 on any New Shares allotted under the Offer.
The Investment Adviser also provides and procures the provision of secretarial and administration services to the Company. The Investment Adviser receives an annual accounting and secretarial fee, index linked, which is currently £63,000.
A performance fee is also payable when the aggregate of cumulative dividends paid as at the last Business day in December each year and the average of the middle market price per Share on the five Business Days prior to that day, exceeds 120 pence per Ordinary Share. The fee is 20 per cent of the excess over this amount multiplied by the number of Shares in issue and the Shares under option (if any). The fee is payable in Shares granted through rights to subscribe. These rights are exercisable in the ratio 95:5 between the Investment Adviser and Chord Capital Limited respectively.
In addition to the fees described above, which are paid by the Company, the Investment Adviser receives advisory fees in connection with new investments which are paid by the relevant investee company. There is an aggregate annual cap applied to these fees for new investments of 3 per cent and for further investments of 2 per cent, with any fees above this cap being payable to the Company. Where expenses have been incurred and the investment does not proceed, the Investment Adviser pays any abort fees. The Investment Adviser also receives monitoring or non-executive director fees from unquoted portfolio companies. These fees are capped at a maximum of £40,000 per annum for an unquoted company.
The following is only a summary of the current law concerning the tax position of individual Qualifying Investors in VCTs. Potential Investors are recommended to consult a duly authorised independent Financial Adviser as to the taxation consequences of an investment in a VCT. The tax rules or their interpretation in relation to an investment in the Company and/or rates of tax may change during the life of the Company and can be retrospective.
1. Tax reliefs
The tax reliefs set out below are those currently available to individuals aged 18 or over who subscribe for New Shares under the Offer and will be dependent on personal circumstances. Whilst there is no specific limit on the amount of an individual's acquisition of shares in a VCT, tax reliefs will only be given to the extent that the total of an individual's subscriptions or other acquisitions of shares in VCTs (including shares issued under a DRIS) in any tax year does not exceed £200,000. Qualifying Investors who intend to invest more than £200,000 in VCTs in any one tax year should consult their professional advisers.
1.1.1 Relief from income tax on investment
A Qualifying Investor subscribing for New Shares will be entitled to claim income tax relief on amounts subscribed up to a maximum of £200,000 invested in VCTs in any tax year.
The relief is given at the rate of 30 per cent on the amount subscribed regardless of whether the Qualifying Investor is a higher rate, additional rate or basic rate tax payer, provided that the relief is limited to the amount which reduces the Qualifying Investor's income tax liability to nil. Investments to be used as security for or financed by loans may not qualify for relief, depending on the circumstances.
1.1.2 Dividend relief
A Qualifying Investor, who acquires shares in any VCT in any tax year having a value up to a maximum of £200,000, will not be liable to income tax on dividends paid on those shares and there is no withholding tax thereon.
1.1.3 Purchases in the market
A Qualifying Investor who purchases existing shares in the market will be entitled to claim dividend relief (as described in paragraph 1.1.2 above) but not relief from income tax (as described in paragraph 1.1.1 above).
1.1.4 Withdrawal of relief
Relief from income tax on a subscription for VCT shares (including New Shares) will be withdrawn if the VCT shares are disposed of (other than between spouses or on death) within five years of issue or if the VCT loses its approval within this period as detailed in paragraph 1.3 on page 17.
Dividend relief ceases to be available once the Qualifying Investor ceases to be beneficially entitled to the dividend or if the VCT loses its approval within this period as detailed on page 17.
1.1.5 Linked sales
If an Investor subscribes for shares (except for shares issued under DRIS) in a VCT within six months before or after selling any shares in that same VCT or in some cases a VCT which merges with that VCT, or if there is a contractual link between the subscription and the disposal, the tax reliefs in relation to that subscription will apply only to the amount invested less the amount for which shares are sold.
1.2.1 Relief from capital gains tax on disposal of VCT shares
A disposal by a Qualifying Investor of VCT shares will give rise to neither a chargeable gain nor an allowable loss for the purposes of UK capital gains tax. The relief is limited to the disposal of VCT shares acquired within the limit of £200,000 for any tax year.
1.2.2 Purchases in the market
An individual purchaser of existing shares in the market will be entitled to claim relief from capital gains tax on disposal (as described in paragraph 1.2.1 above).
For a company to be fully approved as a VCT it must meet the various requirements for full approval as set out on page 18.
If a company which has been granted approval as a VCT subsequently fails to comply with the conditions for approval, approval as a VCT may be withdrawn. In these circumstances relief from income tax on the initial investment is repayable unless loss of approval occurs more than five years after the issue of the relevant VCT shares. In addition, relief ceases to be available on any dividend paid in respect of the profits or gains in any accounting period ending when the VCT status has been lost and any gains on the VCT shares up to the date from which loss of VCT status is treated as taking effect will be exempt from capital gains tax, but gains thereafter will be taxable.
The table below has been prepared for illustrative purposes only and does not form part of the summary of the tax reliefs contained in this section. The table shows how the initial tax reliefs available can reduce the effective cost of an investment of £10,000 in a VCT by a Qualifying Investor subscribing for VCT shares to only £7,000:
| Effective Cost | Tax Relief | |
|---|---|---|
| Investor unable to claim any tax reliefs | £10,000 | Nil |
| Qualifying Investor able to claim tax reliefs | £7,000 | £3,000 |
Income tax relief is only available if the shares are held for the minimum holding period of five years. The limit for obtaining income tax relief in VCTs is £200,000 in each tax year.
The Company will provide to each Qualifying Investor a certificate which the Qualifying Investor may use to claim income tax relief, either by obtaining from HMRC an adjustment to their tax coding under the PAYE system or by waiting until the end of the tax year and using their tax return to claim relief.
The Company has to satisfy a number of tests to qualify as a VCT. A summary of these tests is set out below:
1. Qualification as a VCT
To qualify as a VCT a company must be approved by HMRC. To obtain such approval it must:
The term "eligible shares" means shares which carry no preferential rights to assets on a winding-up and no rights to be redeemed, although they may have certain preferential rights to dividends.
A Qualifying Investment consists of shares or securities first issued to the VCT (and held by it ever since) by a Qualifying Company satisfying the conditions set out in chapter 4 of Part 6 of the Tax Act.
The conditions are detailed but include that the company must have gross assets not exceeding £15 million immediately before and £16 million immediately after the investment; have fewer than 250 full-time (or fulltime equivalent) employees (or 500 in the case of a Knowledge Intensive Company); apply the money raised for the purposes of a qualifying trade within a certain time period; cannot be controlled by another company; at the time of investment does not obtain more than £5 million (from 6 April 2018 £10 million for a Knowledge Intensive Company) of investment from EU state aided risk capital measures in the twelve month period ending on the date of the investment by the VCT; at the time of the investment and including the amount of the investment will not have received more than £12 million (or £20 million if a Knowledge Intensive Company) over its lifetime and no more than seven years (ten years for a Knowledge Intensive Company) has elapsed since the date of its first commercial sale.
A Qualifying Company must be unquoted for VCT purposes and must carry on a qualifying trade. For this purpose certain activities are excluded (such as dealing in land or shares or providing certain financial services). The qualifying trade must either be carried on by, or be intended to be carried on by, the Qualifying Company, or by a qualifying subsidiary at the time of the issue of shares or securities to the VCT (and at all times thereafter).
A Qualifying Company must have a permanent establishment in the UK, but a Qualifying Company need not be UK resident. A company intending to carry on a qualifying trade must begin to trade within two years of the issue of shares or securities to the VCT and continue thereafter.
A Qualifying Company may have no subsidiaries other than qualifying subsidiaries which must, in most cases, be at least 51 per cent owned.
There is a disqualifying purpose test under which an investment will not be a Qualifying Investment if the investee company has been set up for the purpose of accessing tax reliefs or is in substance a financing business. An investment which is regarded as having certain elements of capital preservation will not be a Qualifying Investment.
Funds received from an investment by a VCT into a company cannot be used to acquire shares, another existing business or trade, or certain intangible assets in use in a trade.
A VCT must be approved at all times by HMRC. Approval has effect from the time specified in the approval.
A VCT cannot be approved unless the tests detailed above are met throughout the most recent complete accounting period of the VCT and HMRC is satisfied that they will be met in relation to the accounting period of the VCT which is current when the subscription is made. However, where a VCT raises further funds, VCTs are given grace periods to invest those funds before such further funds become subject to the tests.
The Company has received approval as a VCT from HMRC.
Approval of a VCT may be withdrawn by HMRC if the various tests set out above are not satisfied. The exemption from corporation tax on capital gains will not apply to any gain realised after the point at which VCT status is lost.
If a VCT makes a payment to its shareholders in relation to shares issued on or after 6 April 2014, which amounts to a repayment of share capital (including the payment of a dividend or distribution), other than for the purpose of redeeming or repurchasing such shares, before the end of the third accounting period following the accounting period in which the shares were issued, the VCT status will be withdrawn.
The Finance (No. 2) Act 2015, passed on 18 November 2015, and the Finance Act 2016, passed on 15 September 2016, added a further penalty such that if the VCT makes certain investments which breach the conditions set out in paragraph 1. viii to xi above, the VCT status will be withdrawn.
Withdrawal of approval generally has effect from the time when notice is given to the VCT but, in relation to capital gains of the VCT only, can be backdated to not earlier than the first day of the accounting period commencing immediately after the last accounting period of the VCT in which all of the tests were satisfied.
In this Document the following words and expressions have the following meanings:
| "Admission" | the date on which the New Shares allotted pursuant to the Offer are listed on the premium segment of the Official List and admitted to trading on the London Stock Exchange's main market for listed securities; |
|---|---|
| "Adviser Charge(s)" or "Facilitated Fee" 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 New Shares, and detailed on the Subscription Form; |
|
| "AIM" | AIM, a market operated by the London Stock Exchange, formerly known as the Alternative Investment Market; |
| "Beneficial Owner" | a person in whom the beneficial ownership of Shares is vested, or will be vested immediately upon their release; |
| "Board" or "Directors" | the directors of the Company as at the date of this Document; |
| "British Smaller Companies VCTs" | the Company and BSC; |
| "BSC" | British Smaller Companies VCT 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; |
| "the Company" | British Smaller Companies VCT2 plc; |
| "CREST" | the 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 Company or offering or agreeing to do so, either as principal or agent; |
| "Document" | this document, which describes the Offer; |
| "DGTRs" | the Disclosure Guidance and Transparency Rules made by the FCA under Part VI of FSMA; |
| "DRIS" | a Dividend Re-Investment Scheme; |
| "EU" | the European Union; |
| "Existing Shareholder(s)" | registered holder(s) of Ordinary Shares as at 20 December 2017, or a person who, as at 20 December 2017, was a spouse or civil partner of a registered holder of Ordinary Shares; |
| "FCA" | the Financial Conduct Authority; |
| "Financial Adviser" | an authorised Intermediary offering investment advice to their client; |
| "FSMA" | the Financial Services and Markets Act 2000; |
| "HMRC" | Her Majesty's Revenue and Customs; |
| "Intermediary (ies)" | an authorised firm who signs the Subscription Form and whose details are set out in Section 8 of that document; |
| "Investment Adviser" or "YFM" | YFM Private Equity Limited, registered number 02174994, in its position as the FCA authorised and regulated subsidiary of YFM Equity Partners whose registered office is 5th Floor, Valiant Building, 14 South Parade, Leeds LS1 5QS; |
| "Investor(s)" or "Qualifying Investor(s)" | an individual(s) who subscribes for New Shares; |
| "Link Asset Services"or "Receiving Agent " a trading name of Link Market Services Limited, whose details are given on page 37 of the Document; |
|
| "Listing Rules" | listing rules issued by the UK Listing Authority, as amended from time to time; |
| "London Stock Exchange" | London Stock Exchange plc; |
|---|---|
| "Money Laundering Regulations" | Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017; |
| "NAV" or "Net Asset Value" | net asset value per Ordinary Share; |
| "Net Assets" | gross assets less all liabilities (excluding contingent liabilities) of the Company; |
| "Net Asset Value" or "NAV" | net asset value per Ordinary Share; |
| "New Shareholder" | the spouse or civil partner of an Existing Shareholder subscribing for New Shares under this offer or a new Shareholder subscribing after 2 February 2018; |
| "New Shares" | new Ordinary Shares in the Company to be issued under the Offer; |
| "Nominee" | a party who holds, or subscribes for, Shares on behalf of, and as trustee of, a Beneficial Owner; |
| "Offer" | the offer for Subscription of new Ordinary shares of 10 pence each in the Company to raise up to £4,400,000, described in this Document; |
| "Offer Price" | the Subscription price of each New Share issued under the Offer as calculated in accordance with the Pricing Formula; |
| "Official List" | the Official List of the UK Listing Authority; |
| "Ordinary Share(s)" or "Share(s)" | ordinary share(s) of 10p each in the capital of the Company; |
| "Pricing Formula" | the formula to be used to calculate the Offer Price of the New Shares under the Offer as set out on page 8 of this Document; |
| "Prospectus Rules" | the prospectus rules made in accordance with the EU Prospectus Directive 2003/71/EC; |
| "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 of the Tax Act; |
| "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 of the Tax Act; |
| "RAM Capital" | RAM Capital Partners LLP; |
| "Restricted Territories" | US, Canada, Australia, Japan and South Africa (and each a Restricted Territory); |
| "RPI" | UK Index of Retail Prices; |
| "Securities Act" | The United States Securities Act of 1993, as amended; |
| "Share(s)" or "Ordinary Share(s)" | ordinary share(s) of 10p each in the capital of the Company; |
| "Shareholder(s)" | holder(s) of Ordinary Shares; |
| "State Aid Risk Finance" | as compatible within the European Commission's "Guidelines on State aid to promote risk finance investments 2014/C 19/04"; |
| "Subscriber" | a person whose name appears in a Subscription Form for use in connection with the Offer; |
| "Subscriptions" | offers by Subscribers pursuant to the Offer and made by completing the Subscription Form and posting (or delivering) these to the Receiving Agent or as otherwise indicated on the Subscription Form (and each a Subscription); |
| "Subscription Form" | the subscription form for use in connection with the Offer as set out on pages 33 to 36 of this Document; |
|---|---|
| "Tax Act" | the Income Tax Act 2007 (as amended); |
| "Terms and Conditions" | terms and conditions of Subscription as set out on pages 23 to 25; |
| "Total Return" | NAV plus cumulative dividends paid; |
| "UK Listing Authority" | the FCA acting in its capacity as the competent authority for the purposes of FSMA; |
| "United States" or "US" | the United States of America, its states, territories and possessions (including the District of Columbia); |
| "VAT" | value added tax; |
| "VCT Regulations" | The Venture Capital Trust (Winding Up and Mergers) (Tax) Regulations 2004, as amended from time to time; |
| "VCT Value" | the value of an investment calculated in accordance with section 278 of the Tax Act; |
| "Venture Capital Trust" or "VCT" | a venture capital trust as defined in section 259 of the Tax Act; |
| "YFM Equity Partners" | YFM Equity Partners LLP, registered number OC384467, the ultimate holding company of YFM; |
| "YFM" or "Investment Adviser" | YFM Private Equity Limited, registered number 02174994, the FCA authorised and regulated subsidiary of YFM Equity Partners whose registered office is 5th Floor, Valiant Building, 14 South Parade, Leeds LS1 5QS. |
The following Terms and Conditions apply to the Offer:
Save where the context otherwise requires, words and expressions defined in this Document have the same meaning when used in the Terms and Conditions of Subscription, the Subscription Form and explanatory notes.
The section headed "Notes on how to complete the Subscription Form" forms part of these Terms and Conditions of Subscription. Please note that only Subscriptions returned by post or delivered by hand to the Receiving Agent will be accepted.
(x) agree that, having had the opportunity to read the Document, you shall be deemed to have had notice of all information and statements concerning the Company and the New Shares contained therein;
(xi) confirm that you are not a US person within the meaning of Regulation S made under the Securities Act or a resident of any of the Restricted Territories and that you are not applying for any New Shares with a view to their offer, sale, delivery to or for the benefit of any US Person or a resident of any of the Restricted Territories, and that you have reviewed the restrictions contained in paragraphs (3) and (4) above and warrant compliance therewith;
To enable this process you may be requested to provide a copy of your passport or driving licence. Investors may opt out of the electronic identity verification system. If an Investor chooses to opt out they must enclose a copy of their passport or driving licence certified by a bank or a solicitor stating that it is a "true copy of the original and a true likeness of the client" followed by their name, and a recent (no more than three months old) bank or building society statement or utility bill showing their name and address with the Subscription Form. Copies of online statements will not be accepted. If a cheque is drawn by a third party, the above will also be required from the third party;
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Before making a Subscription to acquire New 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 Subscription Form in accordance with the instructions in these notes.
Please send the completed Subscription Form, together with your cheque(s) or banker's draft(s) by post, or deliver it by hand, to:
If you have any questions on how to complete the Subscription Form please contact Tracey Nice at YFM on 0113 261 6478 or [email protected] in the first instance or call Link Asset Services on 0800 181 4729 (freephone). However, no investment, financial or tax advice can be given by YFM or Link Asset Services. Lines are open between 8:30 am - 5.30 pm, Monday to Friday excluding public holidays. Alternatively please speak to your Financial Adviser.
Note: If there is a query over a Subscription there is no guarantee that it will be resolved in the order of receipt or before any subsequent Subscriptions are received/processed. Also, if multiple Subscriptions are received that take the investment total over £13,000 further identification and verification checks will need to be carried out. This may delay processing.
Insert in box 1 in BLOCK CAPITALS your full name, permanent address, daytime and evening telephone numbers, date of birth, National Insurance number, country of residence for tax purposes and, if you have one, your email address.
Please indicate whether you or your spouse or civil partner is an Existing Shareholder in the Company. If it is your spouse or civil partner who is the Existing Shareholder please enter their name in the box provided.
If you are the spouse or civil partner of an Existing Shareholder, or a new Shareholder subscribing for New Shares after 2 February 2018, please indicate if your preference is to receive hard copies of documentation and information published by the Company rather than electronic communications.
We are legally required to collect information about the tax residency and classifications of new Shareholders which may be shared with HMRC.
It is very important that you complete this section clearly and accurately, as the Receiving Agent will send an email acknowledgement, or, if no email address is given, a confirmation letter to you at the address shown in this section. If your Subscription to the Offer is successful your name and address as stated in this section will be entered onto the Register of the Company and printed on the tax and Share certificates.
If you wish to opt out of the electronic identity verification system please tick the box provided. If you choose to opt out you must enclose a copy of your passport or driving licence certified by a bank or a solicitor stating that it is a "true copy of the original and a true likeness of the client" followed by your name, and a recent (no more than three months old) bank or building society statement or utility bill showing your name and address with the Subscription Form. Copies of online statements will not be accepted. If a cheque is drawn by a third party, the above will also be required from the third party.
If you have invested through a Financial Adviser or wealth manager YFM may be asked to provide them with data on your investment so that they can provide an enhanced level of reporting to you. To enable this to happen the Company will need to share certain data. Please indicate if you do not want us to share your investment data with your Financial Adviser or wealth manager.
Insert the amount of money which you wish to subscribe. Your Subscription must be for a minimum value of £3,000 and in multiples of £1,000. The maximum investment on which tax reliefs on investments in Venture Capital Trusts (including shares issued under a DRIS) is available is £200,000 in each tax year.
Payment can be made by electronic transfer (to the Royal Bank of Scotland account details of which are set out on Section 3 of the Subscription Form), cheque or banker's draft. Your payment must relate solely to this Subscription.
To pay by cheque or banker's draft please attach a cheque or banker's draft to the Subscription Form for the exact amount shown in Section 2. Your cheque or banker's draft must be made payable to "Link Market Services Ltd re: BSC2 – 2018 OFS a/c" and crossed "A/c Payee only". Your payment must relate solely to this Subscription. Cheques may be presented for payment on receipt. Subscription Forms accompanied by a post-dated cheque will not be accepted. Your Subscription Form will be acknowledged by Link Asset Services.
Your electronic transfer, cheque or banker's draft must be drawn in sterling on an account with a United Kingdom or EU regulated credit institution, which is in the sole or joint name of the Subscriber and must bear, if a cheque, the appropriate sort code in the top right-hand corner.
The payment instruction relating to the electronic transfer must also include a unique reference comprising your name and a contact telephone number which should be entered in the reference field on the payment instruction, for example MJ SMITH 01234 567 8910. The Receiving Agent cannot take responsibility for correctly identifying payments without a unique reference nor where a payment has been received but without an accompanying Subscription Form.
The right is reserved to reject any application in respect of which the Subscriber's electronic transfer, cheque or banker's draft has not been cleared on first presentation. Any monies will be returned in the same manner as originally received e.g. by cheque in the post or by a credit to the remitting account, at the risk of the persons entitled thereto.
Please complete this section if you are a New Shareholder.
If you wish to participate in the Company's dividend re-investment scheme, having first read and understood the terms and conditions of the scheme which can be found on the website www.bscfunds.com, please then tick the appropriate box in Section 4.
The dividends paid by the Company can be taken as cash. Section 4 of the Subscription 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 4 is not completed. The Company's 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 Company directly to your bank or building society account, please 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.
Please tick the relevant box to identify the type of investment you are making – Advised, Execution only, or Direct.
You should tick box 5(i) if you have received financial advice with respect to your Subscription to the Offer. (If you tick box 5(i) your financial Intermediary should complete Sections 8 and 9 of the Subscription Form). 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 New Shares issued to the Applicant will be reduced by the amount of the Adviser Charge. The Adviser Charge is inclusive of VAT, if applicable.
You should tick box 5(ii) if you have not received financial advice with respect to your Subscription to the Offer and have used a financial Intermediary on an "execution only" basis (other than platform service providers). (If you tick box 5(ii) your financial Intermediary should complete Sections 8 and 9 of the Subscription Form).
For execution only – you should tick box 5(iii) and complete to show the fees or commission structure you wish to receive.
You should tick box 5(iv) if you have not used a financial Intermediary and have applied direct. Sections 8 and 9 should not be completed if you apply directly and have not used a financial Intermediary with respect to your Subscription.
You must sign, state your name and date the Subscription Form in Section 6 and complete the declaration that you have read the Company's Key Information Document ("KID").
By signing and dating the Subscription Form you agree to invest in the Company in accordance with the Terms and Conditions of the Subscription as set out on pages 23 to 25 of this Document.
Any New Shares allotted to you will be in a registered form capable of being transferred by means of the CREST system. Subscribers who wish to take advantage of the ability to trade in New Shares in uncertificated form, and who have access to a CREST account, may arrange to have their New Shares allotted directly to their CREST account, or subsequently to convert their holdings into dematerialised form in CREST. Investors should be aware that New Shares delivered in certificated form are likely to incur higher dealing costs than those in respect of New Shares held in CREST. The Company's share register will be kept by the Company's Registrar, Link Asset Services.
Intermediaries must complete (in BLOCK CAPITALS) Section 8 giving their full company name and address, a contact name, telephone number, email address and details of their authorisation under the FSMA. The right is reserved to reject any Subscription or withhold any payment of fees or commission if the Company is not, at its sole discretion, satisfied that the Intermediary is authorised or is unable to identify the Intermediary on the basis of information provided. In order for commission or Adviser Charges to be paid by BACS, please complete the relevant boxes.
Intermediaries should sign and date the Subscription Form in Section 9 and include their signing capacity.
If you are an Existing Shareholder in the Company, the existing name, banking and dividend reinvestment (if any) details will be applied to your Subscription. If you are a New Shareholder please complete the bank account details in Section 4 in order to receive dividends in cash or tick the box for option B if you wish your dividends to be re-invested.
Existing Shareholders' dividends payment/re-investment details and Shareholder communications preferences will not be altered as a result of New Shares being issued to them. Should any Existing Shareholder wish to change any of the existing instructions with regards to the administration of their account(s) they should do so separately by contacting the Registrars, Link Asset Services or by registering via their Shareholder portal www.signalshares.com.
A note for Investors - Investors should be aware of the following requirements in respect of the Money Laundering Regulations for Subscriptions that, together with any existing investment in the Company, bring the value of their total shareholding to the sterling equivalent of more than €15,000 (for these purposes approximately £13,000, as at the date of this Document).
b. Is made direct (i.e. not through a financial Intermediary), the Company, or a third party acting on behalf of the Company, will carry out a check of your identity using an online anti-money laundering and identity verification system. To enable this process you may be asked to provide a copy of your passport or driving licence.
If you do not want the online check to be carried out please tick the box in Section 1 of the Subscription Form that states that you are opting out of the electronic identity verification system. If you tick this box you must enclose:
If the cheque for your Subscription is drawn by a third party, the above documentation will also be required from the third party.
If you do not want the online check to be carried out please tick the box in Section 1 of the Subscription Form that states that you are opting out of the electronic identity verification system. If you tick this box you must enclose;
If the cheque for your Subscription is drawn by a third party, the above documentation will also be required from the third party.
On request by the Company or YFM or the Receiving Agent, you will disclose promptly in writing any information which may be reasonably requested in connection with your Subscription including, without limitation, satisfactory evidence of identity to ensure compliance with the Money Laundering Regulations and authorise the Company, YFM or the Receiving Agent to disclose any information relating to your Subscription as the Company, YFM or the Receiving Agent consider appropriate.
Failure to provide the necessary evidence of identity may result in your Subscription being treated as invalid or in delay of confirmation.
Please detach the Subscription Form from this Document before you begin.
You will find it is easier this way to refer to the Notes on pages 27 to 32 and to ensure you provide the correct information.
Link Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU.
If you have any questions on how to complete the Subscription Form, please contact YFM (details below) in the first instance or call Link Asset Services on 0800 181 4729 (Freephone). Lines are open between 8:30 am- 5:30 pm Monday to Friday excluding public holidays. Alternatively speak to your Financial Adviser.
Investor Relations Support Manager
| 1. Personal Details Personal Details Please use BLOCK CAPITALS Please use BLOCK CAPITALS |
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|---|---|---|---|---|
| Title and Full Name: | ||||
| Permanent Address: | ||||
| Postcode: | ||||
| Tel no (day): | Tel no (evening): | |||
| Date of Birth: | National Insurance No: | |||
| Country of Residence for Tax Purposes: | ||||
| Email: | ||||
| Are you an Existing Shareholder or spouse or civil partner of an Existing Shareholder? | Yes | No | ||
| Name of spouse or civil partner (if applicable): | ||||
| If your existing Shares are held by a Nominee or in CREST, please tick this box. (We may need to contact you for further information). | ||||
| If you are an Existing Shareholder in the Company, please ensure that the details provided in this section exactly match those shown on your existing Share certificate(s), so as to avoid duplicate Shareholder accounts being created. |
||||
| If you are a New Shareholder and you would like to receive Shareholder communications in hard copy rather than electronically, please tick this box. | ||||
| If you do not want a check to be carried out please tick this box to opt out of the electronic identity verification system. If you tick this box you must provide | ||||
| the certified copy documents as set out in the Money Laundering Notice on pages 25, 30 and 31. If you do not want the Company to share your investment data with your Financial Adviser or wealth manager, please tick this box. |
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| 2. Subscription Details | ||||
| I wish to subscribe under the Offer for | £ | (minimum £3,000) | ||
| of New Shares, or such lesser amount for which these Subscription(s) will be accepted, which is to be invested in the Company pursuant to the Offer. | ||||
| 3. Payment Details Please complete EITHER Option A or Option B |
||||
| OPTION A - Cheque/banker's draft | £ | |||
| I enclose a cheque/banker's draft drawn on a UK clearing bank for: Made payable to: Link Market Services Ltd re: BSC2 2018 OFS a/c, being equal to the amount in Section 2. |
||||
| OPTION B - Electronic Transfer | I confirm that I have made a bank transfer for: | £ | ||
| Into the account: | Bank: RBS |
Your ref: | Insert name/telephone no. | |
| 15-10-00 Sort Code: Account No: 32577744 |
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| Account Name: | Link Market Services Ltd re: BSC2 2018 OFS a/c |
| 4. Dividend Payment Details Please complete EITHER Option A or Option B |
||
|---|---|---|
| OPTION A - Dividends paid in cash | ||
| Please complete the details below to have dividends paid directly into your bank or building society. | ||
| Name of Bank or Building Society: | Account Name: | |
| Account No: | ||
| Branch: | Sort Code: | |
| The Company cannot accept responsibility if any details provided by you are incorrect. | ||
| OPTION B - Dividend Re-Investment Scheme for capital growth | ||
| and you would like to have your dividends re-invested into Ordinary Shares, rather than received in cash. | Please tick the box if you have read the dividend re-investment scheme terms and conditions on the website www.bscfunds.com | |
| 5. Investment Type Please tick one box only |
||
| (i) | Advised: You have been advised on this investment by an Intermediary. Please ensure Sections 8 and 9 are completed by your Intermediary. Please sign and date Section 6. |
|
| If you have agreed an Adviser Charge with your Intermediary and request that the Company pay that fee, please insert the fee amount in this box. Please note that the number of New Shares issued to you will be reduced by the Adviser Charge. This payment is inclusive of VAT, if applicable. |
£ | |
| (ii) | Execution only: This investment is being processed through your Intermediary who is not providing you with advice – please leave the rest of this section blank and ensure Sections 8 and 9 are completed by your Intermediary. Please sign and date Section 6. |
|
| (iii) | 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: | % | |
| (iv) | Direct – No Intermediary: This is a direct investment (i.e. you are not submitting this application through an Intermediary). Please sign and date Section 6. |
|
| 6. Declaration and Signature | ||
| I have given to the Company are correct. | BY SIGNING THIS FORM I HEREBY DECLARE THAT: (i) I have read the enclosed Terms and Conditions of Subscription of the Document dated 11 January 2018 and agree to be bound by them; (ii) I will be the Beneficial Owner of the New Shares in the Company issued to me pursuant to this Subscription; (iii) to the best of my knowledge and belief, the particulars |
|
| I declare that I have read the Company's Key Information Document ["KID"], which is available in the Company's own |
section at www.bscfunds.com, or which can be obtained free of charge upon written request to the Company.
HM Revenue & Customs may inspect this Subscription Form. It is a serious offence to make a false declaration. The Company, the Receiving Agent, RAM Capital and YFM do not accept responsibility if any details provided by you are incorrect.
Signature: Date:
Print name:
| Page 3 | ||
|---|---|---|
| 7. CREST Details |
I request that any New Shares for which my Subscription is accepted are issued to my Nominee through CREST. |
|---|---|
| CREST Participant ID: | |
| CREST Member Account ID: |
The Company, the Receiving Agent, RAM Capital and YFM do not accept responsibility if any details provided by you are incorrect.
| TO BE COMPLETED BY FCA AUTHORISED INTERMEDIARIES ONLY | ||||
|---|---|---|---|---|
| FCA Authorised Intermediary Name: | ||||
| Contact Name (for administration): | ||||
| Firm Name: | ||||
| Address: | ||||
| Postcode: | ||||
| FCA No: | Tel No: | |||
| Email: | ||||
Please provide details of your bank or building society so that any initial commission or Adviser Charges can be paid via BACS.
| Name of Bank or Building Society: | Account Name: | ||
|---|---|---|---|
| Account No: | |||
| Branch: | Sort Code: | ||
| Email address for commission statements: |
I confirm that I have identified and verified the identity of the Subscriber and the source of the Subscription funds to the standard required by the Money Laundering Regulations within the guidance for the UK Capital Financial Sector issued by the Joint Money Laundering Steering Group and have the authority to sign this declaration on behalf of the authorised Financial Intermediary.
| Signature (to be signed by | Capacity: |
|---|---|
| the FCA Authorised | |
| Intermediary): | Date: |
Please note that this Subscription Form is likely to be rejected if this box is not completed correctly and the signatory's capacity inserted.
The Company, the Receiving Agent, RAM Capital and YFM do not accept responsibility if any details provided by you are incorrect.
Link Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU.
Any queries in respect of completion of this form please contact:
| Tracey Nice | or | Link Asset Services | ||
|---|---|---|---|---|
| Investor Relations Support Manager | ||||
| T: E: W: |
0113 261 6478 [email protected] bscfunds.com |
T: | 0800 181 4729 | |
5th Floor, Valiant Building 14 South Parade Leeds LS1 5QS
The Registry 34 Beckenham Road Beckenham Kent BR3 4TU
No.1 London Bridge London SE1 9BG
One New Change London EC4M 9AF
Corporate Actions The Registry 34 Beckenham Road Beckenham Kent BR3 4TU
4 Staple Inn London WC1V 7QH
55 Baker Street London W1U 7EU
Suite C, First Floor 4-6 Staple Inn Holborn London WC1V 7QH
44 Merrion Street Leeds LS2 8JQ
110 George Street Edinburgh EH2 4LH
5th Floor, Valiant Building 14 South Parade Leeds LS1 5QS
Telephone 0113 244 1000 Email [email protected]
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