Capital Gearing Trust PLC — Proxy Solicitation & Information Statement 2016

Aug 19, 2016

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the action you should take, you are recommended to seek your own independent financial advice from your stockbroker, solicitor, accountant, bank manager or other independent financial adviser authorised under the Financial Services and Markets Act 2000 if you are in the United Kingdom or, if not, from another appropriately authorised financial adviser.

If you have sold or otherwise transferred all of your shares in Capital Gearing Trust P.l.c. (the "Company"), please send this document, together with the accompanying 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 onward transmission to the purchaser or transferee.

CAPITAL GEARING TRUST P.L.C.

(a company incorporated and registered in Northern Ireland with registered number NI005574 and registered as an investment company under section 833 of the Companies Act 2006)

Notice of a General Meeting to renew the Board's authority to issue further shares on a non pre-emptive basis

Notice of the general meeting of the Company to be held on 5 September 2016 at 11.00 a.m. (the "General Meeting") at the offices of Dickson Minto W.S., 16 Charlotte Square, Edinburgh EH2 4DF is set out at the end of this document.

To be valid, the form of proxy accompanying this document must be completed and returned, in accordance with the instructions printed on it, so as to be received by the Company's registrars, Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY or lodged at www.investorcentre.co.uk/eproxy as soon as possible, but in any event not later than 11.00 a.m. on 1 September 2016.

CONTENTS

	Page
EXPECTED TIMETABLE	2
LETTER FROM THE CHAIRMAN	3
Introduction	3
Reasons for requiring the extension and early renewal of the Board's authorities	3
The General Meeting	4
Action to be taken	4
Recommendation	4
NOTICE OF GENERAL MEETING	5

EXPECTED TIMETABLE

	2016
Latest time and date for receipt of forms of proxy	11.00 a.m. on 1 September
General Meeting	11.00 a.m. on 5 September

LETTER FROM THE CHAIRMAN

CAPITAL GEARING TRUST P.L.C.

(a company incorporated and registered in Northern Ireland with registered number NI005574 and registered as an investment company under section 833 of the Companies Act 2006)

E G Meek (Chairman) Waterfront Plaza G A Prescott 8 Laganbank Road R Archibald Belfast A R Laing BT1 3LR J G Matterson

Directors Registered Office

19 August 2016

Dear Shareholder

Notice of General Meeting

Introduction

On 6 May 2016 the Company published a prospectus in connection with the potential issue of further new ordinary shares of 25 pence each (the "Ordinary Shares") pursuant to the Company's discount and premium control policy (the "DCP"). In order to meet the recent and continuing demand for the Ordinary Shares resulting from the operation of this policy, the Board is now proposing to seek the renewal of its shareholder authority to issue Ordinary Shares on a non pre-emptive basis prior to the Company's next annual general meeting which is expected to be held in July 2017 (the "Proposals").

The purpose of this document is therefore to convene a general meeting at which the appropriate shareholder authority will be sought. The General Meeting will be held at 11.00 a.m. on 5 September 2016 at the offices of Dickson Minto W.S., 16 Charlotte Square, Edinburgh EH2 4DF.

Reasons for requiring the extension and early renewal of the Board's authorities

At the annual general meeting in 2015 shareholders approved the DCP. Under this policy the Company purchases or issues Ordinary Shares to ensure, in normal market conditions, that the Ordinary Shares trade as close as possible to their underlying net asset value per share.

At the annual general meeting of the Company held on 7 July 2016, shareholders granted the Board authority to allot up to 1,113,459 Ordinary Shares (being equivalent to approximately one third of the issued share capital of the Company at that time). In addition, the Board were granted authority to disapply pre-emption rights on the issue of up to 340,037 such Ordinary Shares for cash (being equivalent to approximately 10 per cent. of the issued share capital at that time). Both authorities were granted for the period until the next annual general meeting which is expected to be held in July 2017.

Since the adoption of the DCP the Board has exercised its powers by issuing 801,254 new Ordinary Shares (representing 27.38 per cent. of the Company's issued share capital at the time the policy was introduced) on a non pre-emptive basis for cash and at a premium to the prevailing net asset value per share, with an increase in the issuance pattern since the beginning of 2016. As at 18 August 2016 (the latest practicable date prior to the publication of this document) the Company has the capacity to issue only a further 129,138 Ordinary Shares on a non pre-emptive basis.

The Board believes that this current capacity under the existing shareholder authorities will prove insufficient to allow the Board to continue to satisfy demand for the Ordinary Shares during the period up to the Company's next annual general meeting. If such authority is granted by shareholders the Directors will only use the authority to disapply pre-emption rights and issue shares: (i) at a premium to net asset value; (ii) to meet demand from investors; and (iii) when the Directors believe that it is in the best interests of the Company and its shareholders to do so.

The Board believes that the DCP and the Company's continuing ability to issue Ordinary Shares at a premium to net asset value increases liquidity, spreads the fixed costs of the Company over a larger asset base and reduces volatility by preventing the build up of excessive demand for shares. Despite the relative growth in the equity base of the Company since the adoption of the DCP and recent market volatility the Manager continues to find investments into which fresh capital can be deployed effectively.

The General Meeting

The Proposals are conditional on the approval of shareholders. Given the current limited capacity to continue to issue further Ordinary Shares in accordance with the DCP the Board believes there is sufficient urgency to justify utilising their authority to call the General Meeting on 14 clear days' notice. You will find set out at the end of this document a notice convening the General Meeting at which shareholders will be asked to consider and, if thought fit, approve the Proposals. The General Meeting is to be held at 11.00 a.m. on 5 September 2016 at the offices of Dickson Minto W.S., 16 Charlotte Square, Edinburgh EH2 4DF.

The resolution will be proposed at the General Meeting as a special resolution. The resolution will, if passed, enable the Directors to issue new Ordinary Shares, in addition to its existing authority, and resell shares held in treasury for cash without first offering such Ordinary Shares to existing shareholders pro rata to their existing shareholdings up to an aggregate nominal amount of £193,355.50 (being 773,422 Ordinary Shares) which equates to the remaining allotment authority granted at the annual general meeting. This represents 20.75 per cent. of the total Ordinary Share capital of the Company in issue as at 18 August 2016 (the latest practicable date prior to the publication of this document). The Company is seeking more than 10 per cent. non pre-emptive authority as it is administratively and cost expedient to do so, particularly given how the DCP has operated over the last nine months. It does not reflect any change in the Company's policy for growth in the capital base of the Company other than through application of the DCP.

All shareholders are entitled to attend and vote at the General Meeting. In accordance with the Company's articles of association, all shareholders entitled to vote and present in person or by proxy at the General Meeting shall upon a show of hands have one vote and upon a poll shall have one vote in respect of every Ordinary Share held.

Action to be taken

Shareholders will find enclosed a form of proxy for use in connection with the General Meeting. Whether or not shareholders propose to attend the General Meeting, they are requested to complete, sign and return the form of proxy as soon as possible, in accordance with the instructions printed on it.

To be valid, the enclosed form of proxy must be lodged with the Company's registrars, Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY or lodged at www.investorcentre.co.uk/eproxy as soon as possible and, in any event, so as to arrive by not later than 11.00 a.m. on 1 September 2016. The completion and return of the form of proxy will not prevent a shareholder from attending and voting in person at the General Meeting.

Recommendation

The Directors consider the passing of the resolution to be in the best interests of the Company and its shareholders as a whole. Accordingly, the Directors unanimously recommend that shareholders vote in favour of the resolution.

The Directors intend to vote in favour of the resolution in respect of their own beneficial holdings of Ordinary Shares (amounting to 32,107 Ordinary Shares, representing approximately 0.86 per cent. of the issued share capital of the Company as at the date of this document).

Yours faithfully

E G Meek Chairman

CAPITAL GEARING TRUST P.L.C.

(a company incorporated and registered in Northern Ireland with registered number NI005574 and registered as an investment company under section 833 of the Companies Act 2006)

NOTICE OF GENERAL MEETING

NOTICE IS HEREBY GIVEN that a general meeting of Capital Gearing Trust P.l.c. (the "Company") will be held at 11.00 a.m. on 5 September 2016 at the offices of Dickson Minto W.S., 16 Charlotte Square, Edinburgh EH2 4DF to consider and, if thought fit, pass the following resolution which will be proposed as a special resolution:

SPECIAL RESOLUTION

THAT, in addition to all existing authority, the directors of the Company be and are hereby generally empowered, pursuant to sections 570 and 573 of the Companies Act 2006 (the "Act") to allot equity securities (within the meaning of section 560 of the Act) pursuant to any authority for the time being in force under section 551 of the Act and to sell shares held by the Company in treasury, wholly for cash, as if section 561(1) of the Act did not apply to any such allotment or sale, provided that this power:

• (i) shall be limited to the allotment of equity securities and the sale of treasury shares for cash up to an aggregate nominal amount of £193,355.50 (being 20.75 per cent. of the issued share capital of the Company as at 18 August 2016); and
• (ii) expires on the conclusion of the next annual general meeting of the Company to be held after the passing of this resolution, save that the Company may before such expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of such an offer or agreement as if the power conferred hereby had not expired.

By order of the Board Registered office

Steven Cowie 8 Laganbank Road Company Secretary Belfast BT1 3LR

Waterfront Plaza

19 August 2016

Notes:

• 1. As a Shareholder you are entitled to appoint a proxy or proxies to exercise all or any of your rights to attend, speak and vote at the General Meeting. A proxy need not be a member of the Company but must attend the General Meeting to represent you. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You can only appoint a proxy using the procedure set out in these notes and the notes to the proxy form.
• 1. To be valid any proxy form or other instrument appointing a proxy, together with any power of attorney or other authority under which it is signed or a certified copy thereof, must be received by post or (during normal business hours only) by hand to Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY. Proxy votes must be received no later than 48 hours (excluding non-working days) before the time of the meeting or any adjourned meeting.
• 1. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so by using the procedures described in the CREST Manual and by logging on to the registrar's website www.euroclear.com/CREST. 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.
• 1. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a "CREST Proxy Instruction") must be properly authenticated in accordance with Euroclear UK & Ireland Limited's specifications, and must contain the information required for such instruction, as described in the CREST Manual. The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the Company's registrar (ID 3RA50) no later than 48 hours (excluding non-working days) before the time of the meeting or any adjournment. 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 Application Host) from which the Company's registrar is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.
• 1. CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular message. 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 system providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
• 1. 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.
• 1. The return of a completed proxy form or other instrument of proxy will not prevent you attending the General Meeting and voting in person if you wish. If you have appointed a proxy and attend the General Meeting in person your proxy appointment will remain valid and you may not vote at the General Meeting unless you have provided a hard copy notice to revoke the proxy to Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY not later than 11.00 a.m. on 1 September 2016.
• 1. To have the right to attend, speak and vote and the General Meeting (and also for the purposes of calculating how many votes a member may cast on a poll) shareholders must be registered in the Register of Members of the Company no later than 6.30 p.m. on the day which is two days (excluding non-working days) before the day of the General Meeting or any adjourned meeting. Changes to the Register of Members after the relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the meeting.
• 1. As at 18 August 2016 (being the last business day prior to the publication of this notice) the Company's issued share capital consisted of 3,728,160 ordinary shares carrying one vote each. Therefore, the total voting rights in the Company as at 18 August 2016 were 3,728,160 votes.
• 1. Any person holding 3 per cent. or more of the total voting rights of the Company who appoints a person other than the Chairman of the meeting as his proxy will need to ensure that both he and his proxy comply with their respective disclosure obligations under the Disclosure and Transparency Rules.
• 1. A quorum consisting of two or more Shareholders present in person or by proxy is required for the General Meeting. If, within half an hour after the time appointed for the General Meeting, a quorum is not present the General Meeting shall be adjourned for seven days at the same time and place or to such other day and at such other time and place as the Board may determine and no notice of adjournment need be given at any such adjourned meeting. Those shareholders present in person or by proxy shall constitute the quorum at any such adjourned meeting.