INVESTSMART GROUP LIMITED — AGM Information 2013

Oct 16, 2013

AUSTRALASIAN WEALTH INVESTMENTS LIMITED

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that an Annual General Meeting ( AGM or the Meeting ) of the Members of Australasian Wealth Investments Limited ACN 111 772 359 ( AWK or the Company ) will be held on Thursday 28 November 2013 at 10.00 am (Sydney time) at the offices of Bell Potter Securities Limited, Level 38 , 88 Phillip Street, SYDNEY NSW 2000.

ORDINARY BUSINESS

1. Financial and statutory reports

To receive and consider the financial report of the Company, and the reports of the Directors and of the auditor, for the year ended 30 June 2013.

Note: This matter is not voted upon.

2. Adoption of remuneration report

Resolution 1 - as an ordinary resolution:

That the Remuneration Report contained in the Australasian Wealth Investments Limited 2013 Annual Report be hereby adopted

Note: The vote on this matter is advisory only and does not bind the Directors or the Company. Shareholders are encouraged to read items 2 and 8 of the Explanatory Memorandum and for further details on the consequences of voting on this Resolution

Voting Exclusion Statement

As required by Section 250R(4) of the Corporations Act, the Company will disregard any votes cast under Resolution 1 by the Directors of the Company or their related entities and associated parties.

3. Re-appointment of John Reynolds as a Director

The ASX Listing Rules and the constitution of the Company require each Director to be re-elected every three years and also that an election of Directors be held each year. The Managing Director is not required to be re-elected.

Resolution 2 - as an ordinary resolution:

To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

“That John Reynolds, retiring from the office of Director in accordance with rule 6.4 of the Company’s Constitution and being eligible, is re-appointed as a Director of the Company.”

Australasian Wealth Investments Limited ABN 62 111 772 359 Level 4, 1 Alfred Street, SYDNEY, NSW 2000

4. Termination of Management Contract

Resolution 3 - as an ordinary resolution:

Subject to Resolution 4 being passed, to consider and, if thought fit to pass the following resolution as an ordinary resolution:

“That for all purposes, including for the purpose of ASX Listing Rule 10.1, approval is given for the Company to execute a deed of termination to terminate the Management Agreement dated 8 February 2005 (as amended and novated from time to time) which now applies to the Company and Aurora Funds Management Limited (ACN 092 626 885) ( Aurora ) as Manager and for the Company to pay the Manager a fee of $900,000 in consideration for the termination of that management agreement, on the terms and conditions set out in the Explanatory Memorandum accompanying this Notice of General Meeting.”

Voting Exclusion Statement

The Company will disregard any votes cast on Resolution 3 by Aurora Funds Management Limited, Mr Andrew Barnes, and Mr Alastair Davidson and their respective associates. However, the Company will not disregard a vote if it is cast by:

• a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

• the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

5. Issue of options to Andrew Barnes or his nominee

Resolution 4 - as an ordinary resolution:

Subject to Resolution 3 being passed, to consider and, if thought fit to pass the following resolution as an ordinary resolution:

“That for the purposes of ASX Listing Rule 10.11 and all other purposes, approval be given for the issue to Mr. Andrew Barnes or his nominee of up to 3,370,000 options over fully paid shares on the terms described in the Explanatory Memorandum by 30 November 2013”.

Voting Exclusion Statement

The Company will disregard any votes cast on Resolution 4 by Mr Andrew Barnes and his Associates and Alastair Davidson and his associates. However, the Company will not disregard a vote if it is cast by:

• a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

• the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

Australasian Wealth Investments Limited: Notice of 2013 AGM page 2

6. Issue of shares to Ben Heap under the 2013 Long Term Incentive Plan

Resolution 5 - as an ordinary resolution:

To consider, and if thought fit, to pass the following resolution for the purposes of ASX Listing Rules 7.1 and 10.14 as an ordinary resolution:

“That approval be given to the issue of up to 10,575,231 shares in AWK to the prospective Chief Executive Officer & Managing Director Ben Heap upon the commencement of his employment, under the Company’s Long Term Equity Incentive Plan 2013 offer, on the terms summarised in the Explanatory Notes to this Notice of Meeting.”

Voting Exclusion Statement

The Company will disregard any votes cast on Resolution 5 by Mr Ben Heap and his Associates. However, the Company will not disregard a vote if it is cast by:

• a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

• the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

7. Change of status of Company on Australian Securities Exchange

Resolution 6 – as an ordinary resolution:

To consider, and if thought fit, to pass the following resolution for the purposes of ASX Listing Rule 11.1.2 as an ordinary resolution:

“That approval be given to the change in status of the Company from a listed investment company to listed company holding investments in financial services businesses.”

Voting Exclusion Statement

The Company will disregard any votes cast on Resolution 6 by a person who might obtain a benefit, except a benefit solely in the capacity as a holder of ordinary securities, if the resolution is passed. However, the Company will not disregard a vote if it is cast by:

• a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

• the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

CONTINGENT BUSINESS

8. Holding a Spill Meeting

Note - this Resolution will only be voted on if the outcome of Resolution 1 within Item 2 of this Notice of Meeting is such that at least 25% of the votes cast are against the adoption of the Remuneration Report. See Item 7 of the Explanatory Statement for further details.

Australasian Wealth Investments Limited: Notice of 2013 AGM page 3

Resolution 7 - as an ordinary resolution:

To consider and, if thought fit, pass the following as an ordinary resolution:

"That:

• (a) a general meeting of the Company ( Spill Meeting ) be held within 90 days of the 2013 AGM; and

• (b) all the Company's Directors (other than the Managing Director of the Company) who were Directors of the Company when the resolution to make the Directors' Report considered at the 2013 AGM was passed, cease to hold office immediately before the end of the Spill Meeting; and

• (c) resolutions to appoint persons to offices that will be vacated immediately before the end of the Spill Meeting pursuant to paragraph (b) above must be put to the vote at the Spill Meeting."

Voting Exclusion Statement

As required by Section 250V(2) of the Corporations Act, the Company will disregard any votes cast under Resolution 7 by the Directors of the Company or their related entities and associated parties.

EXPLANATORY MEMORANDUM

Please refer to the Explanatory Memorandum attached to this Notice of Meeting in relation to the items of business set out in this Notice.

ENTITLEMENT TO ATTEND AND VOTE AT THE AGM

In accordance with section 1074E(2)(g)(i) of the Corporations Act and regulation 7.11.37 of the Corporations Regulations and ASTC Operating Rule 8.3A.1, the Company has determined that for the purposes of the Annual General Meeting all Shares will be taken to be held by the persons who, according to records of the Company’s share registrar, held them as registered Shareholders at 7pm (Sydney time) on 26 November 2013. Accordingly, share transfers registered after that time will be disregarded in determining entitlements to attend and vote at the Annual General Meeting.

Dated this 17th day of October 2013

By order of the Board of Directors

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Andrew Brown Chairman

Australasian Wealth Investments Limited: Notice of 2013 AGM page 4

Australasian Wealth Investments Limited: 2013 AGM – Notes and voting instructions

AUSTRALASIAN WEALTH INVESTMENTS LIMITED

ANNUAL GENERAL MEETING – NOTES AND VOTING INSTRUCTIONS

How to Vote

Members entitled to vote at the Meeting may vote:

• A. by attending the Meeting and voting in person; or

• B. by appointing an attorney to attend the Meeting and vote on their behalf or, in the case of corporate members or proxies, a corporate representative to attend the meeting and vote on its behalf; or

• C. by appointing a proxy to attend and vote on their behalf, using the proxy form accompanying this Notice. A proxy may be an individual or a body corporate.

A. Voting in person

B. Appointing an attorney or corporate representative to attend the meeting

Members or their proxies, attorneys or representatives (including representatives of corporate proxies) wishing to vote in person should attend the Meeting and bring a form of personal identification (such as their driver's licence).

To vote by attorney at this meeting, the original or a certified copy of the power of attorney or other authority (if any) under which the instrument is signed must be received by the Registry before 10.00 am (Sydney time) on 26 November 2013 in any of the following ways:

By post to the share registry, Boardroom Pty Limited: By hand delivery to Boardroom Pty Limited at: GPO Box 3993, Sydney NSW 2001 Level 7, 207 Kent Street, Sydney NSW 2000

By fax to Boardroom Pty Limited on:

(02) 9290 9655

To vote in person, you or your proxy, attorney, representative or corporate proxy representative must attend the AGM to be held at the offices of Bell Potter Securities Limited, located at Level 38, 88 Phillip Street, Sydney NSW 2000 on 28 November 2013 commencing at 10:00am (Sydney time).

A vote cast in accordance with the appointment of a proxy or power of attorney is valid even if before the vote was cast the appointor:

• died;

• became mentally incapacitated;

• revoked the proxy or power; or

• transferred the Shares in respect of which the vote was cast,

unless AWK received written notification of the death, mental incapacity, revocation or transfer before the meeting or adjourned meeting.

To vote by corporate representative at the meeting, a corporate Member or proxy should obtain an Appointment of Corporate Representative Form from the share registry, complete and sign the form in accordance with the instructions on it. The appointment should be lodged at the registration desk on the day of the Meeting. The appointment of a representative may set out restrictions on the representative's powers.

Australasian Wealth Investments Limited: Notice of 2013 AGM page 5

Australasian Wealth Investments Limited: 2013 AGM – Notes and voting instructions

The original form of appointment of a representative, a certified copy of the appointment, or a certificate of the body corporate evidencing the appointment of a representative is prima facie evidence of a representative having been appointed. The Chairman of the Meeting may permit a person claiming to be a representative to exercise the body's powers even if he or she has not produced a certificate or other satisfactory evidence of his or her appointment.

C. Voting by Proxy

Any shareholder of the Company entitled to attend and vote at this AGM is entitled to appoint a proxy to attend and vote instead of that shareholder. The proxy does not need to be a Member of the Company. A shareholder that is entitled to cast 2 or more votes may appoint 2 proxies and may specify the proportion or number of votes each proxy is appointed to exercise. If no proportion or number is specified, each proxy may exercise half of the shareholder’s votes. A proxy may be an individual or a body corporate. A proxy that is a body corporate may appoint a representative to exercise the powers that the body corporate may exercise as the Member's proxy.

A proxy may vote or abstain as he or she chooses except where the appointment of the proxy directs the way the proxy is to vote on a particular resolution. If an appointment directs the way the proxy is to vote on a particular resolution:

• if the proxy is the chair - the proxy must vote on a poll and must vote in the way directed;

• if the proxy is not the chair - the proxy need not vote on a poll, but if the proxy does so, the proxy must vote in the way directed; and

• in this instance if the proxy does not attend the Meeting, or does not vote on a poll, the chair of the Meeting is taken, before voting on the resolution closes, to have been appointed as the proxy for the purposes of voting on the resolution at that Meeting.

If a proxy appointment is signed or validly authenticated by the Member but does not name the proxy or proxies in whose favour it is given, the Chairman may either act as proxy or complete the proxy appointment by inserting the name or names of one or more Directors or Company Secretary.

If:

• a Member nominates the Chairman of the Meeting as the Member's proxy; or

• the Chairman is to act as proxy if a proxy appointment is signed by a Member but does not name the proxies in whose favour it is given or otherwise under a default appointment according to the terms of the proxy form,

then the person acting as Chairman in respect of an item of business at the Meeting must act as proxy under the appointment in respect of that item of business.

Pursuant to section 250R(5) of the Corporations Act 2001, specific rules in relation to proxy voting pertaining to Resolution 1 are described at section 2.5 of the Explanatory Memorandum.

Proxies must be lodged not later than 48 hours before the Annual General Meeting i.e. 10.00 am (Sydney time) on 26 November 2013 in any of the four following ways:

By post to the share registry, Boardroom Pty Limited: By hand delivery to Boardroom Pty Limited at: GPO Box 3993, Sydney NSW 2001 Level 7, 207 Kent Street, Sydney NSW 2000

By fax to Boardroom Pty Limited on: (02) 9290 9655

Australasian Wealth Investments Limited: Notice of 2013 AGM page 6

Australasian Wealth Investments Limited: 2013 AGM – Notes and voting instructions

By electronic lodgement:

http://www.boardroomlimited.com.au/vote/awkagm2013 in accordance with instructions provided on the website. You will need your Holder Identification Number (HIN) or Security Reference Number (SRN) to lodge your proxy vote online.

A form of proxy is provided with this notice.

Further Information

If you have any queries in relation to the Annual General Meeting, please contact the Company Secretary, Richard Matthews, on (02) 9080 2373 or rmatthews@aurorafunds.com.au

Dated this 17th day of October 2013

By order of the Board of Directors

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Andrew Brown Chairman

Australasian Wealth Investments Limited: Notice of 2013 AGM page 7

EXPLANATORY MEMORANDUM

Explanatory Memorandum for the Annual General Meeting of Australasian Wealth Investments Limited ACN 111 772 359 (“AWK” or “the Company”)

(This Explanatory Memorandum forms part of the Notice of Meeting)

This Explanatory Memorandum provides information for members in respect of the resolutions to be considered at the Annual General Meeting of Australasian Wealth Investments Limited ( AWK or the Company ) to be held on Thursday 28 November 2013 at 10.00 am (Sydney time) at the offices of Bell Potter Securities Limited, Level 38, 88 Phillip Street, SYDNEY NSW 2000 (AGM or the Meeting ).

Ordinary Business

1. Financial Statements

• 1.1 As required by section 317 of the Corporations Act 2001 (Cth) ( Corporations Act ), the Financial Report, Directors’ Report and Auditor’s Report of the Company is contained within the Annual Report 2013 and will be laid before the Meeting.

• 1.2 Members will be provided with the opportunity to ask questions about the reports or about the Company generally but there will be no formal resolution put to the Meeting.

2. Remuneration Report – Resolution 1

• 2.1 As required by section 250R(2) of the Corporations Act, a resolution that the Company’s Remuneration Report be adopted must be put to a vote. The Report is contained within the Directors’ Report in the Company’s Annual Report 2013.

• 2.2 Section 250R(3) of the Corporations Act provides that the vote on this resolution is advisory only and does not bind the directors or the Company, other than in respect of 2.3 – 3.5 below. In accordance with section 250SA of the Corporations Act, members of the Company will be provided with an opportunity to ask questions or make comments on the Remuneration Report.

• 2.3 The Board believes the Company’s remuneration policies and structures as outlined in the Remuneration Report are appropriate relative to the size of the Company, its business and strategic objectives and in relation to current and emerging market practices.

• 2.4 As required by Section 250R(4) of the Corporations Act , interests in AWK Shares held by Key Management Personnel and Directors of AWK (as named within the Remuneration Report contained on page 16 of the 2013 Annual Report) or their related parties or associates (together Prohibited Persons ) will be excluded from voting on this Resolution.

However, the Company will not disregard a vote if the Prohibited Person does so as a proxy appointed by writing that specifies how the proxy is to vote on the proposed resolution and the vote is not cast on behalf of a Prohibited Person.

Australasian Wealth Investments Limited: Notice of 2013 AGM page 8

• 2.5 In respect of undirected proxies, if the Chairman of the Meeting is appointed (or taken to be appointed) as a proxy, the shareholder can direct the Chairman of the Meeting to vote for or against, or to abstain from voting on Resolution 1 (Adoption of Remuneration Report) by marking the appropriate box opposite item 1 in the proxy form. Pursuant to section 250R(5) of the Corporations Act 2001, if the Chairman of the Meeting is a proxy and the relevant shareholder does not mark any of the boxes opposite item 1, the relevant shareholder will be expressly authorising the Chairman to exercise the proxy in relation to item 1. The Chairman intends to exercise such proxies by voting them in favour of the adoption of the Remuneration Report.

• 2.6 As required by Section 250U of the Corporations Act in the event that 25% of the votes cast in respect of this Resolution are opposed to the passing of the Remuneration Report and if members make comments at the Meeting, then in the following year the Board of the Company must report on any proposed responses to those comments, or explain why the Board of the Company does not propose any response.

• 2.7 Furthermore, as required by Section 250U and Section 250V of the Corporations Act, if 25% of the votes cast at the 2012 and 2013 AGMs (or two consecutive AGMs beyond that period) oppose the adoption of the Remuneration Report, then at the 2013 (or second) AGM, the company must give members the option to pass a resolution ( Spill Resolution ) requiring that the entire board (except the Managing Director) stand for re-election at a further general Meeting ( Spill Meeting ). At the Company’s 2012 AGM, over 25% of votes were cast against the adoption of the Remuneration report for the year ended 30 June 2012 and as a consequence, in the event that 25% or more of votes cast on Resolution 1 are against the resolution, then the Spill Resolution, being Resolution 7 (item 8 – contingent business) will be placed before the Meeting.

3. Re-Election of Director – John Reynolds – Resolution 2

• 3.1 In accordance with Clause 6.4 of the Company’s Constitution, John Reynolds must retire from office, and offer himself for election at the Annual General Meeting of the Company.

• 3.2 John Reynolds is a senior client advisor with Bell Potter Securities. Bell Potter is one of the largest retail brokers in Australia with close to 300 securities advisors. John has over 19 years’ experience in the securities industry. He has worked for the last 8 years at Bell Potter having previous experience at the securities firms JB Were, Credit Suisse and Challenger. He is an accredited securities dealer in Australian and International equities, derivatives and numerous equity and nonequity related products.

John has completed a Diploma in Applied Finance and Investment through FINSIA, specialising in portfolio construction and portfolio management. The majority of his advisory work is focused on the Top 50 stocks listed on the ASX. John is also a regular contributor to CNBC and Boardroom Radio.

John became a director of the company on 30 June 2008.

Australasian Wealth Investments Limited: Notice of 2013 AGM page 9

4. Termination of Management Agreement – Resolution 3

• 4.1 ASX Listing Rule 10.1 approval

• ASX Listing Rule 10.1 and requires inter alia that transactions involving the acquisition or disposal of a ‘substantial asset’ with a person of influence, including Directors and substantial shareholders be approved by shareholders. A ‘substantial asset’ is broadly defined by ASX Listing Rule 10.2 as one holding a value equivalent to 5% or more of defined equity interests of the Company.

• 4.2 Current management of the Company

• The Company is a Listed Investment Company. Aurora Funds Management Limited (an entity associated with Alastair Davidson who is a director of the Company) was appointed the investment manager of AWK on 28 March 2013 under a novation deed from the previous manager and approved by the independent directors. Aurora Funds Management Limited appointed Andrew Barnes as sub-manager of the Company on the same date.

A more detailed description of the terms of the current Management Agreement, including the current fee structure, is set out in section 4.7 below.

• 4.3 Proposed structure and management of the Company

If the Proposal is approved by shareholders and implemented, the Management Agreement will be terminated and Andrew Barnes will remain as a Director of the Company. The proposed director’s fee arrangement is set out in section 4.9 below. In addition, it is proposed to offer Andrew Barnes a series of options, subject to appropriate hurdles, the granting of which will be subject to the passing of Resolution 4.

• 4.4 Independent directors

The board of the Company currently comprises Andrew Brown (Chairman), Alastair Davidson, Andrew Barnes and John Reynolds. As announced to the market on 28 March 2013, Adam Lindell and Adrian Redlich resigned as directors.

Andrew Brown and John Reynolds do not have a material personal interest in the Proposal and are independent directors for the purposes of the Proposal.

• 4.5 Recommendation of the Independent Directors Andrew Brown and John Reynolds recommend that shareholders vote in favour of Resolution 3.

Due to their material interest in the Proposal, Alastair Davidson and Andrew Barnes make no recommendation in relation to Resolution 3.

• 4.6 Arm’s length terms

• Under certain circumstances, Shareholder approval for Resolution 3 would also be required to be sought under section 208 of the Corporations Act . However, the non-conflicted Directors believe that the proposed termination of the management agreement is being done on an arm’s length basis, a judgment supported by the Independent Expert’s report. As a consequence, the Company is not required to seek shareholder approval for Corporations Act purposes.

• 4.7 Current Management Agreement

The Management Agreement was entered into on 8 February 2005 between the Company and Fat Prophets Funds Management Australia Pty Ltd and was subsequently transferred to Merricks Capital Pty Ltd on 29 July 2010. The terms of the Management Agreement are summarised as follows.

Australasian Wealth Investments Limited: Notice of 2013 AGM page 10

• 4.7.1 Term

• The term of the Management Agreement is 25 years from the date of entering into the Management Agreement – i.e. from 8 February 2005 until 20 April 2030.

• 4.7.2 Fees

The Management Deed provides for management fees as follows:

• (1) an annual management equal to 1.25% of the net value of the portfolio of Investments calculated on the last business day of each month and payable monthly in arrears;

• (2) for the purposes of the above, the net value of the portfolio is calculated as the sum of the value of each investment less any liability directly or indirectly attributable to the acquisition, maintenance or disposal of any Investment or the management and administration of the portfolio incurred or accrued before the date on which the value is calculated (including but not limited to any unpaid purchase consideration, accrued legal or other expenses, brokerage, stamp duty, borrowings or other liabilities); and

• (3) The Manager is further entitled to a performance fee of 15% of any out performance against the S&P/ASX300 Accumulation Index for the previous month, payable monthly. Any negative performance against the S&P/ASX 300 Accumulation Index since the commencement date of the Company must be recouped before the Manager is entitled to a further performance fee.

The fees payable under the Management Agreement for the last four years are as follows (excluding GST):

ing GST):
Year Ended	30 June 2013	30 June 2012	30 June 2011	30 June 2010
Fees	$200,000	$350,000	$400,000	$814,815

• 4.7.3 Obligations of the Manager

The obligations of the Manager under the Management Agreement are as follows:

• (1) manage the portfolio of the Company’s Investments, and manage and supervise all Investments for the Company;

• (2) provide information to the Company regarding the investment portfolio which will enable the Company to calculate the value of the portfolio and the preparation of financial accounts; and

• (3) maintain the corporate and statutory records, liaise with the ASX and ASIC to comply with regulations.

In addition, the Manager is obligated to bear the cost of its internal expenses such as salaries, rent, research costs, travel entertainment and accommodation.

Australasian Wealth Investments Limited: Notice of 2013 AGM page 11

4.7.4 Termination

The Company may immediately remove the Manager and terminate the Management Agreement if:

• (1) An insolvency event occurs with respect to the Manager;

• (2) The Manager is in default or breach of its obligations under the Management Agreement in a material respect and that such default or breach is not rectified within 30 days after such default or breach has been notified to the Manager in writing;

• (3) The Manager’s AFSL is suspended or cancelled at any time in accordance with Subdivision C, Division 4 of Part 7.6 of the Corporations Act;

• (4) There is a change in control of the Manager and the Company has not previously granted its prior written permission (which must not be unreasonably withheld or delayed); or

• (5) The Manager persistently fails to ensure that investments made on behalf of the Company are consistent with the investment process applicable at the time the investment is made.

The Company may also propose to remove the Manager for non-performance by a special resolution approved by shareholders, where inter alia , the Manager underperforms the S&P/ASX 300 Accumulation Index by a total of 15% over a rolling three year period after appropriate adjustments for equity retirement and dividend distributions.

• 4.8 Amounts payable under the Proposal

Under the Proposal the Company will pay $900,000 cash to the Vendor.

4.9 Other financial terms

In addition to the amounts payable as set out above, under the Proposal, the Company has agreed to employ Andrew Barnes at a salary of $50,000 per annum. In addition, Andrew Barnes and Aurora have agreed to charge fees at a level equating to the assets managed as at 31 July 2013, being the month end preceding the announcements that agreement was reached to place securities in AWK. In the event that the internalisation is not approved, then Aurora and Andrew Barnes will have the right to charge fees on the enlarged assets in the Company as a result of the recent placement as per the original management contract.

4.10 Independent Expert’s Report

ASX Listing Rule 10.10.2 requires that the notice of Meeting given to Shareholders pursuant to ASX Listing Rule 10.1 include a report on the proposal from an independent expert. The report must also state whether the transaction is fair and reasonable to all AWK Shareholders (excluding those AWK Shareholders not entitled to vote at the Meeting, being Aurora and Andrew Barnes and their associates).

The Independent Directors of AWK have commissioned BDO Corporate Finance to prepare the Independent Expert’s Report in relation to the Proposal. A copy of the Independent Expert’s Report accompanies this Explanatory Memorandum and is included as an Annexure to this Explanatory Memorandum.

The Independent Expert’s Report concludes that the proposal is fair and reasonable to nonassociated Shareholders for the reasons outlined in the Independent Expert’s Report. Shareholders

Australasian Wealth Investments Limited: Notice of 2013 AGM page 12

are urged to read the Independent Expert’s Report in its entirety, but in particular, attention is drawn to sections 7 and 8 which contain the assessments of “fairness” and “reasonableness” respectively.

In accordance with ASX Listing Rule 10.10A.3:

• A copy of the Independent Expert’s Report is also available on the AWK website at www.australasianwealth.com.au

• If a Shareholder so requests, AWK will send an additional hard copy of the Independent Expert’s Report free of charge to that Shareholder

• 4.11 Conditions Precedent relating to the Proposal

The Proposal is subject to the following conditions precedent:

• (1) the obtaining of shareholder approval to the Proposal (i.e. the passing of Resolution 4); and

• (2) the obtaining of shareholder approval to the passing of Resolution 5 .

4.12 Management arrangements following the Proposal

If the Proposal is approved, the management of the Company’s Investments will be effectively internalised. Given the recent acquisition of InvestSMART which is an operating business, the Company will cease to be a Listed Investment Company on Australian Securities Exchange and become an operating company within the financial services sphere.

From completion of the Proposal, the Company will effectively manage its own Investments. It will not need an Australian Financial Services Licence to do this and does not intend to obtain one.

• 4.13 Intentions if Proposal is not approved

If the Proposal is not approved, the Company and Aurora/Andrew Barnes will continue to operate as they currently do. That is, Aurora will remain as the investment manager, Andrew Barnes as the sub-manager and will continue to provide investment management services to the Company under the Management Agreement and receive fees under the Management Agreement as they become payable.

For a description of the current terms of the Management Agreement including the current fee structure, refer to section 4.7 above.

5. Issue of options to Andrew Barnes – Resolution 4

Approval is being sought under ASX Listing Rule 10.11 for the issue of securities to a director of the Company, and pursuant to ASX Listing Rule 7.2 (Exception 14), if approval is given under ASX Listing Rule 10.11, approval is not required under ASX Listing Rule7.1 The options are being issued for nil consideration, and can be exercised at the strike prices indicated below. The shares issued as a result of the exercise of these options will be allotted within 5 business days of receipt of the exercise monies, and will rank pari passu will the ordinary shares.

The issue of options to Andrew Barnes is to act as an incentive for Mr. Barnes to continue to grow the equity value of the Company. The Directors believe that in the foreseeable future, whilst AWK remains an amalgam of investments, partly owned businesses and the wholly owned InvestSMART business, that the most transparent hurdles by which the Company can be judged is the return to investors, rather than after tax profit or a specific net tangible asset backing per share target. In time, this approach may well become invalid but is believed to be appropriate for the foreseeable future.

Australasian Wealth Investments Limited: Notice of 2013 AGM page 13

The incentive scheme is a total of 3,370,000 two year American type options (exercisable at any time after issuance until expiry) being vested in two tranches over a three year period subject to certain share price targets being achieved by the end of the vesting period as follows:

	Vesting	Number	Strike	Expiry	Vesting Hurdle
Tranche 1	2 years	1.685 million	$0.45	30 November 2017	1-month VWAP (last month) at or above $0.60
Tranche 2	3 years	1.685 million	$0.60	30 November 2018	1-month VWAP (last month) at or above $0.70

The strike prices of the options were set in relation to the recent capital raisings made by the Company. The options will have specific intrinsic value if they are issued, but will not be issued unless specific target prices for the Company’s shares in the period leading up to the vesting dates are met. The rationale behind this thinking is that Andrew Barnes will not face a double hurdle of receiving out of the money options having already achieved meritorious performance; this will result in the issuance of paper with intrinsic rather than illusory value. If the vesting hurdle is not met, the options will be expire and cannot be exercised.

The options, if approved, will be issued as soon as practicable after the passing of Resolution 4, and before 30 November 2013. If the options are exercised, the Company will use the proceeds of approximately $1.77 million for working capital purposes.

6. Issue of Shares to Ben Heap – Resolution 5

Approval is being sought under ASX Listing Rule 7.1 for the issue of share under the Company’s term equity incentive plan ( LTIP ), introduced as part of its long term executive remuneration strategy. The LTIP is designed to facilitate share ownership by executives, thereby aligning their interests with those of shareholders, and linking a significant portion of executive remuneration to the Company’s share price and returns generated for shareholders. Under the LTIP, eligible executives are provided with a non-recourse loan for the sole purpose of acquiring shares in the Company. The maximum number of shares that can be issued under the LTIP IS 10,575,231. There have been no securities issued under a LTIP previously, and the only eligible employee will be Mr Ben Heap. Currently, no other director or employee is eligible to participate. The LTIP does not produce any new capital for the Company, therefore no use of funds statement is required.

Ben Heap has entered into an employment agreement (dated 14 October 2013) with the Company and will take up his role as CEO & Managing Director no later than 12 December 2013. Under this Agreement, Mr Heap will be provided with a loan for the sole purpose of subscribing for Shares representing a 10% equity stake in AWK.

Whilst Ben Heap is yet to commence his employment, the Directors of AWK wished to avoid the cost of holding of a separate meeting to approve the issue of shares to Mr Heap, and have chosen to place the requisite motion before Shareholders at this time. It should be stressed that should Mr Heap not commence his tenure as CEO & Managing Director, as expected by 12 December 2013, then whilst approval for the issue of Shares under the LTIP will have been granted, no such Shares will be issued.

Under ASX Listing Rule 10.14, shareholder approval is required in order for a director to be issued securities under an employee incentive scheme. Accordingly, Shareholders are asked to approve the issue of up to 10,575,231 Shares to Mr Heap, under the 2013 LTIP offer, upon the commencement of his employment, expected to be on 12 December 2013. Shares under the LTIP

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offer will be issued on a date which is no later than 3 months after the date of the annual general meeting.

An overview of the LTIP offer to Ben Heap is set out in the sections below.

6.1 Entitlement under 2013 LTIP offer

Subject to shareholder approval, Mr Heap will be granted an allotment of Shares representing a 10% equity stake in AWK upon commencement of his employment. The number of shares issued to Mr Heap will not exceed 10,575,231 Shares. Mr Heap will be granted an LTIP loan ( Loan ) of up to $5,076,111 for the sole purpose of subscribing for these Shares at an issue price of 48 cents per share, being the closing share price on the prior trading day to his entering into an employment contract with the Company. If the Issue of these Shares under the LTIP is approved, allotment is expected within five business days of the commencement of Mr Heap’s employment.

6.2 Vesting period

The Shares will vest in three equal tranches as follows:

The first tranche will vest on the later of the first anniversary of the date of the issue of these Shares, and the date at which the AWK share price - on a one month VWAP basis - is at or above 64 cents (a 33% share price appreciation from the issue price of 48 cents per share);

The second tranche will vest on the later of the second anniversary of the date of the issue of these Shares, and the date at which the AWK share price - on a one month VWAP basis - is at or above 80 cents (a 66% share price appreciation from the issue price);

The third tranche will vest on the later of (i) the first anniversary of the date of the issue of these Shares, and (ii) the date at which the AWK share price - on a one month VWAP basis - is at or above 96 cents (a 100% share price appreciation from the issue price).

However, if the Executive has repaid the Loan with respect to a specific ‘vesting tranche of shares’ then they will automatically vest, and in the event of a change of control of the Company, all Shares will automatically vest.

6.3 Key terms of the Loan

The Loan is from the Company for the sole purpose of acquiring shares in the Company. There will be an interest charge to Mr Heap on the Loan equal to the Australian bank bill rate plus 0.50%. Mr Heap may either pay this interest or capitalise it thereby increasing the principal sum owning.

As this is a non-recourse loan, any unvested Shares surrendered are forfeited in full settlement of the loan balance and no benefit accrues to the executive.

Mr Heap will be required to repay the Loan relating to a specific tranche of Shares within three years of the vesting of each tranche of Shares.

Mr Heap will be entitled to any dividends paid on the Shares (whether the Shares have vested to Mr Heap or remain unvested).

6.4 Trading restrictions

The Shares are restricted until the end of the vesting period and while the Loan remains outstanding. Mr Heap may not sell any of the Shares unless they have vested, and sales of the Shares will be governed by the company’s Share Trading Policy in operation at the time.

6.5 Cessation of employment

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In general, all unvested Shares are forfeited and surrendered if a participant ceases employment prior to the end of the vesting period.

If Mr Heap resigns from the Company or is terminated for cause any unvested Shares will be forfeited, in full repayment of the Loan, and he will have no further interest in those Shares. Outstanding components of the Loan with respect to vested Shares must be repaid within twelve months.

If the Company terminates the employment of the Executive, other than for cause, any unvested Shares will immediately vest and any outstanding loans will remain in place and must be repaid within three years.

• 6.6 Circumstances if LTIP not approved

In the event that the LTIP proposed is not approved by Shareholders, the Company will be required to offer Mr Heap an alternative cash based arrangement designed to place him in a no worse position, on an after tax basis, than would have been the case had the LTIP arrangements been approved.

• 6.7 Other required information – ASX Listing Rules

Mr Heap is the only Director and employee entitled to participate in the LTIP scheme, once his Directorship commences, which is expected to be on 12 December 2013. Mr Heap’s annual salary is set at a total of $475,000 per annum including superannuation.

7. Change in status of Company on ASX – Resolution 6

Approval is sought under ASX Listing Rule 11.1.2 to change the status of the Company’s designation on the ASX from a listed investment company to a listed company that holds investments in financial services businesses. Previously, the Company had a concentrated portfolio of listed and unlisted investments in a variety of sectors of the economy, including mining and property. The Company now has a concentrated portfolio of investments in the financial services industry and intends to make further acquisitions of unlisted and listed companies in the same sector. It should be noted that the Company intends to have controlling stakes in these investments. As a result, the Board believes that the shareholders and potential future investors should not consider the Company as a listed investment company, given the concentrated nature of its current, and future portfolio. In addition, as the Company will own 100% or have control, of some of these investments, the financial statements will show a consolidated financial picture, as opposed to an investment accounting of a portfolio of investments. The disadvantages of remaining a listed investment company are the restrictions on paying broker commissions for future capital raisings under the Future of Financial Advice legislation, and the requirement to publish monthly Net Tangible Assets.

8. Holding a Spill Meeting – Resolution 7

At the 2012 AGM, at least 25% of the votes cast on the resolution to adopt the Remuneration Report were against doing so. This constitutes a “first strike” in relation to the “two strikes” rules for listed companies embedded within sections 250U and 250V of the Corporations Act. As a consequence, and as set out in Sections 2.6 and 2.7 above in relation to the Remuneration Report, if 25% or more votes that are cast are against Resolution 1, this will constitute a “second strike” and the Company is required to put this item to the 2013 AGM under section 250V of the Corporations Act.

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If less than 25% of the votes cast are against Resolution 1 (adopting the Remuneration Report) then there will be no “second strike” and this Resolution 7 will not be put to the Meeting. If put, the Spill Resolution will be considered an ordinary resolution, albeit with voting exclusions.

If more than 50% of the votes are cast in favour of the Spill Resolution, the Company must convene an Extraordinary General Meeting (Spill Meeting) within 90 days of the 2013 AGM. All of the Directors who were in office when the 2013 Directors Report was approved, other than the Managing Director and CEO, will need to stand for re-election at the Spill Meeting. Following the Spill Meeting, those persons whose election or re-election as Directors is approved will be Directors of the Company. If a Director is re-appointed at the Spill Meeting, the appointment continues as if the cessation and re-appointment had not occurred.

The Corporations Act includes a mechanism to ensure that the Company will have at least three Directors (including the Managing Director) after the Spill Meeting, as is required for a public company. If at the Spill Meeting, at least two non-executive Directors are not appointed by ordinary resolution, those persons with the highest percentage of votes favouring their appointment will be taken to be appointed (even if less than half of the votes cast on the resolution were in favour of their appointment).

The Directors unanimously recommend Shareholders vote against Resolution 7 if put to the Meeting.

9. Further Information

If you have any queries in relation to the Extraordinary General Meeting, please contact the Company Secretary Richard Matthews on (02) 9080 2373 or rmatthews@aurorafunds.com.au, or Andrew Brown, on (02) 9380 9001.

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10. Glossary and Definitions

Definition	Meaning
ASIC	Australian Securities and Investments Commission
ASX	ASX Limited or the financial market known as the Australian Securities Exchange that is operated by ASX Limited, as the context requires
AGM	The Annual General Meeting to be held at 10.00am Sydney time on Thursday28thNovember 2013
Associate	the meaning given in sections 10 to 17 of the C_orporations_ Act
Aurora	Aurora Funds Management Ltd(ACN 092 626 885)
ASX	Australian Securities Exchange
Board	Board of Directors of the Company
Company	Australasian Wealth Investments Limited(ACN 111 772 359)
Corporations Act	Corporations Act(2001)Cth
Explanatory Memorandum	The document commencing at page 8 containing information on the resolutions set out in the Notice of Meeting
Loan	Non-recourse loan against Shares under the LTIP
LTIP	Longterm incentiveplan
Management Agreement	The agreement dated 8 February 2005 between the Companyand Aurora as novated on 28 March 2013
Meeting	The Annual General Meeting to be held at 10.00am Sydney time on Thursday28thNovember 2013
Proposal	Resolution 3, being item 4 in the Notice of Meeting (Internalisation)
Share	A fully paid ordinaryshare in the Company
Shareholders	Holders of AWK Shares

Dated this 17th day of October 2013

By order of the Board of Directors

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Andrew Brown Chairman

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