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 seek your own financial advice immediately from an independent financial adviser who specialises in advising on shares or other securities and who is authorised under FSMA or, if you are not resident in the UK, from another appropriately authorised independent financial adviser in your own jurisdiction. This document comprises the Prospectus relating to the Company prepared in accordance with the Prospectus Regulation and the Prospectus Regulation Rules made under section 73A of FSMA and made available to the public for the purposes of section 85 of FSMA. This Prospectus has been approved by the FCA of 12 Endeavour Square, London E20 1JN, as competent authority under the Prospectus Regulation. Contact information relating to the FCA can be found at http://www.fca.org.uk/contact. The FCA only approves this Prospectus as meeting the standards of completeness, comprehensibility and consistency imposed by the Prospectus Regulation. Such approval should not be considered as an endorsement of the Company or of the quality of the securities that are the subject of this Prospectus. Investors should make their own assessment as to the suitability of investing in securities. This Prospectus has been drawn up as part of a simplified prospectus in accordance with Article 14 of the Prospectus Regulation. Potential investors are recommended to seek advice from their stockbroker, bank manager, solicitor, accountant or other independent financial adviser duly authorised under FSMA if you are in the United Kingdom, or from another appropriately authorised independent financial adviser if you are in a territory outside the United Kingdom, before investing in the Company. Potential investors should also consider the risk factors relating to the Company set out on pages 11 to 15 of this Prospectus. The Company, whose registered office appears on page 21 of this Prospectus, and the Directors and the Proposed Additional Directors, whose names appear on page 21 of this Prospectus, accept responsibility for the information contained in this Prospectus. To the best of the knowledge of the Company, the Directors and the Proposed Additional Directors, the information contained in this Prospectus is in accordance with the facts and the Prospectus makes no omission likely to affect its import.
Invesco Select Trust plc (Incorporated in England and Wales with registered number 05916642 and registered as an investment company under section 833 of the Companies Act 2006) Prospectus relating to the Issue of New Shares pursuant to a scheme of reconstruction of Invesco Income Growth Trust plc under section 110 of the Insolvency Act 1986 Sponsor & Financial Adviser Alternative Investment Fund Manager Investec Bank plc Invesco Fund Managers Limited
Applications will be made to the FCA and the London Stock Exchange for all of the New Shares to be admitted to the premium segment of the Official List under Chapter 15 of the Listing Rules and to trading on the Main Market. The ISIN for the New Shares admitted to trading is: GB00B1DPVL60. Investec Bank plc (“Investec”), which is authorised in the United Kingdom by the PRA and regulated by the FCA and the PRA, is acting exclusively for the Company and for no one else in relation to the Issue, the Scheme and the other arrangements referred to in this Prospectus. Investec will not regard any other person (whether or not a recipient of this Prospectus) as its client in relation to the Issue, the Scheme and the other arrangements referred to in this Prospectus and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing any advice in relation to the Issue, the Scheme, the contents of this Prospectus or any transaction or arrangement referred to in this Prospectus. Apart from the responsibilities and liabilities, if any, which may be imposed on Investec by FSMA or the regulatory regime established thereunder, or under the regulatory regime of any other jurisdiction where exclusion of liability under the relevant regulatory regime would be illegal, void or unenforceable, Investec accepts no responsibility whatsoever for the contents of this Prospectus or for any statement made or purported to be made by it or on its behalf in connection with the Company, the Issue, the Scheme or the Shares. Investec (and its affiliates) accordingly, to the fullest extent permissible by law, disclaims all and any responsibility or liability, whether arising in tort or contract or otherwise (save as referred to above), which it might otherwise have in respect of this Prospectus or any such statement. Investec and its affiliates may have engaged in transactions with, and provided various investment banking, financial advisory and other services for, the Company and/or the AIFM for which they would have received customary fees. Investec and its affiliates may provide such services to the Company and/or the AIFM and any of their respective affiliates in the future. The contents of this Prospectus are not to be construed as legal, financial, business, investment or tax advice. IIGT Shareholders should consult their own legal adviser, financial adviser or tax adviser for legal, financial, business, investment or tax advice. Investors must inform themselves as to: (a) the legal requirements within their own countries for the purchase, holding, transfer, repurchase or other disposal of New Shares; (b) any foreign exchange restrictions applicable to the purchase, holding, transfer or other disposal of New Shares which they might encounter; and (c) the income and other tax consequences which may apply in their own countries as a result of the purchase, holding, transfer or other disposal of, or subscription for New Shares. Investors must rely on their own representatives, including their own legal advisers and accountants, as to legal, financial, business, investment, tax, or any other related matters concerning the Company and an investment therein. None of the Company, the AIFM, the Investment Manager or Investec nor any of their respective representatives is making any representation to any offeree or purchaser of New Shares regarding the legality of an investment in the New Shares by such offeree or purchaser under the laws applicable to such offeree or purchaser.
The distribution of this Prospectus in certain jurisdictions may be restricted by law. No action has been taken by the Company or Investec that would permit an offer of the New Shares or possession or distribution of this Prospectus or any other offering or publicity material in any jurisdiction where action for that purpose is required, other than in the United Kingdom. Persons into whose possession this Prospectus comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. The New Shares described in this Prospectus have not been, and will not be, registered under the United States Securities Act of 1933 (as amended) or the securities laws of any states of the United States or under any of the relevant securities laws of Canada, Australia, the Republic of South Africa or Japan or their respective territories or possessions. Accordingly, the New Shares may not (unless an exemption from such legislation or such laws is available) be offered, sold or delivered, directly or indirectly, in or into the United States, Canada, Australia, the Republic of South Africa or Japan or their respective territories or possessions. The Company will not be registered under the United States Investment Company Act of 1940 (as amended) and investors will not be entitled to the benefits of such legislation. Persons resident in territories other than the UK should consult their professional advisers as to whether they require any governmental or other consents or need to observe any formalities to enable them to apply for, acquire, hold or dispose of the New Shares. IIGT Shareholders who are resident in, or citizens of, territories outside of the United Kingdom should read the section headed “Overseas IIGT Shareholders” in Part 8 (Details of Issue and Scheme) of this Prospectus. The publication or delivery of this Prospectus shall not under any circumstances imply that the information contained in this Prospectus is correct as at any time subsequent to the date of this Prospectus or that there has not been any change in the affairs of the Company since that date. The Prospectus has been drawn up in accordance with the Prospection Regulation. No arrangement has been made with the competent authority in any other jurisdiction for the use of this Prospectus as an approved prospectus in such jurisdiction and accordingly no public offer is to be made in such jurisdictions.
Without limitation, neither the contents of the Website, the AIFM’s website, Investec’s website, the Investment Manager’s website, the Depositary’s website (or any other website) nor the content of any website accessible from hyperlinks on the Website or the AIFM’s website (or any other website) is incorporated into, or forms part of this Prospectus, or has been approved by the FCA. 30 March 2021
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CONTENTS
PROSPECTUS REGULATION SUMMARY ...... 4 Part 1 : RISK FACTORS ...... 10 Part 2 : IMPORTANT INFORMATION ...... 16 Part 3 : EXPECTED TIMETABLE, STATISTICS AND DEALING CODES ...... 20 Part 4 : DIRECTORS, MANAGEMENT, CUSTODIAN AND ADVISERS ...... 21 Part 5 : THE COMPANY AND THE INVESTMENT MANAGER ...... 23 Part 6 : INVESTMENT STRATEGY AND PORTFOLIO ...... 33 Part 7 : DIRECTORS, MANAGEMENT AND ADMINISTRATION ...... 38 Part 8 : DETAILS OF ISSUE AND SCHEME ...... 46 Part 9 : FINANCIAL INFORMATION ...... 52 Part 10 : UK TAX ...... 56 Part 11 : GENERAL INFORMATION ...... 59 Part 12 : DEFINITIONS ...... 77
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PROSPECTUS REGULATION SUMMARY
1. INTRODUCTION, CONTAINING WARNINGS
This summary should be read as an introduction to this Prospectus. Any decision to invest in securities should be based on consideration of this Prospectus as a whole by the investor. The investor could lose all or part of its invested capital. Civil liability attaches only to those persons who have tabled the summary including any translation thereof, but only where the summary is misleading, inaccurate or inconsistent, when read together with the other parts of the Prospectus, or where it does not provide, when read together with the other parts of the Prospectus, key information in order to aid investors when considering whether to invest in such securities.
The Company is issuing securities under the Prospectus pursuant to the Scheme. The securities which the Company intends to issue are UK Equity Shares, whose ISIN is GB00B1DPVL60 and SEDOL is B1DPVL6. The Company can be contacted by writing to its registered office, Perpetual Park, Perpetual Park Drive, Henley-on-Thames, Oxfordshire, England, RG9 1HH or by calling, within business hours, Freephone: 0800 085 8677 or emailing [email protected]. The Company’s LEI number is 549300JZQ39WJPD7U596. The Prospectus was approved on 30 March 2021 by the FCA of 12 Endeavour Square, London E20 1JN. Contact information for the FCA can be found at https://www.fca.org.uk/contact.
2. KEY INFORMATION ON THE ISSUER
2.1 Who is the issuer of the securities? The Company is a public company with limited liability incorporated in England and Wales and domiciled in the United Kingdom. The Company is an investment company under section 833 of the Companies Act 2006. It is subject to the Listing Rules and the DTR and operates under the Companies Act 2006 and regulations made thereunder. The Company’s LEI number is 549300JZQ39WJPD7U596.
The Company is a multi-asset class investment trust with four independently managed portfolios. The principal activity of the Company is to invest in accordance with the Company’s investment policies with a view to achieving its investment objectives. The Company provides Shareholders with a choice of investment policies and objectives, each intended to generate attractive risk-adjusted returns from segregated portfolios.
As at close of business on 26 March 2021, being the latest practicable date prior to the publication of this Prospectus, in so far as it is known to the Company, the following persons held directly or indirectly 3 per cent. or more of the Company’s voting rights: Name Number of voting rights held % of voting rights held Interactive Investor 6,139,133.4 5.89 P Radburn 5,729,228.9 5.50 Hargreaves Lansdown 5,632,659.9 5.41 Brewin Dolphin 5,051,246.3 4.85 P Davidson 4,653,456.1 4.47 Rathbone Investment Management 4,272,046.4 4.10 Perkins Echo Trust 3,640,831.6 3.50 Schroder & Co 3,450,164.7 3.31 J Pfeil 3,285,040.0 3.15
As at close of business on 26 March 2021, being the latest practicable date prior to the publication of this Prospectus, the Company and the Directors are not aware of any person who, directly or indirectly, jointly or severally, exercises or could exercise control over the Company.
The Board is comprised of Craig Cleland, Alan Clifton, Graham Kitchen and Victoria Muir and, if the Scheme is implemented, will also include the Proposed Additional Directors. The Company’s auditor is Grant Thornton UK LLP of 30 Finsbury Square, London, EC2A 1AG.
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2.2 What is the key financial information regarding the issuer? 2.2.1 Selected historical financial information Selected audited financial information relating to the Company, summarising the financial condition of the Company for the financial year ended 31 May 2020, is set out in the following tables:
Information relevant to closed end funds No. of Total NAV ordinary shares Share Class (£’000) (excluding treasury) NAV per Share UK Equity Shares 46,617 31,977,941 145.8p Global Equity Income Shares 51,372 28,786,800 178.5p Balanced Risk Allocation Shares 7,073 5,236,886 135.1p Managed Liquidity Shares 2,607 2,497,032 104.4p
Statement of Comprehensive Income Year ended 31 May 2020 Revenue Capital Total £’000 £’000 £’000 Losses on investments held at fair value Nil (12,632) (12,632) Gains/(losses) on derivative instruments 2 (159) (157) Losses on foreign exchange Nil (22) (22) Income 3,950 80 4,030 Investment management fees (206) (473) (679) Other expenses (463) (9) (472) Net return before finance costs and taxation 3,283 (13,215) (9,932) Finance costs (37) (88) (125) Return before taxation 3,246 (13,303) (10,057) Tax (245) Nil (245) Return after taxation for the financial year 3,001 (13,303) (10,302) UK Equity Portfolio 4.12p (24.75)p (20.63)p Global Equity Income Portfolio 5.39p (16.58)p (11.19)p Balanced Risk Allocation Portfolio (0.02)p (3.88)p (3.90)p Managed Liquidity Portfolio 0.65p 0.03p 0.68p
Balance sheet for closed end funds 31 May 2020 (£’000) Total Net Assets £107,669 Leverage ratio (calculated under UK AIFM Regulations) (unaudited) Gross Commitment UK Equity Portfolio 1.12:1 1.12:1 Global Equity Income Portfolio 1.10:1 1.10:1 Balanced Risk Allocation Portfolio 1.64:1 1.61:1 Managed Liquidity Portfolio 1.01:1 1.01:1 Neither pro forma financial information nor any qualified audit report has been included in this Prospectus.
2.3 What are the key risks that are specific to the issuer? The attention of the IIGT Shareholders is drawn to the risks associated with an investment in the Company which, in particular, include the following: (a) the past performance of the Company or of other funds managed by the Investment Manager set out in this Prospectus is not indicative, or intended to be indicative, of future performance or results of the Company and the future performance and results of the Company are subject to fluctuating market conditions, changes in macro-economic factors and the availability of financing;
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(b) the Company’s Share classes may not trade closely to their underlying NAVs; (c) the Company may not achieve its investment objectives. The Company is dependent upon the Investment Manager’s successful implementation of its investment strategy and ultimately on its ability to create investment portfolios capable of generating attractive returns; (d) the Company has outsourced all its operations to third party service providers. Failure by any service provider to carry out its obligations in accordance with the terms of its appointment could have a material adverse effect on the Company’s business prospects and results of operations; (e) it is possible that through poor performance, market sentiment, or otherwise, lack of demand for one of the Company’s Share classes could result in the relevant Portfolio becoming too small to be viable; and (f) if the Company fails to maintain its status as an investment trust for the purposes of CTA 2010 and the Investment Trust Regulations, it would result in the Company not being able to benefit from the current exemption for investment trusts from UK tax on chargeable gains and could affect the Company’s ability to provide returns to Shareholders.
3. KEY INFORMATION ON THE SECURITIES 3.1 What are the main features of the securities?
The New Shares are UK equity shares, denominated in sterling, with a nominal value of 1 pence each, whose ISIN is GB00B1DPVL60. As at 26 March 2021, being the latest practicable date prior to the publication of this Prospectus, the Company had 24,234,892 fully paid UK Equity Shares of 1 pence each with voting rights in issue and an additional 20,217,812 UK Equity Shares in treasury.
The New Shares will rank equally in all respects (including voting rights) with each other and the existing UK Equity Shares in issue other than in respect of the Fourth Interim Dividend and any other dividends declared prior to the Effective Date. In summary, the rights attaching to the UK Equity Shares are: Dividend: Subject to the provisions of the Companies Act 2006, the right to receive the revenue profits of the Company attributable to the UK Equity Portfolio and available for distribution and determined to be distributed by way of interim or final dividend. Rights in respect to capital: on a winding-up, after meeting the liabilities of the Company, the surplus assets in the UK Equity Portfolio will be paid to the holders of UK Equity Shares in proportion to their shareholdings. Voting: the right to receive notice of, attend and vote at general meetings of the Company (but excluding the right to vote on any resolution relating to the payment of a dividend on any other class of Shares). On a show of hands, every UK Equity Shareholder shall have one vote and on a poll, the number of votes per share shall equate to the UK Equity NAV per Share. For example, on a day when UK Equity NAV per Share is 179.2p, UK Equity Shares carry 1.792 votes per share.
There are no restrictions on the free transferability of the UK Equity Shares, subject to compliance with applicable securities laws.
For UK Equity Shares, the Company’s policy is to pay four interim dividends per year consisting of three equal interim dividends declared in July, October and January and a ‘wrap-up’ fourth interim dividend declared in April. Depending on the level of income received in each quarter, and in the year, these four dividends may be enhanced with contributions from capital profits to achieve the Board’s target level. The Directors have not set dividend targets for the year to 31 May 2021.
3.2 Where will the securities be traded? Applications will be made to the FCA and the London Stock Exchange for the New Shares to be admitted to the premium segment of the Official List under Chapter 15 of the Listing Rules and to trading on the Main Market. The existing UK Equity Shares are already traded there.
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3.3 What are the key risks specific to the securities? The attention of IIGT Shareholders is drawn to the risks associated with an investment in the New Shares which, in particular, include the following: (a) the market price of the UK Equity Shares may not reflect the value of the underlying investments of the Company and may be subject to wide fluctuations in response to many factors; (b) the use of derivatives for efficient portfolio management may result in increased volatility in the NAV; (c) the UK Equity Portfolio may invest a proportion of its assets in smaller companies. Securities of smaller companies may be subject to abrupt price movements and may be less liquid; (d) the Directors intend that each Portfolio will effectively operate as if it were a stand-alone company. Regardless, if any of the Portfolios have insufficient funds or assets to meet all of its liabilities, such a shortfall would become a liability of the other Portfolios. In addition, company law restrictions mean that if the Company incurs a significant fall in the value of its assets as a whole, the Company’s ability to pay dividends on a particular class of Share may be affected, even though there are distributable profits attributable to the relevant Portfolio; (e) the use of borrowings may increase the volatility of the NAV and may reduce returns when asset values fall; and (f) there can be no assurance, express or implied, that UK Equity Shareholders will receive back the amount of their investment in the UK Equity Shares.
4. KEY INFORMATION ON THE OFFER OF SECURITIES TO THE PUBLIC AND/OR THE ADMISSION TO TRADING ON A REGULATED MARKET
4.1 Under which conditions and timetable can I invest in this security? 4.1.1 Terms and conditions The Scheme is conditional upon: (i) the passing of the resolutions at the IIGT General Meetings and any conditions of such resolutions being fulfilled; (ii) the FCA agreeing to amend the listing of the IIGT Shares as Reclassified Shares for the purpose of implementing the Scheme; (iii) the passing of the Scheme Resolutions at the General Meeting; (iv) the FCA agreeing to admit the New Shares to the Official List with a premium listing and to the Main Market; and (v) the IIGT Directors resolving to proceed with the Scheme.
4.1.2 Expected timetable: Record Date for entitlement under the Scheme close of business on 14 April 2021 First General Meeting of IIGT in relation to the 10.30 a.m. on 15 April 2021 Scheme General Meeting of the Company 11.00 a.m. on 15 April 2021 Calculation Date for the Scheme 5.00 p.m. on 15 April 2021 Second General Meeting of IIGT in relation to the 11.00 a.m. on 23 April 2021 Scheme Effective Date for the Scheme 23 April 2021 Admission of the New Shares and dealings commence 8.00 a.m. on 26 April 2021 CREST accounts credited in respect of New Shares as soon as practicable after issued in uncertificated form 8.00 a.m. on 26 April 2021 Certificates despatched in respect of New Shares week commencing issued in certificated form 3 May 2021
Notes: (1) References to times above and in this Prospectus generally are to London times unless otherwise specified. (2) All times and dates in the expected timetable and in this Prospectus may be adjusted by the Company. Any material changes to the timetable will be notified through a RIS.
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4.1.3 Details of Admission and distribution Applications will be made to the FCA and the London Stock Exchange for the New Shares to be admitted to the premium segment of the Official List under Chapter 15 of the Listing Rules and to trading on the Main Market. The existing UK Equity Shares are already traded there. If the Scheme becomes effective, it is expected that the New Shares will be admitted to the Official List on 26 April 2021, and the first day of dealings in such New Shares on the Main Market will be 26 April 2021.
The New Shares will be available to be issued in either certificated form or uncertificated form. Where applicable, share certificates are expected to be dispatched by post in the week commencing 3 May 2021.
4.1.4 Dilution Existing Shareholders are not able to participate in the Issue and will suffer a dilution to the percentage of the issued share capital (voting rights) that their current holding represents based on an actual number of New Shares issued. For the avoidance of doubt, the value of the underlying assets and the NAV per Share attributable to the Existing Shareholders will not be altered as a direct consequence of the Scheme becoming effective. For illustrative purposes only, had the Calculation Date been 5.00 p.m. on 26 March 2021 (being the latest practicable date prior to the publication of this Prospectus), and assuming that no IIGT Shareholders exercise their right to dissent from participation in the Scheme and that: (a) the maximum amount was elected for the Cash Option, so that 68,374,761 New Shares were issued, Existing Shareholders would have suffered a dilution of approximately 73.8 per cent. to their existing percentage holdings; or (b) all IIGT Shareholders had elected to receive New Shares, so that 97,557,966 New Shares were issued, Existing Shareholders would have suffered a dilution of approximately 80.1 per cent. to their existing percentage holdings.
4.1.5 Expenses of the Scheme and Issue The fixed costs of the Proposals payable by the UK Equity Portfolio and by IIGT are to be aggregated and allocated to the UK Equity Portfolio and the Rollover Pool on a pro rata basis by reference to the UK Equity Portfolio NAV and the IIGT NAV respectively as at the Calculation Date. Any stamp duty, SDRT or other transaction tax, or investment costs incurred by the Company on the acquisition of the Rollover Pool or the deployment of the cash therein upon receipt and listing fees in relation to the listing of the New Shares, will be borne by the Enlarged UK Equity Portfolio. If the Proposals do not proceed on the terms agreed or the required approvals are not obtained, then the Company and IIGT will bear their own costs. The Company’s costs are estimated at approximately £278,000.
4.2 Why is the Prospectus being produced? 4.2.1 Reasons for the Issue The Board has been alert to the size of the Company for some time and has been looking at opportunities to increase the size and scale of the Company. The Board was aware that IIGT had held a continuation vote at the IIGT AGM, and that whilst the IIGT Shareholders ultimately voted in favour of a resolution for the continuation of IIGT as a closed-ended investment company, a certain percentage of those IIGT Shareholders who voted on the continuation resolution voted against the resolution. The Company entered into discussions with the Investment Manager, being the investment manager of both companies, and subsequently explored potential opportunities with the Board of IIGT. Following a comprehensive review of IIGT’s competitive positioning by the IIGT Board and its advisers and taking account of the Board’s desire to increase the size and scale of the Company, the Board and the Board of IIGT considered that the Combination would be in the interests of both companies, offering IIGT Shareholders the best way to continue their investment in a closed-ended investment vehicle with the same Investment Manager and a similar investment philosophy, whilst also meeting the growth objective of
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the Board. The Board of IIGT and the Board each announced on 1 December 2020 that heads of terms for the Combination had been agreed. In consideration for the issue of New Shares to the Liquidators, who will renounce the New Shares in favour of the IIGT Shareholders who hold IIGT Rollover Shares, the cash, undertaking and other assets of IIGT comprising the Rollover Pool, will be transferred to the Company pursuant to the Transfer Agreement.
4.2.2 Use and estimated net amount of the proceeds The Proposals will not result in any proceeds being raised by the Company. The New Shares are being issued to the IIGT Shareholders in consideration for the transfer of the Rollover Pool.
4.2.3 Indication as to whether the offer is subject to an underwriting agreement The Issue has not been underwritten.
4.2.4 Conflicts of interest Invesco and its affiliates serve as the alternative investment fund manager, investment manager and/or investment adviser to other clients, including funds and managed accounts that have similar investment objectives and policies to that of the Company. These investment management services may on occasion give rise to conflicts of interest with the Company and may have a material adverse effect on the Company’s business, financial condition, results of operations and the market price of the UK Equity Shares. Invesco will manage conflicts of interest in accordance with its policies and procedures relating to conflicts of interest. However, there can be no assurance that Invesco will resolve all conflicts of interest in a manner that is favourable to the Company. Save as aforesaid, there are no conflicting interests that are material to the Issue.
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PART I
RISK FACTORS
IIGT Shareholders should consider carefully the following risk factors in addition to the other information presented in this Prospectus. If any of the risks described below were to occur, it could have a material effect on the Company’s business or financial condition or the results of its operations. Additional risks not currently known to the Company, or that the Company currently believes are not material, may also adversely affect its business, its financial condition and the results of its operations. The value of the UK Equity Shares could go down due to any of these risk factors, and UK Equity Shareholders could lose part or all of their investment. Save as specifically provided for, these risk factors apply mutatis mutandis to each class of Shares and to each of the Portfolios.
1. RISKS RELATING TO THE COMPANY’S BUSINESS 1.1 The past performance of the Company and the Investment Manager is not a guarantee of the future performance of the Company The past performance of the Company is not indicative, or intended to be indicative, of future performance or results of the Company for several reasons. For example, the future performance and results of the Company are subject to fluctuating market conditions, changes in macro-economic factors and the availability of financing. Accordingly, there can be no guarantee that the future performance of the Company will reflect the historic performance of the Company. The past performance of other funds managed by the Investment Manager (which have a markedly different risk profile from the Company) is not indicative, or intended to be indicative, of future performance or results of the Company. The performance of the Investment Manager is carefully monitored by the Board and the continuation of the Investment Manager mandates is reviewed each year. The Board has established guidelines to ensure that the investment policies of each class of Share are pursued by the Investment Manager.
1.2 Adverse market conditions could have a significant impact on the Company and the value of its Portfolios The UK Equity Portfolio performance is substantially dependent on the performance of the securities (including derivative instruments) held within the UK Equity Portfolio. The prices of these securities are influenced by many factors including the general health of regional and worldwide economies, interest rates, inflation, government policies, industry conditions, political and diplomatic events, tax laws, environmental laws, and by the demand from investors. The Investment Manager strives to maximise the total return from the UK Equity Portfolio, but the investments held are influenced by market conditions and the Board acknowledges the external influences on the performance of the UK Equity Portfolio. The extreme market volatility experienced in 2020 from the market reaction to Covid-19, and the continuing effects, exemplify the risks from external influences. All of the Company’s Portfolios, except for the Managed Liquidity Portfolio, were considerably affected and may continue to be. There is an ongoing risk to global economies from the measures taken in response to Covid-19. Many companies have been and continue to be at risk from the effects of the imposed lockdowns on their production and revenues and this has a consequential effect on the availability of investment income.
1.3 Brexit The United Kingdom voted in favour of withdrawing from the EU in a referendum on 23 June 2016 and on 29 March 2017, the UK Government exercised its right under Article 50 of the Treaty of the European Union to notify the EU of the United Kingdom’s intention to withdraw from the EU. Although the United Kingdom and the EU agreed a trade arrangement which took effect from 1 January 2021, there remains uncertainty as to the UK’s relationship with the EU.
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The withdrawal of the United Kingdom from the EU could have a material adverse effect on the Company’s results or operations and the value of the UK Equity Shares, especially in the short-term. In particular, the United Kingdom’s withdrawal from the EU may result in currency movements, volatility in the UK and global markets, regulatory changes and other unpredictable and ultimately unfavourable economic circumstances that may have a materially adverse effect on the Company, Invesco and the Portfolios.
1.4 There can be no assurance that the Investment Manager will be successful in achieving the Company’s investment objectives The Company is dependent upon the Investment Manager’s successful implementation of the Company’s investment policies and ultimately on its ability to create investment portfolios capable of generating attractive returns. This implementation will be subject to a number of factors, including market conditions and the timing of investments relative to market cycles, many of which (particularly over the short term) are beyond the control of the Company and difficult to predict.
1.5 The Company may not generate sufficient income from its Portfolios There is a risk that the Company fails to generate sufficient income from its Portfolios to meet the Company’s investment objective to provide Shareholders with a choice of investment strategies and policies, each intended to generate attractive risk-adjusted returns. The Company’s ability to make distributions is dependent on a number of factors, including the level of dividends and interest earned from its Portfolios and the net revenue profits after tax available for that purpose. Income returns from the Portfolios will be dependent, amongst other things, upon the Company successfully pursuing its investment objectives. As a result of Covid-19, some companies are suspending, lowering or postponing their dividend payments, which may affect the income received by the UK Equity Portfolio and the Global Equity Income Portfolio. Any change in the tax treatment of dividends received by the Company from investments or income received by the Company may reduce the distributions made to Shareholders. Any change to the basis upon which dividends can be paid by the Company under UK law or accounting rules and standards could have an adverse effect on the Company’s ability to pay dividends or distributions.
1.6 The Company may use gearing to seek to enhance investment returns Performance may be enhanced by use of the £20 million 364 day multicurrency revolving credit facility. As at the latest practicable date, agreement in principle has been reached to increase this facility to £40 million, conditional upon the Scheme becoming effective and, subject to the agreement of legally binding documentation. The Company also has an uncommitted overdraft facility of up to 10% of net assets. There is no guarantee that these facilities will be renewed at maturity or on terms acceptable to the Company. If it were not possible to renew these facilities or replace them with one from another lender, the amounts owing by the Company would need to be funded by the sale of securities. Gearing levels of the different Portfolios will change from time to time in accordance with the respective portfolio managers’ assessments of risk and reward. Where market exposure is geared, any reduction in the value of the geared Portfolio’s investments may lead to a correspondingly greater percentage reduction in its NAV (which is likely to affect Share prices adversely). Any reduction in the number of Shares in issue (for example, as a result of buy backs) will, in the absence of a corresponding reduction in borrowings, result in an increase in a Portfolio’s gearing level. Whilst the use of borrowings by the Company should enhance the total return on a particular class of Share where the return on the underlying securities is rising and exceeds the cost of borrowing, it will have the opposite effect where the underlying return is falling, further reducing the total return on that Share class. Similarly, the use of gearing by investment companies or funds in which the Company invests increases the volatility of those investments.
1.7 Hedging The Company may use derivatives to hedge its exposure to currency or other risks and for the purpose of efficient portfolio management. There may be a correlation between price
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movements in the underlying securities, currency or index, on the one hand, and price movements in the investments, which are the subject of the hedge, on the other hand. In addition, an active market may not exist for a particular hedging derivative instrument at any particular time.
1.8 Reliance on third party service providers The Company has no employees and the Directors have all been appointed on a non-executive basis. The Company is therefore reliant upon the performance of third party service providers for its executive function. In particular, Invesco provides services that are integral to the operation of the Company and the Depositary holds assets on its behalf. Failure by any service provider to carry out its obligations to the Company in accordance with the terms of its appointment could have a materially detrimental impact on the operation of the Company and could affect the ability of the Company to successfully pursue its investment policy. Invesco may be exposed to reputational risks (including litigation, misconduct, operational failures, negative publicity and press speculation, whether or not it is valid) which may harm its reputation. Any damage to the reputation of Invesco could result in potential counterparties and third parties being unwilling to deal with Invesco and by extension the Company. This could have an adverse impact on the ability of the Company to successfully pursue its investment policies. Other control failures, either by Invesco or any other of the Company’s service providers, could result in operational or reputational problems, erroneous disclosures or loss of assets through fraud, as well as breaches of regulations.
1.9 The Company is subject to the risk of cybersecurity breaches The Company and its service providers (including the Investment Manager) may be prone to operational, information security and related risks resulting from failures of or breaches in cybersecurity. A failure of, or breach in, cybersecurity (“cyber incidents”) may cause disruption and impact business operations, potentially resulting in financial losses, interference with the ability to calculate the Net Asset Value, impediments to trading, violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, or additional compliance costs. While the Company’s service providers and the Investment Manager have established business continuity plans in the event of, and risk management strategies, systems, policies and procedures to seek to prevent, cyber incidents, there are inherent limitations in such plans, strategies, systems, policies and procedures, including the possibility that certain risks have not been identified. Furthermore, none of the Company, the Investment Manager and/or the other service providers can control the cybersecurity plans, strategies, systems, policies and procedures put in place by the entities in which the Company invests.
1.10 The value of the UK Equity Shares could be adversely affected by exchange rate movements between pounds Sterling and other currencies that the Company’s investments may be denominated in The UK Equity Shares are denominated in pounds Sterling and, while the majority of the Company’s investments are also denominated in pounds Sterling, the Company is permitted to invest up to 20 per cent. of its gross assets in the UK Equity Portfolio in overseas assets; and as at the date of this Prospectus around 10.6 per cent. of the current UK Equity Portfolio is invested in securities listed on exchanges outside of the UK. Accordingly, the Company’s NAV is subject to the risk of movements in exchange rates i.e. the pound Sterling value of the Company’s investments that are not denominated in pounds Sterling may rise or fall solely on account of exchange rate fluctuations (including, inter alia, short term exchange rate fluctuations arising from the UK’s withdrawal from the EU). The Company does not fully hedge its currency exposures, and changes in exchange rates may lead to a depreciation in the Company’s Net Asset Value.
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2. RISKS RELATING TO THE AIFM AND INVESTMENT MANAGER 2.1 The AIFM, the Investment Manager and their affiliates may allocate some of their resources to activities in which the Company is not engaged, which could have a negative impact on the Company’s ability to achieve its investment objective The AIFM and the Investment Manager are not required to commit all of their resources to the Company’s affairs. Insofar as the AIFM and the Investment Manager devote resources to their responsibilities to other business interests, their ability to devote resources and attention to the Company’s affairs will be limited. This could adversely affect the Company’s ability to achieve its investment objective, which could have a material adverse effect on the Company’s profitability, the NAV per Share and the market price of the Shares.
2.2 Potential conflicts of interest The AIFM, the Investment Manager and their affiliates serve as the alternative investment fund manager, investment manager and/or investment adviser to other clients, including funds and managed accounts that have similar investment objectives and policies to that of the Company. These investment management services may on occasion give rise to conflicts of interest with the Company and may have a material adverse effect on the Company’s business, financial condition, results of operations and the market price of the Shares. For example, the AIFM, the Investment Manager and/or their affiliates may have conflicts of interest in allocating its time and activity between the Company and their other clients, in allocating investments among the Company and their other clients and in effecting transactions between the Company and other clients, including ones in which the AIFM, the Investment Manager and/or their affiliates may have a greater financial interest. Furthermore, the AIFM and the Investment Manager may provide services to certain in-house funds into which the Company may invest which may give rise to a conflict of interest. The AIFM and the Investment Manager will manage conflicts of interest in accordance with their policies and procedures relating to conflicts of interest. However, there can be no assurance that the AIFM and the Investment Manager will resolve all conflicts of interest in a manner that is favourable to the Company.
3. RISKS RELATING TO THE SHARES 3.1 Suitability Shares in the Company are designed to be held over the long-term and may not be suitable as short-term investments. There can be no guarantee that any appreciation in the value of the Company’s Shares will occur and investors may not get back the full value of their investments. Owing to the potential difference between the mid-market price of the Shares and the prices at which they are sold, there is no guarantee that their realisable value will reflect their mid-market price. The market value of a Share, as well as being affected by its NAV, is also influenced by investor demand, its dividend yield, where applicable, and prevailing interest rates, amongst other factors. As such, the market value of a Share can fluctuate and may not reflect its underlying NAV. Shares may therefore trade at discounts to their NAVs. However, the Board has adopted a discount control policy that applies to all Share classes and the Board and the Investment Manager monitor the market rating of each Share class. While it is the intention of the Directors to pay dividends to holders of the UK Equity Shares, Global Equity Income Shares and Managed Liquidity Shares, this will be affected by the returns achieved by the respective Portfolios and the dividend policy adopted by the Board. Accordingly, the amount of dividends paid to Shareholders may fluctuate. Any change in the tax or accounting treatment of dividends received or other returns may also affect the level of dividend paid on the Share in future years.
3.2 The Company may issue additional UK Equity Shares that dilute existing Shareholders and may adversely affect the market price of the UK Equity Shares Subject to legal and regulatory requirements, the Company may issue additional UK Equity Shares. Any additional issuances by the Company, or the possibility of such issue, may cause the market price of the existing UK Equity Shares to decline. Furthermore, although UK Equity Shares may not be issued at a discount to their prevailing NAV per Share (unless they are first offered pro rata to existing Shareholders, or the issuance is otherwise authorised by
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Shareholders), the relative voting percentages of UK Equity Shareholders may be diluted by further issues of UK Equity Shares.
3.3 Viability and compulsory conversion of a class of Share It is possible that through poor performance, market sentiment, or otherwise, lack of demand for one of the Company’s Share classes could result in the relevant Portfolio becoming too small to be viable. The Board monitors share conversions and Portfolio sizes and liaises with the Investment Manager on the continued viability of each Share class. The Board has received assurances from the Investment Manager that the size of the Portfolios is not critical to the Investment Manager being able to continue to offer its investment management services in respect of any of the Company’s four portfolio strategies. The continued listing on the Official List of each class of Share is dependent on at least 25 per cent. of the Shares in that class being held in public hands. This means that if more than 75 per cent. of the Shares of any class were held by, inter alia, the Directors, persons connected with the Directors or persons interested in 5 per cent. or more of the relevant Shares, the listing of that class of Share might be suspended or cancelled. The Listing Rules state that the FCA may allow a reasonable period of time for the Company to restore the appropriate percentage if this rule is breached, but in the event that the listing of any class of Shares were cancelled the Company would lose its investment trust status. Accordingly, if at any time the Board considers that the listing of any class of Share on the Official List is likely to be cancelled and the loss of such listing would mean that the Company would no longer be able to qualify for approval as an investment trust under section 1158 of the CTA 2010, the Board may serve written notice on the holders of the relevant Shares requiring them to convert their Shares into another Share class.
3.4 Liability of a Portfolio for the liabilities of another Portfolio The Directors intend that, in the absence of unforeseen circumstances, each Portfolio will effectively operate as if it were a stand-alone company. However, investors should be aware of the following factors: (a) as a matter of law, the Company is a single entity. Therefore, in the event that any of the Portfolios has insufficient funds or assets to meet all of its liabilities, on a winding-up or otherwise, such a shortfall would become a liability of the other Portfolios and would be payable out of the assets of the other Portfolios in such proportions as the Board may determine; and (b) the Companies Act 2006 prohibits the Directors from declaring dividends in circumstances where, following the distribution, the Company’s assets would represent less than one and a half times the aggregate of its liabilities or the amount of net assets would be less than the aggregate of its share capital and undistributable reserves. If the Company were to incur material liabilities in the future, a significant fall in the value of the Company’s assets as a whole may affect the Company’s ability to pay dividends on a particular class of Share, even though there are distributable profits attributable to the relevant Portfolio.
4. RISKS RELATING TO REGULATION AND TAXATION 4.1 Investment trust status It is the intention of the Directors to continue to conduct the affairs of the Company so as to satisfy the conditions under section 1158 of CTA 2010 and the Investment Trust Regulations and, accordingly, for the Company to retain approval as an investment trust. In respect of each accounting period for which the Company is an approved investment trust, the Company will be exempt from UK corporation tax on chargeable gains. There is a risk that if the Company fails to maintain its status as an investment trust, the Company would be subject to the normal rates of corporation tax on chargeable gains arising on the transfer or disposal of investments and other assets, which could adversely affect the Company’s financial performance, its ability to provide returns to its Shareholders or the post-tax returns received by its Shareholders. In addition, it is not possible to guarantee that the Company will remain a non-close company, which is a requirement to maintain investment trust status, as the Shares are freely transferable. In the event that the Company fails to continue to satisfy the criteria for maintaining investment
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trust status, the Company will, as soon as reasonably practicable, notify Shareholders of this fact.
4.2 Changes in tax legislation or practice Statements in this Prospectus concerning the taxation of Shareholders or the Company are based on current UK taxation law and HMRC published practice as at the date of this Prospectus. Any changes to the tax status of the Company or any of its underlying investments, or to tax legislation or practice (whether HMRC practice in the UK or in jurisdictions in which the Company invests), could affect the value of investments held by the Company, affect the Company’s ability to provide returns to Shareholders and affect the tax treatment for Shareholders of their investments in the Company (including the applicable rates of tax and availability of reliefs). Prospective investors should consult their tax advisers with respect to their own tax position before deciding whether to invest in the Company.
4.3 Alternative Investment Fund Managers Regulations The Alternative Investment Fund Managers (Amendment etc.) (EU Exit) Regulations 2019/328 “onshored” the Alternative Investment Fund Managers Directive (2011/61/ EU) into UK law, principally through amending the Alternative Investment Fund Managers Regulations 2013. The UK AIFM Regulations seek to regulate UK alternative investment fund managers. In order to maintain authorisation under the UK AIFM Regulations, alternative investment fund managers and depositaries need to comply with various organisational, operational and transparency obligations, which may create significant additional compliance costs, some of which may be passed to investors in the alternative investment funds and may affect dividend returns. The Company has appointed the AIFM which is subject to the full requirements of the UK AIFM Regulations, as its alternative investment fund manager. For the purposes of the AIFMD (and subject to any long-term arrangements agreed between the UK and EU) the Company is a non-EU AIF which is managed by a non-EU AIFM. Accordingly, the AIFM will not be entitled to market the UK Equity Shares in EU member states pursuant to the passporting rules set out in the AIFMD. Instead, the AIFM will be required to rely on the individual national private placement regimes in each EU member state (which are not harmonised) if it wishes to market the UK Equity Shares in the EU.
5. RISK RELATING TO THE SCHEME Implementation of the Scheme is conditional, amongst other conditions, upon the approval of the Scheme Resolutions by the Existing Shareholders at the General Meeting and IIGT Shareholders approving the Scheme. If any condition of the Scheme is not met, the Scheme will not be implemented and certain costs and expenses incurred in connection with the Scheme may be borne by the Company. In these circumstances, the Company and IIGT would remain as separate investment trusts.
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PART 2
IMPORTANT INFORMATION
1. GENERAL IIGT Shareholders should rely only on the information contained in this Prospectus. No person has been authorised to give any information or make any representations in connection with the Issue other than the information contained in, or incorporated by reference into, this Prospectus and, if given or made, such information or representations must not be relied on as having been authorised by or on behalf of the Company, Invesco, Investec or any of their respective affiliates, officers, directors, members, employees or agents. Without prejudice to the Company’s obligations under applicable law and regulations, neither the delivery of this Prospectus nor the issue of New Shares made pursuant to the Issue shall, under any circumstances, create any implication that there has been no change in the business or affairs of the Company since the date of this Prospectus or that the information contained in this Prospectus, including any forward-looking statements, is correct as at any time subsequent to the date of this Prospectus. IIGT Shareholders should carefully consider all of the information contained in this Prospectus. However, IIGT Shareholders should not treat the contents of this Prospectus or any subsequent communication from the Company, Invesco, Investec or any of their respective affiliates, officers, directors, members, employees or agents as advice relating to legal, financial, taxation, accounting, regulatory, investment or any other related matters.
2. REGULATORY INFORMATION The distribution of this Prospectus in jurisdictions other than the United Kingdom may be restricted by law and persons into whose possession this Prospectus comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. This Prospectus does not constitute, and may not be used for the purposes of, an offer or solicitation to anyone in any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation. The distribution of this Prospectus and the offering of New Shares in certain jurisdictions may be restricted and accordingly persons into whose possession this Prospectus is received are required to inform themselves about and to observe such restrictions.
3. INVESTMENT CONSIDERATIONS IIGT Shareholders should inform themselves as to: (a) the legal requirements within their own countries for the holding, transfer or other disposal of UK Equity Shares; (b) any foreign exchange restrictions applicable to the holding, transfer or other disposal of UK Equity Shares which they might encounter; and
(c) the income and other tax consequences that may apply in their own countries as a result of the holding, transfer or other disposal of IIGT Shares by IIGT Shareholders. IIGT Shareholders must rely on their own advisers as to legal, financial, taxation, accounting, regulatory, investment or any other related matters concerning the Company and their holding of UK Equity Shares. An investment in the Company should be regarded as a long-term investment. There can be no assurance that the Company’s investment objectives will be achieved. It should be remembered that the price of the New Shares, and the income from such New Shares (if any), can go down as well as up. All IIGT Shareholders are entitled to the benefit of, are bound by, and are deemed to have notice of, the provisions of the Articles, which IIGT Shareholders should review. Details of where the Articles are displayed, can be found in paragraph 14 of Part 11 (General Information) of this Prospectus.
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A summary of the provisions in the Articles relating to the rights attached to the UK Equity Shares, including any limitation of those rights and procedures for the exercise of those rights is set out in paragraph 4.1 of Part 11 (General Information) of this Prospectus.
4. DATA PROTECTION The information that IIGT provides to the Company or its agents in relation to the Issue or subsequently, by whatever means, which relates to the IIGT Shareholders who are individuals or a third party individual (“personal data”) will be held and processed by the Company (and any third party, functionary or agent in the UK to whom the Company may delegate certain administrative or other functions in relation to the Company, including the Registrar) in compliance with the relevant data protection legislation and regulatory requirements of the UK. Each IIGT Shareholder acknowledges and consents that such information will be held and processed by the Company (or any third party, functionary or agent appointed by the Company, including the Registrar) for the following purposes: (a) verifying the identity of the IIGT Shareholder to comply with statutory and regulatory requirements in relation to anti-money laundering procedures; (b) contacting the IIGT Shareholder with information about other products and services provided by the AIFM, the Investment Manager or their affiliates, which may be of interest to the IIGT Shareholder; (c) carrying out the business of the Company and the administering of interests in the Company; (d) meeting the legal, regulatory, reporting and/or financial obligations of the Company in the UK or elsewhere; and (e) disclosing personal data to other functionaries of, or advisers to, the Company to operate and/or administer the Company. Each IIGT Shareholder acknowledges and consents that, where appropriate, it may be necessary for the Company (or any third party, functionary or agent appointed by the Company, including the Registrar) to: (a) disclose personal data to third party service providers, affiliates, agents or functionaries appointed by the Company or its agents to provide services to the IIGT Shareholder; and (b) transfer personal data outside of the EEA states to countries or territories which may not offer the same level of protection of personal data as the UK. If the Company (or any third party, functionary or agent appointed by the Company, including the Registrar) discloses personal data to such a third party, functionary or agent and/or makes such a transfer of personal data it will use reasonable endeavours to ensure that any third party, functionary or agent to whom the relevant personal data is disclosed or transferred is contractually bound to provide an adequate level of protection in respect of such personal data. IIGT Shareholders are responsible for informing and obtaining any required consent of any third party individual to whom the personal data relates to the disclosure and use of such data in accordance with these provisions. Each IIGT Shareholder acknowledges that personal data provided to the Company by IIGT will be held and processed in compliance with the Investment Manager’s privacy policy. Please refer to the Website for a copy of the Investment Manager’s privacy policy. Shareholders will be notified if an updated privacy policy has been published on the Website through a RIS.
5. FORWARD-LOOKING STATEMENTS This Prospectus includes statements that are, or may be deemed to be, “forward-looking statements”. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes”, “estimates”, “plans”, “projects”, “anticipates”, “expects”, “intends”, “may”, “will”, or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include matters that are not historical facts and include statements regarding the Company’s intentions, beliefs or current expectations. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances that may or may not occur. A number of factors could cause actual results and developments to differ materially from those expressed or implied by the forward-looking
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statements including, without limitation, the facts described in Part 1 (Risk Factors) of this Prospectus. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements in this Prospectus reflect the Company’s view with respect to future events as at the date of this Prospectus and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company’s operations and strategy. Save as required by applicable law, or any UK or EU regulatory requirements (including FSMA, MAR, the UK AIFM Regulations, the Prospectus Regulation, the Prospectus Regulation Rules, the Listing Rules, the Takeover Code and the DTR) the Company is under no obligation publicly to release the results of any revisions to any forward-looking statements in this Prospectus that may occur due to any change in its exceptions or to reflect events or circumstances after the date of this Prospectus. Given these uncertainties, IIGT Shareholders are cautioned not to place any undue reliance on such forward-looking statements and should carefully consider Part 1 (Risk Factors) of this Prospectus for a discussion of additional factors that could cause the Company’s actual results to differ materially before making any investment decision. Notwithstanding the foregoing, nothing contained in this Prospectus shall in any way be taken to qualify the working capital statement contained in paragraph 7 of Part 9 (Financial Information) of this Prospectus.
6. PRESENTATION OF INFORMATION 6.1 Currency, presentation All references in this Prospectus to “£”, “Sterling” or “pence” are to the lawful currency of the UK.
6.2 Market, economic and industry data Market, economic and industry data used throughout this Prospectus is sourced from various industry and other independent sources. The Company and the Directors confirm that such data has been accurately reproduced and, so far as they are aware and are able to ascertain from information published from such sources, no facts have been omitted which would render the reproduced information inaccurate or misleading.
6.3 No incorporation of website information Information on the Website or the websites of the AIFM, the Investment Manager, the Depositary or Investec does not form part of this Prospectus unless that information is incorporated by reference.
7. PRIIPs Investors should be aware that the PRIIPs Regulation requires the AIFM, as PRIIP manufacturer, to prepare a KID in respect of each of the Company’s share classes. The KIDs must be made available by the AIFM to retail, or private, investors prior to them making any investment decision. The KIDs are available on the Website. A hard copy of each KID is available on request and unless the retail, or private, investor requests in writing that the KIDs be provided in paper form, such investor is deemed to have consented to being provided the KIDs via the Website. The Company is not responsible for the information contained in the KIDs and investors should note that the procedures for calculating the risks, costs and potential returns are prescribed by the law. The figures in the KIDs may not reflect the expected returns for the Company and anticipated performance returns cannot be guaranteed.
8. LATEST PRACTICABLE DATE Unless otherwise indicated, the latest practicable date for the inclusion of information in this Prospectus is the close of business on 26 March 2021.
9. NON-MAINSTREAM POOLED INVESTMENTS As the Company is an investment trust, the UK Equity Shares will be “excluded securities” under the FCA’s rules on non-mainstream pooled investments. Accordingly, the promotion of the UK Equity Shares is not subject to the FCA’s restriction on the promotion of non-mainstream pooled investments.
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The Board has reviewed MiFID II and the ESMA guidance published thereto and has concluded that the UK Equity Shares constitute a non-complex product for the purposes of UK MiFIR.
10. TAX REPORTING, FATCA AND CRS Shareholders should furnish any information and documents the Company may from time to time request in connection with tax reporting, including but not limited to information required under FATCA or CRS. Shareholders may be subject to tax reporting under applicable laws. FATCA and CRS documentation and reporting obligations can also arise in respect of Shareholders where third parties hold Shares or act on their behalf.
11. GOVERNING LAW Unless otherwise stated, statements made in this Prospectus are based on the law and practice currently in force in England and are subject to changes therein.
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PART 3
EXPECTED TIMETABLE, STATISTICS AND DEALING CODES
1. EXPECTED TIMETABLE OF PRINCIPAL EVENTS Record Date for entitlement under the Scheme close of business on 14 April 2021 First General Meeting of IIGT in relation to the Scheme 10.30a.m. on 15 April 2021 General Meeting of the Company 11.00 a.m. on 15 April 2021 Calculation Date for the Scheme 5.00 p.m. on 15 April 2021 Second General Meeting of IIGT in relation to the Scheme 11.00 a.m. on 23 April 2021 Effective Date for the Scheme 23 April 2021 Admission of the New Shares and dealings commence 8.00 a.m. on 26 April 2021 CREST accounts credited in respect of New Shares issued as soon as practicable after in uncertificated form 8.00 a.m. on 26 April 2021 Certificates despatched in respect of New Shares issued in certificated form week commencing 3 May 2021 Notes: (1) References to times above and in this Prospectus generally are to London times unless otherwise specified. (2) All times and dates in the expected timetable and in this Prospectus may be adjusted by the Company. Any material changes to the timetable will be notified through a RIS.
2. ILLUSTRATIVE ISSUE STATISTICS
New Shares to be issued Up to 130,000,000 New Shares
3. DEALING CODES
UK Equity Shares ISIN GB00B1DPVL60 SEDOL B1DPVL6 Ticker IVPU LEI 549300JZQ39WJPD7U596
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PART 4
DIRECTORS, MANAGEMENT, CUSTODIAN AND ADVISERS
Directors (all non-executive) Graham Kitchen (Chairman) Craig Cleland Alan Clifton Victoria Muir All of the registered office below
Registered Office of the Company Perpetual Park, Perpetual Park Drive, Henley-on-Thames, Oxfordshire, England, RG9 1HH
Website of the Company www.invesco.co.uk/investmenttrusts
Proposed Additional Directors Davina Curling Mark Dampier Tim Woodhead All of the registered office above
Investment Manager Invesco Asset Management Limited (company number 00949417) Perpetual Park Perpetual Park Drive Henley-on-Thames Oxfordshire RG9 1HH Telephone number: +44 1491 417000 Website: www.invesco.co.uk LEI: X87LBO0OFEU7S3WI0T57 Authorised and registered by the FCA in the UK
AIFM Invesco Fund Managers Limited (company number 00898166) Perpetual Park Perpetual Park Drive Henley-on-Thames Oxfordshire RG9 1HH Telephone number: +44 1491 417000 Website: www.invesco.co.uk LEI: 5493006UKCFMY99W2779 Authorised and registered by the FCA in the UK
Company Secretary Invesco Asset Management Limited (company number 00949417) Perpetual Park Perpetual Park Drive Henley-on-Thames Oxfordshire RG9 1HH
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Registrar and Receiving Agent
Link Market Services Limited The Registry 34 Beckenham Road Beckenham Kent BR3 4TU Website: http://www.linkmarketservices.com/
Sponsor and Financial Adviser Investec Bank plc 30 Gresham Street London EC2V 7QP Authorised and Regulated by the FCA under FSMA
Legal Advisers to the Company
Dentons UK and Middle East LLP Quartermile One 15 Lauriston Place Edinburgh EH3 9EP
Depositary and Custodian
The Bank of New York Mellon (International) Limited 1 Canada Square London E14 5AL Telephone number: +44 20 7570 1784 Website: www.bnymellon.com LEI: 549300KP56LL8NKKFL47 Authorised by the Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority
Auditor Grant Thornton UK LLP 30 Finsbury Square London EC2A 1AG Member firm of the Institute of Chartered Accountants in England and Wales
Reporting Accountant
Grant Thornton UK LLP 30 Finsbury Square London EC2A 1AG Member firm of the Institute of Chartered Accountants in England and Wales
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PART 5
THE COMPANY AND THE INVESTMENT MANAGER
1. INTRODUCTION
The Company is a closed-ended investment company incorporated in England and Wales on 25 August 2006 with registered number 05916642, with an unlimited life and registered as an investment company under section 833 of the Companies Act 2006.
The Company has four share classes being UK Equity Shares, Global Equity Income Shares, Balanced Risk Allocation Shares and Managed Liquidity Shares which are listed on the premium segment of the Official List and are admitted to trading on the premium segment of the Main Market. The Company provides Shareholders with a choice of investment policies and objectives, each intended to generate attractive risk-adjusted returns from segregated portfolios. The Company’s purpose is to generate sustainable returns for Shareholders by providing a choice of investment strategies and the ability to switch between them, free of cost, according to their needs.
The Company is not regulated by the FCA or any other regulatory authority but is subject to the Listing Rules and the DTR. The Listing Rules include a listing principle that a listed company must ensure that it treats all holders of the same class of shares that are in the same position equally in respect of the rights attaching to such shares. The Directors intend, at all times, to conduct the affairs of the Company so as to enable it to qualify as an investment trust for the purposes of section 1158 of the CTA 2010, as amended.
The Board has outsourced the day-to-day investment management, risk management and administration and company secretarial services as well as promotional activities of the Company to Invesco and other third party providers. The Company has appointed the AIFM as its alternative investment fund manager under the terms of the Management Agreement for the purposes of the UK AIFM Regulations. The AIFM has delegated its responsibilities as to investment management and promotional activities to the Investment Manager by way of a group delegation agreement in place between the AIFM and the Investment Manager. The AIFM has also delegated its responsibilities as to administrative and secretarial services to the Company Secretary. A summary of the Management Agreement is set out in paragraph 7.1 of Part 11 (General Information) of this Prospectus.
2. REASONS FOR PUBLICATION OF THIS PROSPECTUS 2.1 Background to the Proposals
The Board has been alert to the size of the Company for some time and as a result has been looking at opportunities to increase the size and scale of the Company. The Board was aware that IIGT had held a continuation vote at the IIGT AGM, and that whilst the IIGT Shareholders ultimately voted in favour of a resolution for the continuation of IIGT as a closed-ended investment company, the Board was aware that a certain percentage of those IIGT Shareholders who voted on the continuation resolution voted against the resolution. It was noted by the Board that the Board of IIGT had announced that it would assess with its advisers the votes cast and would engage with the IIGT Shareholders as appropriate to determine what action, if any, it should take. The Company entered into discussions with the Investment Manager, being the investment manager of both companies, and subsequently explored potential opportunities with the Board of IIGT. Following a comprehensive review of IIGT’s competitive positioning by the IIGT Board and its advisers and considering the Board’s desire to seek corporate opportunities to increase the size and scale of the Company, the Board and the Board of IIGT considered that combining IIGT’s assets with the Company would be in the interests of both companies, offering IIGT Shareholders the best way to continue their investment in a closed-ended investment vehicle with the same Investment Manager and a similar investment philosophy, whilst also meeting the growth objective of the Board.
The Board of IIGT and the Board each announced on 1 December 2020 that heads of terms for the Combination had been agreed.
2.2 The Proposals Under the proposed terms of the Scheme, subject to the satisfaction of the Conditions, IIGT will be placed into members’ voluntary liquidation and the Scheme will take effect. It is
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expected that the Scheme will become effective on the Effective Date, whereupon the cash, undertaking and other assets of IIGT comprising the Rollover Pool, will be transferred to the Company pursuant to the Transfer Agreement, in consideration for the issue of New Shares, effected on a FAV for FAV basis as at the Calculation Date. The relevant numbers of New Shares will be allotted to the Liquidators who will renounce the New Shares in favour of the IIGT Shareholders who elect or are deemed to have elected for the Rollover Option (save for any Overseas IIGT Shareholders). IIGT Shareholders may elect to receive cash instead of New Shares in respect of some or all of their holdings in IIGT at a discount of 2.5 per cent. of the value of the Cash Pool as at the Calculation Date. The Cash Option will be limited to 30 per cent. of IIGT Shares in issue (excluding IIGT Shares in treasury), if aggregate Elections are made for the Cash Option which exceed 30 per cent. of the issued IIGT Shares (excluding IIGT Shares held in treasury), IIGT Shareholders who have made an Election for the Cash Option in excess of their Basic Entitlement shall have their Excess Applications scaled back in a manner which is, as near as practicable, pro rata to the number of IIGT Shares elected under such Excess Applications. IIGT Shares which are subject to such scaling back will be deemed to have elected for the Rollover Option. Overseas IIGT Shareholders will not receive a copy of this Prospectus. Further details of the Scheme and the Issue are set out in Part 8 (Details of Issue and Scheme) of this Prospectus.
2.3 Benefits of the Proposals The Board and the Board of IIGT believe that the Proposals offer IIGT Shareholders an opportunity to continue their investment in a closed-ended investment vehicle with a similar investment objective and the same AIFM and Investment Manager, but in a vehicle whose shares trade at a tighter discount to net asset value per share than the persistently wide discount to net asset value at which the IIGT Shares have historically traded at. The Board understands that all of the IIGT Directors intend to roll over their entire beneficial holdings of IIGT Shares into New Shares. The Board believes that the Combination has the following benefits for Shareholders and the IIGT Shareholders: (a) the increase in the size of the Company should enhance the profile of the Company, its relevance to investors and its secondary market liquidity, and will allow fixed costs to be spread over a larger cost base, thereby improving the ongoing charges ratio to the benefit of Shareholders; (b) the current flat annual management fee of 0.55 per cent. of net assets payable on the UK Equity Share class will be reduced, with 0.55 per cent. payable on its net assets up to £100 million and 0.50 per cent. over £100 million; (c) the performance fee (being 12.5 per cent. of any increase in net assets above the benchmark plus 1.0 per cent. capped at 0.55 per cent. of net assets) will be removed; (d) the AIFM will waive its accrued performance fee of approximately £531,000 in respect of the UK Equity Portfolio; and (e) the UK Equity share class will be managed to a UK equity income growth mandate, benefitting from the combined expertise of Ciaran Mallon, the current portfolio manager of IIGT and James Goldstone, the current portfolio manager of the UK Equity Portfolio. Ciaran has been lead portfolio manager of IIGT since July 2005 and has a considerable track record of providing sustainable returns through a combination of above average income combined with long-term capital growth. Over the ten years to 28 February 2021, IIGT has returned 92.3 per cent. on a NAV total return basis compared with the FTSE All-Share Index, which returned 70.73 per cent. over the same timeframe. James Goldstone has been lead portfolio manager of the UK Equity Portfolio since 4 October 2016. Since James became lead portfolio manager to 28 February 2021, the UK Equity Portfolio has returned 11.7 per cent. on a NAV total return basis compared with the FTSE All-Share Index, which returned 12.8 per cent. over the same timeframe.
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3. INVESTMENT OBJECTIVE
The Company’s investment objective is to provide Shareholders with a choice of investment strategies and policies, each intended to generate attractive risk-adjusted returns. The Company’s share capital comprises four share classes: UK Equity Shares, Global Equity Income Shares, Balanced Risk Allocation Shares and Managed Liquidity Shares, each of which has its own separate portfolio of assets and attributable liabilities. The investment objective for each Share class is as follows: l UK Equity Portfolio: to provide UK Equity Shareholders with an attractive long-term total return by investing primarily in UK quoted equities; l Global Equity Income Portfolio: to provide an attractive and growing level of income return and capital appreciation over the long term, predominantly through investment in a diversified portfolio of equities worldwide; l Balanced Risk Allocation Portfolio: to provide holders of Balanced Risk Allocation Shares with an attractive total return in differing economic and inflationary environments, and with low correlation to equity and bond market indices by gaining exposure to three asset classes: debt securities, equities, and commodities; and l Managed Liquidity Portfolio: to produce an appropriate level of income return combined with a high degree of security. (It should be noted that the Managed Liquidity Portfolio is not a cash fund and as such, is not without risk to capital). Subject to Shareholder approval, as a result of the Combination and recognising the income growth expectations of the IIGT shareholders, it is proposed to amend the investment objective of the UK Equity Portfolio to make it more compatible with the investment objective of IIGT. Further details are set out in paragraph 5 of Part 5 (The Company and the Investment Manager) of this Prospectus. The Company enables Shareholders to alter their asset allocation to reflect their views of prevailing markets through the opportunity to convert between Share classes every three months, on or around 1 February, 1 May, 1 August and 1 November each year. For the next 12 month period, the Company will enable Shareholders to convert between Share classes on 4 May 2021, 2 August 2021, 1 November 2021 and 1 February 2022. Notice from a Shareholder to convert any class of Share on any Conversion Date will be accepted up to ten days prior to the relevant Conversion Date. Forms for conversion are available on the web pages of all the Share classes on Invesco’s website www.invesco.co.uk/investmenttrusts and from the Company Secretary. Conversion from one class of Share into another will be on the basis of a ratio derived from the prevailing underlying Net Asset Value of each class of relevant Share, calculated shortly before the date of conversion, all in accordance with the Articles of Association.
4. INVESTMENT POLICY AND LIMITS 4.1 Investment Policy
In pursuit of the Company’s investment objective, the Company’s current investment policy for each Share class is set out below. Subject to Shareholder approval, as a result of the Combination and recognising the income growth expectations of the IIGT shareholders, it is proposed to amend the investment policy of the UK Equity Portfolio to make it more compatible with the investment policy of IIGT. The current investment policy of the UK Equity Portfolio is set out immediately below. Further details of the proposed new investment policy are set out in paragraph 5 of Part 5 (The Company and the Investment Manager) of this Prospectus.
UK Equity Portfolio The UK Equity Portfolio is invested primarily in UK equities and equity-related securities of UK companies across all market sectors, and will not invest in companies which are not listed, quoted or traded at the time of investment, although it may have exposure to such companies where, following investment, the relevant securities cease to be listed, quoted or traded. The Investment Manager invests the UK Equity Portfolio so as to maximise exposure to the most attractive sectors and securities, within a portfolio structure that reflects the Investment Manager’s view of the macroeconomic environment. The Investment Manager does not set out to manage the risk characteristics of the UK Equity Portfolio relative to the FTSE All-Share
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Index (the “benchmark index”) and the investment process may result in potentially very significant over or underweight positions in individual sectors versus the benchmark. The size of weightings will reflect the Investment Manager’s view of the attractiveness of a security and the degree of conviction held. If a security is not considered to be a good investment, it will not be held in the UK Equity Portfolio, irrespective of its weight in the benchmark index. The Investment Manager controls the stock-specific risk of individual securities by ensuring that the UK Equity Portfolio is always diversified across market sectors. In-depth and continual analysis of the fundamentals of investee companies allows the Investment Manager to assess the financial risks associated with any particular security. It is expected that, typically, the UK Equity Portfolio will hold between 45 and 80 securities. The Directors believe that the use of borrowings can enhance returns to Shareholders and the UK Equity Portfolio will generally use borrowings in pursuing its investment objective.
Global Equity Income Portfolio The Global Equity Income Portfolio is invested predominantly in a portfolio of listed, quoted or traded equities worldwide, but may also hold other securities from time to time including, inter alia, fixed interest securities, preference shares, convertible securities and depositary receipts. Investment may also be made in regulated or authorised collective investment schemes. The Global Equity Income Portfolio will not invest in companies which are not listed, quoted or traded at the time of investment, although it may have exposure to such companies where, following investment, the relevant securities cease to be listed, quoted or traded. The Investment Manager will at all times invest and manage the Global Equity Income Portfolio’s assets in a manner that is consistent with spreading investment risk, but there will be no rigid industry, sector, region or country restrictions. The Global Equity Income Portfolio may utilise derivative instruments including index-linked notes, contracts for differences, covered options and other equity-related derivative instruments for efficient portfolio management and investment purposes. Any use of derivatives for investment purposes will be made on the basis of the same principles of risk spreading and diversification that apply to the Global Equity Income Portfolio’s direct investments, as described above. The Company makes use of borrowing facilities to seek to enhance Shareholder returns when appropriate.
Balanced Risk Allocation Portfolio The Balanced Risk Allocation Portfolio utilises two main strategies: the first seeks to balance the risk contribution from each of three asset classes (equities, bonds and commodities), with the aim of reducing the probability, magnitude and duration of capital losses, and the second seeks to shift tactically the allocation among the assets with the aim of improving expected returns. The Balanced Risk Allocation Portfolio is constructed so as to achieve appropriate diversity and to balance risk by asset class (bonds, equities and commodities) and by asset within each asset class. Neutral risk weighting is achieved when each asset class contributes an equal proportion of the total Balanced Risk Allocation Portfolio risk and each asset contributes an equal proportion of the total risk for its respective asset class. The Investment Manager is permitted to actively vary asset class weightings, subject to a maximum of 150 per cent. and a minimum of 50 per cent. of each asset class’s neutral weight. The Investment Manager is also permitted to actively vary individual asset weightings, provided the asset class guidelines are not violated. Asset weights may not be less than zero (short) and will not exceed twice the neutral weight. For the purposes of the maximum weighting only, commodity exposures are aggregated and measured by commodity complex rather than by individual assets. The Balanced Risk Allocation Portfolio will be mainly invested directly in highly liquid and transparently priced exchange-traded futures contracts, with cash and cash equivalents being held as collateral. However, the Balanced Risk Allocation Portfolio may also be invested in equities, equity-related securities and debt securities (including floating rate notes). Financial derivative instruments (including but not limited to futures and total return swaps) are used only to achieve long exposure to the three asset classes. The Balanced Risk Allocation Portfolio may also use financial derivative instruments, including currency futures and forwards, for efficient portfolio management, hedging and investment purposes. Financial derivative instruments will
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not be used to create net short positions in any asset class. The derivatives portfolio will typically comprise between 20 and 33 investment positions.
Managed Liquidity Portfolio The Managed Liquidity Portfolio invests mainly in a range of Sterling-based or related high quality debt securities and similar assets (which may include transferable securities, money market instruments, warrants, collective investment schemes and deposits), either directly or indirectly through authorised funds investing in such instruments, including funds managed by the Investment Manager. The Managed Liquidity Portfolio generally invests in funds authorised as UCITS schemes (Undertakings for Collective Investments in Transferable Securities, being open ended retail investment funds in the EU), which are required under governing regulations to provide a prudent spread of risk. In the event that the Managed Liquidity Portfolio is invested directly in securities and instruments, the Investment Manager will observe investment restrictions and risk diversification policies that are consistent with UCITS regulations.
5. PROPOSED CHANGES TO UK EQUITY PORTFOLIO INVESTMENT OBJECTIVE AND POLICY AS A RESULT OF THE COMBINATION Subject to Shareholder approval, as a result of the Combination and recognising the income growth expectations of the IIGT shareholders, it is proposed to amend the investment objective and the investment policy of the UK Equity Portfolio to make it more compatible with the investment objective and policy of IIGT, and in particular to include an express investment objective of the Company to have “an income that will grow over time by investing primarily in UK-quoted equities”. The proposed amended investment objective and policy is as follows with the proposed changes shown in bold:
Investment Objective “The Investment objective of the UK Equity Portfolio is to provide Shareholders with an attractive real long-term total return, with an income that will grow over time, by investing primarily in UK-quoted equities.
Investment Policy “The UK Equity Portfolio is invested primarily in UK-quoted equities across all market sectors, and may also hold equity-related or fixed interest securities of UK companies. The UK Equity Portfolio will not invest in companies which are not listed, quoted or traded at the time of investment, although it may have exposure to such companies where, following investment, the relevant securities cease to be listed, quoted or traded. The Investment Manager invests the UK Equity Portfolio so as to maximise exposure to the most attractive sectors and securities, within a portfolio structure that reflects the Investment Manager’s view of the macroeconomic environment. The Investment Manager does not set out to manage the risk characteristics of the UK Equity Portfolio relative to the FTSE All-Share Index (the “benchmark index”) and the investment process may result in potentially very significant over or underweight positions in individual stocks and sectors versus the benchmark. The size of weightings will reflect the Investment Manager’s view of the attractiveness of a security and the degree of conviction held. If a security is not considered to be a good investment, it will not be held in the UK Equity Portfolio, irrespective of its weight in the benchmark index. The Investment Manager controls the stock-specific risk of individual securities by ensuring that the UK Equity Portfolio is always diversified across market sectors. In-depth and continual analysis of the fundamentals of investee companies allow the Investment Manager to assess the financial risks associated with any particular security. It is expected that, typically, the UK Equity Portfolio will hold between 40 and 50 securities. The Directors believe that the use of borrowings can enhance returns to Shareholders and the UK Equity Portfolio will generally use borrowings in pursuing its investment objective.”
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5.1 Investment Limits
The Board sets investment guidelines within which the Investment Manager must operate. All of these limits are measured at the point of acquisition of investments, unless otherwise stated. All of these limits will apply as at the Effective Date, as follows:
UK Equity Portfolio l no more than 12 per cent. of the gross assets of the UK Equity Portfolio may be held in a single investment;
l no more than 10 per cent. of the gross assets of the UK Equity Portfolio may be held in other listed investment companies (excluding REITs);
l no more than 20 per cent. of the gross assets of the UK Equity Portfolio may be held in overseas assets; and
l borrowings may be used to raise equity exposure up to a maximum of 25 per cent. of the net assets of the UK Equity Portfolio when it is considered appropriate.
Global Equity Income Portfolio l no more than 20 per cent. of the gross assets of the Global Equity Income Portfolio may be invested in fixed interest securities;
l no more than 10 per cent. of the gross assets of the Global Equity Income Portfolio may be held in a single investment;
l no more than 10 per cent. of the gross assets of the Global Equity Income Portfolio may be held in other listed investment companies (excluding REITs); and
l borrowings may be used to raise equity exposure up to a maximum of 20 per cent. of the net assets of the Global Equity Income Portfolio, when it is considered appropriate.
Balanced Risk Allocation Portfolio l the aggregate notional amount of financial derivative instruments positions may not exceed 250 per cent. of the net assets of the Balanced Risk Allocation Portfolio; and
l no more than 10 per cent. of the gross assets of the Balanced Risk Allocation Portfolio may be held in other listed investment companies.
Managed Liquidity Portfolio l no more than 10 per cent. of the gross assets of the Managed Liquidity Portfolio may be held in a single investment, other than authorised funds or high quality sovereign debt securities; and
l no more than 5 per cent. of the gross assets of the Managed Liquidity Portfolio may be held in unquoted investments, other than authorised funds. As an investment trust, the Company aims to comply with section 1158 of the CTA 2010, which imposes on the Company an obligation to spread investment risk.
In accordance with the Listing Rules, the Company will not make any material change to its published investment policies without the prior approval of the FCA and the approval of its Shareholders by ordinary resolution. Such an alteration would be announced by the Company through a RIS.
In the event of any breach of the investment restrictions applicable to the Company, Shareholders will be informed of the actions to be taken by the Company by an announcement issued through a RIS.
5.2 Dividend policy
For UK Equity Shares and Global Equity Income Shares, the Company’s policy is to pay four interim dividends per year consisting of three equal interim dividends declared in July, October and January and a ‘wrap-up’ fourth interim dividend declared in April. Depending on the level of income received in each quarter, and in the year, these four dividends may be enhanced with contributions from capital profits to achieve the Board’s target level. In recent years the
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Directors have set a target of at least maintaining, in the absence of unforeseen circumstances, the level of annual dividends per share on the UK Equity and Global Equity Income Shares. The impact of Covid-19 constitutes unforeseen circumstances in this context and, given the current uncertainty of future income flows, the Directors have not set dividend targets for the year to 31 May 2021. In order to maximise the capital return on the Balanced Risk Allocation Shares, the Directors only intend to declare dividends on the Balanced Risk Allocation Shares to the extent required to maintain the Company’s status as an investment trust under section 1158 of the CTA 2010. The Board intends to declare dividends on the Managed Liquidity Shares when the level of income allows.
For the financial year ended 31 May 2020, interim dividends were paid by the Company as follows:
l UK Equity Shares: Interim dividends of 1.5 pence per UK Equity Share were paid by the Company on 16 August 2019, 15 November 2019, and 17 February 2020. A fourth interim dividend of 2.1 pence per UK Equity Share was paid to Shareholders on 15 May 2020. The four interim dividends result in total dividends per UK Equity Share for the financial year ended 31 May 2020 of 6.6 pence;
l Global Equity Income Shares: Interim dividends of 1.55 pence per Global Equity Income Share were paid by the Company on 16 August 2019, 15 November 2019 and 17 February 2020. The fourth interim dividend of 2.4 pence per Global Equity Income Share was paid to Shareholders on 15 May 2020. The four interim dividends result in total dividends per Global Equity Income Share for the financial year ended 31 May 2020 of 7.05 pence;
l Balanced Risk Allocation Shares: No dividends were paid.
l Managed Liquidity Shares: An interim dividend of 0.8 pence per Managed Liquidity Share was paid by the Company on 15 May 2020. In respect of the year ending 31 May 2021, interim dividends have been paid by the Company as follows:
l UK Equity Shares: Interim dividends of 1.5 pence per UK Equity Share were paid by the Company on 17 August 2020, 16 November 2020 and 15 February 2021; and
l Global Equity Income Shares: Interim dividends of 1.55 pence per Global Equity Income Share were paid by the Company on 17 August 2020, 16 November 2020 and 15 February 2021.
5.3 Discount Management The Company has a discount control policy in place for all four Share classes, whereby the Company offers to issue or buy back Shares of all classes with a view to maintaining the market price of the Shares at close to their respective Net Asset Values and, by so doing, avoid significant overhangs or shortages in the market. It is the Board’s policy to buy back Shares and to sell Shares from treasury on terms that do not dilute the Net Asset Value attributable to existing Shareholders at the time of the transaction. The operation of this policy is dependent upon the authorities to buy back and issue Shares being renewed by Shareholders. Notwithstanding the intended effect of this policy, there can be no guarantee that the Shares will trade at close to their respective Net Asset Values. Shareholders should also be aware that there is a risk that this discount policy may lead to a reduction in the size of the Company over time. The Board and Invesco closely monitor movements in the Company’s Share prices and dealings in the Company’s Shares. From 1 June 2020 to 26 March 2021 (being the latest practicable date prior to the publication of this Prospectus) the Company has bought back 8,240,000 UK Equity Shares, 4,874,000 Global Equity Income Shares, 801,000 Balanced Risk Allocation Shares and 569,000 Managed Liquidity Shares.
5.4 Gearing
The Company has a £20 million 364 day multicurrency revolving credit facility with the Bank of New York Mellon. As at the latest practicable date, agreement in principle has been reached to increase this facility to £40 million, conditional upon the Scheme becoming effective and,
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subject to the agreement of legally binding documentation. The Board is responsible for setting the gearing policy of the Company and for the limits on gearing. The Investment Manager is responsible for gearing within the limits set by the Board. The UK Equity Portfolio and the Global Equity Income Portfolio may use bank borrowings, the proceeds from which can be invested, gearing up exposure to the stock market with the aim of enhancing returns to Shareholders. The managers of these portfolios generally use borrowings in the pursuit of the respective investment objectives. The Balanced Risk Allocation Portfolio is geared by means of the financial derivative instruments used to implement its investment policy.
5.5 Leverage
For the purposes of the UK AIFM Regulations, leverage is any method which increases the Company’s exposure, including the borrowing of cash and the use of derivatives. It is expressed as a ratio between the Company’s exposure and its Net Asset Value and can be calculated on a gross and a commitment method. Under the gross method, exposure represents the sum of the Company’s positions after the deduction of Sterling cash balances, without taking into account any hedging and netting arrangements. Under the commitment method, exposure is calculated without the deduction of Sterling cash balances and after certain hedging and netting positions are offset against each other. The table below sets out the current maximum permitted limit and actual level of leverage for the Company:
UK AIFM Regulations UK AIFM Regulations leverage at 31 May 2020 leverage limit Gross Commitment Gross Commitment UK Equity Portfolio 112% 112% 250% 200% Global Equity Income Portfolio 110% 110% 250% 200% Balanced Risk Allocation Portfolio 164% 161% 350% 300% Managed Liquidity Portfolio 101% 101% 175% 150% There have been no breaches of the maximum level during the last financial year to 31 May 2020 and no changes to the maximum level of leverage employed by the Company. There is no right of re-use of collateral or any guarantees granted under the leveraging arrangement. Changes to the information contained either within the Company’s 2020 annual report or the Company’s pre-investment disclosure document in relation to any special arrangements in place; the maximum level of leverage which the AIFM may employ on behalf of the Company; the right of use of collateral or any guarantee granted under any leveraging arrangement; or any change to the position in relation to any discharge of liability by the Depositary will be notified via a RIS without undue delay in accordance with the UK AIFM Regulations.
6. AIFM AND THE INVESTMENT MANAGER
The AIFM is the Company’s alternative investment fund manager for the purposes of the UK AIFM Regulations. The AIFM has delegated certain responsibilities including the day-to-day management of the Portfolios to the Investment Manager. The AIFM is a limited liability company, incorporated and registered in England and Wales on 14 February 1967 with registration number 00898166. The Investment Manager is a limited liability company, incorporated and registered in England and Wales on 7 March 1969 with registration number 00949417. The AIFM and the Investment Manager are authorised and regulated by the FCA to conduct certain restricted activities in relation to collective investment schemes and general securities and derivatives. The AIFM is a wholly–owned subsidiary of Invesco Ltd., a leading independent global investment management company incorporated in Bermuda with global headquarters in Atlanta, Georgia, USA. Invesco Ltd had assets under management at 31 December 2020 of US$1349.9 billion (2019: US$1,226.2 billion). It is a widely held public company listed on the New York Stock Exchange under the symbol IVZ. It has a significant presence in the retail and institutional markets within the investment management industry in North America, UK, Continental Europe, Middle East and Asia-Pacific. A summary of the Management Agreement is set out in paragraph 7.1 of Part 11 (General Information) of this Prospectus.
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6.1 Risk Controls The AIFM’s Investment Risk team is responsible for providing second-line, risk management oversight and monitoring for investment risk within the portfolios managed, including those of the Company. This oversight and monitoring is provided in accordance with the AIFM’s Investment Risk framework and standards and inclusive of applicable regulatory obligations. A Risk Profile and Limit System (“RPLS”) is established for each portfolio and is periodically reviewed and updated for any changes to the investment strategies and/or restrictions of each fund. The team is also responsible for producing and maintaining all risk management policies and RPLS reporting packs, monitoring portfolio risk limits (and where appropriate escalating potential or actual limit breaches) and for preparing quarterly investment risk reports to the relevant management committees and boards. The Investment Risk team produces a dashboard of key investment risk metrics to allow management committees and boards to monitor the overall risk profile of the Company’s portfolios in support of its risk management objectives and requirements.
6.2 Environmental, Social and Governance (“ESG”) Engagement In relation to the Portfolios, the Company has delegated the management of the Company’s investments to Invesco, who has an ESG Guiding Framework which sets out a number of principles that are intended to be considered in the context of its responsibility to manage investments in the financial interests of shareholders. Invesco is committed to being a responsible investor and applies, and is a signatory to, the United Nations Principles for Responsible Investment, which demonstrates its extensive efforts in terms of ESG integration, active ownership, investor collaboration and transparency. Invesco is also a signatory to the FRC Stewardship Code 2012, which seeks to improve the quality of engagement between institutional investors and companies to help improve long-term returns to shareholders and the efficient exercise of governance responsibilities. As long term, valuation led, active investors, the portfolio managers’ investment process is aligned with ESG integration and active ownership.
6.3 Active Engagement The Board considers that the Company has a responsibility as a shareholder towards ensuring that high standards of corporate governance are maintained in the companies in which it invests. To achieve this, the Board does not seek to intervene in daily management decisions, but aims to support high standards of governance and, where necessary, will take the initiative to ensure those standards are met. The principal means of putting shareholder responsibility into practice is through the exercise of voting rights. The Company’s voting rights are exercised on an informed and independent basis. The Company’s stewardship functions have been delegated to Invesco, which has adopted a clear and considered policy towards its responsibility as a shareholder on behalf of the Company. As part of this policy, Invesco takes steps to satisfy itself about the extent to which the companies in which it invests look after shareholders’ value and comply with local recommendations and practices, such as the UK Corporate Governance Code.
7. INVESTMENT MANAGEMENT TEAM
If the Scheme is approved, the UK Equity Portfolio will be managed jointly by James Goldstone and Ciaran Mallon, respectively the current managers of the UK Equity Portfolio and IIGT. In May 2020 James and Ciaran were appointed joint managers of the Invesco High Income Fund (UK) and the Invesco Income Fund (UK), Invesco’s flagship UK equity retail funds. Further details of their experience is set out below, and they are supported by product directors and operational staff.
James Goldstone, UK Equities Portfolio Manager James is a fund manager for Invesco’s Henley-based UK Equities team and is responsible for the management of the UK Equity Portfolio, to which he was appointed in October 2016, and other UK and Pan-European equity mandates. Prior to joining Invesco in August 2012, James was co-head of Pan European sales at Banco Espirito Santo in London. He began his career in equity sales at Credit
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Lyonnais in 2001 and went on, via HSBC and Dresdner Kleinwort, to specialise in UK equity sales. James graduated with a first class honours degree in French from Manchester University.
Ciaran Mallon, UK Equities Portfolio Manager Ciaran is a fund manager for Invesco’s Henley-based UK Equities team and is responsible for the management of a number of UK equity portfolios, including that of IIGT, which he has managed since July 2005. Ciaran began his investment career in 1994, joining HSBC where he was an investment analyst before moving to United Friendly Asset Management (UFAM) in 1999 as a fund manager and joining Invesco in 2005. He holds an MA in Chemistry from Oxford University, the Securities Institute Diploma and is a CFA charterholder.
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PART 6
INVESTMENT STRATEGY AND PORTFOLIO
1. THE INVESTMENT STRATEGY The proposed strategy for the Enlarged UK Equity Portfolio is to generate attractive real returns, with an income that grows over time, from mainly UK equities through an active, high conviction investment approach, which is based on individual stock selection across the market capitalisation spectrum. The portfolio managers seek to identify undervalued businesses that can offer capital appreciation and growth in income over time. The portfolio managers have a flexible and pragmatic approach, whilst the UK Equity Portfolio will have no inbuilt sector, style or market capitalisation bias.
2. DELIVERY OF THE INVESTMENT OBJECTIVES The portfolio managers believe strongly in active management and share a fundamentals-driven approach to stock picking. They are looking to find the right companies at the right price and which they will want to hold for the long term. Since they started working together, they have spent a great deal of time designing a clearly defined, repeatable four stage process, that embeds challenge at every stage with the aim of delivering a better outcome for investors in their funds.
! The investment process for the UK Equity Portfolio will be the same as the portfolio managers deploy for the other funds they manage jointly, but they will have greater freedom to invest in companies that, because of their size and/or the liquidity in their shares, are not appropriate investments for the much larger open-ended funds they manage. Accordingly, the UK Equity Portfolio will be differentiated from other portfolios and will comprise the portfolio managers’ best investment ideas typically holding between 40 and 50 securities.
Stock selection The portfolio managers share a number of beliefs about what makes an attractive investment. They seek companies with good management and strong competitive positions in their markets. In-depth analysis of each investment idea is required to ensure that these criteria are met and are sustainable. Valuation is critical, with free cash flow yield a key measure, amongst others such as price to book. Close attention is also paid to capital allocation and returns on capital employed. ESG factors are also an important consideration and are integrated in the stock selection process, with a particular focus on good governance. The portfolio managers have constructed an illustrative portfolio which is described in the sections below. However, the actual portfolio to be selected following completion of the Scheme will be determined according to market conditions then prevailing and may differ from the illustrative portfolio.
Portfolio characteristics While each investment is assessed on its own merits, companies selected will typically share one or more characteristics or themes with others in the portfolio. Highlighting some of these shared
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characteristics or themes can be useful for investors to better understand the exposures they acquire when investing in the portfolio. Accordingly the illustrative portfolio can be sub-divided into the following categories, each representing a characteristic shared by a number of companies selected: l UK Domestic – businesses which derive the majority of their earnings from within the UK and that are influenced by UK domestic economic and political drivers, and expectations for changes therein. l International Value – ‘International’ refers to UK listed companies that derive the majority of their earnings from overseas and whose businesses are subject to a greater extent to international/global economics and political drivers. ‘Value’ refers to opportunity derived from market inefficiencies in pricing of income and cash flows that can be generated largely from existing/modest growth in capital and resources employed. l International Growth – UK listed companies that are ‘International’ (as defined above) but which present a growth opportunity from market inefficiencies in the pricing of growing levels of income into the future, achievable from successful deployment of increased levels of capital and resources. l Recovery – companies whose share prices have suffered disproportionately for a period of time due to the market’s assessment of risks, but that now have the potential to turn around. l Transformers – companies whose management teams have anticipated and responded to developments which pose severe threats to their existing business models and have driven change so as to be able to take advantage of opportunities created by those same developments.
ESG The portfolio managers’ investment process is aligned with ESG integration and active ownership. The core aspects to the ESG philosophy include materiality, which refers to consideration of ESG issues on a risk-adjusted basis and in an economic context; ESG momentum, which promotes improving investee companies’ ESG performance over time; and engagement by way of dialogue with company management. This approach is supported by a range of tools and resources including third party ESG research, Invesco’s in-house ESG team and a recently developed proprietary system called ESGIntel. This tool allows the portfolio managers to analyse potential issues in detail and to target issues that matter most for sustainable value creation and risk management.
2.1 Return performance
The table below shows the NAV and share price returns for the UK Equity Portfolio and its benchmark index (FTSE All-Share Index) since James Goldstone took on management of this portfolio in October 2016 to 28 February 2021: Since 1 year 3 years 4 October 2016 Net asset value 6.03% 2.68% 11.70% Share price 3.72% 3.63% 12.49% Benchmark 3.50% 3.76% 12.82% Source: Refinitiv As noted above, if the Scheme is approved, the UK Equity Portfolio will be co-managed by James Goldstone and Ciaran Mallon, the current fund manager of IIGT. James and Ciaran have been co-managing two large UCITS funds since May 2020 and the table below shows the performance record of these funds from their appointment to 28 February 2021: Since 14 May 2020 Invesco UK Equity Income Fund (UK) 20.61% Invesco UK Equity High Income Fund (UK) 18.81% Benchmark 16.69% Source: Invesco
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2.2 Dividend performance The annual dividends paid on the UK Equity Shares are shown, in pence per share, in the table below. Dividends have been paid quarterly since January 2012.
3. CURRENT MARKET OPPORTUNITY The portfolio managers believe that attractive opportunities exist in the UK equity market. The impact of the UK’s vote to leave the European Union on share prices and the years of negotiations and missed deadlines has been significant. In terms of price, the UK equity market has significantly lagged behind every other major market since June 2016. Confidence in UK stocks has fallen so far that UK equities have been trading at a significant discount to their 20-year average price to book valuation. In contrast, the US, developed markets, emerging markets, and Asia ex-Japan markets are all trading at a premium to their long-term average price to book valuation. Japan and Europe ex-UK are trading close to their long-term average. On that basis, both relative to its own history and to international markets, the portfolio managers believe that the UK equity market presents an attractive valuation opportunity. In the near-term the successful rollout of the Coronavirus vaccine in the UK and the early indications that there is a significant reduction in hospital admissions have been well received by the market. The portfolio managers believe that this, combined with the reduction in positive cases and the falling number of recorded deaths, increases the likelihood that the UK economy will return to more normal levels of activity later in the year, albeit with a note of caution. The projections in the Bank of England’s February Monetary Policy Report show real GDP falling by 4 per cent. in the first quarter of 2021 but recovering rapidly thereafter. The portfolio managers believe that private sector savings that have built up during 2020 are likely to unwind, and that policy conditions are likely to remain accommodative, all of which would be beneficial for domestically focused UK business. Broadly speaking estimates show real GDP rising by around 15 per cent. over the balance of 2021 and 2022, with real GDP rising above pre-virus levels in the first quarter of 2022.
3.1 Outlook The portfolio managers believe that, in a changing global environment, the interests of investors are best served by employing a well-tested investment process, which is based on fundamental company analysis and a prudent approach to valuation. The portfolio managers continue to evaluate and re-evaluate the holdings in the portfolio, seeking the best opportunities to create a sustainable flow of dividend income for investors. Now that the UK has left the EU, the portfolio managers believe that a degree of uncertainty has been removed and that there could be a significant upside for the UK equity market, on both an absolute basis and relative to international indices. Over the coming months, the portfolio managers expect to see some strengthening in Sterling and renewed interest in the UK equity market from international investors. The portfolio managers believe that some of the most compelling opportunities rest within domestic sectors. Meanwhile, selective opportunities also exist in UK
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listed companies with international earnings and companies particularly affected by the Covid- 19 pandemic that should recover swiftly as the UK economy returns to normal.
4. PORTFOLIO SUMMARY
UK Equity Portfolio Set out below is a summary of the sector and geographical exposures of the UK Equity Portfolio as at 26 March 2021: Industry Breakdown Fund % Basic Materials 12.93 Consumer Discretionary 1.11 Consumer Goods 8.48 Consumer Services 18.99 Financials 26.11 Health Care 3.00 Industrials 15.75 Oil & Gas 5.49 Technology 0.23 Telecommunications 2.31 Utilities 5.60 Geographical Breakdown Fund % United Kingdom 89.41 North America 10.59 The UK Equity Portfolio’s investments at 26 March 2021 are set out below: Bid Market % of Security Description Industry Value Total Portfolio Barclays Financials 3,215,803. 6.28% BP Oil & Gas 2,811,128 5.49% Next Consumer Services 195,535,632 3.82% Barrick Gold – Canadian Listed Basic Materials 1,809,848 3.53% SSE Utilities 1,725,338 3.37% JD Sports Fashion Consumer Services 1,672,471 3.26% Newmont – US Listed Basic Materials 1,629,994 3.18% PureTech Health Health Care 1,537,250 3.00% Ultra Electronics Industrials 1,308,631 2.55% Coats Industrials 1,277,144 2.49% Babcock International Industrials 1,186,596 2.32% Vodafone Telecommunications 1,183,634 2.31% Ashtead Industrials 1,122,033 2.19% Agnico Eagle Mines – Canadian Listed Basic Materials 1,107,671 2.16% RELX Consumer Services 1,086,086 2.12% Future Consumer Services 1,009,183 1.97% Johnson Service Industrials 978,956 1.91% Phoenix Spree Deutschland Financials 962,561 1.88% Barratt Developments Consumer Goods 944,139 1.84% Sigma Capital Financials 929,588 1.81% Aviva Financials 909,151 1.77% CVS Consumer Services 900,341 1.76% Tesco Consumer Services 892,432 1.74% Wheaton Precious Metals – Canadian Listed Basic Materials 877,484 1.72% MJ Gleeson Consumer Goods 857,150 1.67% Fevertree Drinks Consumer Goods 837,463 1.64% PRS REIT Financials 829,419 1.62% Chemring Industrials 828,639 1.62% Urban Logistics REIT Financials 802,128 1.57% XPS Pensions Financials 784,565 1.53% Hays Industrials 770,518 1.50% Secure Trust Bank Financials 762,931 1.49%
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Bid Market % of Security Description Industry Value Total Portfolio Standard Chartered Financials 763,895 1.49% Sirius Real Estate Financials 720,264 1.41% Chesnara Financials 693,069 1.35% McBride Consumer Goods 688,116 1.34% DFS Furniture Consumer Services 686,139 1.34% National Grid Utilities 673,053 1.31% Bushveld Minerals Basic Materials 663,867 1.30% Burford Capital Financials 610,331 1.19% easyJet Consumer Services 606,609 1.18% Essentra Industrials 597,817 1.17% Countryside Consumer Goods 559,068 1.09% Glencore Basic Materials 532,173 1.04% On the Beach Consumer Services 494,144 0.96% The Restaurant Group Consumer Discretionary 478,909 0.94% United Utilities Utilities 469,781 0.92% British American Tobacco Consumer Goods 459,512 0.90% Safestyle UK Consumer Services 432,610 0.84% Lancashire Financials 425,351 0.83% Sherborne Investors (Guernsey) C Financials 357,120 0.70% Distribution Finance Capital Financials 229,528 0.45% Tungsten Financials 220,367 0.43% Phoenix Financials 158,129 0.31% Sage Group Technology 118,310 0.23% The Restaurant Group Placing Consumer Discretionary ______88,100 ______0.17% ______51,231,893 ______100.00%
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PART 7
DIRECTORS, MANAGEMENT AND ADMINISTRATION
1. DIRECTORS & PROPOSED ADDITIONAL DIRECTORS
1.1 Directors The Directors, all of whom are non-executive and all of whom are independent of the AIFM and the Investment Manager, are responsible for the determination of the Company’s investment policy and the overall supervision of the Company, including the review of investment activity and performance and the control and supervision of the Investment Manager. The Board currently consists of:
Graham Kitchen – Chairman Graham Kitchen was appointed as a Director on 1 June 2018 and became the Chairman of the Company on 3 October 2019. He was Global Head of Equities at Janus Henderson Investors until March 2018, having joined in 2005. He was briefly at Threadneedle Investments before that, having previously spent 13 years at Invesco as a UK Fund Manager and Co-Head of Investment. He is a non-executive director of The Mercantile Investment Trust plc, AVI Global Trust plc and Places for People and is a member of the Investment Committee of the charity Independent Age. He is Chairman of the Company’s Nomination Committee.
Craig Cleland Craig Cleland was appointed as a Director with effect from 1 November 2016 and became Chairman of the Audit Committee on 31 July 2017. He is Head of Corporate Development: Investment Trusts, at CQS (UK) LLP. He is also a non-executive director of BlackRock Latin American Investment Trust plc. He was previously at JPMorgan Asset Management (UK) Limited, latterly as Managing Director, and led their technical groups in the investment trust business. Prior to that he was a Director and senior company secretary at Fleming Investment Trust Management, transferring to JPMorgan Asset Management after Chase Manhattan Bank acquired Robert Fleming Holdings Limited. He is Chairman of the Company’s Audit Committee.
Alan Clifton Alan Clifton was appointed as a Director on January 10 2008. He is a former Member of The Stock Exchange, London, and a former Managing Partner of the stockbrokers, Kitcat & Aitken. From 1990 until 2001 he was the Managing Director of Morley Fund Management (now Aviva Investors), the asset management arm of Aviva plc. He is a past chairman of a number of investment trusts and remains a director of Macau Property Opportunities Fund Ltd and of Canada Life Asset Management and is an investment adviser to the Official Solicitor and Public Trustee at the Ministry of Justice. He is the Company’s Senior Independent Director and Chairman of the Management Engagement Committee.
Victoria Muir Victoria Muir was appointed as a Director with effect from 1 July 2015. She is a Chartered Director and a Fellow of the Institute of Directors. She is a distribution specialist and has worked in financial services, with a focus on asset management, for over 25 years. She was Global Head of Investor Relations at BlueBay Asset Management and Head of Client Account Management at Royal London Asset Management, where she held four executive directorships. She is a non-executive director of Christie Group plc, Schroder Income Growth Fund plc, Smith & Williamson Fund Administration Limited, State Street Trustees Limited, Premier Miton Global Renewables Trust plc and its subsidiary PGMR Securities 2025 plc. She is also chair of State Street Managed Accounts Services Limited. She holds no executive positions. She is Chairman of the Company’s Marketing Committee.
1.2 Proposed board changes If the Scheme is implemented, for continuity purposes for the IIGT Shareholders it is intended that Davina Curling, Mark Dampier and Tim Woodhead will join the Board on the Effective Date.
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Alan Clifton will step down on the Effective Date. Graham Kitchen will be the Chairman of the Enlarged Company. The Proposed Additional Directors will be non-executive Directors and independent of the AIFM and the Investment Manager. Further details of the Proposed Additional Directors are set out below.
Davina Curling Ms Curling was appointed to the Board of IIGT on 1 March 2011 and is Chairman of the Management Engagement Committee and the Senior Independent Director. Ms Curling is a non-executive director of Henderson Opportunities Trust plc. She is also a non-executive director of BlackRock Greater Europe Investment Trust plc and is a member of the Investment Committee of St James’s Place. Prior to this she was Managing Director and Head of Pan European Equities at Russell Investments and before this of F&C Asset Management. Ms Curling started her career at Kleinwort Benson in 1987 before moving to run the European desks at Nikko, RSA and then ISIS Asset Management.
Mark Dampier Mr Dampier was appointed to the Board of IIGT on 1 March 2016. He was, until August 2020, Head of Investment Research at Hargreaves Lansdown, a position he had held since 1998. He is also a non-executive director of Jupiter Emerging & Frontier Trust plc. He has over 30 years’ experience in the fund management industry, including marketing investment trusts and unit trusts, has published a book on effective investing and is a leading commentator on the investment sector.
Tim Woodhead Mr Woodhead was appointed to the Board of IIGT on 3 April 2018. He is a senior Investment Director at Rathbone Brothers plc. Mr Woodhead holds various trustee positions in charities and for a number of family trusts. He previously held the role of lead fund manager of Albany Investment Trust plc and was a member of the Stock Selection Committee at Rathbone Brothers plc. He was a Trustee and then Chairman of Rathbone 1987 Pension Scheme, standing down in June 2018. Mr Woodhead has over 20 years of investment experience managing private client investments and is an active investor with a keen interest in UK midcap and investment trusts. It is expected that the Board of the Enlarged Company will initially comprise six directors, but that this may reduce to five directors in the future.
1.3 Responsibility
To the best of the knowledge of the Directors and the Proposed Additional Directors, the information contained in this Prospectus is in accordance with the facts and the Prospectus makes no omission likely to affect its import. All the Directors and the Proposed Additional Directors accept responsibility accordingly.
2. MANAGERIAL, SECRETARIAL, ADMINISTRATION AND DEPOSITARY ARRANGEMENTS 2.1 Managerial, secretarial and administration arrangements
The Board has outsourced the day-to-day investment management, risk management and administration and company secretarial services of the Company to the AIFM. The Company entered into the Management Agreement with the AIFM on 22 July 2014, as subsequently amended, under which the AIFM was been appointed to provide to the Company investment management, risk management, administration and company secretarial services, subject to the overall supervision of the Directors in accordance with the policies laid down by the Directors from time to time and the investment restrictions referred to in the Management Agreement. The AIFM is entitled to a basic fee (payable quarterly) as follows:
l 0.55 per cent. per annum of net assets in the case of the UK Equity Portfolio and the Global Equity Income Portfolio;
l 0.75 per cent. per annum for the Balanced Risk Allocation Portfolio; and
l 0.12 per cent. per annum of net assets in the case of the Managed Liquidity Portfolio.
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The Management Agreement provides for the basic fee to be reduced by any fee payable separately to the AIFM on any investments in other funds managed by the AIFM. The AIFM is also entitled to receive performance fees in respect of the UK Equity Portfolio and Global Equity Income Portfolio of 12.5 per cent. of the increase in net assets per relevant share in excess of a hurdle of the relevant benchmark plus 1 per cent. per annum. The amount of the performance fee that can be paid in any one year has been capped at 0.55 per cent. of the net assets of the relevant Portfolio and payment is subject to a high water mark. If a performance fee is earned in any year, but the Net Asset Value per Share does not meet the high water mark at the year end, the amount of fee up to the cap for that year is carried forward as a creditor and will be paid when the high water mark and cap allow. Additionally, a provision for performance fee arises when the amount earned exceeds the cap for fees payable in any one year. Such provision is carried forward to be paid in future periods or offset against future underperformance. So far as the cap allows, the provision, less any amounts offset, will become payable in any future year in which the closing Net Asset Value is greater than the high water mark. No performance fee can be earned until any past underperformance is offset. If the Scheme becomes effective, the current flat annual management fee of 0.55 per cent. of net assets payable on the UK Equity and Global Equity Income Share classes will be reduced, with 0.55 per cent. payable on its net assets up to £100 million and 0.50 per cent. over £100 million. Invesco (in its capacity as AIFM) has agreed to waive, subject to the Scheme becoming effective, its entitlement to any performance fee accrued in respect of the UK Equity Portfolio up to the Effective Date. The benefit of the accrued performance fee waiver will be applied towards the Total Benefits, as described in paragraph 2 of Part 8 of this Prospectus. As at 26 March 2021 (being the latest practicable date prior to the publication of this Prospectus), the value of this accrued fee was £531,000. In addition, the AIFM’s performance fee payable on the UK Equity and Global Equity Income Share classes (being 12.5 per cent. of any increase in net assets above the benchmark plus 1.0 per cent. capped at 0.55 per cent. of net assets) will also be removed.
By way of sub-delegation from the AIFM, the Investment Manager manages the Portfolios and the Company’s investments in accordance with the policies laid down by the Directors from time to time and in accordance with the investment restrictions referred to in the Management Agreement.
The AIFM has also delegated administrative and company secretarial services to the Investment Manager (in its capacity as Company Secretary). Pursuant to the terms of the Sub-Investment Management Agreement entered into between the AIFM and the Investment Manager on 22 July 2014, the secretarial services provided by the Company Secretary include (but are not limited to) convening and recording general meetings and meetings of the Board, the keeping of the Company’s statutory books and records, filing requirements of UK regulatory authorities and returns (including annual returns), and the provision of the registered office of the Company.
The Investment Manager (in its capacity as Investment Manager and Company Secretary) receives an annual fee for its investment management, administrative and company secretarial services. This fee is agreed in writing between the AIFM and the Investment Manager from time to time in accordance with the FCA Handbook. A summary of the Management Agreement is set out in paragraph 7.1 of Part 11 (General Information) of this Prospectus.
2.2 Depositary and Custodian arrangements
The Company has appointed the Depositary as the Company’s depositary and custodian under the UK AIFM Regulations. The Depositary is responsible for, amongst other things, the safe keeping of the Company’s assets. The Depositary has arranged for the safe keeping of the Company’s financial instruments to be held and settles (directly or through sub-custodians) all transactions relating to those financial instruments on behalf of the Company. The Depositary reports to the Audit Committee at least annually, including on the Company’s compliance with the UK AIFM Regulations.
In satisfaction of the services rendered by the Depositary pursuant to the Depositary Agreement for the year ended 31 May 2020, the Company was charged £29,125 by the
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Depositary. A summary of the Depositary Agreement is set out in paragraph 7.4 of Part 11 (General Information) of this Prospectus.
2.3 Registrar The Registrar is responsible for the maintenance of the register of members and for the transfer and settlement of Shares as applicable. In satisfaction of the services rendered by the Registrar pursuant to the Registrar’s Agreement for the year ended 31 May 2020, the Company was charged £41,987 by the Registrar. Details of the Registrar’s Agreement are set out in paragraph 7.2 of Part 11 (General Information) of this Prospectus.
2.4 Auditor
Grant Thornton UK LLP is registered to carry on audit work in the UK by the Institute of Chartered Accountants in England and Wales and was selected to be the Company’s auditor following a tender exercise in 2016. Grant Thornton UK LLP was first appointed by Shareholders on 4 October 2016 and has been appointed as auditor at each annual general meeting since and most recently in respect of the financial year ending 31 May 2021. The financial statements are prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law) including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”.
3. CAPITAL STRUCTURE AND DURATION
The Company’s share capital structure immediately following the Issue will consist of UK Equity Shares, Global Equity Income Shares, Balanced Risk Allocation Shares and Managed Liquidity Shares. The Shares will be in registered form and may be held in certificated or in uncertificated form. The Company does not have a fixed life.
4. CORPORATE GOVERNANCE
4.1 Compliance The Board is committed to maintaining high standards of corporate governance. The Board has put in place a framework for corporate governance which it believes is appropriate to an investment trust. In doing so, the Board has considered the principals and the provisions of the AIC Code. The AIC Code addresses all of the principles set out in the Corporate Governance Code, as well as setting out additional principles and recommendations which are of specific relevance to investment trusts. The AIC Code is available on the AIC’s website, www.theaic.co.uk. The Corporate Governance code is available on the Financial Reporting Council’s website, www.frc.org.uk.
4.2 Board independence, composition and tenure The Chairman and each of the other Directors is independent of the AIFM and the Investment Manager and each Director is non-executive. If the Scheme is implemented, the Board will also include the Proposed Additional Directors who will each be independent of the AIFM and the Investment Manager and will each be non-executive. The Chairman is responsible for organising the business of the Board, ensuring its effectiveness and setting its agenda. The executive responsibilities for investment management have been delegated to the AIFM. The AIFM has delegated day-to-day management of the Portfolios to the Investment Manager. Alan Clifton is the Senior Independent Director. The Board’s policy on tenure is that the tenure of the Chairman shall normally be limited to nine years as Chairman and up to 12 years including any time served as a Director before becoming Chairman, since the Board considers that the continuity and accumulated experience and knowledge of chairmen are of considerable value to the Company. All other Directors shall normally have tenure limited to nine years from first appointment to the Board. However, in each case, there is flexibility for the Board to determine that this be extended where it is considered that the continued participation on the Board of an individual Director, or the Chairman, is in the best interests of the Company and its Shareholders. This is also subject to the Director’s re-election by Shareholders. In accordance with the AIC Code, subject to any Directors not seeking to continue in office, all Directors will offer themselves for re-election annually at the AGM. The Board considers that this policy provides both for
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adequate continuity and encourages regular refreshment, which is conducive to fostering diversity of its constituents. The Board considers that none of the Directors’ other commitments interferes with the discharge of their duties to the Company. The AIC Code provides that the Board should undertake a formal and rigorous annual evaluation of its own performance and that of its committees and individual Directors. The Board conducts an annual evaluation of its performance and that of its Committees, using questionnaires and discussion, amongst other tools, to ensure that the Directors have all devoted sufficient time and contributed adequately to the work of the Board and Committees. The annual performance review takes into consideration, amongst other things, attendance at Board and Committee meetings, the independence of individual directors, the ability of Directors to make an effective contribution to the Board and Committees due to the diversity of skills and experience each Director brings to the meetings, and the Board’s ability to challenge Invesco and debate the future strategy of the Company.
4.3 Audit Committee The Audit Committee is chaired by Craig Cleland and comprises all of the Directors other than the Chairman of the Company. It meets at least three times each year to review the internal financial and non-financial controls, to approve the contents of the draft annual and half-yearly financial reports to Shareholders, to review the Company’s accounting policies and to approve the audit plan. In addition, the Audit Committee reviews the auditor’s independence, objectivity and effectiveness, the service organisation controls of the service providers to the Company, the effectiveness of the audit process, and, together with the AIFM, reviews the Company’s compliance with financial reporting and regulatory requirements. The Audit Committee confirms to the Board that the financial statements are fair, balanced and understandable and also recommends the approval of the Company’s financial statements to the Board. It also provides a forum through which the auditor reports to the Board. The AIFM’s internal audit and compliance teams report to the Audit Committee at least twice each year and the Depositary reports at least annually.
4.4 Management Engagement Committee The Management Engagement Committee comprises all of the Directors and is chaired by Alan Clifton. The Management Engagement Committee meets at least once a year to review the performance, quality and service provision of all major service providers, in particular services provided by the AIFM and Investment Manager. Each Portfolio’s performance is evaluated relative to its peers and respective benchmark. The Directors also take into account market factors that have a bearing on the strategy being pursued in each case and discussions with the portfolio managers throughout the year on strategy and performance. Administrative services provided by Invesco are also evaluated.
4.5 Nomination Committee The Nomination Committee, chaired by Graham Kitchen and comprising all of the Directors, meets at least annually. The main responsibilities of the Nomination Committee are to review the size, structure, skills and diversity of the Board and to make recommendations to the Board with regard to any changes considered necessary or new appointments. The Nomination Committee is also responsible for longer-term succession planning, including setting a policy on tenure of the Chairman; performance evaluation of the Directors; and oversight of appointments to the Board, including engagement of independent search consultants. The Nomination Committee’s overriding priority in appointing new Directors is to identify the candidate with the optimal range of skills and experience to complement the existing Directors. The Board recognises the benefits, and is supportive, of the principle of diversity in its recruitment of new Directors. The Board’s policy on diversity is that the Board seeks to ensure that its structure, size and composition, including the skills, knowledge, diversity (including gender) and experience of Directors, is sufficient for the effective direction and control of the Company. The Board has not set any measurable objectives in respect of this policy. The Board has formulated a formal, rigorous and transparent procedure for the selection and appointment of new directors to the Board. The Nomination Committee carries out the procedure with a view to making recommendations to the Board. The Nomination Committee may consider using an executive
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search consultancy or open advertising when seeking new candidates for appointment, or may alternatively decide that candidates found from sources within the Company and through its advisers are of a sufficiently high quality.
4.6 Marketing Committee The Marketing Committee, chaired by Victoria Muir and comprising all of the Directors other than the Chairman of the Company, meets at least two times per year. The Marketing Committee is responsible for overseeing investor relations and efforts to refresh and expand the Company’s shareholder base.
4.7 Policy on Directors’ fees In accordance with the Articles, the aggregate fees of the Directors will not exceed £200,000 per annum. The limit can be amended by Shareholder resolution from time to time, albeit it has not been increased since incorporation. There are no performance conditions attaching to the remuneration of the Directors as the Board does not believe that this is appropriate for non-executive directors. The Directors are not eligible for bonuses, pension benefits, share options, long-term incentive schemes or other benefits.
5. PROFILE OF TYPICAL INVESTORS
The Directors believe that: l the UK Equity Shares and the Global Equity Income Shares are intended for investors aiming for income and capital growth over the long term, who may not have specific financial expertise but are able to make informed investment decisions and understand that there is no capital guarantee or protection; l the Balanced Risk Allocation Shares are intended for investors aiming for capital preservation and growth over the long term, who may not have specific financial expertise but are able to make informed investment decisions and understand that there is no capital guarantee or protection; and l the Managed Liquidity Shares are intended for investors aiming for income and maintenance of capital, who may not have specific financial expertise but are able to make informed investment decisions and understand that there is no capital guarantee or protection.
6. TAXATION A summary of certain limited aspects of UK taxation applicable to the Company and Shareholders is contained in Part 10 (UK Tax) of this Prospectus. If any IIGT Shareholder is in any doubt about the tax consequences of his/her acquiring, holding, disposing or conversion of New Shares, he/she should seek advice from his/her own independent professional advisers.
7. FINANCIAL INFORMATION
7.1 Financial reports The audited annual financial statements of the Company are drawn up in pounds Sterling and prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law) including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”. They include an income statement, balance sheet, statement of changes in equity and cash flow statement, related notes and any additional information that the Board deems appropriate or that is required by applicable law. The Company’s annual report and financial statements are prepared up to 31 May each year and ordinarily copies are sent to Shareholders within three months of the year-end. The Company’s annual accounting reference date is 31 May and the Company’s current accounting period will end on 31 May 2021. Shareholders also receive an unaudited half-year report covering the six months to 30 November each year which is usually despatched within two months of that date. Information on performance, holdings and investment activity is prepared by the AIFM and published monthly by the AIFM in the form of a factsheet to be made available on the Website.
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In accordance with the UK AIFM Regulations, the AIFM will ensure that the following information in relation to the Portfolios is published in the Company’s annual report and audited accounts: (a) the percentage of the Company’s assets which are subject to special arrangements arising from their illiquid nature; (b) any new arrangements for managing the liquidity of the Company; (c) the current risk profile of the Company and the risk management systems employed by the AIFM to manage those risks; (d) any changes to the maximum level of leverage which the AIFM may employ on behalf of the Company as well as any right of the re-use of collateral or any guarantee granted under the leveraging arrangement. The Company will, in addition, notify Shareholders of any such changes, rights or guarantees without undue delay by issuing an announcement through a RIS; and (e) the total amount of leverage employed by the Company.
7.2 Annual running expenses In addition to management, advisory, administration and secretarial fees referred to in paragraph 2 of this Part 7 (Directors, Management and Administration) of the Prospectus, the Company will pay all other fees and expenses incurred in the operation of its business including, without limitation: (a) Directors’ fees and expenses; (b) fees and expenses for the Registrar, corporate broker, legal, auditing and other professional services; (c) the ongoing costs of maintaining the listing of the Shares (where relevant) on the premium segment of the Official List and their continued admission to trading on the Main Market; (d) NAV publication costs; (e) directors and officers insurance premiums; (f) promotional expenses (including membership of any industry bodies, including the AIC and promotional initiatives by the AIFM as approved by the Board); and (g) costs of printing the Company’s financial reports and posting them to Shareholders.
The Enlarged Company’s operational costs are estimated to be £1,075,000 for the financial year ended 31 May 2021 and £1,342,000 for the financial year ended 31 May 2022. Shareholders do not bear any fees, charges and expenses directly, other than any fees, charges and expenses incurred as a consequence of acquiring, transferring, redeeming or otherwise selling Shares.
7.3 Allocation of ongoing costs Interest expenses will be recognised within ‘finance costs’ in the Income Statement using the effective interest rate method. All other expenses will be recognised in the Statements of Comprehensive Income in the period in which they are incurred (on an accruals basis). The Company charges investment management fees and finance costs to revenue and capital respectively in the proportions shown below: Portfolio Revenue Capital UK Equity Share 30% 70% Global Equity Income 30% 70%
Balanced Risk Allocation 25% 75% Managed Liquidity 100% 0%
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7.4 NAV calculations and valuation policy
Under the Management Agreement, the AIFM is responsible for calculating the NAV per Share. The AIFM has sub-delegated this responsibility to the Investment Manager who in turn has engaged The Bank of New York Mellon. The unaudited NAV per Share is calculated on each Dealing Day (on a cum-income basis) by The Bank of New York Mellon and is announced by the Company Secretary through a RIS. Unless otherwise disclosed, the NAV is calculated in accordance with the recommendations of the AIC. In particular: (1) financial assets have been valued on a fair value basis using bid prices, or, if more appropriate, a last trade basis; (2) debt is valued at par and, where applicable, debt is also separately valued at market value; (3) diluted NAVs are disclosed where applicable (for this purpose, treasury shares are excluded for the purposes of calculation); and (4) provisions for performance fees are included where applicable. The Board may determine that the Company shall temporarily suspend the determination of the NAV per Share when the prices of any investments owned by the Company cannot be promptly, accurately or without undue expenditure, ascertained. Any suspension in the calculation of the NAV will be notified to Shareholders through a RIS as soon as practicable after such suspension occurs. The Company may delay public disclosure of the NAV to avoid prejudice to its legitimate interests, provided that such delay would not be likely to mislead the public and the Company has put in place appropriate measures to ensure confidentiality of that information. For the purposes of valuing its investments the Company has chosen to apply the recognition and measurement provisions of sections 11 and 12 of FRS 102. All investments have been designated upon initial recognition at fair value through profit or loss. This is done because all investments are considered to form part of a group of financial assets which is evaluated on a fair value basis, in accordance with the Company’s documented investment strategy, and information about the grouping is provided internally on that basis. Investments are recognised and de-recognised at trade date where a purchase or sale is under a contract whose terms require delivery within the timeframe established by the market concerned, and are measured initially at fair value. Subsequent to initial recognition, investments are valued at fair value through profit or loss. For listed investments, this is deemed to be bid market prices or closing prices for SETS (London Stock Exchange’s electronic trading service) stocks sourced from the London Stock Exchange. Gains and losses arising from changes in fair value are included in the net return for the period as a capital item in the Statement of Comprehensive Income and are ultimately recognised in the capital reserve.
8. CONFLICTS OF INTEREST The AIFM and the Investment Manager and their officers and employees may be involved in other financial, investment or professional activities that may on occasion give rise to conflicts of interest with the Company. In particular, the AIFM and the Investment Manager may provide investment management, investment advice or other services in relation to a number of funds that may have similar investment policies to that of the Company. The AIFM and the Investment Manager will have regard to its obligations under the Management Agreement or otherwise to act in the best interests of the Company, so far as is practicable having regard to their obligations to other clients or funds, should potential conflicts of interest arise. The AIFM and the Investment Manager have put in place organisational and administrative arrangements to ensure that reasonable steps are taken to prevent a conflict giving rise to a material risk of damage to the interests of its clients. The AIFM and the Investment Manager are committed to identifying, monitoring and managing all actual and potential conflicts of interest that can arise, and have a conflicts of interest policy which covers the fair management and resolution of such situations should they arise and which is reviewed on at least an annual basis. In addition, where the AIFM or the Investment Manager pays or accepts any fee or commission, or provides or receives any non-monetary benefit in relation to its investment services, the AIFM and the Investment Manager take care to ensure that such benefits do not place it or any third party firm in a situation which would not be in compliance with the general duty to act in accordance with the best interests of their clients.
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PART 8
DETAILS OF ISSUE AND SCHEME
1. INTRODUCTION The Issue is being undertaken pursuant to the proposed members’ voluntary liquidation and a scheme of reconstruction of IIGT under which IIGT Shareholders will be entitled to elect to receive in respect of some or all of their IIGT Shares: (a) New Shares (the “Rollover Option”); and/or (b) cash (the “Cash Option”).
The Cash Option is limited to 30 per cent. of the IIGT Shares in issue (excluding IIGT Shares held in treasury). IIGT Shareholders are entitled to elect to receive more than 30 per cent. of their individual holdings of IIGT Shares (the “Basic Entitlement”, such excess amount being an “Excess Application”). If aggregate Elections are made for the Cash Option which exceed 30 per cent. of the issued IIGT Shares (excluding IIGT Shares held in treasury) as at the Calculation Date, IIGT Shareholders who have made an Election for the Cash Option in excess of their Basic Entitlement shall have their Excess Applications scaled back in a manner which is, as near as practicable, pro rata to the number of IIGT Shares elected under such Excess Applications. IIGT Shares which are subject to such scaling back will be deemed to have elected for the Rollover Option. IIGT Shareholders who make no Election (or no valid Election) under the Scheme will be deemed to have elected to receive New Shares in the Company in respect of their entire holding of IIGT Shares. Valid Elections under the Scheme must be received by 1.00p.m. on 14 April 2021. The Scheme involves IIGT being placed into members’ voluntary liquidation and IIGT Shareholders, who elected or are deemed to elect for the Rollover Option, receiving New Shares issued by the Company, in exchange for the transfer to the Company of the Rollover Pool. The New Shares are only available to IIGT Shareholders under the Scheme. The New Shares are not being offered to the Existing Shareholders or to the public. The Issue has not been underwritten. The Board of IIGT has resolved to recommend the Scheme to the IIGT Shareholders.
2. DETAILS OF THE SCHEME Subject to the satisfaction of the Conditions, IIGT will be placed into members’ voluntary liquidation and the Scheme will take effect. It is expected that the Scheme will become effective on the Effective Date, whereupon the cash, undertaking and other assets of IIGT comprising the Rollover Pool shall be transferred to the Company pursuant to the Transfer Agreement in consideration for the issue of the New Shares. The relevant numbers of New Shares will be allotted to the Liquidators (as nominees for the IIGT Shareholders entitled to them) who will renounce the New Shares in favour of the IIGT Shareholders who elect or are deemed to have elected for the Rollover Option (save for any Overseas IIGT Shareholders). In advance of the Effective Date, the IIGT Directors intend that IIGT and/or Invesco (or their agents) will have, to the extent practicable, realised or realigned the undertaking and business carried on by IIGT in accordance with the Scheme and the Elections made or deemed to have been made thereunder so that, so far as practicable, IIGT will hold, in addition to assets destined to become the Cash Pool and the Liquidation Pool, investments suitable for transfer to the Company for the benefit of the UK Equity Portfolio, by virtue of the Transfer Agreement. Subject to the resolutions being passed at the First General Meeting of IIGT and becoming unconditional, on the Calculation Date, or as soon as possible thereafter, the IIGT Directors and Invesco, in consultation with the proposed Liquidators, shall calculate the aggregate value of the total assets of IIGT, the IIGT NAV, the Residual Net Asset Value, the Residual Net Asset Value per IIGT Share, the IIGT FAV, the IIGT FAV per Share and the Cash Pool NAV. On the Calculation Date, the IIGT Directors and Invesco, in consultation with the proposed Liquidators, and the Directors shall also determine the Total Costs, the Total Benefits, the IIGT Proportion and the Company Proportion. The UK Equity NAV, the UK Equity FAV and the UK Equity FAV per Share will be determined by the Board as at the Calculation Date. On the Calculation Date, or as soon as practicable thereafter, the IIGT Directors and Invesco, in consultation with the proposed Liquidators shall procure the finalising of the division of IIGT’s
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undertaking, cash and other assets into three separate and distinct pools, namely the Liquidation Pool, the Cash Pool and the Rollover Pool, as follows and in the following order: (a) first, there shall be appropriated to the Liquidation Pool cash and other assets of IIGT (including receivables and contingent assets) of a value calculated in accordance with the terms of the Scheme, which is estimated by the proposed Liquidators, in consultation with the IIGT Directors, to be sufficient to meet the current and future, actual and contingent liabilities of IIGT, including, without prejudice to the generality of the foregoing and save to the extent that the same have already been paid or already deducted in calculating the total assets of IIGT: (i) the costs of purchasing (or making provision for the purchase of) the interests of IIGT Shareholders who have validly exercised their rights to dissent from the Scheme under section 111(2) of the Insolvency Act; and (ii) an amount considered by the Liquidators to be appropriate to provide for any unascertained, unknown or contingent liabilities of IIGT (such amount currently not expected to exceed £55,000 (the “Retention”)), and in each case including any VAT in respect thereof; (b) second, there shall be appropriated to the Cash Pool and the Rollover Pool all the undertaking, cash and other assets of the Company remaining after the appropriation referred to in paragraph (a) above (excluding any Relevant Dividend), in terms of value determined as at the Calculation Date, in proportion to the value attributable to the Elections (which shall include deemed Elections) for the Cash Option and the Rollover Option respectively, on the basis that the value attributable to each Election shall be the Residual Net Asset Value per IIGT Share multiplied by the number of IIGT Shares to which that Election relates. There shall be appropriated to the Rollover Pool such undertaking, cash and assets of IIGT as IIGT, in consultation with the Liquidators and the Company, shall determine as being suitable for the purpose, and so as not to cause any infringement of this Prospectus, taking due account of the investment objective and investment policy of the UK Equity Portfolio; (c) third, an amount equal to 2.5 per cent. of the value of the Cash Pool as at the Calculation Date (the “Cash Pool Discount”) shall be deducted from the Cash Pool (and instead be applied towards the Total Benefits); and (d) fourth, there shall be deducted from the Rollover Pool the IIGT Proportion of the Total Costs and allocated to the Rollover Pool the IIGT Proportion of the Total Benefits. The Total Costs and Total Benefits will be allocated to the Rollover Pool and the UK Equity Portfolio as at the Calculation Date on a pro rata basis by reference to the IIGT NAV and the UK Equity NAV respectively as at the Calculation Date (IIGT’s pro rata portion being the “IIGT Proportion” and the UK Equity Portfolio’s pro rata portion being the “Company Proportion”). As a result of such pro rata allocations to the Rollover Pool and the UK Equity Portfolio as at the Calculation Date: (a) the value of the Rollover Pool as at the Calculation Date will therefore be adjusted. Such adjusted value of the Rollover Pool shall be referred to as the “IIGT FAV”; and (b) the UK Equity NAV as at the Calculation Date will therefore be adjusted. Such adjusted net asset value of the UK Equity Portfolio shall be referred to as the “UK Equity FAV”. On the Calculation Date, or as soon as practicable thereafter, (but in any event at least 3 days prior to the Effective Date), IIGT shall procure that there shall be delivered to the Company (or its nominee) particulars of the undertaking, cash and other assets comprising the Rollover Pool in accordance with the terms of the IIGT Letter of Undertaking. Further details of the Transfer Agreement are provided in paragraph 7.7 of Part 11 (General Information) of this Prospectus and full details of the Scheme are set out in the circular to IIGT Shareholders dated 30 March 2021.
3. DETAILS OF THE ISSUE
The issue of the New Shares under the Rollover Option will be effected on a FAV for FAV basis as at the Calculation Date. The Calculation Date for determining the value of the Rollover Pool is expected to be at 5.00 p.m. on 15 April 2021.
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In consideration for the transfer of the Rollover Pool to the Company (for the benefit of the UK Equity Portfolio), the New Shares shall be issued to holders of IIGT Shares who elected or are deemed to have elected for the Rollover Option on the basis that the number of such New Shares to which each such holder is entitled shall be determined in accordance with the following formula (rounded down to the nearest whole number of New Shares): A Number of New Shares = ×C B where: A is the IIGT FAV per Share (as at Calculation Date); B is the UK Equity FAV per Share (as at Calculation Date); and C is the aggregate number of IIGT Rollover Shares held by the relevant IIGT Shareholder.
No value shall be attributable to IIGT Shares held in treasury by IIGT. Fractions of New Shares will not be issued under the Scheme and entitlements to such New Shares will be rounded down to the nearest whole number. Any assets representing a fraction of the entitlements of holders of IIGT Shares who elected or are deemed to have elected for the Rollover Option whose holding of New Shares is rounded down shall be retained by the Company and represent an accretion to its assets. The New Shares to be issued pursuant to the Scheme will be allotted, credited as fully paid, to the Liquidators (as nominee for the IIGT Shareholders entitled thereto), whereupon the Liquidators will renounce the allotments of New Shares in favour of IIGT Shareholders entitled to them under the Scheme. On such renunciation, the Company will issue the New Shares to the IIGT Shareholders entitled thereto. The Company shall: (i) in the case of the New Shares issued in certificated form, arrange for the despatch of certificates for such shares issued under the Scheme to the IIGT Shareholders entitled thereto at their respective addresses in the IIGT’s register of members (and, in the case of joint holders, to the address of the first-named) or to such other person and address as may be specified by such persons in writing, in each case at the risk of the persons entitled thereto; and (ii) in the case of the New Shares issued in uncertificated form, procure that Euroclear is instructed on the Business Day following the Effective Date (or as soon as practicable thereafter) to credit the appropriate stock accounts in CREST of the IIGT Shareholders entitled thereto with their respective entitlements to New Shares issued under the Scheme. The Company shall be entitled to assume that all information delivered to it in accordance with the Scheme is correct and to utilise the same in procuring registration in the Company’s register of members of the holders of the New Shares issued under the Scheme.
The New Shares will rank equally in all respects with the existing issued UK Equity Shares other than in respect of the Fourth Interim Dividend and any other dividend declared with a record date prior to the Effective Date.
For illustrative purposes only, had the Calculation Date been 5.00 p.m. on 26 March 2021 (being the latest practicable date prior to the publication of this Prospectus), and assuming that no IIGT Shareholders exercise their right to dissent from participation in the Scheme, after deduction of the Fourth Interim Dividend and of IIGT’s pre-liquidation special dividend of 8.35 pence per IIGT Share and assuming:
(a) the maximum amount is elected for the Cash Option, the IIGT FAV per Share would have been 290.76 pence and the UK Equity FAV per Share would have been 173.70 pence. On the basis of these figures, an IIGT Shareholder who held 1,000 IIGT Shares would have received 1,673 New Shares under the Scheme. In aggregate, 68,374,761 New Shares would have been issued to IIGT Shareholders under the Scheme, representing approximately 73.8 per cent. of the issued Ordinary Share capital of the Enlarged Company; or
(b) all IIGT Shareholders had elected to receive New Shares, the IIGT FAV per Share would have been 288.68 pence and the UK Equity FAV per Share would have been 172.67 pence. On the basis of these figures, an IIGT Shareholder who held 1,000 IIGT Shares would have received 1,671 New Shares under the Scheme. In aggregate 97,557,966 New Shares would have been issued to IIGT Shareholders under the Scheme, representing approximately 80.1 per cent. of the issued Ordinary Share capital of the Enlarged Company.
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The results of the Scheme and the Issue, including the calculations of the UK Equity FAV per Share and the IIGT FAV per Share and the number of New Shares to be issued under the Scheme, will be announced through a RIS as soon as reasonably practicable following the Calculation Date and prior to the Issue.
4. CONDITIONS OF THE SCHEME
The Scheme is conditional upon: (a) the passing of the resolutions at the IIGT General Meetings and any conditions of such resolutions being fulfilled; (b) the FCA agreeing to amend the listing of the IIGT Shares to reflect their reclassification as Reclassified Shares for the purpose of implementing the Scheme; (c) the passing of the Scheme Resolutions at the General Meeting; (d) the FCA agreeing to admit the New Shares to the Official List and the London Stock Exchange agreeing to admit the New Shares to trading on its Main Market, subject only to allotment; and (e) the IIGT Directors resolving to proceed with the Scheme.
Unless the conditions set out above have been satisfied or, to the extent permitted, waived by the Company and IIGT at or before 31 May 2021, the Scheme shall not become effective.
5. COSTS AND EXPENSES OF THE PROPOSALS The Proposals will not result in any proceeds being raised by the Company. The New Shares are being issued to the IIGT Shareholders in consideration for the transfer of the Rollover Pool to the Company. The fixed costs of the Proposals payable by the UK Equity Portfolio and by IIGT are to be aggregated and allocated to the UK Equity Portfolio and the Rollover Pool on a pro rata basis by reference to the UK Equity Portfolio NAV and the IIGT NAV respectively as at the Calculation Date. Any stamp duty, SDRT or other transaction tax, or investment costs incurred by the Company on the acquisition of the Rollover Pool or the deployment of the cash therein upon receipt and listing fees in relation to the listing of the New Shares, will be borne by the Enlarged UK Equity Portfolio. If the Proposals do not proceed on the terms agreed or the required approvals are not obtained, then the Company and IIGT will bear their own costs. The Company’s costs are estimated at approximately £278,000. Total Costs shall mean the following costs and expenses relating to IIGT and the Company which are attributable to the implementation of the Scheme, which are fixed as at the Calculation Date and determined by the Directors, in consultation with the proposed Liquidators, and the IIGT Board on the Calculation Date, with such costs and expenses determined using the relevant amount(s) as stated in the relevant invoice(s) or fee quote(s): Costs and expenses relating to the Company Costs and expenses relating to IIGT (borne by the UK Equity Portfolio) IIGT’s financial adviser Company’s financial adviser IIGT’s legal adviser Company’s legal adviser Fee of the Liquidators Registrar Reporting accountant Reporting accountant Receiving agent Printing and postage of the Prospectus and the Circular D&O run off Printing and postage of the Scheme circular and the forms of election and forms of proxy Other miscellaneous costs directly attributable Other miscellaneous costs directly attributable to the implementation of the Scheme to the implementation of the Scheme
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Total Costs shall not include any of the following: l Any costs and expenses incurred by IIGT Instead, such costs and expenses will be borne in realising or realigning its portfolio in by IIGT if they are incurred before the connection with the implementation of the Calculation Date. Scheme. However, if they are incurred after the Calculation Date, these costs and expenses will be borne by the Enlarged UK Equity Portfolio. l Any costs and expenses incurred by the Instead, such costs and expenses will be borne Company in realising or aligning the UK by the UK Equity Portfolio if they are incurred Equity Portfolio in connection with the before the Calculation Date. implementation of the Scheme. If they are incurred after the Calculation Date, these costs and expenses will be borne by the Enlarged UK Equity Portfolio. l Any stamp duty on the transfer of assets Instead, such costs will be borne by the from IIGT to the Company. Enlarged UK Equity Portfolio. l Any dividends which have been declared Instead, these will have been accounted for in either by the Company or IIGT prior to the the calculation of the UK Equity NAV and the Calculation Date but not yet paid to the IIGT NAV as at the Calculation Date. relevant company’s shareholders. l Any fees and expenses in connection with Instead, such fees and expenses will be borne the application for the Admission of the by the Enlarged UK Equity Portfolio New Shares. l The Retention. Instead, the value representing the Retention will be appropriated to the Liquidation Pool (and
borne by IIGT).
If the Proposals do not proceed on the terms agreed or the required approvals are not obtained, then IIGT and the Company will bear their own costs.
6. ADMISSION AND DEALINGS
Application will be made to the FCA and to the London Stock Exchange for the New Shares to be admitted to the premium segment of the Official List and to trading on the Main Market. The existing UK Equity Shares are already traded there. If the Scheme becomes effective, it is expected that the New Shares will be admitted to the Official List on 26 April 2021, and the first day of dealings in such New Shares on the Main Market will be 26 April 2021. The New Shares will be in registered form. Temporary documents of title will not be issued. The ISIN of the New Shares will be GB00B1DPVL60. IIGT Shareholders who hold their IIGT Shares in uncertificated form and are entitled to receive New Shares, will receive New Shares in uncertificated form on 26 April 2021. Certificates in respect of New Shares to be issued to IIGT Shareholders who hold their IIGT Shares in certificated form and are entitled to receive New Shares, will be despatched in the week commencing 3 May 2021. Fractional entitlements to New Shares pursuant to the Scheme will not be issued under the Proposals and entitlements will be rounded down to the nearest whole number. No cash payments shall be made or returned in respect of any fractional entitlements which will be retained for the benefit of the Company.
7. DILUTION
Existing Shareholders are not able to participate in the Issue and will suffer a dilution to the percentage of the issued share capital (voting rights) that their current holding represents based on an actual number of New Shares issued. For the avoidance of doubt, the value of the underlying assets and the NAV per Share attributable to the Existing Shareholders will not be altered as a direct consequence of the Scheme becoming effective.
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For illustrative purposes only, had the Calculation Date been 5.00 p.m. on 26 March 2021 (being the latest practicable date prior to the publication of this Prospectus), and assuming that no IIGT Shareholders exercise their right to dissent from participation in the Scheme and that: (a) the maximum amount is elected for the Cash Option, so that 68,374,761 New Shares were issued, Existing Shareholders would have suffered a dilution of approximately 73.8 per cent. to their existing percentage holdings; or (b) all IIGT Shareholders had elected to receive New Shares, so that 97,557,966 New Shares were issued, Existing Shareholders would have suffered a dilution of approximately 80.1 per cent. to their existing percentage holdings.
8. OVERSEAS IIGT SHAREHOLDERS Overseas IIGT Shareholders will not receive a copy of the Prospectus unless they have satisfied the Directors and the IIGT Directors that they are entitled to receive and hold New Shares without breaching any relevant securities laws and without the need for compliance on the part of the Company or IIGT with any overseas laws, regulations, filing requirements or the equivalent. No action has been taken or will be taken in any jurisdiction other than in the UK where action is required to be taken to permit the distribution of the Prospectus. Accordingly, such documents may not be used for the purposes of, and do not constitute, an offer or solicitation by anyone in any jurisdiction or in any circumstances in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation. It is the responsibility of IIGT Shareholders with registered addresses outside of the UK to satisfy themselves as to the observance of the laws of the relevant jurisdiction in connection with the Issue, including obtaining any governmental or exchange control or other consents which may be required, the compliance with any other necessary formalities which need to be observed and the payment of any issue, transfer or other taxes or duties due in such jurisdiction. IIGT Shareholders who are subject to taxation outside the UK should consult their independent financial adviser as soon as possible. Overseas IIGT Shareholders who wish to receive New Shares under the Scheme should contact IIGT directly if they are able to demonstrate, to the satisfaction of the IIGT Directors and/or the Liquidators and the Directors that they can be issued New Shares without breaching any relevant securities laws. Unless the IIGT Directors and/or the Liquidators and the Directors are so satisfied (in their respective absolute discretions), to the extent that an Overseas IIGT Shareholder would otherwise receive New Shares under the Scheme, either because no election for the Cash Option was made or because an Excess Application for the Cash Option is scaled back in accordance with the Scheme, such New Shares will instead be issued to the Liquidators as nominees on behalf of such Overseas IIGT Shareholder who will arrange for such shares to be sold promptly by a market maker. The net proceeds of such sales (after deduction of any costs incurred in effecting such sales) will be paid to the relevant Overseas IIGT Shareholders entitled to them within 10 Business Days of the date of sale, save that entitlements of less than £5.00 per Overseas IIGT Shareholder will be retained by the Company for its own account. The provisions of the Scheme relating to Overseas IIGT Shareholders may be waived, varied or modified as regards a specific IIGT Shareholder or on a general basis by the Directors and the IIGT Directors in their respective absolute discretions.
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PART 9
FINANCIAL INFORMATION
1. INTRODUCTION
The financial statements of the Company for the financial year ended 31 May 2020 (“Statutory Accounts”) have been prepared in accordance with United Kingdom law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”. The Statutory Accounts, in respect of which the Auditor, who are members of the Institute of Chartered Accountants in England and Wales, made an unqualified report under section 495, section 496 and section 497 of the Companies Act 2006, did not contain any statement under section 498(2) or (3) of the Companies Act 2006.
Details of where the Statutory Accounts are displayed can be found in paragraph 14 of Part 11 (General Information) of this Prospectus.
2. HISTORICAL FINANCIAL INFORMATION
Historical financial information relating to the Company on the matters referred to below is included in the published annual report including audited financial statements of the Company for the financial year ended 31 May 2020 (“Annual Report”) as set out in the table below and is expressly incorporated by reference into this Prospectus. The non-incorporated parts of these annual reports of the Company are either not relevant to investors or covered elsewhere in this Prospectus. Nature of information Annual Report Page No. Financial Performance 2 Chairman’s Statement 3-5 Manager’s Report – UK Equity Shares 8-11 Manager’s Report – Global Equity Income Shares 15-18 Manager’s Report – Balanced Risk Allocation Shares 22-24 Manager’s Report – Managed Liquidity Shares 29-30 Portfolio of Investments – UK Equity Shares 12 Portfolio of Investments – Global Equity Income Shares 19 Portfolio of Investments – Balanced Risk Allocation Shares 26 Portfolio of Investments – Managed Liquidity Shares 31 Independent Auditors’ Report 66-73 Income Statement 74 Balance Sheet 76 Statement of Changes in Equity 75 Cash Flow Statement 78 Notes to the Financial Statements 79-103
3. SELECTED FINANCIAL INFORMATION The information in this paragraph 3 is information regarding the Company which has been prepared by the Company and has been extracted directly from the historical financial information referred to in paragraph 2 above of this Part 9 (Financial Information). Selected historical audited financial information relating to the Company which summarises the financial condition of the Company for the financial year ended 31 May 2020 is set out in the following table:
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Global Balanced Equity Risk Managed UK Equity Income Allocation Liquidity Shares Shares Shares Shares Net asset value Net assets (£’000) 46,617 51,372 7,073 2,607 Total Shareholders’ funds (£’000) 46,617 51,372 7,073 2,607 Net asset value per share 145.8p 178.5p 135.1p 104.4p Income Revenue return after taxation (£’000) 1,340 1,639 (1) 23 Revenue return per share (pence) 4.12p 5.39p (0.02p) 0.65p Dividends Dividend per share in respect of the financial year (pence) 6.60p 7.05p Nil 0.80p
Ongoing charges As a percentage of average daily net assets funds (unaudited) 0.89% 0.88% 1.25% 0.35%
NAV/share price returns Net asset value per share total return (unaudited) –12.4% –6.4% –3.1% 1.1% Share price total return (unaudited) –16.2% –6.1% –6.9% 1.6%
4. OPERATING AND FINANCIAL REVIEW A description of changes in the performance of the Company, both capital and revenue, and changes to the Portfolios is set out in the sections headed “Chairman’s Statement”, “Manager’s Report” and “Performance Record” in the published Annual Report as follows: Nature of information Annual Report Page No. Chairman’s Statement 3-5 Manager’s Report – UK Equity Shares 8-11 Manager’s Report – Global Equity Income Shares 15-18 Manager’s Report – Balanced Risk Allocation Shares 22-24 Manager’s Report – Managed Liquidity Shares 29-30 Performance Record – UK Equity Shares 7 Performance Record – Global Equity Income Shares 14 Performance Record – Balanced Risk Allocation Shares 21 Performance Record – Managed Liquidity Shares 28
5. SIGNIFICANT CHANGE
Since 30 November 2020 (being the end of the most recent financial period of the Company for which financial information has been published), there has been no significant change in the financial position of the Company.
6. CAPITALISATION AND INDEBTEDNESS
The tables below set out the capitalisation and the indebtedness of the Company as at the dates stated and as such do not reflect the impact of the Issue. The following table sets out the Company's capitalisation as at 30 November 2020, being the balance sheet date of the Company’s most recent published financial information: As at 30 November 2020 (£’000) Capitalisation – Shareholder’s equity – Share capital 1,051 – Share premium account 1,290 – Capital redemption reserves ______361 TOTAL SHAREHOLDERS’ EQUITY ______2,702
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The information for capitalisation as at 30 November 2020 has been extracted without material adjustment from the Company's last published balance sheet (being part of its last unaudited interim financial statements). The change in the capitalisation from 30 November 2020 to the latest practicable date to the publication of this Prospectus is due to the quarterly conversion of Shares, resulting in the allotments and cancellation of deferred shares, as announced by the Company on 29 January 2021. The following table sets out the unaudited total indebtedness of the Company as at 28 February 2021 (distinguishing between guaranteed and unguaranteed, and secured and unsecured indebtedness): As at 28 February 2021 (unaudited) (£’000) Current debt – Guaranteed 15,630 – Secured 0 – Unguaranteed/unsecured ______0 Total current debt ______15,630 Non-current debt – Guaranteed 0 – Secured 0 – Unguaranteed/unsecured ______0 Total non-current debt ______TOTAL INDEBTEDNESS ______15,630
The information for total indebtedness as at 28 February 2021 has been extracted from the latest unaudited internal management accounting records held by the Company. The following table shows the Company’s unaudited net indebtedness as at 28 February 2021: As at 28 February 2021 (unaudited) £’000 A Cash 1,533 B Cash equivalent 0 C Trading securities 0 D Liquidity (A+B+C) 1,533 E Current financial receivable 0 F Current bank debt (15,630) G Current portion of non-current debt 0 H Other current financial debt 0 I Current financial debt (F+G+H) (15,630) J Net current financial liquidity/(indebtedness) (I+E+D) (14,097) K Non-current bank loans 0 L Bonds issued 0 M Other non-current loans 0 N Non-current financial indebtedness (K+L+M) 0 O Net financial liquidity/(indebtedness) (J+N) (14,097) The Company has no further indirect or contingent indebtedness. The information for net indebtedness as at 28 February 2021 has been extracted from the latest unaudited internal management accounting records held by the Company.
7. WORKING CAPITAL
The Company is of the opinion that the working capital available to the Company is sufficient for the Company’s present requirements (that is, for at least the next 12 months from the date of this Prospectus).
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8. NET ASSET VALUE
The unaudited Net Asset Value per Share (including current income) as at 26 March 2021 was as follows: UK Equity Shares 172.23 pence Global Equity Income Shares 225.05 pence Balanced Risk Allocation Shares 162.51 pence Managed Liquidity Shares 105.94 pence
9. ANALYSIS OF PORTFOLIOS
As at 26 March 2021 (being the latest practicable date prior to the publication of this Prospectus), the Portfolios comprised investments and cash with an aggregate unaudited value, calculated in accordance with the Company’s accounting policies, of approximately £121.2 million. Further details of the UK Equity Portfolio can be found in Part 6 (Investment Strategy and Portfolio) of this Prospectus.
The information in this paragraph 9 is unaudited information on the Company, which has been extracted from the latest internal management accounting records held by the Company.
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PART 10
UK TAX
The information below is a general guide based on current UK taxation law and HMRC published practice in force as at the date of this Prospectus, both of which are subject to change (possibly with retrospective effect). It does not constitute tax advice. In particular, the tax legislation of a Shareholder’s country of domicile or residence and of the Company’s country of incorporation and/or tax residence may have an impact on returns received from the UK Equity Shares. The information below summarises the tax position of the Company and of Shareholders who are UK resident for UK tax purposes (except where indicated) and hold UK Equity Shares as investments. Shareholders who are in any doubt about their tax position, or who may be subject to tax in a jurisdiction other than the UK, are recommended to take professional advice. The comments apply only to Shareholders who are the beneficial owners of their UK Equity Shares, who hold their UK Equity Shares as an investment, who are not regarded as having acquired their UK Equity Shares as a result of a right or opportunity made available by an office or employment held by any person and who do not fall within certain special classes of Shareholder, such as dealers in securities, operators of depositary receipt or clearance systems, collective investment schemes or insurance companies.
1. THE COMPANY It is the intention of the Directors to continue to conduct the affairs of the Company so as to satisfy the conditions for approval as an investment trust under section 1158 and 1159 of CTA 2010 and the Investment Trust Regulations. Having previously obtained approval from HMRC, the Company will continue to be approved as an investment trust pursuant to the Investment Trust Regulations and will therefore continue to have investment trust status in each accounting period, other than where the Company breaches any of the eligibility conditions in section 1158 (and/or section 1159) of CTA 2010 or commits a serious breach of any of the requirements imposed by the Investment Trust Regulations. In order to maintain its investment trust status for an accounting period, the Company must not, inter alia, be a close company as defined in section 439 of CTA 2010 at any time in that accounting period. The Directors do not anticipate that the Company will be a close company as defined in section 439 of CTA 2010. Provided that it continues to have investment trust status, the Company will not be liable for UK corporation tax in respect of its capital gains. The Company will, however, be liable to UK corporation tax on its income profits in the normal way, with dividend income generally being exempt from UK corporation tax. Income arising from overseas investments may be subject to foreign withholding taxes at varying rates, and potentially foreign taxes, at varying rates, but double taxation relief may be available on income that is also subject to UK tax. Capital gains derived by the Company may be subject to capital gains taxes in the overseas investee jurisdictions, at varying rates, but double taxation relief may be available.
2. SHAREHOLDERS 2.1 Taxation of capital gains Shareholders resident in the UK for taxation purposes may, depending upon their personal circumstances, be liable to UK capital gains tax or, in the case of corporations, UK corporation tax, on chargeable gains arising from the sale or other disposal (which includes disposal upon a winding up) of their UK Equity Shares. From 6 April 2021, a chargeable gain arising on a disposal by an individual Shareholder who is resident in the UK for taxation purposes will be subject to capital gains tax at a rate of tax of 20 per cent. where the individual pays income tax at the higher or additional rates of tax or where (and then to the extent only that) the Shareholder pays UK income tax at the basic rate of tax and the gain exceeds the unused portion of the Shareholder’s basic rate band; otherwise a capital gains tax rate of 10 per cent. applies. An individual Shareholder may be able to claim certain reliefs (including the Annual Exempt Amount of the first £12,300 of capital gains received in the fiscal year 2021/22) subject to their personal circumstances.
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Shareholders which are corporations resident in the UK will generally be liable to UK corporation tax on chargeable gains arising from the sale or other disposal of their UK Equity Shares. Shareholders which are corporations resident in the UK will no longer benefit from an indexation allowance which, in general terms, was used to increase the tax base cost of an asset in accordance with changes in the Retail Price Index. Under measures enacted in Finance Act 2018, indexation allowance (which applied solely to corporate bodies and not individuals from 6 April 2008) was frozen as at 31 December 2017 such that for disposals on or after 1 January 2018 the indexation allowance will only be calculated up to 31 December 2017, irrespective of the date of disposal. Therefore, for chargeable assets acquired after 31 December 2017, the indexation allowance will no longer be available. Indexation allowance may not create or increase an allowable loss. Shareholders who are not resident in the UK for taxation purposes will not normally be liable to UK taxes on capital gains arising from the sale or other disposal of their UK Equity Shares unless those UK Equity Shares are held through or for the purposes of a UK branch or agency or (in the case of a corporate Shareholder) a UK permanent establishment. Such Shareholders may be subject to foreign taxation depending upon their personal circumstances.
2.2 Taxation of dividends General The Company has to date not elected into the streaming regime in relation to dividends paid by the Company in respect of UK Equity Shares and therefore no part of any dividend received in respect of the New Shares is expected to be treated as interest. Shareholders who intend to convert all or part of their New Shares into Balanced Risk Allocation Shares should note that it is the intention of the Directors that, so far as permitted by law, dividends paid in respect of Balanced Risk Allocation Shares (if any) be designated as interest distributions. Any dividend so designated would be treated in the hands of a Shareholder who is within the charge to income tax in respect of the dividend as a payment of yearly interest and, in the hands of a Shareholder who is within the charge to corporation tax in respect of the dividend, as a payment of interest under a creditor relationship of that Shareholder
Individuals Each individual who is resident in the UK for tax purposes is entitled to an annual tax-free dividend allowance of £2,000 (fiscal year 2021/22). Dividends received in excess of this allowance will be subject to UK income tax for the fiscal year 2021/22 at 7.5 per cent. (to the extent that, when added to the Shareholder’s taxable income from other sources, the dividends are within the Shareholder’s basic rate band), 32.5 per cent. (to the extent that, when added to the Shareholder’s taxable income from other sources, the dividends are within the Shareholder’s higher rate band) and 38.1 per cent. (to the extent that, when added to the Shareholder’s taxable income from other sources, the dividends exceed the Shareholder’s higher rate band). No UK withholding tax will be applied to dividends paid by the Company.
Other Shareholders In general, UK resident corporate Shareholders (other than dealers and certain insurance companies) may be subject to UK corporation tax on dividends paid by the Company unless the dividends fall within one of the exempt classes contained within Part 9A of CTA 2009. Non-UK resident Shareholders may be subject to tax on dividend income under any law to which they are subject outside of the UK. It is important that Shareholders who are not resident in the UK for tax purposes obtain their own tax advice concerning tax liabilities on dividends received from the Company.
3. STAMP DUTY AND STAMP DUTY RESERVE TAX 3.1 Issue of New Shares pursuant to the Issue The issue of New Shares pursuant to the Issue should not give rise to any stamp duty or SDRT.
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3.2 Subsequent transfers If an instrument of transfer of the UK Equity Shares is executed (for example, if the UK Equity Shares are not transferred through CREST), it will generally be subject to stamp duty at the rate of 0.5 per cent. of the amount or value of the consideration given, if the consideration (taken together with the consideration for any larger transaction or series of transactions of which the transfer forms part) exceeds £1,000. The stamp duty payable must be rounded up to the nearest multiple of £5. When such an instrument of transfer is duly stamped and stamp duty is paid within specified time limits, the SDRT charge will be cancelled and any SDRT already paid will be refunded. Paperless transfers of UK Equity Shares (such as those occurring within CREST where there is a change in the beneficial ownership of the shares) are generally liable to SDRT, rather than stamp duty, at the rate of 0.5 per cent. (the amount payable being rounded up to the nearest penny) of the amount or value of the consideration given. When UK Equity Shares are transferred into the CREST system, there should generally be no SDRT on the transfer (unless made for a consideration, in which case SDRT will be payable at the rate of 0.5 per cent. of the actual consideration given, the amount payable being rounded up to the nearest penny). Liability to pay stamp duty or SDRT is normally that of the transferee or purchaser. Certain persons (e.g. brokers or custodians) may have SDRT liabilities and compliance obligations in respect of certain transactions and agreements involving UK Equity Shares. Such persons should seek their own professional advice in respect of these liabilities and obligations. Special rules may apply to transfers, or agreements to transfer, treasury shares. Specific advice should be sought in respect of such transactions.
4. ISAs, SIPPs AND SSASs To the extent that IIGT Shareholders hold their IIGT Shares within an ISA, SIPP or SSAS, New Shares issued to the IIGT Shareholders pursuant to the Scheme should also be eligible for inclusion within the same ISA, SIPP or SSAS.
5. INFORMATION REPORTING The UK has entered into international agreements with a number of jurisdictions which provide for the exchange of information in order to combat tax evasion and improve tax compliance. These include, but are not limited to, FATCA. The UK has also introduced legislation implementing other international exchange of information arrangements, including CRS developed by the OECD. In connection with such international agreements and arrangements the Company may, among other things, be required to collect and report to HMRC certain information regarding Shareholders and other account holders of the Company and HMRC may pass this information on to tax authorities in other jurisdictions in accordance with the relevant international agreements.
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PART 11
GENERAL INFORMATION
1. RESPONSIBILITY
The Company, whose registered office appears in paragraph 2.3 of this Part 11 (General Information), and the Directors and the Proposed Additional Directors accept responsibility for the information contained in this Prospectus. To the best of the knowledge of the Company, the Directors and the Proposed Additional Directors, the information contained in this Prospectus is in accordance with the facts and the Prospectus makes no omission likely to affect its import. All of the Directors and the Proposed Additional Directors accept responsibility accordingly.
2. THE COMPANY
2.1 The Company was incorporated in England and Wales on 25 August 2006 with registered number 05916642 as a public company limited by shares under the Companies Act 2006. The Company is registered as an investment company under section 833 of the Companies Act 2006. The Company’s LEI is 549300JZQ39WJPD7U596. The Company does not have a fixed life.
2.2 As a listed investment trust, the Company is not regulated as a collective investment scheme by the FCA. However, as a company with its shares admitted to listing on the premium segment of the Official List and to trading on the Main Market, it is subject to the Prospectus Regulation Rules, the Listing Rules, the DTR, the Takeover Code, the Market Abuse Regulation and the rules of the London Stock Exchange. The Company is domiciled in England. The Company is an alternative investment fund pursuant to the UK AIFM Regulations. The principal legislation under which the Company operates is the Companies Act 2006.
2.3 The address of the registered office and principal place of business of the Company is Perpetual Park, Perpetual Park Drive, Henley-on-Thames, Oxfordshire, RG9 1HH, with freephone telephone number: 0800 085 8677. 2.4 The Company has no employees and its day-to-day activities are delegated to third parties. 2.5 The Company intends at all times to conduct its affairs so as to enable it to qualify as an investment trust for the purposes of section 1158 of the CTA 2010 and the Investment Trust (Approved Company) (Tax) Regulations 2011. In summary, the key conditions that must be met for approval by HMRC for any given accounting period as an investment trust are that: 2.5.1 Throughout the accounting period, all, or substantially all, of the business of the Company is investing its funds in shares, land or other assets (being shares in the case of the Company) with the aim of spreading investment risk and giving members the benefit of the results of the management of its funds; 2.5.2 the Company is not a close company at any time during the accounting period; 2.5.3 the Company’s ordinary share capital is admitted to trading on a regulated market (as defined in section 1158(4) of the CTA 2010) throughout the accounting period; and 2.5.4 the Company must not retain in respect of the accounting period an amount greater than the higher of: (i) 15 per cent. of its income for the period; and (ii) the amount of any income which the Company is required to retain in respect of the period by virtue of a restriction imposed by law. However, where the Company has relevant accumulated losses brought forward from previous accounting periods of an amount equal to or greater than the higher of the amounts mentioned in (i) and (ii) above, it may retain an amount equal to the amount of such losses.
3. SHARE CAPITAL
3.1 As at 26 March 2021, being the latest practicable date prior to the publication of this Prospectus, the issued and fully paid share capital of the Company (excluding shares held in treasury) consisted of:
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Nominal value (£) Number UK Equity Shares 242,348.92 24,234,892 Global Equity Income Shares 238,109.88 23,810,988 Balanced Risk Allocation Shares 42,299.11 4,229,911 Managed Liquidity Shares 16,238.71 1,623,871 3.2 As at 26 March 2021, being the latest practicable date prior to the publication of this Prospectus, the Company held 20,217,812 UK Equity Shares, 15,388,159 Global Equity Income Shares, 6,122,218 Balanced Risk Allocation Shares and 9,250,678 Managed Liquidity Shares in treasury. The UK Equity Shares, Global Equity Income Shares, Balanced Risk Allocation Shares and Managed Liquidity Shares are admitted to the premium listed segment of the Official List and to trading on the London Stock Exchange’s main market for listed securities. The Company has no authorised share capital. 3.3 The Company enables Shareholders to alter their asset allocation to reflect the views of prevailing markets through the opportunity to convert between Share classes every three months, on or around 1 February, 1 May, 1 August and 1 November each year. For the next 12 month period, the Company will enable Shareholders to convert between Share classes on 4 May 2021, 2 August 2021, 1 November 2021 and 1 February 2022. 3.4 For illustrative purposes only, had the Calculation Date been 5.00 p.m. on 26 March 2021 (being the latest practicable date prior to the publication of this Prospectus), and assuming that no IIGT Shareholders exercise their right to dissent from participation in the Scheme and assuming: 3.4.1 the maximum amount is elected for the Cash Option, so that 68,374,761 New Shares were issued, the issued and fully paid share capital of the Company immediately following the Issue (excluding treasury shares) would have been as follows: Nominal value (£) Number UK Equity Shares 926,096.53 92,609,653 Global Equity Income Shares 238,109.88 23,810,988 Balanced Risk Allocation Shares 42,299.11 4,229,911 Managed Liquidity Shares 16,238.71 1,623,871 3.4.2 all IIGT Shareholders had elected to receive New Shares, so that 97,557,966 New Shares were issued, the issued and fully paid share capital of the Company immediately following the Issue (excluding treasury shares) would have been as follows: Nominal value (£) Number UK Equity Shares 1,217,928.58 121,792,858 Global Equity Income Shares 238,109.88 23,810,988 Balanced Risk Allocation Shares 42,299.11 4,229,911 Managed Liquidity Shares 16,238.71 1,623,871
3.5 In addition to the ordinary business of the Company, resolutions were passed at the AGM held on 6 October 2020 as follows: 3.5.1 the Directors were generally and unconditionally authorised in accordance with section 551 of the Companies Act 2006 to exercise all the powers of the Company to allot relevant securities (as defined in sections 551(3) and (6) of the Companies Act 2006) up to an aggregate nominal amount equal to £1,000,000 of UK Equity Shares, £1,000,000 of Global Equity Income Shares, £1,000,000 of Balanced Risk Allocation Shares and £1,000,000 of Managed Liquidity Shares, provided that this authority shall expire at the conclusion of the next AGM of the Company or the date falling 15 months after the passing of this resolution, whichever is the earlier, but so that such authority shall allow the Company to make offers or agreements before the expiry of this authority which would or might require relevant securities to be allotted after such expiry and the Directors may allot relevant securities in pursuance of such offers or agreements as if the power conferred hereby had not expired; 3.5.2 the Directors were empowered, in accordance with sections 570 and 573 of the Companies Act 2006 to allot Shares in each class (UK Equity, Global Equity Income, Balanced Risk Allocation and Managed Liquidity) for cash, either pursuant to the authority referred to in paragraph 3.4.1 above or (if such allotment constitutes the sale
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of relevant Shares which, immediately before the sale, were held by the Company as treasury shares) otherwise, as if section 561 of the Companies Act 2006 did not apply to any such allotment, provided that this power shall be limited: (a) to the allotment of Shares in connection with a rights issue in favour of all holders of a class of Share where the Shares attributable respectively to the interests of all holders of Shares of such class are either proportionate (as nearly as may be) to the respective numbers of relevant Shares held by them or are otherwise allotted in accordance with the rights attaching to such Shares (subject in either case to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or legal or practical problems under the laws of, or the requirements of, any regulatory body or any stock exchange in any territory or otherwise); (b) to the allotment (otherwise than pursuant to a rights issue) of equity securities up to an aggregate nominal amount of £30,279 of UK Equity Shares, £27,475 of Global Equity Income Shares, £5,236 of Balanced Risk Allocation Shares and £2,497 of Managed Liquidity Shares; and (c) to the allotment of equity securities at a price of not less than the net asset value per Share as close as practicable to the allotment or sale and this power shall expire at the conclusion of the next AGM of the Company or the date 15 months after the passing of this resolution, whichever is the earlier, but so that this power shall allow the Company to make offers or agreements before the expiry of this power which would or might require equity securities to be allotted after such expiry as if the power conferred by this resolution had not expired; and so that words and expressions defined in or for the purposes of Part 17 of the Companies Act 2006 Act shall bear the same meanings in this resolution. 3.5.3 the Directors were empowered and unconditionally authorised in accordance with section 701 of the Companies Act 2006 to make market purchases (within the meaning of section 693(4) of the Companies Act 2006 of its issued Shares in each Share class (UK Equity, Global Equity Income, Balanced Risk Allocation and Managed Liquidity) provided always that: (i) the maximum number of Shares hereby authorised to be purchased shall be 14.99% of each class of the Company’s share capital at 6 October 2020, the date of the Annual General Meeting (equivalent, at 30 July 2020, to 4,538,963 UK Equity Shares, 4,118,622 Global Equity Income Shares, 785,009 Balanced Risk Allocation Shares and 374,305 Managed Liquidity Shares); (ii) the minimum price which may be paid for a Share shall be 1p; (iii) the maximum price which may be paid for a Share in each Share class must not be more than the higher of: (a) 5% above the average of the mid-market values of the Shares for the five business days before the purchase is made; and (b) the higher of the price of the last independent trade in the Shares and the highest then current independent bid for the Shares on the London Stock Exchange; (iv) any purchase of Shares will be made in the market for cash at prices below the prevailing net asset value per Share (as determined by the Directors); (v) the authority hereby conferred shall expire at the conclusion of the next AGM of the Company or, if earlier, on the expiry of 15 months from the passing of this resolution unless the authority is renewed at any other general meeting prior to such time; and (vi) the Company may make a contract to purchase Shares under the authority hereby conferred prior to the expiry of such authority which will be executed wholly or partly after the expiration of such authority and may make a purchase of Shares pursuant to any such contract; and 3.5.4 the period of notice required for general meetings of the Company (other than Annual General Meetings) shall be not less than 14 days.
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3.6 At a general meeting of the Company on 7 January 2021 the Shareholders granted the Directors renewed general authority to make market purchases of the Company’s issued Shares in each of the following Share classes: Balanced Risk Allocation, UK Equity and Global Equity Income. The maximum number of Shares authorised to be purchased was 14.99% of each of the Balanced Risk Allocation, UK Equity and Global Equity Income classes of the Company’s Share capital at 7 January 2021 (equivalent, at 30 November 2020, to 669,978 Balanced Risk Allocation Shares, 4,094,026 UK Equity Shares and 3,857,979 Global Equity Income Shares). The minimum price which may be paid for a Share shall be 1p and the maximum price which may be paid for a Share in each Share class must not be more than the higher of: (a) 5% above the average of the mid-market values of the Shares for the five business days before the purchase is made; and (b) the higher of the price of the last independent trade in the Shares and the highest then current independent bid for the Shares on the London Stock Exchange. The authority shall expire at the conclusion of the next AGM of the Company or, if earlier, on the expiry of 15 months from the passing of this resolution unless the authority is renewed at any other general meeting prior to such time and the Company may make a contract to purchase Shares under the authority hereby conferred prior to the expiry of such authority which will be executed wholly or partly after the expiration of such authority and may make a purchase of Shares pursuant to any such contract.
3.7 At the General Meeting, the Directors will seek Shareholder authority generally and unconditionally, pursuant to section 551 of the Companies Act 2006, to allot New Shares and to grant rights to subscribe for or to convert any securities into New Shares up to an aggregate nominal amount of £1.3 million in connection with the Issue (such authority to expire on 30 June 2021 (unless previously revoked)). 3.8 As at 26 March 2021, being the latest practicable date prior to the publication of this Prospectus: 3.8.1 no subscriptions, issues or options are to be given by the Company, or are already existing, in respect of any securities of the Company, including any that have a prior right over the Shares to a distribution of the profits or assets of the Company; 3.8.2 no shares which do not represent capital have been issued by the Company and remain outstanding;
3.8.3 no convertible securities, exchangeable securities or securities with warrants have been issued by the Company and remain outstanding; and
3.8.4 save in connection with the Issue there are no acquisition rights and/or obligations over any of the Company’s authorised but unissued capital and no undertakings to increase the Company’s capital.
3.9 There have been no public takeover bids by third parties in respect of the Company’s equity, since the financial year ended 31 May 2020.
4. ARTICLES OF ASSOCIATION
Below is a summary of the provisions in the Articles relating to the rights attached to the securities, including any limitation of those rights and procedures for the exercise of those rights.
4.1 Summary of the share rights in the Articles as at the date of this Prospectus 4.1.1 Variation of rights
Subject to the provisions of the Companies Act 2006, if at any time the share capital of Company is divided into different classes of shares, the rights attached to any class (whether or not the Company is being wound up) may be varied either in the manner provided for by the rights of that class or with the consent in writing of the holders of three-fourths in nominal value of the issued shares of that class (excluding any shares of that class held as treasury shares) or with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of that class. At every such separate general meeting all provisions of the Statutes and the Articles relating to general meetings of the Company shall apply, except that no member shall be entitled to receive notice of such meeting or to attend it unless he is a holder of shares of the class in question and no vote shall be given except in respect of a share of that
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class. The necessary quorum shall be two persons holding or representing by proxy at least one-third in nominal value of the issued shares of the class in question (excluding any shares of that class held as treasury shares), (but at any adjourned meeting any holder of shares of the class present in person or by proxy (whatever the number of shares held by him) shall be a quorum). At such separate general meeting, any holder of shares of the class present in person or by proxy and entitled to vote may demand a poll and every such holder shall on a poll have one vote for every share of the class held by him (subject to any rights or restrictions attached to any class of shares). The foregoing provisions shall apply to the variation of all or any special rights which only attach to certain shares of a particular class as if the shares carrying such special rights formed a separate class. The rights attached to any class of share, unless expressly provided for, shall not be deemed to be varied by the allotment or further issue of equal ranking shares, the purchase, redemption or cancellation by the Company of any of its own shares, the transfer or sale of treasury shares or the directors resolving that a class of shares shall become a participating security.
4.1.2 Alteration of share capital Subject to the Statutes and if authorised by an ordinary resolution, the Company may consolidate, or consolidate and divide all or any of its share capital into shares of a larger nominal amount than its existing shares and sub-divide its shares into a smaller nominal amount than its existing shares. Whenever as a result of any consolidation and division or sub-division of shares any members of the Company would become entitled to any issued shares of the Company in fractions, the Board may deal with such fractions as it shall determine and in particular may sell the shares to which members would become so entitled in fractions to any person (including, subject to the provisions of the Statutes, the Company) for the best price reasonably obtainable and pay and distribute to and amongst the members entitled to such shares, in due proportions, the net proceeds of the sale thereof provided that where the entitlement of a member is to a sum of less than £3.00 then such sum may be retained by the Company for its own benefit. For the purpose of giving effect to any such sale the Board may authorise some person to execute an instrument of transfer of a certificated share or effect an uncertified share on behalf of the holder of the share to any person. The transfer will be effective as if it had been made by the holder of the share.
The Company will not, without a special resolution of the holders of the relevant class of shares passed at a class meeting in accordance with the Articles, pass a resolution to reduce any part of the share capital of the Company consisting of shares of the relevant class.
4.1.3 Conversion of Shares Subject to the provisions of the Articles, each holder of Shares shall be entitled to convert all or any of his Shares into any other class of Shares, save that no Shareholder shall be entitled to convert his Shares into a class of Shares of which no Shares are in issue as at the business day immediately preceding the relevant Conversion Date or in respect of which the Board has served written notice pursuant to the Articles.
4.1.4 Issue of shares Subject to the Statutes, the Articles and any resolution of the Company in general meeting, the Directors may allot Shares at such times and on such terms as they think proper. No Share may be issued at a discount.
4.1.5 Dividends The holders of each class of Shares shall have the right to receive the revenue profits of the Company attributable to the Portfolio established for that class and available for distribution.
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Subject to the provisions of the Statutes, the Company may by ordinary resolution declare dividends in accordance with the respective rights of the Shareholders but no dividend shall exceed the amount recommended by the Directors. Subject to any priority, preference or special rights as to dividends attached to any class of Shares, all dividends shall be apportioned and paid pro rata according to the amounts paid on the Share during any portion or portions of the period in respect of which the dividend is paid, but if any Share is issued on terms providing that it shall rank for dividend as if paid up in full or in part from a particular date, whether past or future, such Share will rank for dividend accordingly. Subject to the Statutes, the Directors may pay interim dividends, or dividends payable at a fixed rate, in such manner as they may think fit. If the Directors act in good faith they shall not incur any liability to the holders of Shares for any loss they may suffer in consequence of the payment of an interim or fixed dividend. Except as otherwise provided by the rights attaching to, or the terms of issue of, any Share, all dividends shall be apportioned and paid in proportion to the amounts paid on the Shares during any part(s) of the period in respect of which the dividend is paid. No amount paid up on a Share in advance of calls shall be treated as paid up on the Share. No dividend payable in respect of a Share shall bear interest as against the Company unless otherwise provided by the rights attached to such Share or the provisions of another agreement between the holder of that Share and the Company. Subject to the Articles, and to the rights attaching to or the terms of issue of any Shares, any dividend may be paid in such currency as the Directors may determine. The Company may, on the recommendations of the Directors, by ordinary resolution direct payment of a dividend in whole or in part by the distribution of specific assets. Directors shall give effect to such a resolution and where any difficulty arises settle the difficulty in a way they think expedient and may make provisions for dealing with fractional entitlements, fix the value for distribution of such specific assets, determine that cash payments be made on fixed value and vest any such specific assets on trustees. The Directors, if authorised by an ordinary resolution of the Company, may offer holders of shares of a particular class the right to elect to receive further shares instead of cash in respect of all or part of any dividends.
4.1.6 Reserves 4.1.6.1 Sums carried to reserve The Board may, before recommending any dividend or capital distribution, from time to time set aside out of the profits of the Company and carry to reserves to form a general reserve fund such sums as they think proper which shall, at the discretion of the Board, be applicable for any purpose to which the profits of the Company may properly be applied and pending such application may, at the like discretion, either be employed in the business of the Company or be invested in such investments as the Board think fit. The Board may divide the reserves into such special funds as they think fit and may consolidate into one fund any special funds or any parts of any special funds into which the reserves may have been divided. The Board may also, without placing the same to reserves, carry forward any profits. In carrying funds to reserves and in applying the same the Board shall comply with the provisions of the Statutes.
4.1.6.2 Capital reserve Subject to the Statutes, all monies derived from the sale or realisation of any capital asset or investment of the Company in excess of the book value and other sums in the nature of capital profit shall be carried to the credit of such capital fund as the Directors shall determine, either for the purpose of providing for possible depreciation of investments, or for diminution in the value
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of assets, or for creating or augmenting any capital reserve fund, but may be used for any purpose to which the capital of the Company may be applied. Any losses realised on the sale of any investment or other capital asset may be charged wholly or partially against any funds of the Company, including the reserve funds, as the Directors may in their discretion determine and shall not be debited to the profit and loss account.
4.1.7 Voting rights
The holders of each class of Shares shall have the right to vote at any general meeting of the Company, except that the holders of any class of Shares shall not by virtue of their holding of such Shares have the right to vote on any resolution relating to the payment of a dividend on any other class of Shares. At any general meeting of the Company, on a show of hands every holder of a class of Shares who is present in person or by proxy shall have one vote and on a poll every holder of a class of Shares who is present in person or by proxy shall, in respect of each class of Shares held by him, have the number of votes determined in accordance with the following formula: A V = — B where V = the number of votes for each class of Share held by the relevant holder calculated to five decimal places; A = the NAV of the Portfolio established in relation to the class of Shares referred to in “V” above as at the Voting Record Time; and B = the total number of Shares in the class referred to in “V” above in issue as at the Voting Record Time. At any separate class meeting of the holders of any class of Shares, on a show of hands every holder of Shares who is present in person or by proxy shall have one vote and on a poll every holder of Shares who is present in person or by proxy shall have one vote for every share of which he is the holder. No Shareholder shall have any right to vote at any general meeting or at any separate meeting of the holders of any class of Share, either in person or by proxy, in respect of any share held by him unless all amounts presently payable by him in respect of that Share have been paid. The Board may decide otherwise.
4.1.8 Transfer of shares
Subject to the Articles, any Shareholder may transfer all or any of his certificated shares by an instrument of transfer in any usual form or in any form approved by the Directors. The instrument of transfer shall be signed by or on behalf of the transferor and, unless the Share is fully paid, by or on behalf of the transferee. Subject to the Articles, a Share in uncertificated form may be transferred in accordance with the CREST Regulations and the rules of any relevant system. The Board may, subject to the Market Rules and requirements of the FCA, decline to register any transfer of any Share which is not a fully paid Share provided that such power will not be exercised to disturb the market in the Shares. In addition, the Board may refuse to register a transfer of a certificated Share unless: (i) it is in respect of only one class of Share; (ii) it is in favour of a single transferee or not more than four joint transferees; (iii) it is duly stamped (if required); and (iv) it is delivered to the registrar’s office or such other place as the Directors have specified, accompanied by the certificate(s) for the Shares to which it relates and such other evidence as the Directors may reasonably require to prove the title of the transferor. If the Directors refuse to register the transfer of a certificated Share, they shall send notice of refusal to the transferee together with reasons for the refusal as soon as
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practicable and in any event within two months after the date on which the transfer was lodged with the Company. No fee shall be charged for the registration of any instrument of transfer or other document or instruction relating to or affecting the title to any share.
4.1.9 Distribution of assets on a winding-up
On a return of assets, on a liquidation or otherwise, the surplus assets of the Company comprising or comprised in each Portfolio, after satisfaction of all liabilities incurred by the Company in relation to a Portfolio and (to the extent determined by the Board in accordance with the Articles) any other liabilities of the Company, including without limitation liabilities relating to any other Portfolio not otherwise paid and satisfied, shall be paid to the holders of the class of shares for which the relevant Portfolio was established (and distributed amongst such holders rateably according to the amounts paid up on the shares of the relevant class held by them respectively).
4.1.10 Restrictions on rights: failure to respond to a Section 793 notice If a Shareholder, or any other person appearing to be interested in Shares held by that Shareholder, fails to comply within the relevant period with any statutory notice in respect of those Shares the Company may impose restrictions of those Shares under a direction notice including the suspension of the right to attend or vote (whether in person or by representative or proxy) at any general meeting or any separate meeting of the holders of any class or on any poll and, where those Shares represent at least 0.25 per cent. of their class (excluding treasury shares), the withholding of any dividend payable in respect of those Shares and Board refusal to register a transfer of the shares or any of them unless the transfer is an approved transfer. 4.1.11 Untraced Shareholders
Subject to various notice requirements, the Company may sell any of a Shareholder’s Shares if, during a period of 12 years from the date of publication of two newspaper advertisements, at least three dividends on such shares have become payable and have not been claimed and 3 months after the publication of the advertisements (notice requirements) no communication has been received by the Company from the Shareholder or person concerned.
4.1.12 General meetings An annual general meeting shall be called by not less than 21 clear days’ notice in writing and any other general meeting by not less than 14 clear days’ notice in writing. The notice shall be given to the Company’s auditors, to the Directors and to all members who are entitled to receive such notices from the Company. No business, other than the appointment of a chairman of the meeting, shall be transacted at any general meeting unless a quorum is present when the meeting proceeds to business. Two members present in person or by proxy shall be a quorum for all purposes. A Shareholder is entitled to appoint another person as his proxy to exercise all or any of his rights to attend and to speak and vote at a general meeting. A Shareholder may appoint more than one proxy in relation to a meeting, provided that each proxy is appointed to exercise the rights attached to a different share or shares held by him. Subject to the provisions of the Companies Act 2006, any corporation which is a Shareholder may, by resolution of its directors or other governing body, authorise such person(s) to act as its representative(s) at any meeting of the Company, or at any separate meeting of the holders of any class of Shares. Delivery of an appointment of proxy shall not prevent a Shareholder from attending and voting at the meeting or at any adjournment of it. Directors may attend and speak at General Meetings and at any separate meeting of the holders of any class of Shares, whether or not they are Shareholders.
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A resolution put to the vote at any general meeting will be decided on a show of hands unless a poll is duly demanded. A poll may be demanded in advance of the general meeting where the resolution is to be put to the vote, or at the general meeting before, or on the declaration of the result of, a show of hands on that resolution, or on the withdrawal of any other demand for a poll in accordance with the Articles. A poll may be demanded by the chairman of the meeting or those members entitled under the Companies Act 2006 to demand a poll.
5. THE TAKEOVER CODE 5.1 Mandatory bid
The Takeover Code applies to the Company. Under Rule 9 of the Takeover Code, if: 5.1.1 a person acquires an interest in shares which, when taken together with shares already held by him or persons acting in concert with him, carry 30 per cent. or more of the voting rights in the Company; or 5.1.2 a person who, together with persons acting in concert with him, is interested in not less than 30 per cent. and not more than 50 per cent. of the voting rights in the Company acquires additional interests in shares which increase the percentage of shares carrying voting rights in which that person is interested, the acquirer and, depending on the circumstances, its concert parties, would be required (except with the consent of the Panel) to make a cash offer for the outstanding shares at a price not less than the highest price paid for any interests in the shares by the acquirer or its concert parties during the previous 12 months.
5.2 Compulsory acquisition Under sections 974 to 991 of the Companies Act 2006, if an offeror acquires or contracts to acquire (pursuant to a takeover offer) not less than 90 per cent. of the shares (in value and by voting rights) to which such offer relates it may then compulsorily acquire the outstanding shares not assented to the offer. It would do so by sending a notice to outstanding holders of shares telling them that it will compulsorily acquire their shares and then, six weeks later, it would execute a transfer of the outstanding shares in its favour and pay the consideration to the company, which would hold the consideration on trust for the outstanding holders of shares. The consideration offered to the holders whose shares are compulsorily acquired under the Companies Act 2006 must, in general, be the same as the consideration that was available under the takeover offer. In addition, pursuant to section 983 of the Companies Act 2006, if an offeror acquires or agrees to acquire not less than 90 per cent. of the shares (in value and by voting rights) to which the offer relates, any holder of shares to which the offer relates who has not accepted the offer may require the offeror to acquire his shares on the same terms as the takeover offer. The offeror would be required to give any holder of shares notice of his right to be bought out within one month of that right arising. Sell-out rights cannot be exercised after the end of the period of three months from the last date on which the offer can be accepted or, if later, three months from the date on which the notice is served on the holder of shares notifying them of their sell-out rights. If a holder of shares exercises its rights, the offeror is bound to acquire those shares on the terms of the takeover offer or on such other terms as may be agreed.
5.3 Frustrating actions Rule 21.1 of the Takeover Code provides that, during the course of an offer, the Board must not, without the approval of the Shareholders in general meeting, take any action which may result in any offer or bona fide possible offer being frustrated or in Shareholders being denied the opportunity to decide on its merits, or: 5.3.1 issue any shares or transfer or sell, or agree to transfer or sell, any shares out of treasury or effect any redemption or purchase by the Company of its own shares; 5.3.2 issue or grant options in respect of any unissued shares; 5.3.3 create or issue, or permit the creation or issue of, any securities carrying rights of conversion into or subscription for shares;
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5.3.4 sell, dispose of or acquire, or agree to sell, dispose of or acquire, assets of a material amount; or 5.3.5 enter into contracts otherwise than in the ordinary course of business.
6. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
6.1 Directors’ interests 6.1.1 Each of the Proposed Additional Directors who hold IIGT Shares have indicated their intention to roll over their investments in full into New Shares pursuant to the Scheme. Accordingly, following implementation of the Issue, the interests (all of which are or will be beneficial unless otherwise stated) of the Directors (together with their connected persons) in the issued share capital of the Company are expected to be as follows (assuming the maximum amount is elected for the Cash Option, so that 68,374,761 New Shares are issued):
Graham Craig Alan Victoria Davina Mark Tim Kitchen Cleland Clifton Muir Curling Dampier Woodhead Number of UK Equity 5,445 20,000 25,000 2,500 – – – Shares as at beneficial 26 March 2021 6,300 non-beneficial % of issued 0.05% 0.08% 0.10% 0.01% – – – UK Equity Share capital prior to Completion Number of Global 9,800 20,000 25,000 2,500 – – – Equity Income beneficial Shares as at 3,515 26 March 2021 non-beneficial % of issued Global 0.06% 0.08% 0.10% 0.01% – – – Equity Share capital prior to Completion Number of Balanced 7,215 10,000 25,000 2,500 – – – Risk Allocation beneficial Shares as at 8,400 26 March 2021 non-beneficial % of issued 0.37% 0.24% 0.59% 0.06% – – – Balanced Risk Allocation Share capital prior to Completion Number of Managed – – – 2,500 – – – Liquidity Shares as at 26 March 2021 % of issued Managed – – – 0.15% – – – Liquidity share capital prior to Completion Number of UK Equity 28,009 20,000 25,000 2,500 5,021 34,387 40,174 Shares following beneficial beneficial Completion 66,546 10,346 non- non- beneficial beneficial % of issued UK Equity 0.10% 0.02% 0.03% 0.00% 0.01% 0.05% 0.04% Share capital following Completion Number of 9,800 20,000 25,000 2,500 – – – Global Equity beneficial Income Shares 3,515 following non-beneficial Completion
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Graham Craig Alan Victoria Davina Mark Tim Kitchen Cleland Clifton Muir Curling Dampier Woodhead % of issued Global 0.06% 0.08% 0.10% 0.01% – – – Equity Share capital following Completion Number of Balanced 7,215 10,000 25,000 2,500 Risk Allocation beneficial Shares following 8,400 Completion non- beneficial % of issued 0.37% 0.24% 0.59% 0.06% – – – Balanced Risk Allocation Share capital following Completion Number of Managed – – – 2,500 – – – Liquidity Shares following Completion % of issued Managed – – – 0.15% – – – Liquidity capital following Completion *If the Scheme becomes effective Davina Curling, Mark Dampier and Tim Woodhead will join the Board on the Effective Date. 6.1.2 No Director of the Company has or has had any interest in any transaction which is or was unusual in its nature or conditions or significant to the business of the Company which was effected by the Company since its incorporation. 6.1.3 No share or loan capital of the Company is under option or is agreed conditionally or unconditionally to be put under option. 6.1.4 There are no outstanding loans granted by the Company to any of the Directors nor is any guarantee provided by the Company for the benefit of any of the Directors.
6.2 Directors’ contracts with the Company 6.2.1 All the Directors of the Company are non-executive. Each of the Directors is engaged under a letter of appointment with the Company and does not have a service contract with the Company. Directors must retire and be subject to re-election at the first AGM after their appointment, and at least every three years thereafter. New appointments to the Board will be placed on the fee applicable to all Directors at the time of appointment. Their appointments may be terminated by the other Directors by written notice and without compensation.
6.3 Directors’ and Proposed Additional Directors’ other interests 6.3.1 Over the five years preceding the date hereof, the Directors and the Proposed Additional Directors have held the following directorships (apart from their directorships of the Company and IIGT respectively) and/or partnerships: Current directorships/partnerships Past directorships/ partnerships Graham Kitchen The Mercantile Investment Trust plc PFPL (Holdings) Ltd (Chair) AVI Global Trust plc Henderson Investment Funds Limited Places for People Treasury plc Derwent Housing Association Limited Places for People Finance plc Janus Henderson Group Places for People Investments Limited Places for People Group Limited Places for People Ventures Limited Places for People Ventures Operations Limited Places for People Homes Limited Places for People Living+ Limited Granatik Limited
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Current directorships/partnerships Past directorships/ partnerships Craig Cleland BlackRock Latin American Martin Currie Asia Unconstrained Investment Trust plc Trust plc The People’s Investment Trust plc (dissolved) Alan Clifton Macau Property Opportunities Fund Schroder UK Growth Fund plc Limited International Biotechnology Trust plc Canada Life Asset Management IBT Securities Limited (dissolved) Limited JPMorgan Japan Smaller Companies Trust plc Victoria Muir Premier Miton Global Renewables PGIT Securities 2020 plc Trust plc (a subsidiary of Premier Miton Global PMGR Securities 2025 plc Renewables Trust plc) (in members’ (a subsidiary of Premier Miton voluntary liquidation) Global Renewables Trust plc) Sterling ISA Managers Limited Christie Group plc Schroder Income Growth Fund plc State Street Managed Accounts Services Limited State Street Trustees Limited Smith & Williamson Fund Administration Limited Davina Curling BlackRock Greater Europe None Investment Trust plc Henderson Opportunities Trust plc Mark Dampier Jupiter Emerging & Frontier Income Hargreaves Lansdown Asset Trust plc Management Limited Hargreaves Lansdown Pension Trustees Limited Tim Woodhead None None
6.3.2 As at the date of this Prospectus, save as set out in the table at paragraph 6.3.1 above, there are no potential conflicts of interest between any of the Directors’ duties to the Company and their private interests and/or other duties. 6.3.3 There are no lock-up provisions regarding the disposal by any of the Directors of any UK Equity Shares.
6.3.4 The Directors and the Proposed Additional Directors in the five years before the date of this Prospectus: 6.3.4.1 do not have any convictions in relation to fraudulent offences; 6.3.4.2 have not been associated with any bankruptcies, receiverships or liquidations of any partnership or company through acting in the capacity as a member of the administrative, management or supervisory body or as a partner, founder or senior manager of such partnership or company; and 6.3.4.3 do not have any official public incrimination and/or sanctions by statutory or regulatory authorities (including designated professional bodies) and have not been disqualified by a court from acting as a member of the administrative, management or supervisory bodies of any issuer or from acting in the management or conduct of the affairs of any issuer. 6.3.5 The Company shall maintain directors’ and officers’ liability insurance on behalf of the Company at the expense of the Company
6.4 Major Shareholders 6.4.1 The Company shall issue a notice requiring disclosure of an interest in shares of 3 per cent. or more of the issued share capital of the Company and the DTR provide that certain persons (including shareholders) must notify the Company if the proportion of
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the Company’s voting rights which they then hold directly or indirectly as a Shareholder or through a direct or indirect holding of certain financial instruments reaches, exceeds or falls below thresholds of 3 per cent., 4 per cent., 5 per cent., 6 per cent., 7 per cent., 8 per cent., 9 per cent. and 10 per cent. and each 1 per cent. thereafter up to 100 per cent.
6.4.2 As at close of business on 26 March 2021, being the latest practicable date prior to the publication of this Prospectus, other than as set out below, there are no persons known to the Company who, directly or indirectly, will be interested in 3.0 per cent. or more of the Company’s issued share capital or voting rights. Shareholder Number of voting rights held Percentage of voting rights held (%) Interactive Investor 6,139,133.4 5.89 P Radburn 5,729,228.9 5.50 Hargreaves Lansdown 5,632,659.9 5.41 Brewin Dolphin 5,051,246.3 4.85 P Davidson 4,653,456.1 4.47 Rathbone Investment Management 4,272,046.4 4.10 Perkins Echo Trust 3,640,831.6 3.50 Schroder & Co 3,450,164.7 3.31 J Pfeil 3,285,040.0 3.15
6.4.3 As at the date of this Prospectus, the Company is not aware of any person who will directly or indirectly, jointly or severally, exercise or could exercise control over the Company. The Company is not aware of any arrangement, the operation of which may at a subsequent date result in a change of control of the Company.
6.4.4 Major Shareholders do not have any different voting rights from other Shareholders.
6.5 Related party transactions
As at the date of this Prospectus, except in relation to the appointment letters entered into between the Company and each Director and each Proposed Additional Director, the fees payable during the year to the Directors and each Proposed Additional Director (which as the date of this Prospectus are £36,000 per annum for the Chairman, £30,000 per annum for the Chairman of the Audit Committee, £28,000 per annum for the Senior Independent Director, and £25,000 for the remaining Director) and their interests in UK Equity Shares (if any), the Company is not a party to, nor has any interest in, any related party transaction (as defined in the UK-adopted international accounting standards).
7. MATERIAL CONTRACTS The following is a summary of each material contract, other than contracts entered into in the ordinary course of business, to which the Company is a party or which contains any provision under which the Company has any obligation or entitlement which is material to it at the date of this Prospectus.
7.1 Management Agreement The Company entered into the Management Agreement with the AIFM on 22 July 2014. The Management Agreement was amended pursuant to supplemental agreements dated 28 October 2014, 22 June 2016, 3 August 2017 and 15 July 2019. Under the Management Agreement the AIFM has been appointed to provide to the Company investment management, risk management, general administration services and company secretarial services, subject to the overall supervision of the Directors in accordance with the policies laid down by the Directors from time to time and the investment restrictions referred to in the Management Agreement.
The Management Agreement provides that the AIFM is entitled to a basic fee (payable quarterly) in respect of each Portfolio as follows:
l 0.55 per cent. per annum of net assets in the case of the UK Equity Portfolio and the Global Equity Income Portfolio;
l 0.75 per cent. per annum for the Balanced Risk Allocation Portfolio; and
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l 0.12 per cent. per annum of net assets in the case of the Managed Liquidity Portfolio. The Management Agreement provides for the basic fee to be reduced by any fee payable separately to the AIFM on any investments in other funds managed by the AIFM. The AIFM is also entitled to receive performance fees in respect of the UK Equity Portfolio and the Global Equity Income Portfolio of 12.5 per cent.of the increase in net assets per relevant Share in excess of a hurdle of the relevant benchmark plus 1 per cent. per annum. The amount of the performance fee that can be paid in any one year has been capped at 0.55 per cent. of the net assets of the relevant Portfolio and payment is subject to a high water mark. If a performance fee is earned in any year, but the net asset value per share does not meet the high water mark at the year end, the amount of fee up to the cap for that year is carried forward as a creditor and will be paid when the high water mark and cap allow. If the Scheme becomes effective, the current flat annual management fee of 0.55 per cent. of net assets payable on the UK Equity and Global Equity Income Share classes will be reduced, with 0.55 per cent. payable on its net assets up to £100 million and 0.50 per cent. over £100 million. The AIFM’s performance fee for both Share classes (being 12.5 per cent. of any increase in net assets above the benchmark plus 1.0 per cent. capped at 0.55 per cent. of net assets) will also be removed. The Management Agreement is terminable by: (a) any of the parties to it on 12 months’ prior written notice; (b) the Company at any time subject to the payment of compensation by the Company to the AIFM for such early termination; (c) the Company at any time within six months of a change of control of the AIFM, where, after three months, the Board is not satisfied about the ability of the AIFM to carry out its duties under the Management Agreement in a manner that is in the best interests of Shareholders; (d) the Company within three months of the AIFM ceasing to maintain its permission from the FCA to act as AIFM of the Company, or such permission is suspended; (e) either party within three months of: (i) a material breach of the Agreement by the other party which is not remedied within 30 days; (ii) either party having a receiver or administrator appointed over the whole or any part of its assets or a resolution being passed or an order made for the Company’s winding-up; or (iii) either party becoming insolvent; or (f) the AIFM immediately if the Board: (i) takes such action or resolves to take such action; or (ii) fails to take such action or fails to resolve to take such action, as is recommended in writing by the AIFM, and, in either case, the result of such action or inaction would, in the opinion of the AIFM, cause the AIFM to be in breach of, or become unable otherwise to comply with its obligations under AIFMD or the UK AIFM Regulations. The AIFM has, and shall maintain, the necessary expertise and resources to act as AIFM to the Company and shall ensure compliance with the UK AIFM Regulations and other applicable law. By way of sub-delegation from the AIFM, the Investment Manager manages the Portfolios and the Company’s investments in accordance with the policies laid down by the Directors from time to time and in accordance with the investment restrictions referred to in the Management Agreement.
The AIFM has also delegated administrative and company secretarial services to the Investment Manager (in its capacity as Company Secretary). Pursuant to the terms of the Sub-Investment Management Agreement entered into between the AIFM and the Investment Manager on 22 July 2014, the secretarial services provided by the Company Secretary include (but are not limited to) convening and recording general meetings and meetings of the Board, the keeping of the Company’s statutory books and records, filing requirements of UK regulatory authorities and returns (including annual returns), and the provision of the registered office of the Company. The Investment Manager (in its capacity as Investment Manager and Company Secretary) receives an annual fee for its investment management, administrative and company secretarial
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services. This fee is agreed in writing between the AIFM and the Investment Manager from time to time in accordance with the FCA Handbook.
7.2 Registrar’s Agreement The Registrar was appointed by the Company to provide registrar services pursuant to the Registrar’s Agreement entered into between the Company and the Registrar dated 12 October 2006. This agreement was subsequently replaced with an updated agreement dated 21 August 2019. The Company pays to the Registrar an annual fee in accordance with a Service and Fee Schedule, as amended from time to time, for the services to be rendered by the Registrar under the Registrar’s Agreement. The base fee is £7,360, subject to an annual Retail Price Index increase as is mutually agreed between the parties. The Company pays additional fees to the Registrar for transfers, general meeting attendance, insurance and additional services. The fees paid to the Registrar by the Company for services provided under the Registrar’s Agreement are listed at paragraph 2.4 of Part 7 (Directors, Management and Administration). The Registrar’s Agreement contains certain standard indemnities from the Company in favour of the Registrar and from the Registrar in favour of the Company.
7.3 Receiving Agent’s Agreement The Company entered into a receiving agent agreement with Link Group on 29 March 2020 pursuant to which the Receiving Agent will provide receiving agent duties and services to the Company in respect of the Issue. Under the terms of the Receiving Agent’s Agreement the Receiving Agent is entitled to a fee of £40,500.00 including disbursements but excluding VAT and reimbursement of all reasonable out-of-pocket expenses properly incurred by it in connection with its duties under the Receiving Agent’s Agreement. The Receiving Agent’s Agreement contains certain standard indemnities from the Company in favour of the Receiving Agent’s. The Receiving Agent’s liability under the Receiving Agent’s Agreement is subject to a cap. The agreement is governed in accordance with English law.
7.4 Depositary Agreement
The Depositary Agreement is dated 22 July 2014 and entered into between the Company, the AIFM and the Depositary whereby the Depositary is appointed to act as custodian and depositary of the Company. The Depositary performs the customary services of a depositary in accordance with the UK AIFM Regulations. The Depositary may delegate its obligations in respect of the safe keeping of the Company’s investments to third parties, subject to AIFM law and the certain conditions within the Depositary Agreement. The Depositary has not contractually discharged any of its liabilities under the Depositary Agreement in respect of any delegated services. The fees paid to the Depositary by the Company for services provided under the Depositary Agreement are listed at paragraph 2.3 of Part 7 (Directors, Management and Administration). The Depositary Agreement may be terminated by either party on 90 days’ prior written notice. The Depositary Agreement may be immediately terminated by either party where the other party ceases to be authorised to carry on its relevant regulated activity by the relevant regularity authority. The Depositary Agreement contains customary indemnities given by the Company in favour of the Depositary.
7.5 Facility Agreement The Company entered into a facility agreement with The Bank of New York Mellon (“BNY”) on 29 April 2009, as amended by a letter of amendment dated 13 May 2020, pursuant to which BNY provided the Company with a £20 million committed 364 day multicurrency revolving credit facility (the “Facility”) to finance investments in accordance with the Company’s investment policies and satisfy the Company’s general corporate purposes (“Facility Agreement”). Under the Facility Agreement BNY is not bound to monitor or verify the utilisation of the Facility. For amounts drawn on the Facility, interest is payable based on LIBOR or EURIBOR, as appropriate, plus a margin and a mandatory cost. Additionally, there is a 0.25 per cent. commitment fee on the amount of the Facility not utilised. Under the Facility’s covenants, the Company’s total indebtedness must not exceed 30 per cent. of total assets (excluding any hedge fund assets) and the total assets must not be less than £60 million.
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As at the latest practicable date, the Company and BNY have agreed in principle to increase the Facility to £40 million, conditional upon the Scheme becoming effective and, subject to the agreement of legally binding documentation.
7.6 Transfer Agreement If the Proposals become effective, the Company will enter into the Transfer Agreement with the Liquidators (in their personal capacity and on behalf of IIGT), pursuant to which the Rollover Pool will be transferred to the Company in consideration for the allotment and issue by the Company of the New Shares to the Liquidators (as nominees for IIGT Shareholders entitled to them in accordance with the Scheme). Thereafter, the Liquidators will renounce the allotments of the New Shares in favour of IIGT Shareholders who hold IIGT Rollover Shares, and such New Shares will be issued by the Company to those IIGT Shareholders pursuant to the Scheme. The Transfer Agreement provides that the assets to be transferred to the Company (for the benefit of the UK Equity Portfolio) will be transferred with such rights and title as IIGT may have in respect of the same or any part thereof subject to and with the benefit of all and any rights, restrictions, obligations, conditions and agreements affecting the same or any part thereof, including any income, dividend, distribution, interest or other right or benefit on any investment marked “ex” the relevant income, dividend, distribution, interest or other right or benefit at or prior to the Calculation Date. The Transfer Agreement further provides that IIGT, acting by the Liquidators, shall (insofar as they are reasonably able to do so by law or otherwise) comply with all reasonable requests made by the Company (or its nominee) with a view to transferring the legal title in each of the assets comprised in the Rollover Pool. The Transfer Agreement excludes any personal liability on the part of the Liquidators for any action taken by the Liquidators in accordance with the express provisions of the Transfer Agreement or the Scheme. The Enlarged UK Equity Portfolio will pay SDRT to the extent applicable on the acquisition of the Rollover Pool and listing fees in relation to the listing of the New Shares. The parties to the Transfer Agreement have entered into irrevocable undertakings, to enter into the Transfer Agreement on the Effective Date.
8. LITIGATION
During the 12 month period prior to the date of this Prospectus there have been no governmental, legal or arbitration proceedings, and the Company is not aware of any governmental, legal or arbitration proceedings pending or threatened, which may have, or have had, in the recent past, a significant effect on the Company and / or the financial position or profitability of the Company.
9. THIRD PARTY INFORMATION AND CONSENTS The AIFM, the Investment Manager and the Sponsor have each given and not withdrawn their written consent to the inclusion in this Prospectus of references to their name.
Certain information contained in this Prospectus has been sourced from third parties and where such third party information has been referenced in the Prospectus, the source of that information has been disclosed. Such information has been accurately reproduced and, as far as the Company is able to ascertain from information published by such third parties, no facts have been omitted which would render the reproduced information inaccurate or misleading.
10. UK AIFM REGULATIONS DISCLOSURES 10.1 The AIFM is required to make certain disclosures to prospective investors prior to their investment in the Company, in accordance with section 3.2 of the Investment Funds Sourcebook. An explanation of where each of these disclosures may be found in this Prospectus (or of the non-applicability to the Company of certain of these disclosures) is set out in this paragraph 10. 10.2 Part 5 (The Company and the Investment Manager) of this Prospectus contains a description of the investment objective and investment policy of the Company, the types of assets in which the Company may invest, the techniques it may employ, any applicable investment restrictions and the procedures by which the Company may change its investment strategy or the Company’s investment policy. 10.3 Part 5 (The Company and the Investment Manager) of this Prospectus also contains a description of the circumstances in which the Company may use leverage, the types and
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sources of leverage permitted, restrictions on the use of leverage and the maximum level of leverage which the Company is permitted to employ. There are no collateral or reuse arrangements in place in respect of the Portfolios. 10.4 Part 6 (Investment Strategy and Portfolio) of this Prospectus contains a description of the investment strategy of the Company and its Portfolios. 10.5 The key risks associated with the investment policy, strategy, objectives and techniques of the Company are contained in Part 1 (Risk Factors) of this Prospectus. 10.6 The Company is not a fund of funds and so there is no master AIF for the purposes of the UK AIFM Regulations, nor will there be any underlying funds. 10.7 A description of the terms and conditions and of the Issue and the Scheme are contained in Part 8 (Details of Issue and Scheme) of this Prospectus. The Issue is governed by English law and subject to the jurisdiction of English courts, the same law and jurisdiction under which the Company is established. The UK has acceded to the Hague Convention on Choice of Courts Agreements 2005 (the “Hague Convention”) which applies between the EU member states, Montenegro, Denmark, Mexico, Singapore and the UK and provides for the recognition of foreign judgments in respect of contracts which contain an exclusive jurisdiction clause. The Hague Convention does not, however, extend to contracts containing non-exclusive jurisdiction clauses, which typically permit the more dominant party to the contract to sue in the court of their choice while restricting the right of the less dominant party to the courts of a single country. The UK has also applied to re-join the Lugano Convention 2007 which would permit for the recognition of judgments based on contracts under the laws of member states regardless of whether the contract contains an exclusive or a non-exclusive choice of law clause in the states that are parties to that convention (i.e. EU member states and Iceland, Norway and Switzerland). However, each member of the Lugano Convention (EU, Iceland, Norway and Switzerland) has a veto on the accession of new members and UK accession may not occur.
11. MAR DISCLOSURE
The Board of IIGT and the Board each announced on 1 December 2020 that heads of terms for the Combination had been agreed.
12. GENERAL The Company is not dependent on patents or licences, industrial, commercial or financial contracts or new manufacturing processes which are material to the Company’s business or profitability. No application is being made for the New Shares to be dealt with in or on any stock exchange or investment exchange other than the Main Market. The publication or delivery of this Prospectus shall not under any circumstances imply that the information contained in this Prospectus is correct as at any time subsequent to the date of this Prospectus or that there has not been any change in the affairs of the Company since that date. As at the date of the Prospectus the Company has no subsidiaries.
13. AUDITOR The auditor of the Company is Grant Thornton UK LLP of 30 Finsbury Square, London, EC2A 1AG, a member firm of the Institute of Chartered Accountants in England and Wales.
14. AVAILABILITY OF PROSPECTUS
A copy of this Prospectus will be available on the Website. In addition, a copy of this Prospectus is available at the National Storage Mechanism which is located at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
15. DOCUMENTS ON DISPLAY
Copies of the following documents will be available on the Website and, in the event that the current Government restrictions implemented in response to Covid-19 are lifted before Admission, for inspection between 9.00 a.m. and 5.00 p.m. on any day (Saturdays, Sundays and public holidays excepted) at the Company’s registered office, Perpetual Park, Perpetual Park Drive, Henley-on-Thames, Oxfordshire, RG9 1HH, from the date of this Prospectus until the Admission:
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15.1 this Prospectus dated 30 March 2021; 15.2 the Statutory Accounts; 15.3 the Articles; and 15.4 the notice of the General Meeting.
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PART 12
DEFINITIONS
In this Prospectus, unless the context otherwise requires, the expressions as set out below shall bear the following meanings: Admission the date on which admission of the New Shares to the premium segment of the Official List and to trading on the Main Market becomes effective in accordance with the Listing Rules and the admission and disclosure standards of the London Stock Exchange; AGM annual general meeting of the Company; AIC the Association of Investment Companies; AIC Code the AIC Code of Corporate Governance, as amended from time to time; AIF alternative investment fund; AIFM Invesco Fund Managers Limited, the Company’s alternative investment fund manager; AIFMD the Alternative Investment Fund Managers Directive (2011/61/ EU); Articles the articles of association of the Company; Audit Committee the audit committee of the Company as described in paragraph 4.3 of Part 7 (Directors, Management and Administration) of this Prospectus; Auditor the auditors of the Company from time to time, being Grant Thornton UK LLP as at the date of this Prospectus; Balanced Risk Allocation Portfolio the Company’s portfolio of investments in relation to the Balanced Risk Allocation Shares; Balanced Risk Allocation Share a balanced risk allocation share of nominal value one pence each in the capital of the Company; Basic Entitlement subject to the Scheme becoming effective in accordance with its terms, the entitlement of each IIGT Shareholder to elect for, and have accepted in full an election for, the Cash Option in respect of up to 30 per cent. by number of its holding of IIGT Shares as at the Calculation Date, rounded down to the nearest whole number; Board or Directors the directors of the Company whose names are set out at Part 4 (Directors, Management, Custodian and Advisers) of this Prospectus; Board of IIGT the board of directors of IIGT; Business Days any day on which the London Stock Exchange is open for business and banks are open for business in London; Calculation Date the time and date to be determined by the IIGT Directors but expected to be 5.00 p.m. on 15 April 2021, at which the value of IIGT’s assets and liabilities will be determined for the creation of the Liquidation Pool, the Cash Pool and the Rollover Pool, and at which the IIGT NAV, the UK Equity NAV, the Residual Net Asset Value, the Residual Net Asset Value per IIGT Share, the IIGT FAV, the UK Equity FAV, the IIGT FAV per Share, the UK Equity FAV per Share, the Cash Pool NAV, the Total Costs, the Total Benefits, the IIGT Proportion and the
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Company Proportion will be calculated for the purposes of the Scheme; Cash Option the option for IIGT Shareholders to receive cash under the terms of the Scheme; Cash Pool the pool of assets attributable to the IIGT Cash Shares; Cash Pool Discount an amount equal to 2.5 per cent. of the value of the Cash Pool as at the Calculation Date; Cash Pool NAV the value of the Cash Pool as at the Calculation Date, minus the Cash Pool Discount; Chairman the chairman of the Company, Graham Kitchen Combination the combination of the assets of the Company and certain assets of IIGT to create the Enlarged Company; Companies Act 2006 Companies Act 2006, as amended from time to time; Company Invesco Select Trust plc; Company Accrued Performance the waiver by the Investment Manager, subject to the Scheme Fee Waiver becoming effective, of its entitlement to any performance fee accrued in respect of the UK Equity Portfolio up to the Effective Date; Company Proportion the pro rata portion of the Total Costs and the Total Benefits allocated to the UK Equity Portfolio as at the Calculation Date calculated by reference to the IIGT NAV and the UK Equity NAV as at the Calculation Date; Company Secretary Invesco Asset Management Limited; Completion completion of the Issue; Conditions the conditions to the Proposals including those set out in paragraph 4 of Part 8 (Details of Issue and Scheme) of this Prospectus; Conversion Date subject to the Articles, 1 February, 1 May, 1 August and 1 November in each calendar year (and 1 February, 1 June, 1 August and 1 November for the year ended 31 December 2021) (and if such date is not a business day, the first business day following such date) or such other dates (being not more than five business days prior to nor more than five business days after 1 February, 1 May, 1 August or 1 November respectively in each calendar year) as the Board may determine and notify to Shareholders from time to time; Corporate Governance Code the Corporate Governance Code as published by the Financial Reporting Council from time to time; CREST the system for the paperless settlement of trades in securities and the holding of uncertificated securities operated by Euroclear in accordance with the CREST Regulations; CREST Regulations the Uncertificated Securities Regulations 2001 (SI 2001 No. 2001/3755) as transposed into UK law by EUWA and as further amended by secondary legislation made under EUWA from time to time; CRS the OECD Common Reporting Standard; CTA 2009 the Corporation Tax Act 2009; CTA 2010 the Corporation Tax Act 2010, as amended; Dealing Day a day on which the London Stock Exchange is open for business;
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Depositary BNY Mellon Trust & Depositary (UK) Limited Depositary Agreement the depositary agreement dated 22 July 2014 between the Company, the AIFM and the Depositary, further details of which are set out in paragraph 7.4 of Part 11 (General Information); DTR the Disclosure Guidance and Transparency Rules made by the FCA under Part VI of FSMA; Effective Date the date on which the Scheme becomes effective as determined by the terms of the Scheme, which is expected to be 23 April 2021; Election the choice made by an IIGT Shareholder for the Rollover Option and/ or the Cash Option pursuant to the Scheme (including, where the context so permits, a deemed choice for the Rollover Option or the Cash Option) and any reference to “elect” or “election” shall, except where the context requires otherwise, mean “elect or is deemed to elect” or “election or deemed election, respectively; Enlarged Company the Company following completion of the Combination; Enlarged UK Equity Portfolio the UK Equity Portfolio following completion of the Combination; EU or European Union the European Union first established by the treaty made at Maastricht on 7 February 1992; Euroclear Euroclear UK & Ireland Limited (a company incorporated in England and Wales with registered number 02878738, being the operator of CREST); European Economic Area or EEA the countries of the European Union, plus Iceland, Norway and Liechtenstein; EUWA the European Union (Withdrawal) Act 2018; Excess Application that portion of an Election by a IIGT Shareholder for the Cash Option that exceeds that IIGT Shareholder’s Basic Entitlement; Existing Shareholders the holders of Shares prior to completion of the Combination; FATCA the US Foreign Account Tax Compliance Act; FAV formula asset value; FCA the Financial Conduct Authority; FCA Rules the handbook of rules and guidance of the FCA, as amended; First General Meeting of IIGT the general meeting of IIGT convened for 10.30 a.m. on 15 April 2021 (or any adjournment thereof); Forms of Election the forms of election for use by IIGT Shareholders holding IIGT Shares in certificated form in relation to the Scheme; Fourth Interim Dividend the intended fourth quarterly interim dividend of the Company for the year ending 31 May 2021 of 1.5 pence per UK Equity Share; FSMA the Financial Services and Markets Act 2000 (as amended); General Meeting the general meeting of the Company convened for for 11.00 a.m. on 15 April 2021 (or any adjournment thereof); Global Equity Income Portfolio the Company’s portfolio of investments in relation to the Global Equity Income Shares; Global Equity Income Shares a global equity income share of nominal value one pence each in the capital of the Company;
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HMRC Her Majesty’s Revenue and Customs; IIGT Invesco Income Growth Trust plc; IIGT AGM the annual general meeting of IIGT held on 10 September 2020; IIGT Cash Shares the number of IIGT Shares elected for the Cash Option; IIGT Directors the directors of IIGT from time to time; IIGT FAV the value of the Rollover Pool as at the Calculation Date as adjusted to take into account the deduction of the IIGT Proportion of the Total Costs from it and the allocation of the IIGT Proportion of the Total Benefits to it; IIGT FAV per Share the IIGT FAV divided by the total number of IIGT Rollover Shares (expressed in pence and calculated to two decimal places with rounding to the nearest whole number and with 0.005 rounded down). IIGT General Meetings the First General Meeting of IIGT and the Second General Meeting of IIGT (or any adjournment thereof); IIGT Letter of Undertaking the letter of undertaking entered into by IIGT on 30 March 2021 in respect of the Transfer Agreement; IIGT NAV the net asset value of IIGT as at the Calculation Date, determined in accordance with the normal accounting principles adopted by IIGT from time to time (and (to the extent not already accounted for) including a deduction for any Relevant Dividends, but excluding any provision for the Retention or any item included in the Total Costs. For the avoidance of doubt, neither the Termination Fee Waiver Amount nor the amount representing the Company Accrued Performance Fee Waiver shall be recognised as an asset); IIGT Proportion the pro rata portion of the Total Costs and the Total Benefits allocated to the Rollover Pool as at the Calculation Date calculated by reference to the value of the IIGT NAV and the UK Equity NAV as at the Calculation Date; IIGT Rollover Shares the number of IIGT Shares elected for the Rollover Option; IIGT Shareholder a holder of IIGT Shares; IIGT Shares ordinary shares of nominal value twenty-five pence each in the capital of IIGT; Invesco the AIFM and/or the Investment Manager, as the context requires; Investec Investec Bank plc, the Company’s sponsor and financial adviser; Investment Funds Sourcebook the Investment Funds sourcebook as contained in the FCA Rules; Investment Manager Invesco Asset Management Limited; Investment Trust Regulations the Investment Trust (Approved Company) (Tax) Regulations 2011; ISA individual savings account; ISIN International Security Identification Number; Issue the issue of New Shares under the Scheme; KID the key information document relating to the Company produced pursuant to the PRIIPs Regulation, as amended from time to time;
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Link Group the trading name of Link Market Services Limited, a company incorporated in England and Wales with registered number 02605568; Liquidation Pool the pool of cash and other assets to be retained by the Liquidators in connection with the Scheme to meet all known and unknown liabilities of IIGT and other contingencies; Liquidators the liquidators of IIGT appointed in connection with the implementation of the Scheme; Listing Rules the Listing Rules made by the FCA under Part VI of FSMA; London Stock Exchange London Stock Exchange plc (a company registered in England and Wales with registered number 2075721); Main Market the main market of the London Stock Exchange for listed securities; Managed Liquidity Portfolio the Company’s portfolio of investments in relation to the Management Liquidity Shares; Managed Liquidity Share a managed liquidity share of nominal value one pence each in the capital of the Company; Management Agreement the Management Agreement between the Company and the AIFM, a summary of which is set out in paragraph 7.1 of Part 11 (General Information) of this Prospectus; Market Abuse Regulation or MAR the Market Abuse Regulation (EU) No. 596/2014 as transposed into UK law by EUWA and as further amended by secondary legislation made under EUWA from time to time; Market Rules the Admission and Disclosure Standards of the London Stock Exchange (including any modification, amendment or replacement thereof); MiFID MiFID II Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (“MiFID”) and Regulation (EU) No 600/2014 of the European Parliament and the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012 (“MiFIR”, and together with MiFID, “MiFID II”); NAV per Share the Net Asset Value per Share from time to time; Net Assets Total Assets less long-term liabilities; Net Asset Value or NAV the aggregate value of the assets of the Company, the UK Equity Portfolio or IIGT, as appropriate, less its liabilities (including provisions for such liabilities) determined by the relevant board of directors in their absolute discretion in accordance with the accounting principles adopted by that company; New Shares the new UK Equity Shares to be issued pursuant to the Scheme; OECD the Organisation for Economic Co-operation and Development; Official List the Official List maintained by the FCA pursuant to Part VI of FSMA; Overseas IIGT Shareholder an IIGT Shareholder who has a registered address outside or who is resident in, or citizen, resident or national of, jurisdictions outside the United Kingdom, the Channel Islands and the Isle of Man; Portfolios the Company’s portfolios of investments from time to time;
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PRA the Prudential Regulation Authority of the Bank of England; PRIIPs Regulation Regulation EU No. 1286/2014 on KIDs for packaged retail and insurance-based investment products, as transposed into UK law by EUWA and as further amended by secondary legislation made under EUWA from time to time; Proposals the proposals for the members’ voluntary liquidation and scheme of reconstruction of IIGT and the Issue; Proposed Additional Directors Davina Curling, Mark Dampier and Tim Woodhead; Prospectus this prospectus; Prospectus Regulation EU Regulation 2017/1129 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC, as transposed into UK law by EUWA and as further amended by secondary legislation made under EUWA from time to time; Prospectus Regulation Rules the Prospectus Regulation Rules made by the FCA under Part VI of FSMA; Receiving Agent Link Group; Receiving Agent’s Agreement the receiving agent agreement between the Company and the Receiving Agent, a summary of which is set out in paragraph 7.3 of Part 11 (General Information) of this Prospectus; Reclassified Shares IIGT Shares with “A” or “B” rights arising as a result of the Proposals; Registrar Link Group; Registrar’s Agreement the registrar’s agreement between the Company and the Registrar, a summary of which is set out in paragraph 7.2 of Part 11 (General Information) of this Prospectus; Regulatory Information a regulatory information service that is on the list of regulatory Service or RIS information services maintained by the FCA; Relevant Dividend any dividend declared by IIGT prior to the Calculation Date but not yet paid to IIGT Shareholders; Reporting Accountant the reporting accountant of the Company from time to time, being Grant Thornton UK LLP as at the date of this Prospectus; Residual Net Asset Value the IIGT NAV as at the Calculation Date less the value of the cash and other assets appropriated to the Liquidation Pool in accordance with the Scheme; Residual Net Asset Value per the Residual Net Asset Value divided by the number of IIGT IIGT Share Shares in issue as at the Calculation Date (excluding any IIGT Shares held in treasury) (expressed in pence and calculated to two decimal places with rounding to the nearest whole number and with 0.005 rounded down); Retention an amount considered by the Liquidators to be appropriate to provide for any unascertained, unknown or contingent liabilities of IIGT (such amount currently not expected to exceed £55,000; Rollover Option the option for IIGT Shareholders under the Scheme to elect to receive New Shares in respect of some or all of their holding of IIGT Shares on the winding up of IIGT; Rollover Pool the pool of cash, undertaking and other assets to be established under the Scheme to be transferred to the Company pursuant to the Transfer Agreement;
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Scheme the proposed scheme of reconstruction and voluntary winding up of IIGT under section 110 of the Insolvency Act 1986; Scheme Resolutions the resolutions to be proposed at the General Meeting to approve amendments to the investment objective and investment policy of the UK Equity Portfolio and the issue of the New Shares; SDRT UK stamp duty reserve tax; Second General Meeting of IIGT the general meeting of IIGT convened for 11.00 a.m. on 23 April 2021 (or any adjournment thereof); Securities Act the United States Securities Act of 1933, as amended; Shares the UK Equity Shares, Global Equity Income Shares, Balanced Risk Allocation Shares and Managed Liquidity Shares; Shareholder a registered holder of one or more Shares; SIPP self-invested personal pension; SSAS small self-administered pension scheme; Statutes the Companies Act 2006 as amended and every other statute for the time being in force concerning companies and affecting the Company; Statutory Accounts the financial statements of the Company for the year ended 31 May 2020; Takeover Code the City Code on Takeovers and Mergers, as amended from time to time; Termination Fee Waiver Amount the amount representing Invesco Fund Managers Limited’s waiver of its entitlement (in its capacity as the investment manager of IIGT), subject to the Scheme becoming effective, to the termination fee which would otherwise be payable to it in respect of the termination of the existing alternative investment fund management agreement entered into between IIGT and Invesco Fund Managers Limited relating to IIGT on the Effective Date; Total Assets the aggregate value of the assets of the Company less the current liabilities of the Company as determined in accordance with the accounting policies adopted by the Company from time to time; Total Benefits the Cash Pool Discount and the amount representing the Company Accrued Performance Fee Waiver, both of which are fixed as at the Calculation Date; Total Costs the costs and expenses relating to the Company and IIGT which are attributable to the implementation of the Scheme, which are fixed as at the Calculation Date and determined by the IIGT Directors, in consultation with the proposed Liquidators, and the Board on the Calculation Date, with such costs and expenses determined using the relevant amount(s) as stated in the relevant invoice(s) or fee quote(s); Transfer Agreement the transfer agreement to be entered into on the Effective Date between the Company and the Liquidators (in their personal capacity and on behalf of IIGT), a summary of which is set out in paragraph 7.6 of Part 11 (General Information) of this Prospectus; UK or United Kingdom the United Kingdom of Great Britain and Northern Ireland;
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UK AIFM Regulations The Alternative Investment Fund Managers Regulations 2013 as amended by The Alternative Investment Fund Managers (Amendment etc.) (EU Exit) Regulations 2019/328; UK Equity FAV the UK Equity NAV as at the Calculation Date as adjusted to take into account the deduction of the Company Proportion of the Total Costs from it and the allocation of the Company Proportion of the Total Benefits to it; UK Equity FAV per Share the UK Equity FAV divided by the number of UK Equity Shares in issue at the Calculation Date; UK Equity NAV the net asset value of the UK Equity Portfolio as at the Calculation Date, determined in accordance with the normal accounting principles adopted by the Company from time to time and (to the extent not already accounted for) including a deduction for any dividends declared prior to the Calculation Date but not yet paid to Shareholders, but excluding any provision for any item included in the Total Costs, and none of the items constituting the Total Benefits shall be recognised as an asset); UK Equity NAV per Share the Net Asset Value per UK Equity Share from time to time; UK Equity Share a UK equity share of nominal value one pence each in the capital of the Company; UK Equity Shareholder a registered holder of one or more UK Equity Shares; UK Equity Portfolio the Company’s portfolio of investments in relation to the UK Equity Shares; UK MiFIR Markets in Financial Instruments Regulation (600/2014) as amended by The Markets in Financial Instruments (Amendment) (EU Exit) Regulations 2018 (SI 2018/1403); United States or U.S. the United States of America, its possessions or territories, any State of the United States of America and the district of Columbia or any area subject to its jurisdiction or any political subdivision thereof; Voting Record Time for the purpose of determining the number of votes which may be cast in respect of a Share at a general meeting of the Company, the close of business on such date (being not more than 10 business days prior to the date of the relevant meeting) as the Board may at its discretion determine; and Website www.invesco.co.uk/investmenttrusts In this Prospectus, unless specified, all references to Sterling, pounds or £ are to United Kingdom pounds Sterling and all references to “p” are to United Kingdom pence Sterling. In this Prospectus any reference to any EU directive, EU regulation, EU decision, EU tertiary legislation or provision of the EEA agreement (an “EU Matter”) which forms or is to form part of domestic law by application of the European Union (Withdrawal) Act 2018 shall be read as a reference to that EU Matter as it forms (by virtue of the European Union (Withdrawal) Act 2018) part of domestic law and as modified by domestic law from time to time. For the purposes of this paragraph: (i) “domestic law” shall have the meaning given in the European Union (Withdrawal) Act 2018; (ii) “transition period” means the transition or implementation period provided for by Part 4 of the Withdrawal Agreement; and (iii) any other words and expressions shall, unless the context otherwise provides, have the meanings given in the European Union (Withdrawal) Act 2018.
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Linkway Financial Printers Typeset & Printed in London (UK) 17285