CANADIAN GENERAL INVESTMENTS, LIMITED

Transcription

1 CANADIAN GENERAL INVESTMENTS, LIMITED DIVIDEND REINVESTMENT AND SHARE PURCHASE PLAN RETAIN FOR FUTURE REFERENCE AS AMENDED OCTOBER 25, 1995

2 CANADIAN GENERAL INVESTMENTS, LIMITED October 25, 1995 Dear Shareholder: 110 YONGE STREET, SUITE 1601, TORONTO, ONTARIO M5C 1T4 TELEPHONE (416) FAX (416) Canadian General Investments has amended its Dividend Reinvestment and Share Purchase Plan dated March 1, The amended plan takes effect with cash dividends paid on or after December 15, There is no need for current participants to notify the Agent (Montreal Trust Company of Canada) of continued participation, as this will automatically take place unless the Agent is formally notified to the contrary. The Corporation will continue to absorb all costs related to the Plan. The enclosed brochure dated October 31, 1995 represents the Amended Plan. The primary changes from the original are as follows: i) The dividend reinvestment segment of the Plan will now allow for U.S. shareholder participation. We are extremely pleased that we are able to respond positively to the requests from current U.S. shareholders. ii) Shares required to support the needs of the Plan will henceforth be purchased by the Agent on the open market, as long as the market price remains below Net Asset Value Per Share. Previously, shares to support the Plan were issued from Treasury. Purchasing shares on the secondary market will be non-dilutive, will foster trading activity, and should support the narrowing of the discount. iii) Shares issued under the dividend reinvestment segment of the Plan will be issued at 100% of the price as provided by the Agent versus the current 95%. Shares issued under the Cash Option segment of the Plan will continue to be issued at 100% of the price provided by the Agent. The discontinuance of the 5% discount previously allowed to participants of the dividend reinvestment plan is a reflection of the fact that shares will no longer be issued from Treasury but rather be purchased on the secondary market. It will also allow for the equitable treatment of all current and future shareholders. A reminder that the Corporation's shares are fully eligible investments for RRSP purposes. It is possible for Canadian shareholders to utilize the Plan for their individual self-directed RRSP. Please consult your personal investment counsellor and RRSP plan trustee with respect to this matter. Our Dividend Reinvestment and Share Purchase Plan continues to offer a unique low cost opportunity for shareholders to increase their holdings in one of Canada's largest closed-end funds. Please take time to read the attached brochure which fully explains all aspects of the Amended Plan. If you have any questions, please call Montreal Trust Shareholder Services at (416) Yours sincerely, (signed) E. Louise Morgan Chairman

3 CANADIAN GENERAL INVESTMENTS, LIMITED DIVIDEND REINVESTMENT AND SHARE PURCHASE PLAN THE PLAN Purpose The Dividend Reinvestment and Share Purchase Plan (the "Plan") has been established by Canadian General Investments, Limited (the "Corporation") to provide registered holders of common shares ( Common Shares") of the Corporation with an option to acquire additional Common Shares at regular intervals through the reinvestment of dividends and optional cash payments without payment of brokerage commissions or service fees. The Plan permits shareholders as an alternative to receiving regular cash dividends to automatically reinvest these dividends paid on their Common Shares in additional Common Shares of the Corporation at 100% of the Average Market Cost if purchased on the open market or 100% of the Average Market Price if purchased from the Corporation (see Number and Price of Additional Common Shares"). In addition, shareholders are permitted to invest not less than $100 and not more than $5,000 per calendar quarter in additional Common Shares at 100% of the Average Market Cost or Average Market Price as applicable. The Plan is completely optional and, subject to the terms of the Plan, holders of Common Shares may commence or terminate their participation in the Plan at any time. The Plan provides for full investment of cash dividends and additional optional investment amounts as it permits fractional Common Shares as well as whole Common Shares to be purchased and credited to the accounts of Plan participants (the "Participants"). In addition, dividends in respect of whole and fractional Common Shares held in the Plan will also automatically be invested in further Common Shares. All administrative costs incurred in connection with the Plan, including the fees and expenses of Montreal Trust Company of Canada, the Agent under the Plan as well as service fees and brokerage commissions payable in connection with the purchase of Common Shares under the Plan, will be borne by the Corporation. In addition to The Toronto Stock Exchange, the Corporation's Common Shares are currently listed on the London Stock Exchange, and United Kingdom shareholders are fully eligible to participate in both the dividend reinvestment and cash option segments of the Plan. Shareholders or beneficial owners who are citizens or residents of the United States of America, its territories and possessions may participate only in the dividend reinvestment segment of the Plan. Non-residents of Canada should see Eligible Participants. Administration Montreal Trust Company of Canada (the "Agent") acts as the agent for all Participants under the Plan. The Corporation pays to the Agent on behalf of the Participants in the Plan the full amount of all cash dividends paid on their Common Shares (net of any applicable Canadian withholding taxes in the case of non-resident shareholders) and all optional cash payments provided by shareholders for the purchase of additional Common Shares. The Agent purchases additional Common Shares for the Participants on the open market unless the market price exceeds the net asset value ("NAV'') of the Common Shares of the Corporation in which case the Agent will purchase the Common Shares directly from the Corporation on the dividend payment date. The Corporation s shares have historically traded at a discount to NAV, therefore it is anticipated that shares to support the Plan will in all likelihood be purchased on the open market. Common Shares purchased under the Plan will be registered in the name of and held by the Agent, as Agent for and on behalf of the Participants in the Plan. Eligible Participants Except as otherwise provided herein, any registered holder of Common Shares may participate in the Plan at any time by completing the enclosed Authorization Form and returning it to the Agent (see Enrolment ). Beneficial owners of Common Shares whose Common Shares are not registered in their own names may only participate in the Plan if they transfer such Common Shares into their own name or into a specific segregated registered account such as a numbered account with a bank or trust company. Beneficial owners of Common Shares whose Common Shares are held in a numbered nominee account with a bank, trust company or brokerage firm may arrange to enroll such account in the Plan by instructing their nominee to participate in the Plan on their behalf.

4 The Corporation s shares are currently listed on the London Stock Exchange, and United Kingdom shareholders are fully eligible to participate in both segments of the Plan. Shareholders who are citizens or residents of the United States, its territories or possessions may participate only in the dividend reinvestment segment of the Plan, and only if the Agent is purchasing the Common Shares on the open market. Shareholders resident outside Canada apart from those in the United States and the United Kingdom may also participate in the Plan unless prohibited by the law of the country in which they reside. Cash dividends to be reinvested for non-resident shareholders will be reduced by the amount of the applicable Canadian withholding tax (see Canadian Federal Income Tax Considerations''). Enrolment To join the Plan, a shareholder must complete and sign the Authorization Form which accompanies this document and return it to the Agent. The Authorization Form directs the Corporation to forward to the Agent all of the participating shareholder's cash dividends received (less any applicable Canadian withholding taxes in the case of nonresident shareholders) and directs the Agent to invest such dividends in the purchase of additional Common Shares on behalf of the participating shareholder. If a beneficial owner holds Common Shares in more than one brokerage account and wishes to participate in the Plan in respect of Common Shares in all such accounts, a separate Authorization Form must be completed and returned in respect of each such account. Following receipt by the Agent of a duly completed Authorization Form, participation in the Plan becomes effective on the next record date for any dividend declared on the Common Shares and remains in effect for all subsequent dividends until terminated. Dividends are normally declared and paid on a quarterly basis. Additional Authorization Forms may be obtained by a shareholder at any time by written request addressed to the Agent, or, alternatively, in the United Kingdom, from the Corporation's U.K. Transfer Agent, CIBC Mellon Trust Company, Balfour House, 390 High Road, Ilford, Essex, IGI INQ. Share Purchase Option Shareholders may elect to purchase additional Common Shares by making optional cash payments of not less than $100 and not more than $5000 in each calendar quarter on or before the dates specified below. Initial payments may be made when enrolling in the Plan by enclosing with the Authorization Form a cheque or money order (in Canadian currency) payable to Montreal Trust Company of Canada. Subsequent payments may be made by using the cash payment form which is included with the quarterly statement sent to each Participant. Alternatively, Participants may forward payment for optional purchases of additional Common Shares accompanied by an appropriate letter of instruction to the Agent. Common Shares will be credited to the account of a Participant as of March 15, June 15, September 15 and December 15 of each year (the "Investment Dates") provided that payment has been received by the Agent not later than the first day of such month. Cheques in payment for Common Shares may be postdated to the first day of the month in which the investment is to take place. Payments received after the first day of the month in which the investment is to take place will be held by the Agent and applied for the purchase of Common Shares on the next investment Date unless the Participant requests the return of the payments. No interest will be paid to Participants on funds held for Participants under the Plan. Additional Common Shares purchased will automatically have dividends thereon reinvested in Common Shares pursuant to the terms of the Plan. Number and Price of Additional Common Shares The price at which additional Common Shares of the Corporation will be purchased under the Plan will be based on: a) the weighted average cost of the total number of Common Shares purchased for the participants in the Plan on the open market during the thirty days immediately prior to a dividend payment date (the Average Market Cost") if the market price is less than the NAV of the Common Shares on the dividend record date, or: b) the weighted average of the prices at which the Common Shares of the Corporation traded on the open market during the five trading days immediately following a dividend record date as reported by The Toronto Stock Exchange (the Average Market Price ) if the Market price is equal to or greater than the NAV of the Common Shares on the dividend record date.

5 Where a shareholder has elected to participate in the Plan, the number of Common Shares to be purchased with the proceeds of a particular dividend or with an optional cash payment, will be calculated by dividing the amount of the cash dividend (net of any applicable withholding tax in the case of non-resident shareholders) and additional cash payment by 100% of the Average Market Cost or Average Market Price, as applicable. Participants' Accounts and Statements The Agent will maintain a separate account for each Participant. Each participant s account in the Plan will be credited by the Agent with that number of Common Shares purchased for the Participant, including fractional interests (computed to three decimal places) in Common Shares that result from the reinvestment of cash dividends and optional additional investment amounts, and the number of additional Common Shares to be credited to each Participant s account shall be determined as described under the heading "Number and Price of Additional Common Shares". As soon as is practicable following each dividend payment date, the Agent will send statements of account to Participants setting out the number of whole and fractional Common Shares acquired by reinvestment of cash dividends and optional additional investment amounts ("Plan Shares") and the total number of Plan Shares then held by the Participant or for the account of the Participant under the Plan. These statements are a Participant's only record of the cost of each purchase of Plan Shares. All statements should be retained by a Participant for income tax purposes. In addition, each Participant will receive annually the appropriate tax information for reporting dividend income. Plan Shares will be registered in the name of the Agent or its nominee and will be held by the Agent for a Participant under the Plan. Plan Shares may not be sold, transferred, pledged or otherwise disposed of by the Participant while such Plan Shares remain in the Plan. A Participant who wishes to sell, transfer, pledge or dispose of any Plan Shares must withdraw them from the Plan by instructing the Agent in writing to issue, in the name of the Participant, a share certificate representing whole Plan Shares. Share certificates will not be issued to Participants for Plan Shares at the time additional shares are allotted. However, a Participant may at any time, upon written request to the Agent, without charge and without terminating participation in the Plan, have share certificates issued and registered in the Participant s name for any number of whole Plan Shares owned by such Participant. No certificates for fractional Plan Shares will be issued, although dividends on fractional Plan Shares will be credited to the account of the Participant. Termination of Participation A Participant may terminate participation in the Plan at any time by written notice to the Agent and no fee or penalty shall be payable on such termination. Within a reasonable time following receipt by the Agent of notice of termination, the Agent will settle the Participant s account by issuing a share certificate for the number of whole Plan Shares in the account of the Participant registered in the Participant's name and by purchasing for cash any fractional Plan Shares, as at the termination date. The amount of the payment for any such fractional Plan Shares will be based on the most recently determined Average Market Price. For a notice of termination to be effective for a particular dividend payment, notice must be received by the Agent at least one business day prior to a dividend record date. Otherwise, termination and settlement of the Participant's account will not take place until after the dividend payment date and the dividend payable on the corresponding dividend payment date will be reinvested in accordance with the Plan. All subsequent dividends declared will be paid in cash unless a further Authorization Form is deposited with the Agent. Participation in the Plan will also be terminated upon receipt by the Agent of a written notice of the death of a Participant. Certificates for Plan Shares will be issued in the name of the deceased Participant and/or in the name of the estate of the deceased Participant, as appropriate, and the Agent will send such certificates and cash payment for any fractional Plan Shares to the representative of the deceased Participant. Upon termination of participation, a Participant may request that all Plan Shares held for the Participant s account be sold. Such sale will be made by the Agent, through a stockbroker designated by the Agent, as soon as is practicable following receipt by the Agent of written instructions to do so. The proceeds of such sale, less brokerage commissions and transfer taxes, if any, will be paid to the Participant by the Agent. Plan Shares that are to be sold may be commingled with Plan Shares of other Participants, in which case the proceeds to each Participant will be based upon the average sale price of all Plan Shares so commingled. With respect to any fraction of a Plan Share, the

6 Agent will purchase such fraction for cash at a price determined in the same manner as in the case of whole Plan Shares sold for the Participant. Dividends, Rights Offerings, Stock Splits, Stock Dividends, Changes, Reclassifications and Conversions Plan Shares and fractions thereof held for the account of Participants in the Plan by the Agent will be eligible, pro rata, for dividends paid by the Corporation, which dividends will also automatically be invested in further Common Shares of the Corporation. In the event that the Corporation makes available to its shareholders rights to subscribe for additional shares or other securities, rights certificates will be issued to Participants for their whole Plan Shares. No such rights will be made available in respect of fractions of Plan Shares. Any Common Shares distributed pursuant to a stock dividend or a stock split on Plan Shares will be retained by the Agent and credited proportionally to the accounts of Participants. In the event of a change, reclassification or conversion of the Common Shares into other shares or securities, the Plan shall continue to apply to the shares or securities resulting from that event and references herein to the Common Shares and to Plan Shares shall be deemed to be references to the shares or securities resulting from that event. Voting of Plan Shares Whole Plan Shares held for a Participant's account under the Plan will be voted, at any meeting of shareholders at which the holders of Common Shares are entitled to vote, in accordance with the proxy of the Participant properly executed and filed with the Agent. In the absence of any such proxy, the Plan Shares will not be voted. Responsibilities of The Corporation and The Agent Neither the Corporation nor the Agent shall be liable for any act done in good faith, or for any good faith omission to act. In particular, without limiting the generality of the foregoing, neither the Corporation nor the Agent shall be liable in respect of any claim arising out of failure to terminate a Participant's account upon such Participant's death prior to receipt of notice in writing of such death or with respect to the prices at which Common Shares are purchased for the Participant's account and the times at which such purchases are made. Participants should recognize that neither the Corporation nor the Agent can assure a gain or protect against loss as a result of Participants holding Plan Shares. Amendment, Suspension or Termination of the Plan The Corporation reserves the right to amend, suspend or terminate the Plan at any time, in which case all Participants will be sent written notice thereof at least 30 days before the effective date of any amendment and at least 60 days prior to any dividend record date in the case of any suspension or termination. If the Plan is terminated, the Agent will remit to Participants certificates registered in their names for whole Plan Shares in their account as at the date of termination, together with the proceeds from the sale of any fractions of Plan Shares. If the Plan is suspended, subsequent dividends on Plan Shares will be paid in cash and no further optional investments will be permitted. The Corporation reserves the right to deny access to the Plan to any investment dealer or shareholder who it believes may acquire substantial amounts of Common Shares prior to the dividend record date solely for the purpose of exploiting the arbitrage opportunities of participating in the Plan. Notices All notices required to be given to Participants under the Plan will be mailed to Participants at the address shown on the records of the Agent.

7 All written communications to the Agent should be addressed as follows: Montreal Trust Company of Canada Attention: Shareholder Services 151 Front Street West 7th Floor, Toronto, Ontario, M5J 2N1 Effective Date The Plan is effective with respect to cash dividends paid on and after December 15, A properly completed Authorization Form authorizing participation in the Plan must be received by the Agent on or before the dividend record date to be effective for such dividend and otherwise shall become effective only for subsequent dividends. CANADIAN FEDERAL INCOME TAX CONSIDERATIONS The following is a general summary of the principal Canadian federal income tax considerations generally applicable to Participants in the Plan based on the Corporation's understanding of the current provisions of the Income Tax Act (Canada) (the "Tax Act") and the regulations thereunder. The summary does not take into account provincial or foreign income tax legislation or considerations, and is not intended to be tax advice to any particular Participant. The Corporation advises each shareholder to consult a professional tax advisor regarding the income tax consequences of participating in the Plan. Residents of Canada A Participant who is resident in Canada will be treated, for income tax purposes, as having received a cash dividend from the Corporation on each dividend payment date and will be required to pay income tax on all such dividends in accordance with the provisions of the Tax Act. The reinvestment of cash dividends under the Plan does not relieve a Participant of any liability for income tax that may be payable on such cash dividend. For purposes of the Tax Act, the cost of Plan Shares acquired either through the reinvestment of dividends or through optional additional investments will be equal to the amount paid therefore. An actual or deemed disposition of Plan Shares by a Participant may result in a Participant realizing a gain or loss for tax purposes. Whether the gain or loss will be treated as a capital gain or a capital loss or ordinary income or loss will depend upon the Participant s own particular circumstances. Non-Residents of Canada If cash dividends on Common Shares of a non-resident Participant are subject to Canadian withholding tax, the amount to be invested under the Plan will be reduced by the amount of tax withheld. Cash dividends paid to nonresidents of Canada are subject under the Tax Act to Canadian withholding tax at a general rate of 25%, although such rate is subject to reduction under the provisions of any tax treaty between Canada and the country of residence of the non-resident shareholder. For example, under the Canada-United States Income Tax Convention and the Canada- United Kingdom Income Tax Convention, the rate of such tax is reduced to 15%. A non-resident not carrying on business in Canada will generally not be subject to tax under the Tax Act on any gain realized on a disposition of Common Shares. October 25, 1995