TERRA CAPITAL PLC (Incorporated and registered in the Isle of Man under the Companies Acts 1931 to 2004 with registered number C)

Transcription

1 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about what action you should take, you should seek your own financial advice immediately from your stockbroker, bank manager, solicitor, accountant or other independent professional adviser duly authorised pursuant to the Financial Services and Markets Act 2000, or, if you are not in the United Kingdom, another appropriately authorised independent professional adviser. If you have sold or transferred all of your Ordinary Shares please forward this document and the accompanying Form of Proxy as soon as possible to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was effected, for delivery to the purchaser or transferee. TERRA CAPITAL PLC (Incorporated and registered in the Isle of Man under the Companies Acts 1931 to 2004 with registered number C) Recommended proposals for the adoption of a new investment policy, re-registration under the Isle of Man Companies Act 2006 and proposals for the compulsory redemption of Ordinary Shares Your attention is drawn to the letter from the Chairman of the Company which is set out on pages 5 to 10 of this document and which contains the unanimous recommendation of the Board that Shareholders vote in favour of all the Resolutions which are to be proposed at the Extraordinary General Meeting. This document should be read as a whole and Shareholders should consider whether to vote in favour of the Resolutions in light of the information contained or referred to in this document. A Notice convening an Extraordinary General Meeting of the Company to be held at the offices of Galileo Fund Services Limited, Millennium House, 46 Athol Street, Douglas, Isle of Man IM1 1JB at a.m. on 10 July 2018 is set out at the end of this document. To be valid, the Form of Proxy enclosed with this document for use in relation to the Extraordinary General Meeting must be completed in accordance with the instructions set out therein and returned as soon as possible to the Company s registrars at Galileo Fund Services Limited, Millennium House, 46 Athol Street, Douglas, Isle of Man IM1 1JB, but in any event so as to arrive no later than a.m. on 8 July The completion and return of a Form of Proxy will not preclude a Shareholder from attending and voting at the Extraordinary General Meeting, in person, should they subsequently decide to do so. A summary of the action to be taken by Shareholders is set out on page 10 of this document and in the accompanying Notice of Extraordinary General Meeting. Every Shareholder s vote is important Please complete and return your Form of Proxy now and cast a vote in respect of the Resolutions.

2 CONTENTS DEFINITIONS 3 Page PART 1 LETTER FROM THE CHAIRMAN 5 1. INTRODUCTION 5 2. NEW INVESTMENT POLICY 6 3. CHANGES TO THE INVESTMENT MANAGEMENT ARRANGEMENTS 6 4. RE-REGISTRATION UNDER THE 2006 ACT 7 5. COMPULSORY REDEMPTION MECHANISM 7 6. SETTLEMENT 8 7. ALTERNATIVE METHODS TO RETURN CASH TO SHAREHOLDERS 8 8. AIM ADMISSION AND LIQUIDATION 8 9. RISKS ASSOCIATED WITH THE PROPOSALS EXTRAORDINARY GENERAL MEETING ACTION TO BE TAKEN RECOMMENDATION 9 PART 2 TAXATION 10 PART 3 NOTICE OF EXTRAORDINARY GENERAL MEETING 12 2

3 DEFINITIONS Act the Isle of Man Companies Acts (as amended from time to time) 2006 Act the Isle of Man Companies Act 2006 (as amended from time to time) AIM AIM Rules Articles Board Company or Terra Compulsory Redemption CREST Director Distributions EGM Euroclear Form of Proxy Investment Manager the AIM market of London Stock Exchange plc the AIM rules for companies whose securities are admitted to trading on AIM as published by the London Stock Exchange from time to time the existing articles of association of the Company the board of Directors at the date of this document Terra Capital plc, registered in the Isle of Man with company number C has the meaning given in paragraph 5 of Part 1 of this document the system for paperless settlement of trades and the holding of uncertificated securities administered by Euroclear a director of the Company at the date of this document distributions to Shareholders of any nature whatsoever to include (without limitation): (i) cash dividends and any other form of dividend or distribution (to include a bonus issue of shares or securities); (ii) returns of capital (to include distributions of securities in companies); (iii) distributions in specie of assets; and (iv) any other cash benefit received by Shareholders from the Company to include the amount paid by the Company in respect of any purchase or redemption or cancellation of Ordinary Shares (to include Compulsory Redemptions) or as consideration for the giving up of any rights attaching to Ordinary Shares the extraordinary general meeting of Company convened for 10 July 2018 notice of which is set out on page 13 of this document Euroclear UK & Ireland Limited the form of proxy for use in connection with the EGM Terra Partners Asset Management Limited Investment Management the investment management agreement dated 1 September 2012 Agreement and entered into between the Company, Terra Capital Cayman, Terra Partners Asset Management and the Investment Manager London Stock Exchange NAV or Net Asset Value Net Asset Value Date London Stock Exchange plc the total assets of the Company less the total liabilities of the Company (including accrued but unpaid fees) valued in accordance with the accounting policies adopted by the Company from time to time and expressed in U.S. Dollars the date on which an estimated or confirmed Net Asset Value per Ordinary Share is published by the Company 3

4 New Articles New ISIN New Investment Policy New Memorandum Old ISIN Ordinary Shares Panmure Gordon Portfolio Proposals Redemption Announcement Redemption Date Redemption Price Redemption Record Date Relevant Percentage Re-registration Resolutions RIS Shareholders Solvency Test the new articles of association to be adopted by the Company on Re-registration a new ISIN in respect of the remaining Ordinary Shares in issue which have not been subject to Compulsory Redemption the new investment policy, as described in this document, to be approved by Shareholders at the EGM The new memorandum of association to be adopted by the Company on Re-registration the disabled ISIN by virtue of the redemption of Ordinary Shares on the Redemption Date (being, at the date of this document, 15 June 2018) ordinary shares of US$0.10 each in the capital of the Company Panmure Gordon(UK) Limited, the Company s nominated adviser the Company s portfolio of investments the proposed adoption of the New Investment Policy, the Reregistration, the adoption of the New Memorandum and the New Articles and the proposals relating to Compulsory Redemption in each case as described in this document the announcements to be made by the Company to Shareholders in advance of any Compulsory Redemption the date on which a Compulsory Redemption becomes effective the Net Asset Value per Ordinary Share that will be redeemed on a particular Redemption Date (or at a Net Asset Value Date selected by the Board), less the costs associated with the relevant Compulsory Redemption and as adjusted as the Directors consider appropriate the close of business on the relevant Redemption Date or as otherwise set out in the relevant Redemption Announcement the percentage of Ordinary Shares to be redeemed by the Company on a given Redemption Date the re-registration of the Company as a company governed by the 2006 Act the resolutions to be proposed at the EGM or any one of them as the context so requires Regulatory Information Service holders of Ordinary Shares the statutory solvency test set out in section 49 of the 2006 Act namely that (i) a company is able to pay its debts as they become due in the normal course of business and (ii) the value of a company s assets exceed the value of its liabilities 4

5 PART 1 LETTER FROM THE CHAIRMAN TERRA CAPITAL PLC (Incorporated and registered in the Isle of Man with registered no c) Registered Office: Dirk Van den Broeck Millennium House (Non-executive Chairman) 46 Athol Street Ian Dungate Douglas (Non-executive Director) Isle of Man IM1 1JB Peter Bartlett British Isles (Non-executive Director) To Shareholders Dear Shareholder 15 June 2018 RECOMMENDED PROPOSALS FOR THE ADOPTION OF A NEW INVESTMENT POLICY, RE-REGISTRATION UNDER THE ISLE OF MAN COMPANIES ACT 2006 AND PROPOSALS FOR THE COMPULSORY REDEMPTION OF ORDINARY SHARES 1. INTRODUCTION In January 2015, as part of the recommended restructuring proposals, Shareholders approved proposals whereby the Board was released from the obligation to propose a continuation vote in Instead the Board agreed to offer Shareholders, in June 2018, an opportunity to realise all or part of their investment in the Company at a price equal to the then prevailing net asset value (less costs associated with the opportunity) (the Realisation Opportunity ). Additionally, it was envisaged that if the number of Shareholders who availed themselves of the Realisation Opportunity was such that the Company was no longer a viable proposition the Realisation Opportunity would be abandoned and the Company would be placed into voluntary liquidation. As announced on 19 April 2018, the Board consulted with Shareholders who between them hold in excess of 60 per cent. of the issued share capital of the Company, from which it became clear that such Shareholders would accept the Realisation Opportunity and as such the Company would no longer be a viable proposition. In the light of the above consultation the Board has determined to dispense with the Realisation Opportunity, and instead, subject to approval by Shareholders, adopt the New Investment Policy which involves the Company ceasing all new investments and seeking to realise, in an orderly fashion, the Company s portfolio of investments and return the net proceeds generated to Shareholders as soon as is practicable. The Board, having consulted with its advisers, believe an orderly realisation of the portfolio of investments is preferable to an immediate liquidation as it is likely to achieve greater returns to Shareholders. In order to give the Board maximum flexibility in terms of the manner in which the net proceeds of the realisation of the Company s portfolio of investments is returned to Shareholders, it is also proposed to Reregister the Company under the 2006 Act. As part of this process the Company will adopt the New Articles which, in addition to reflecting the fact that the Company will be re-registered under the 2006 Act, will include a mechanism to allow the Company to redeem compulsorily Ordinary Shares as a means of returning the proceeds of realisations to Shareholders. The purpose of this document is to give you details of the Proposals and to convene an EGM, notice of which is set out at the end of this document, at which Resolutions necessary to implement the Proposals will be proposed. 5

6 2. NEW INVESTMENT POLICY Subject to the passing of the relevant Resolution at the EGM the New Investment Policy will be as follows: the Company shall cease to make any new investments and shall realise its portfolio of investments in an orderly manner and return the net proceeds to Shareholders as soon as practicable. It should be appreciated that there is no time horizon in terms of the implementation of the New Investment Policy. Although the Portfolio is comprised of largely liquid equity holdings the Company also has some illiquid investments and it may take the Investment Manager some time to realise these. Should both the Resolutions be passed the Directors intend to make a first distribution by way of a first Compulsory Redemption in July Further details of this first Compulsory Redemption will be announced to the market by way of an announcement released on an RIS after the EGM. Shareholders should note that the Resolution approving the New Investment Policy is not conditional upon the passing of the Resolution approving the Re-registration and the adoption of the New Memorandum and the New Articles. Accordingly, should Shareholders pass only the Resolution approving the New Investment Policy the Company will have less flexibility in terms of the manner in which it returns the net proceeds generated by the sale of investments to Shareholders. In implementing the New Investment Policy it may be, particularly in respect of less liquid investments, that funds managed by the Investment Manager might be best placed parties to purchase investments from the Company. Notwithstanding this, no investments will be sold to funds managed by the Investment Manager without the prior approval of the Board and in accordance with the provisions of any relevant AIM Rules. In deciding whether the Board should give its approval the Board may, in the light of prevailing circumstances, take independent advice on the terms of any such sale at its discretion. 3. CHANGES TO THE INVESTMENT MANAGEMENT ARRANGEMENTS The Board, having consulted with Shareholders, believe it is appropriate and in the best interests of Shareholders to incentivise the Investment Manager to realise, in accordance with the New Investment Policy, the Company s portfolio of investments in a timely fashion. It is proposed that the Investment Management Agreement be amended such that the current fee structure, 1.25 per cent. per annum of NAV and a performance fee linked to NAV increases, will be replaced with an arrangement whereby the Investment Manager will be entitled to receive a fee equal to 1 per cent. of any Distributions made to Shareholders, which would include cash that is returned by way of a Compulsory Redemption of Ordinary Shares. The new fee arrangements will, subject as set out below, be deemed to come into effect as at 1 July Although on an ongoing basis the Investment Manager will not be entitled to receive a performance fee, the Investment Manager will be entitled to receive a performance fee in respect of the period ending 30 June 2018 if it is due such a fee under the existing arrangements. In addition to the changes to the fee arrangements the Investment Management Agreement will be amended to make it clear that the Investment Management Agreement may be terminated by the Company if the Company is in liquidation. The Board believes that the proposed changes to the fee arrangements will, in the light of the New Investment Policy, better align the interests of Shareholders and the Investment Manager. The Board consulted with Shareholders concerning the proposed new arrangements and has received support from Shareholders who between them hold approximately 58 per cent. of the issued share capital of the Company. For the purposes of the AIM Rules, the entering into of the revised fee and other arrangements outlined above constitute a related party transaction. In this regard the Board considers, having consulted with Panmure Gordon, the Company s nominated adviser, that the revised arrangements are fair and reasonable insofar as Shareholders are concerned. Shareholders should note that the revised arrangements with the Investment Manager, which are not themselves subject to Shareholder approval, are conditional upon the Resolution approving the New Investment Policy being passed. 6

7 4. RE-REGISTRATION UNDER THE 2006 ACT The Company was incorporated under the Isle of Man Companies Acts 1931 to 2004 and is currently subject to the provisions of the Act. Companies incorporated under the Act are subject to traditional rules regarding the maintenance of capital meaning that the ability of the Company to make distributions is referenced to profit and distributable reserves. The 2006 Act updates and modernises Isle of Man company law and, amongst other things, abolishes a number of traditional company law formalities including (as outlined above) as to maintenance of capital, replacing it with a straightforward Solvency Test. As part of the Re-registration process it is necessary for the Company to adopt a new memorandum of association (the New Memorandum ) and the New Articles which conform to the provisions of the 2006 Act Copies of the New Memorandum and the New Articles are available for review on the Company s website at and will be available for inspection at the EGM. On the basis that the relevant Resolution is passed at the EGM the Company will be deemed to be the same legal entity as existed prior to the re-registration and the Re-registration will not serve to prejudice or affect the continuity of the Company. On the date the Registrar of Companies in the Isle of Man issues a certificate of re-registration in respect of the Company, the Company will cease to be a company incorporated under and subject to the Act, instead the Company will be subject to the 2006 Act. It is a requirement of the 2006 Act that the Company appoint a licensed registered agent in the Isle of Man to act as registered agent to the Company. The registered agent is required to submit the Re-registration application to the Isle of Man Companies Registry on behalf of the Company. It is intended that Galileo Fund Services Limited be appointed as the registered agent of the Company. 5. COMPULSORY REDEMPTION MECHANISM In addition to changes to reflect the fact that the Company will become registered under the 2006 Act, the New Articles will permit the Directors, at their sole discretion, to redeem compulsorily Ordinary Shares on an ongoing basis, and pro rata to a Shareholder s holding of Ordinary Shares in order to return capital to Shareholders ( Compulsory Redemption ). The Compulsory Redemption of Ordinary Shares will be in volumes and on dates to be determined at the Directors sole discretion, with the amount distributed in respect of the Compulsory Redemption on each occasion representing the cash available for distribution by the Company at the relevant time. Ordinary Shares will be redeemed from all Shareholders pro rata to the existing holdings of Ordinary Shares on the relevant Redemption Date. Details of the tax consequences of the Compulsory Redemption are set out in Part 2 of this document. As and when the Directors exercise their discretion to exercise the right of Compulsory Redemption the Company will make a Redemption Announcement. The Redemption Announcement is expected to include the following details in respect of each Compulsory Redemption: the aggregate amount to be distributed to Shareholders by way of the Compulsory Redemption; the Relevant Percentage of Ordinary Shares to be redeemed (pro rata as between Shareholders as at the Redemption Record Date); the Redemption Price; a New ISIN in respect of Ordinary Shares which will continue to be traded on AIM following the relevant Redemption Date; and any additional information that the Board deems necessary in connection with the Compulsory Redemption. 7

8 Redemption of Ordinary Shares will become effective on each Redemption Date. In determining the timing of any Compulsory Redemption the Directors will take into account the amount of cash available and the costs associated with the relevant Compulsory Redemption. The Directors reserve the right (and the New Articles reflect this) to amend or alter the term of any Compulsory Redemption as they, in the light of prevailing circumstances, believe necessary or appropriate. 6. SETTLEMENT In the case of Ordinary Shares held in uncertificated form (that is, in CREST), redemptions will take effect automatically on each Redemption Date and redeemed Ordinary Shares will be cancelled. All Ordinary Shares in issue will be disabled in CREST on the relevant Redemption Date and the existing ISIN applicable to such Ordinary Shares (the Old ISIN ) (which, as at the date of this document, is 1M00BIGJR404), will expire. A new ISIN (the New ISIN ) in respect of the remaining Ordinary Shares in issue and which have not been redeemed will be enabled and available for transactions from and including the first Business Day following the relevant Redemption Date (or such other date notified to Shareholders). The New ISIN will be notified to Shareholders in the relevant Redemption Announcement. Up to and including the Redemption Date, Ordinary Shares will be traded under the Old ISIN and, as such, a purchaser of such Ordinary Shares would have a market claim for a proportion of the redemption proceeds. CREST will automatically transform any open transactions as at the Redemption Date (which may be the record date for the purposes of the redemption) into the New ISIN. In the case of Ordinary Shares held in certificated form (that is, not in CREST), redemptions will take effect automatically on each Redemption Date. As the Ordinary Shares will be compulsorily redeemed, certificated Shareholders do not need to return their share certificates to the Company in order to claim their redemption monies. Shareholders existing share certificates will be cancelled and new share certificates will be issued to each such Shareholder for the balance of their shareholding in the Company after each Redemption Date. Cheques will automatically be issued to certificated Shareholders upon the Compulsory Redemption of any of their Ordinary Shares. All Ordinary Shares that are redeemed will be cancelled with effect from the relevant Redemption Date. Accordingly, once redeemed, Ordinary Shares will be incapable of transfer. Payments of redemption monies are expected to be effected either through CREST (in the case of Ordinary Shares held in uncertificated form) or by cheque (in the case of Ordinary Shares held in certificated form) within 14 Business Days of the relevant Redemption Date, or as soon as practicable thereafter. Shareholders will be paid their redemption proceeds in U.S. Dollars. 7. ALTERNATIVE METHODS TO RETURN CASH TO SHAREHOLDERS The Directors shall continue to have the right to return cash otherwise than through Compulsory Redemptions, such as by way of tender offers to Shareholders to purchase their Ordinary Shares. In such circumstances, a tender offer will be made to Shareholders in accordance with market practice and in compliance with the AIM Rules and applicable law. Further, the Directors may determine, in their absolute discretion where they consider it to be in the best interests of Shareholders, to return cash from sales made pursuant to the New Investment Policy to Shareholders by way of dividend or any other distribution permitted by the AIM Rules and applicable law. As already mentioned should only the Resolution approving the New Investment Policy be passed then the Company will have less flexibility in terms of the manner in which it returns cash to Shareholders. 8. AIM ADMISSION AND LIQUIDATION It is the current intention of the Directors that the Company s quotation on AIM should be maintained. However, it may be (particularly if the Company has been able to return significant sums to Shareholders by way of Compulsory Redemption or otherwise) that the costs of maintaining such quotation will become disproportionate. If that is the case the Directors will consider whether it is appropriate to seek Shareholder approval to the cancellation of the AIM quotation. The Board has determined that it would be in the best interests of Shareholders for the Company s Portfolio to be realised in an orderly fashion by the Investment Manager as opposed to the Company being placed into liquidation with the realisation of the Portfolio being under the control of liquidators. However at some point in time, when substantially all of the Portfolio has been realized, it will inevitably be the case that the Company should be placed into liquidation with the approval of Shareholders. 8

9 9. RISKS ASSOCIATED WITH THE PROPOSALS The Directors believe that the risks set out below are the material risks of which they are aware. Additional risks and uncertainties not currently known to the Directors or that the Directors currently deem to be immaterial may also have an adverse effect on the Company. As the New Investment Policy is implemented, the value of the Portfolio will be reduced and concentrated in fewer holdings, and the mix of asset exposure will be affected accordingly. The Company might experience increased volatility in its Net Asset Value and/or its Ordinary Share price as a result of possible changes to the Portfolio structure following the approval of the Proposals. Investments within the Portfolio may not be realised at their fair market value, and it is possible that the Investment Manager may not be able to realise some investments at any value. Sales commissions, liquidations cost, taxes and other costs associated with the realisation of the Portfolio will reduce the cash available for distribution to Shareholders. The liquidity profile of the Portfolio is such that Shareholders may have to wait a considerable period of time before receiving all of their distributions pursuant to the New Investment Policy. During that time, the concentration of the value of the Portfolio in fewer holdings will reduce diversification and the spread of risk. This may adversely affect the Portfolio s performance. The maintenance of the Company as an ongoing AIM quoted vehicle will entail administrative, legal and listing costs, which will decrease the amount ultimately distributed to Shareholders. Although the Board intends to maintain the Company s listing for as long as the Directors believe it to be practicable. Once cancelled, the Ordinary Shares would no longer be capable of being traded on the London Stock Exchange, which would materially reduce market liquidity in the Ordinary Shares. Compulsory Redemption will be made at the Directors sole discretion, as and when they deem that the Company has sufficient assets available to make a Compulsory Redemption. Shareholders will therefore have little certainty as to when their Ordinary Shares will be redeemed. 10. EXTRAORDINARY GENERAL MEETING The EGM will be held at a.m. on 10 July 2018 at Millennium House, 46 Athol Street, Douglas, Isle of Man IM1 1JB. The Notice of the EGM is provided in Part 3 of this document. The first Resolution to be proposed at the EGM is the resolution to adopt the New Investment Policy, which will be an ordinary resolution (requiring at least 50 per cent. of the voting rights cast at the EGM to be in favour of the Resolution). The second resolution to be proposed at the EGM is the Resolution approving the Re-registration (which also includes the adoption of the New Articles), which will be a special resolution (requiring at least 75 per cent. of the voting rights cast at the EGM to be in favour of the Resolution). As already noted in paragraph 4 above the New Memorandum and the New Articles, which contain the relevant powers and authority to authorise and implement Compulsory Redemptions, are available for inspection at the Company s website at ACTION TO BE TAKEN A Form of Proxy for use at the EGM is enclosed. Whether or not you propose to attend the EGM in person, you are requested to complete and sign the Form of Proxy as soon as possible and in any event no later than a.m. on 8 July 2018 and send the completed and signed form to the Company s registrars at Millennium House, 46 Athol Street, Douglas, Isle of Man IM1 1JB. Completion and return of a Form of Proxy will not prevent you from voting in person at the EGM should you so wish. 12. RECOMMENDATION The Directors consider the Proposals to be in the best interests of the Company and Shareholders as a whole and therefore unanimously recommend that Shareholders vote in favour of the Resolutions. Dirk Van den Broeck Chairman 9

10 PART 2 TAXATION The following comments are intended only as a general guide to certain aspects of the current UK tax law and HMRC s published practice, both of which are subject to change, possibly with retrospective effect. They are of a general nature and do not constitute tax advice and apply only to Shareholders who are resident in the UK (except where indicated) and who hold their Ordinary Shares beneficially as an investment. They do not address the position of certain classes of Shareholders such as dealers in securities, insurance companies, collective investment schemes and persons acquiring their Ordinary Shares in connection with their employment. The tax consequences for each Shareholder may depend upon the Shareholder s own tax position and upon the relevant laws of any jurisdiction to which the Shareholder is subject. The tax position on any tender offer will be described in the circular accompanying any such tender offer. The Company The Directors have been advised that, following certain changes to the UK tax rules regarding alternative investment funds implemented by the Finance Act 2014 and contained in Section 363A of the Taxation (International and Other Provisions) Act 2010, the Company should not be resident in the UK for UK tax purposes. Accordingly, and provided that the Company does not carry on a trade in the UK (whether or not through a branch, agency or permanent establishment situated therein), the Company will not be subject to UK income tax or corporation tax other than on any UK source income. Compulsory Redemption UK resident individuals Any individual Shareholder who is UK resident may, depending on that Shareholder s personal circumstances, be subject to capital gains tax in respect of any gain arising on a disposal (including pursuant to a Compulsory Redemption) of their Ordinary Shares. For such individuals, capital gains are taxed at a rate of 10 per cent. (for basic rate taxpayers) or 20 per cent. (for higher or additional rate taxpayers). Individuals may, depending on their personal circumstances, benefit from certain reliefs and allowances (including an annual exemption from capital gains which is 11,300 for the tax year 2017/2018). Shareholders who are not resident in the UK for taxation purposes will not normally be liable to UK taxation on chargeable gains arising from the disposal of their Ordinary Shares unless those Ordinary Shares are held for the purposes of a trade, profession or vocation through a UK branch, agency or permanent establishment, although such Shareholders may be subject to foreign taxation depending on their own particular circumstances. Individual Shareholders who are temporarily not resident in the UK for tax purposes may be liable to capital gains tax under tax anti-avoidance legislation. UK resident companies For Shareholders who are UK resident companies, the redemption of Ordinary Shares (including pursuant to a Compulsory Redemption) may be treated as giving rise to both an income distribution and a capital disposal. The extent to which the proceeds are treat as a distribution will depend amongst other things on the amount initially subscribed for the redeemed Ordinary Shares by the original subscriber and may be affected by subsequent transactions such as conversions of the Ordinary Shares. Shareholders should seek appropriate professional advice where necessary. Shareholders within the charge to UK corporation tax which are small companies (for the purposes of UK taxation of distributions) should expect to be subject to tax on any distribution deemed to arise on the redemption of Ordinary Shares. Other Shareholders within the charge to UK corporation tax will not be subject to tax on any distribution deemed to arise on redemption of the Ordinary Shares so long as the distribution falls within an exempt category and certain conditions are met. In general, a distribution to a UK corporate shareholder which holds less than 10 per cent. Of the Ordinary Shares should fall within an exempt category. 10

11 However, the exemptions are not comprehensive and are subject to anti-avoidance rules. If the conditions for exemption are not or cease to be satisfied, or such a Shareholder elects for an otherwise exempt distribution to be taxable, the Shareholder will be liable to corporation tax on any distribution deemed to arise on redemption of the Ordinary Shares. Based on the existing practice of HM Revenue & Customs, the part of the proceeds that is not treated as an income distribution should be treated as consideration for a disposal of the shares for a Shareholder within the charge to UK corporation tax. This may, depending upon the Shareholder s circumstances and subject to any available exemption or relief (such as an indexation allowance), give rise to a chargeable gain or an allowable loss for the purposes of UK corporation tax. Offshore Fund Rules The treatment described above is based on any gain arising on a disposal of a Shareholder s Ordinary Shares not being taxed as income under the offshore fund rules which apply for the purposes of UK tax legislation. Under current law, if the Company (or any class of shares) were to be treated for UK taxation purposes as an offshore fund, gains on disposals of Ordinary Shares realised by a Shareholder would be taxable as income and not as income and not as capital gains. Dividends Significant changes have been made to the income tax treatment of dividends in the UK with effect from 6 April 2016, with the dividend tax credit abolished and replaced with a nil rate of income tax on the first 5,000 of dividend income in a tax year (the Nil Rate Amount ). Any dividend income received by a UK resident individual Shareholder in respect of the Ordinary Shares in excess of the Nil Rate Amount will be subject to income tax at a rate of 7.5 per cent. to the extent that it is within the basic rate band, 32.5 per cent. to the extent that it is within the higher rate band and 38.1 per cent. to the extent that is within the additional rate band. The Government announced in the Spring Budget 2017 that it would reduce the Nil Rate Amount to 2,000 from April Dividend income that is within the Nil Rate Amount counts towards an individual s basic or higher rate limits - and will therefore affect the level of savings allowance to which they are entitled, and the rate of tax that is due on any dividend income in excess of the Nil Rate Amount. In calculating into which tax band any dividend income over the Nil Rate Amount falls, savings and dividend income are treated as the highest part of an individual s income. Stamp duty No UK stamp duty or stamp duty reserve tax ( SDRT ) will be payable by the Shareholder on a Compulsory Redemption. Shareholders who are subject to tax in a jurisdiction other than the UK or who are in any doubt as to the potential tax consequences of the Proposals for their Ordinary Shares are strongly recommended to consult their own professional advisers without delay. 11

12 PART 3 TERRA CAPITAL PLC (Incorporated and registered in the Isle of Man with registered no c) NOTICE OF EXTRAORDINARY GENERAL MEETING Notice is given that an Extraordinary General Meeting of Terra Capital Plc (the Company ) will be held at Millennium House, 46 Athol Street, Douglas, Isle of Man IM1 1JB at a.m. on 10 July 2018 for the purpose of considering and, if thought fit, passing the following resolutions of which resolution 1 will be proposed as an ordinary resolution and resolution 2 will be proposed as a special resolution: ORDINARY RESOLUTION 1. THAT in substitution for the existing investment policy of the Company the investment policy of the Company shall be that the Company shall cease to make any new investments and shall realise its portfolio of investments in an orderly manner and then return the net proceeds to Shareholders as soon as is practicable. 2. THAT: SPECIAL RESOLUTION (a) (b) (c) (d) (e) the Company be re-registered as a company incorporated under the Companies Act 2006 (the 2006 Act ); upon re-registration of the Company as a company incorporated under the 2006 Act, the memorandum of association complying with section 149(2) of the 2006 Act in the form initialled by the Chairman of the meeting (the Memorandum ) and the articles of association in the form initialled by the Chairman of the meeting (the Articles of Association ) be adopted as the memorandum and articles of association of the Company in substitution for and to the exclusion of the existing memorandum and articles of association; any variation to the rights attaching to the Ordinary Shares in the Company pursuant to the reregistration of the Company under the 2006 Act and the adoption of the Memorandum and Articles of Association, and in particular the right for the Company to redeem the Ordinary Shares, be approved; Galileo Fund Services Limited be appointed the first registered agent of the Company and be authorised to make the application to the Registrar of Companies for the re-registration of the Company as a company incorporated under the 2006 Act; and the Directors be authorised to carry out all actions necessary to complete the Company s reregistration under the 2006 Act. By order of the Board Ian Dungate Company Secretary 15 June 2018 Registered Office: Millennium House 46 Athol Street Douglas Isle of Man IM1 1JB 12

13 Notes 1. The Company, pursuant to Regulation 22 of the Uncertificated Securities Regulations 2005 or 2006 (as appropriate) (Isle of Man), specifies that only those members registered in the register of members of the Company as at a.m. on 8 July 2018 (or in the event that the meeting is adjourned, on the register of members 48 hours before the time of any adjournment meeting) shall be entitled to attend or vote at the meeting in respect of the Ordinary Shares registered in their name at that time. Changes to entries on the register of members after a.m. on 8 July 2018 (or, in the event that the meeting is adjourned, on the register of members of the Company less than 48 hours before the time of any adjourned meeting) shall be disregarded in determining the rights of any person to attend or vote at the meeting. 2. A member entitled to attend and vote at the meeting may appoint a proxy to attend and, upon a poll, vote instead of him. A proxy need not be a member of the Company. 3. A form of proxy is enclosed. If you do not intend being present at the meeting please complete and return it so as to reach the Company s registrar s at Millennium House, 46 Athol Street, Douglas, Isle of Man IM1 1JB no later than 48 hours before the meeting. The return by a member of a fully completed form of proxy will not preclude any such member from attending in person and voting at the meeting. 13

14 Perivan Financial Print