Statement re Tender Offer and Proposals
1 August, 2008
The Throgmorton Trust PLC
NOTICE OF EGM IN RELATION TO TENDER OFFER TO PURCHASE UP TO 40 PER CENT OF THE
SHARES IN ISSUE WITH A MIX AND MATCH FACILITY, CHANGE IN THE COMPANY'S
INVESTMENT POLICY, AUTHORITY TO MAKE REGULAR TENDER OFFERS AND FURTHER
BUY-BACKS OF THE SHARES, RENEWAL OF DISAPPLICATION OF PRE-EMPTION RIGHTS,
CHANGE TO THE ARTICLES OF ASSOCIATE
On 4 June 2008, the Board of The Throgmorton Trust PLC ("Throgmorton" or the
"Company") announced its intention to appoint a new investment manager,
BlackRock (which appointment took affect on 1 July 2008). The Company also
announced proposals to introduce an up to 40 per cent tender offer, regular
tender offers and change in investment policy. Today, a circular containing the
formal terms of the proposed tender offer with a mix and match facility,
changes in the Company's investment policy, authority to make regular tender
offers and further buy-backs, renewal of disapplication of pre-emption rights
and changes to the Articles of Association (together the "Proposals") together
with an explanation of the background to the Proposals and details of how
Shareholders who wish to exercise their rights can tender Shares for purchase
has been sent to Shareholders. This circular also contains the notice of the
Extraordinary General Meeting at which the resolutions on the Proposals will be
proposed.
Summary of the Proposals
- Provide for a Tender Offer for up to 40 per cent. of the Company's
issued share capital on a tender pool basis with a 2 per cent. exit
charge (such 40 per cent. threshold being subject to increase to the
extent that Incoming Investors through the Mix and Match Facility
agree to acquire Shares that are tendered by Tendering Shareholders);
- Provide for a change to the Company's investment policy to have a
target gross underlying equity exposure of approximately 30 per cent.
of its net assets invested in a portfolio of Contracts for
Differences (CFDs) and/or comparable equity derivatives to provide
both long and short exposure;
- Provide the Board with powers, following the Tender Offer, to
implement regular tender offers on a twice annual basis, subject to
annual Shareholder approval, and to buy back Shares in the market;
- Provide for changes to the Company's Articles of Association to
reflect recent changes in legislation; and
- Provide for the renewal of the authority to allot equity securities
(as defined in section 94 of the Act) on a non pre-emptive basis and
extension of such authority to permit the transfer on a non
pre-emptive basis of equity securities held by the Company in
treasury.
Shareholder approval for these Proposals will be sought at the EGM on 11
September 2008. The Tender Offer will be carried out in accordance with the
terms and conditions set out in the Circular. Shareholder approval will also be
sought at the EGM in accordance with the Act (i) granting the Directors
authority to repurchase up to 14.99 per cent. of the Company's issued share
capital, (ii) granting the Directors authority to implement the first two of
the regular twice yearly tender offers proposed for up to 20 per cent. of
shares then in issue on each occasion, (iii) approving the proposed changes to
the Company's Articles of Association, and (iv) approving the renewal of the
authority to allot equity securities, including the addition of authority to
transfer equity securities held in treasury, on a non-pre-emptive basis. In
addition, in accordance with the Listing Rules, the Board is seeking approval
at the EGM of the proposed change to the Company's investment policy.
The Directors recommend that Shareholders vote in favour of the resolutions to
be proposed that the EGM, as the Directors intend to do in respect of their own
beneficial holdings.
Background to the Proposals
Following a proposal from Gartmore Growth Opportunities Plc regarding a
possible merger with the Company (which proposal the Board has subsequently
rejected), the Board conducted an extensive review of the Company's options
going forward. In conducting its review the Board focused on selecting an
experienced investment manager with strong capabilities in the smaller
companies sector, and on its stated intentions of introducing robust discount
controls together with the need to ensure greater liquidity in the Shares As a
result of the review the Company appointed BlackRock as the Company's new
investment manager on 1 July 2008, replacing AXA Framlington as investment
manager. During discussions with certain of the Company's principal
Shareholders, a number of them expressed a wish to realise all, or part, of
their investment in the Company. In structuring the Proposals the Board has
sought to provide, through the Tender Offer, an exit for those Shareholders who
wish to exit in the short term. For those Shareholders with a longer investment
horizon, the Board is seeking to introduce robust discount controls together
with greater liquidity in the Company's shares, and to provide Shareholders
with the opportunity to benefit from the best aspects of modern portfolio
management by allowing the Company to have a proportion of its assets invested
in short positions.
Tender Offer
The key elements of the Tender Offer are as follows:
- the Company will conduct a tender offer for up to 40 per cent. of the
Company's issued share capital;
- Shareholders will be entitled to have their Basic Entitlement of 40
per cent. of their holding of Shares accepted within the Tender
Offer;
- investors will be invited to acquire Shares from Tendering
Shareholders, through UBS, pursuant to the Mix and Match Facility;
- requests from Shareholders to sell Further Shares, in excess of their
Basic Entitlement, will be satisfied to the extent that there is
Unutilised Tender Capacity and that there are sufficient Mix and
Match Shares;
- Shareholders may tender none, any or all of their Shares;
- the Tender Offer will only be open to Shareholders on the register at
the close of business on 5 August 2008 (the Record Date) in respect
of Shares continually held from that date until the Tender Closing
Date; and
- the Tender Price per Share will be the Final Tender Offer Asset Value
of the Tender Pool divided by the total number of Exit Shares; and
- the price ("Investment Price") per Mix and Match Share will be a
price equivalent to the NAV per Share at the Calculation Date less 5
per cent.
Shareholders (other than Shareholders in Restricted Territories) on the
Register on the Record Date will be invited to tender for sale some or all
(subject to the overall limits of the Tender Offer) of their Shares to UBS who
will, as principal, purchase at the Tender Price the Shares validly tendered
(subject to the overall limits of the Tender Offer).
UBS will sell any Mix and Match Shares to Incoming Investors on or before 22
September 2008 for cash at the Investment Price. UBS will sell the remaining
Shares validly tendered to the Company at the Tender Price by way of an
on-market transaction once all of the assets in the Tender Pool have been
realised, which is expected to be not later than the end of January 2009.
Tendering Shareholders will receive the full Tender Price for any such Shares
(including Mix and Match Shares) only once all of the assets in the Tender Pool
have been realised (and may receive one or more interim distributions before
such time). All transactions (save for the sale of Mix and Match Shares to
Incoming Investors) will be carried out on the London Stock Exchange.
Mix and Match Facility
UBS will, prior to the tender closing date, invite investors to purchase, at
the Investment Price, Shares which UBS will buy from Tendering Shareholders. In
the opinion of the Company's manager, it is likely that the disposal costs of
the underlying equities of the Tender Pool would amount to at least 5 per cent
of their market valuation. To the extent that the aggregate Investment Price
paid by Incoming Investors reduces the assets in the Tender Pool required to be
disposed of these disposal costs will be avoided. It is the Board's intention
that the benefits of this cost saving be shared between exiting Shareholders
and Incoming Investors. Accordingly, it is proposed the Investment Price will
be set at a price equivalent to the NAV per Share at the Calculation Date less
5 per cent.
The Company has agreed to buy back from UBS up to 40 per cent. of the Company's
issued share capital. UBS will acquire from Shareholders at the Tender Price
any Tendered Shares which Incoming Investors have agreed to acquire pursuant to
the Mix and Match Facility, including any Shares tendered in excess of such 40
per cent. threshold, and will sell such shares on to Incoming Investors at the
Investment Price. UBS will sell the remaining shares validly tendered to the
Company at the Tender Price, subject to there being sufficient Tender Capacity.
Tender Pool
All of the Company's assets and liabilities will following the valuation, be
allocated between the Continuing Pool and the Tender Pool.. The Tender Pool
assets will be realised and any liabilities settled and the net cash proceeds
paid to Shareholders who successfully tendered their Shares (save that the cash
paid into the Tender Pool for the Mix and Match Shares shall not be subject to
a realisation process).
The Tender Pool will bear the costs and expenses relating to the Tender Offer
(other than those which will be borne by BlackRock by way of a management fee
waiver), including the costs of the Tender Offer, the costs of realising the
assets in the Tender Pool, commissions and the amount of stamp duty or stamp
duty reserve tax payable on the repurchase by the Company of the Shares
acquired from UBS. Shareholders who successfully tendered will receive a pro
rata share of the net proceeds of the Tender Pool, less associated costs and a
2 per cent. exit charge. It is expected that the assets of the Tender Pool will
be realised such that final cash payments can be made to the Exiting
Shareholders not later than the end of January 2009. It is expected that the
first interim distribution from the Tender Pool will be made before the end of
September 2008 (and thereafter, there may be further interim distributions).
Change in Investment Policy
Outlined below is the Company's proposed new investment policy, the
implementation of which is subject to Shareholder approval in accordance with
the Listing Rules
The objective of the Company remains as providing Shareholders with capital
growth and an attractive total return from investment predominantly in UK
smaller companies which are listed on the Official List and admitted to trading
on the main market of the London Stock Exchange and are traded on AIM.
In addition to holding a conventional portfolio of UK small and mid cap
equities, the Company will also devote a percentage of its assets to a
portfolio of CFDs and/or comparable equity derivatives which will enable the
Company's managers to have both long and short exposure to its target investee
companies.
In order to maximise risk adjusted returns, it is proposed that this CFD
portfolio will have a target gross underlying equity exposure of approximately
30 per cent. of the net assets of the Company. Under normal circumstances, the
Board expects the direct equity portfolio to comprise 100 per cent. of the
Company's net assets. Hence the Company will, going forward, typically have
gross exposure of 130 per cent. of net assets, albeit that some of this
exposure will represent short positions.
The performance of the Company is measured by reference to the Hoare Govett
Smaller Companies Index plus AIM (excluding investment companies) (the
"Index"). The Index covers companies with a market capitalisation of up to
approximately £1.3 billion. The Company will normally invest in companies with
a market capitalisation up to this level. The Manager may invest in companies
outside the Index without restriction subject to the limits noted below,
including stocks traded on AIM which are considered to be attractive investment
opportunities.
The risks of investing in smaller companies are managed by investment in a
diversified portfolio of companies. The equity portfolio will usually comprise
at least 75 stocks and the CFD portfolio will comprise approximately 60
positions. In addition, the Board has an operating guideline that not more than
50 per cent. of the equity portfolio by value should be invested in AIM stocks.
Under the taxation rules for investment trusts, the maximum amount which may be
invested in any one company is 15 per cent. of the Company's investments.
However, such concentration is unlikely to occur and in practice it would be
unusual for more than 5 per cent. to be invested in one company.
The Company may not invest more than 10 per cent., in aggregate, of the value
of its total assets in other listed closed-ended investment funds except in the
case of investment in closed-ended investment funds which themselves have
published investment policies to invest no more than 15 per cent. of their
total assets in other listed closed-ended investment funds, in which case the
limit is 15 per cent.
The Company's Articles of Association allow it to borrow up to a sum equal to
twice the amount paid up on the issued share capital for the time being of the
Company and the amounts standing to the credit of the reserves of the Company
and its subsidiaries. The Company has issued, or guaranteed the issue by a
wholly-owned subsidiary, of two listed Debenture Stocks: £19,118,645 of 12 5/16
per cent. Debenture Stock 2010 (£17.16 million of which is outstanding) and £15
million of 11 5/16 per cent. Guaranteed Debenture Stock 2018 (all of which is
outstanding).The Debenture Stocks are intended to be repaid prior to the EGM,
as announced on 31 July 2008. In addition the Company has a short term
overdraft facility of £10 million which can be used for trading activity. The
Board's policy that net gearing (ie borrowings less cash) should not exceed 20
per cent. of gross assets will remain unchanged, assuming the Debenture Stocks
are repurchased.
The Company's Performance and Prospects
The Board and the Manager are nervous about the prospects for both the UK and
US economies in the short term. The subprime crisis is impairing the ability
and willingness of the banks to lend. UK consumers are spending less and
retailers, leisure companies and housebuilders are feeling the impact most
acutely. Share prices of these companies have already fallen sharply in
anticipation of the bad news, but operational gearing, and in some cases also
financial gearing, for these companies is high; a relatively modest fall in
sales can lead to a large fall in earnings. The Manager considers that earnings
expectations are still too high, and cannot see why these stocks will
outperform in the near term.
Spending by UK corporates is also likely to come under pressure. Staffing
companies look vulnerable, as do some information technology software and
services companies, especially those selling into weak sectors such as
investment banking.
Some companies exposed to UK Government expenditure could face cutbacks.
Government debt is high and stamp duty and certain other tax receipts could
fall short of expectations. The Manager expects the Government to delay or
cancel non-essential, non-contractual spending where it can. The Manager still
considers that those companies with long term contractual revenues should fare
reasonably well.
UK exporters look more interesting; with sterling weak, many can expect to
benefit from currency upgrades. Some also have material revenues from emerging
markets, where growth looks set to remain fairly strong, and from sectors with
good fundamentals at present such as oil & gas and mining.
The aerospace sector has proved relatively defensive so far this year, although
the risks have been increasing of late as the higher oil price threatens the
viability of many civil airlines, and a new US President could look to reduce
military spending.
Resources prices remain very high. The Manager generally favours stocks that
are in production and with good production growth forecasts.
Pessimism is pervasive at present and markets have already fallen a long way.
Whilst the Manager still expects a large number of profit warnings from more
cyclical companies, the smaller companies universe is large and it is now able
to find a number of high quality growth companies which it considers to be
undervalued.
The Board and the Manager also expect continuing volatility and that this will
provide the Company with good opportunities for the proposed CFD portfolio,
both short and long.
Further regular tender offers
The Directors believe it is important to Shareholders that Shares do not trade
at a significant discount to their prevailing Net Asset Value. The Board
believes this may be achieved in two ways: through the use of further regular
tender offers and the active use of share buy-back powers. The Board
anticipates that the combination of the aggressive discount protection
mechanism offered by regular tender offers together with the facility to buy
back Shares will serve to maintain the discount at a consistently low level.
Subject to certain limitations (set out below) and the Directors exercising
their discretion to operate the tender offers, Shareholders may, as part of the
ongoing tender offer programme proposed, tender for purchase all or part of
their holdings of Shares for cash.
Such regular tender offers will be carried out on a tender pool basis. The
tender pool assets will be realised and the liabilities settled and the net
cash proceeds paid to Shareholders who successfully tendered their Shares. The
tender pool will bear the costs and expenses relating to the relevant tender
offer. Shareholders who successfully tendered will receive a pro rata share of
the net proceeds of the tender pool, less associated costs and a 2 per cent.
exit charge. The price at which Shares will be purchased will be the Net Asset
Value of the tender pool, once the tender pool has been realised, less the
costs and expenses of the tender offer and an exit charge of 2 per cent.,
divided by the number of Shares purchased in the tender offer. Subject to the
Directors' discretion being exercised on any relevant occasion, the tender
offers will be effected such that the relevant tender offer calculation dates
will be 28 February and 31 August of each year (or the succeeding business day)
commencing on 28 February 2009. It is the Directors' current intention that
each tender offer will be restricted to a maximum of 20 per cent. in aggregate
of the Shares in issue as at the relevant tender offer record date (excluding
any Shares held in treasury). Requests to tender Shares in excess of the limit
set by the Directors in respect of a particular tender offer will be scaled
back pro rata in proportion to the excess amount tendered. Implementation of
tender offers will be subject to prior Shareholder approval. Shareholder
approval by way of a special resolution will be sought at the EGM to grant the
Directors authority to implement the first two tender offers, should they
decide to exercise their discretion to do so. Renewal of these repurchase
authorities will be sought at each annual general meeting of the Company.
Repurchase of Shares
The Directors will consider repurchasing Shares in the market if they believe
it to be in Shareholders' interests and as a means of correcting any imbalance
between supply of and demand for the Shares.
Any purchase of Shares by the Company will be in accordance with the Articles
and the Listing Rules in force at the time. In accordance with the Act, market
purchases of Shares may only be made out of the proceeds of a fresh issue of
shares made for the purpose of the repurchase or out of distributable profits.
Shareholder approval will be sought by way of a special resolution at the EGM
granting the Directors authority to repurchase up to 14.99 per cent. of the
Company's issued share capital during the period expiring on the earlier
conclusion of the Company's next annual general meeting. Renewal of this
buy-back authority will be sought at each annual general meeting.
Purchases of Shares will only be made through the market at prices (after
allowing for costs) below the prevailing Net Asset Value per Share and
otherwise in accordance with guidelines established from time to time by the
Board. Under the current Listing Rules, the maximum price that may be paid by
the Company on the repurchase of any Shares pursuant to a general authority is
the higher of (i) an amount equal to 105 per cent. of the average of the
closing mid-market price of Shares (as derived from the Daily Official List of
the London Stock Exchange) for the five business days immediately preceding the
date of purchase (ii) the price of the last independent trade; and (iii) the
highest current independent bid at the time of purchase. The minimum price will
not be below the nominal value of 5p.
Renewal of disapplication of pre-emption rights
The EGM notice includes a resolution for the renewal of the authority granted,
pursuant to section 95 of the Act, at the annual general meeting of the Company
held on 19 March 2008, and extending such authority to allow for the transfer
on a non-pre-emptive basis of equity securities (as defined in section 94 of
the Act) which are held by the Company in treasury. The effect of the
resolution would be to permit the Directors to enter into offers or
arrangements during a period expiring at the conclusion of the next annual
general meeting of the Company or, if earlier, on the date which is fifteen
months after the date of the passing of the resolution, for the allotment for
cash of the Company's equity securities, or the sale of equity securities which
are held by the Company in treasury from time to time, to any person up to an
aggregate nominal amount of £343,129, equal to 5 per cent. of the nominal
amount of the Company's current issued equity share capital. This proposal is
designed merely to renew (and extend, by including reference to treasury
shares) an existing authority and the Directors have no present plans to allot
any equity securities pursuant to the renewed authority.
Amendments to the Articles of Association
The proposed changes to the Articles of Association as set out in the circular
and in Appendix A of this announcement, give the Directors authority to approve
situations of conflicts and include other provisions to allow conflicts of
interest to be dealt with in a similar way to the current position. Shareholder
approval for such changes is being sought by way of special resolution at the
EGM.
The Board intends to seek Shareholder approval in 2009 for further amendments
to the Articles of Association to implement or reflect changes in company law
brought about by the Companies Act 2006.
Treasury Shares
Shares repurchased pursuant to the Tender Offer, any of the ongoing regular
tender offers or the general authority to buy back Shares, may be held in
treasury.
The Company is seeking approval of the Shareholders at the EGM to be held on 11
September 2008 to grant the Directors the authority to reissue a limited number
of Shares from treasury on a non-pre-emptive basis, and a resolution to renew
such authority will again be put to Shareholders at the next annual general
meeting of the Company.
Both the repurchase for cancellation and the use of treasury shares should
assist the Manager in the objective of providing a discount management
mechanism and enhancing the Net Asset Value of the Shares. This will provide
the Directors with additional flexibility to manage the Company's investment
portfolio.
The Directors have determined the following policies in respect of the
Manager's discretion in the use of treasury shares:
- in the event that treasury shares are not reissued to the market
within twelve months of their date of purchase they will
automatically be cancelled;
- the Manager will not repurchase Shares into treasury at a discount to
Net Asset Value of less than 2 per cent. on the date of purchase;
- the number of treasury shares that may be held for reissue at any one
time will be li1mited to 10 per cent. of the shares in issue; and
- treasury shares will only be reissued at a price equal to or in
excess of the Net Asset Value per Share.
Debentures
The Company announced on 31 July 2008 its offer to repurchase some or all of
its listed Debenture Stocks, the £19,118,645 12 5/16 per cent. Debenture Stock
2010 (£17.16 million of which is outstanding) and the £15 million 11 5/16 per
cent. Guaranteed Debenture Stock 2018 (all of which is outstanding).The
Debenture Stocks represent expensive debt for the Company and, as the Company's
issued share capital has decreased as a result of share buybacks, and is
expected to decrease further as a result of the Tender Offer and subsequent
semi-annual tender offers and/or share buybacks, the Debenture Stocks
constitute greater, and thus relatively more expensive, gearing for the
Company.
A full redemption of either of the Debenture Stocks requires the approval by
extraordinary resolution of the stockholders of each of the Debenture Stocks
and meetings with stockholders to give such approval have been convened for 26
August 2008. It is proposed that the Debenture Stocks accepted for repurchase
are repaid at a margin above the yield of the reference gilt for each of the
Debenture Stocks. The proposal to redeem the Debenture Stocks is being
accompanied by a tender offer by the Company to repurchase any or all of the
outstanding Debenture Stocks so that, if the relevant extraordinary resolution
is not passed, the Company has the option of repaying some but not all of the
outstanding stock. Stockholders who successfully tender their stock early and/
or lodge early proxy votes in favour of the relevant extraordinary resolution
will be entitled to a small premium on the redemption price.
Subject to the requisite approval by stockholders, the Debenture Stocks
accepted for repurchase will have been repaid in full by the time of the EGM to
approve the Proposals. As a result, the gross assets of the Company will be
reduced by the amount required to redeem the Debenture Stocks.
Extraordinary General Meeting
The Proposals are subject to Shareholder approval. A notice convening an EGM to
be held at 33 King William Street, London, EC4R 9AS on 11 September 2008 at
11.30 a.m. is set out in the shareholder circular. At this meeting a single
special resolution will be proposed to give effect to all the Proposals other
than the proposal to amend the Articles of Association, for which a separate
special resolution will be proposed at the EGM.
Shareholders will find enclosed within the circular a Form of Proxy for use at
the EGM. Shareholders do not need to tender their Shares in the Tender Offer to
be able to attend and vote at the EGM. Whether or not Shareholders plan to
attend the EGM, they are urged to complete and return their Form of Proxy by
post to Capita Registrars, Proxy Department, The Registry, 34 Beckenham Road,
Beckenham Road, Kent BR3 4TU as soon as possible but in any event so as to
arrive not later than 11.30am on 9 September 2008.
Recommendation
The Board considers that the Proposals are in the best interests of the Company
and its Shareholders as a whole. Accordingly the Board recommends unanimously
that Shareholders vote in favour of the Resolutions to be proposed at the EGM.
The Board has received financial advice from UBS in relation to the Tender
Offer and the proposed subsequent tender offers. In providing this advice UBS
has relied on the Directors' commercial assessment of the Proposals.
The Directors intend to vote in favour or procure to vote in favour of the
Resolutions at the EGM in respect of their beneficial holdings of Shares which,
in aggregate, amount to 57,705 Shares representing approximately 0.04 per cent.
of the Company's issued share capital.
The Directors do not intend to tender any of their own Shares. The Directors
make no recommendation to Shareholders as to whether or not they should tender
their Shares in the Tender Offer. Whether or not Shareholders decide to tender
their Shares will depend, amongst other factors, on their view of the Company's
prospects and their own individual circumstances, including their own tax
position.
Indicative timetable
Record date for the Tender Offer 5pm on 5 August
Latest time and date for receipt of Form of Proxy for EGM 11.30am on 9
September
Latest time and date for applications under the
Mix and Match Facility 3pm on 9 September
Tender closing date 3pm on 9 September
Extraordinary General Meeting 11.30am on 11 September
Calculation date close of business on 11 September
Results of EGM and Tender Offer announced 11 September
Document viewing facility
Copies of the circular dated 1 August relating to the Proposals will be
submitted to the UK Listing Authority later today, and will be available for
inspection at the UK Listing Authority's Document Viewing Facility, which is
situated at:
Financial Services Authority
25 The North Colonnade
Canary Wharf
London
E14 5HS
Enquiries
BlackRock 020 7743 2178
Jonathan Ruck Keene
UBS Limited 020 7567 8000
John Humphrey
Joe Winkley
Definitions within this announcement have the same meaning as those in the
circular.
UBS Limited ("UBS") are acting exclusively for the Company and no one else in
relation to the matters described in this announcement and will not be
responsible to anyone other than Throgmorton for providing the protections
afforded to clients of UBS or for giving advice in relation to this
announcement or any transaction or arrangement referred to herein.
This announcement does not constitute an offer or form any part of any offer or
invitation to sell or issue or purchase or subscribe for any shares in
Throgmorton.
The value of investments and the income derived from them may fall as well as
rise and investors may not recoup the original amount invested in the Company.
Past performance is not indicative of future performance. There is no assurance
that the investment objectives of the Trust will actually be achieved.
APPENDIX A
Proposed changes to the Articles of Association of The Throgmorton Trust PLC
If the appropriate resolution is passed at the EGM, the articles of association
of the Company (the "Articles") would be amended as follows:
1 By deleting the existing 1 in the introduction to the Articles and
substituting therefore the following new introduction 1:
"1. Neither the Regulations in Table A applicable to the Company under any
former enactment relating to companies and Table A set out in the Schedule to
The Companies (Tables A to F) Regulations 1985 nor the amendments to such
Regulations set out in the Companies (Tables A to F) (Amendment) Regulations
2007 and the Companies (Tables A to F) (Amendment) (No.2) Regulations 2007
shall apply to the Company."
2 By inserting the following definition after the definition of "the Act" in 2
of the introduction to the
Articles:
"the 2006 Act the Companies Act 2006 (to the extent in force);"
3 By deleting "and" after "the Act" in the definition of "Statutes" and
inserting the following wording:
", the 2006 Act and, where the context requires,"
4 By replacing the reference to Article 142(B) in existing Article 17 to
"Article 144(B)".
5 By inserting the following new Article 108(A) after Article 107 and referring
to the existing Article 108 as "Article 108(B)":
"108 (A) This Article 108 and Article 109 shall only apply until the
commencement in force of Sections 175 to 177, 180(1), (2) (in part) and 4(b)
and 181(2) and (3) and 182 to 187 of the 2006 Act."
6 By inserting the following new Articles 110 and 111 after Article 109 and
updating the numbering of the remaining articles accordingly:
"Conflicts of Interest
110
(A) This Article 110 and Article 111 shall only apply on and from the
commencement in force of Sections 175-177, 180(1), (2) (in part) and 4(b) and
181(2) and (3) and 182 to 187 of 2006 Act.
(B) Provided that Article 111(B) and, where appropriate, Article 111(A) is
complied with, a Director, notwithstanding his office:
(i) may be a party to or otherwise be interested in any transaction,
arrangement or proposal with the Company or in which the Company is otherwise
interested;
(ii) may hold any other office or place of profit under the Company (except
that of Auditor or of auditor of a subsidiary of the Company) in conjunction
with the office of Director and may act by himself or through his firm in a
professional capacity for the Company, and in any such case on such terms as to
remuneration and otherwise as the Board may arrange, either in addition to or
in lieu of any remuneration provided for by any other Article;
(iii) may be a director or other officer of, or employed by, or a party to any
transaction or arrangement with or otherwise interested in, any company
promoted by the Company or in which the Company is otherwise interested or as
regards which the Company has any powers of appointment; and
(iv) shall not be liable to account to the Company for any profit, remuneration
or other benefit realised by any office or employment or from any transaction,
arrangement or proposal or from any interest in any body corporate, and no such
transaction, arrangement or proposal shall be liable to be avoided on the
grounds of any such interest or benefit nor shall the receipt of any such
profit, remuneration or any other benefit constitute a breach of his duty under
2006 Act or under the law not to accept benefits from third parties.
111
(A) (i) The Board may authorise any matter proposed to it in accordance with
these Articles which would, if not so authorised, involve a breach by a
Director of his duty to avoid conflicts of interest under the 2006 Act,
including, without limitation, any matter which relates to a situation (a
`relevant situation') in which a Director has, or can have, an interest which
conflicts, or possibly may conflict, with the interest of the Company or the
exploitation of any property, information or opportunity, whether or not the
Company could take advantage of it, but excluding any situation which cannot
reasonably be regarded as likely to give rise to conflict of interest. The
provisions of this Article do not apply to a conflict of interest arising in
relation to a transaction or arrangement with the Company.
(ii) Any such authorisation will be effective only if (a) the relevant
situation arose on or after the date on which Section 175 of 2006 Act came into
force; (b) any requirement as to a quorum at the meeting at which the matter is
considered is met without counting the Director in question or any other
interested Director; and (c) the matter was agreed to without their voting or
would have been agreed to if their votes had not been counted.
(iii) The Board may (whether at the time of the giving of the authorisation or
subsequently) make any such authorisation subject to any limits or conditions
it expressly imposes but such authorisation is otherwise given to the fullest
extent permitted.
(iv) The Board may vary or terminate any such authorisation at any time.
(B) (i) A Director shall declare the nature and extent of his interest in a
relevant situation within Article 111(A)(i) to the other Directors.
(ii) A Director who is aware that he is in any way interested in a proposed
transaction or arrangement with the Company must declare the nature and extent
of his interest to the other Directors.
(iii) A Director who is aware that he is in any way interested in a transaction
or arrangement that has been entered into by the Company must declare the
nature and extent of his interest to the other Directors, unless the interest
has already been declared under Article 111(B)(ii).
(iv) The declaration of interest must be made either at a meeting of the
Directors, or by general or specific notice to the Directors in accordance with
the 2006 Act.
(v) If a declaration of interest made pursuant to this Article 111(B) proves to
be, or becomes, inaccurate or incomplete, a further declaration must be made.
(vi) Any declaration of interest required by Article 111(B)(ii) must be made
before the Company enters into the transaction or arrangement or, in the case
of an interest which arose before the date on which Section 177 of 2006 Act
came into force, at the first meeting of the Directors at which the question of
entering into the proposed transaction or arrangement is taken into
consideration.
(vii) Any declaration of interest under Article 111(B)(iii) must be made as
soon as reasonably practicable. Failure to comply with this requirement does
not affect the underlying duty to make the declaration of interest.
(viii) For the purposes of Article 111(B)(i), (ii) and (iii) a Director need
not declare an interest which arose on or after the date on which Section 177
of 2006 Act came into force:
(a) if it cannot reasonably be regarded as likely to give rise to a conflict of
interest; or
(b) if, or to the extent that, the other Directors are already aware of it; or
(c) if, or to the extent that, it concerns terms of his service contract that
have been or are to be considered by a meeting of the Directors; or
(d) by a committee of the Directors appointed for the purpose under these
Articles.
(C) (i) Subject to 111(C)(ii), a Director shall be under no duty to the Company
with respect to any information which he obtains or has obtained otherwise than
as a Director of the Company and in respect of which he has a duty of
confidentiality to another person. In particular, the Director shall not be in
breach of the general duties he owes to the Company under the 2006 Act because
he fails:
(a) to disclose any such information to the Board or to any Director or other
officer or employee of the Company; and/or
(b) to use or apply any such information in performing his duties as a Director
of the Company.
(ii) To the extent that the relationship between a Director and a person to
whom he owes a duty of confidentiality gives rise to a conflict of interest or
possible conflict of interest, Article 111(C)(i) applies only if the existence
of that relationship has been authorised by the Board pursuant to Article 111
(C).
(D) Where the existence of a Director's relationship with another person is
authorised by the Board pursuant to Article 111(A) (and subject to any limits
or conditions imposed pursuant to Article 111(A)(iii)) and his relationship
with that person gives rise to a conflict of interest or possible conflict of
interest, the Director shall not be in breach of the general duties he owes to
the Company under the 2006 Act because he:
(a) absents himself from meetings of the Board at which any matter relating to
the conflict of interest or possible conflict of interest will or may be
discussed or from the discussion of any such matter at a meeting or otherwise;
and/or
(b) makes arrangements not to receive documents and information relating to any
matter which gives rise to the conflict of interest or possible conflict of
interest sent or supplied by the Company and/or makes arrangements for such
documents and information to be received and read by a professional adviser,
for so long as he reasonably believes such conflict of interest or possible
conflict of interest subsists.
(E) The provisions of Articles 111(C) and 111(D) are without prejudice to any
equitable principle or rule of law which may excuse the Director from:
(a) disclosing information in circumstances where disclosure would otherwise be
required under these Articles; or
(b) attending meetings or discussions or receiving documents and information as
referred to in Article 111(D), in circumstances where such attendance or
receiving such documents and information would otherwise be required under
these Articles.
(F) A Director shall not vote on, or be counted in the quorum in relation to,
any resolution of the
Board or of a committee of the Board concerning any arrangement, transaction or
proposal in which he has an interest which may reasonably be regarded as likely
to give rise to a conflict of interest and, if he purports to do so, his vote
shall not be counted, but this prohibition shall not apply and the Director may
vote (and be counted in the quorum) in respect of any resolution concerning any
one or more of the following matters:
(a) any transaction or arrangement in which he is interested by means of an
interest in shares, debentures or other securities or otherwise in or through
the Company;
(b) the giving of any guarantee, security or indemnity in respect of money lent
or obligations incurred by him or any other person at the request of or for the
benefit of the Company or any of its subsidiary undertakings;
(c) the giving of any guarantee, security or indemnity in respect of a debt or
obligation of the Company or any of its subsidiary undertakings for which he
himself has assumed responsibility in whole or in part under a guarantee or
indemnity or by the giving of security;
(d) the giving of any other indemnity where all other Directors are also being
offered indemnities on substantially the same terms;
(e) any proposal concerning an offer of shares or debentures or other
securities of or by the
Company or any of its subsidiary undertakings in which offer he is or may be
entitled to participate as a holder of securities or in the underwriting or
sub-underwriting of which he is to participate;
(f) any proposal concerning any other body corporate in which he does not to
his knowledge have an interest (as the term is used in Part 22 of the 2006 Act)
in one per cent. or more of the issued equity share capital of any class of
such body corporate (calculated exclusive of any shares of that class in that
company held as treasury shares) nor to his knowledge hold one per cent. or
more of the voting rights which he holds as shareholder or through his direct
or indirect holding of financial instruments (within the meaning of the
Disclosure and Transparency Rules of the Financial Services Authority) in such
body corporate;
(g) any proposal relating to an arrangement for the benefit of the employees of
the Company or any of its subsidiary undertakings which does not award him any
privilege or benefit not generally awarded to the employees to whom such
arrangement relates;
(h) any proposal concerning insurance which the Company proposes to maintain or
purchase for the benefit of Directors or for the benefit of persons who include
Directors; or
(i) any proposal concerning the funding of expenditure for the purposes
referred to in Articles 105 and 106 or doing anything to enable such Director
or Directors to avoid incurring such expenditure.
(G) A Director shall not vote or be counted in the quorum on any resolution of
the Board or committee of the Board concerning his own appointment (including
fixing or varying the terms of his appointment or its termination) as the
holder of any office or place of profit with the Company or any company in
which the Company is interested. Where proposals are under consideration
concerning the appointment (including fixing or varying the terms of
appointment or its termination) of two or more Directors to offices or places
of profit with the Company or any company in which the Company is interested,
such proposals may be divided and a separate resolution considered in relation
to each Director. In such case each of the Directors concerned (if not
otherwise debarred from voting under these Articles) shall be entitled to vote
(and be counted in the quorum) in respect of each resolution except that
concerning his own appointment.
(H) If any question arises at any meeting as to whether an interest of a
Director (other than the Chairman's interest) shall reasonably be regarded as
likely to give rise to a conflict of interest or as to the entitlement of any
Director (other than the Chairman) to vote or be counted in a quorum, and such
question is not resolved by his voluntarily agreeing to abstain from voting or
being counted in the quorum, such question shall be referred to the Chairman of
the meeting. The Chairman's ruling in relation to the Director concerned shall
be final and conclusive except in a case where the nature or extent of the
interest of the Director concerned (so far as it is known to him) has not been
fairly disclosed to the Board.
(I) Subject to the provisions of the 2006 Act and to the Listing Rules of the
UK Listing Authority, the Company may by ordinary resolution suspend or relax
any of the provisions of Articles 111(A) to 111(H), either generally or in
respect of any particular matter, or ratify any transaction not duly authorised
by reason of a contravention of these Articles.
(J) For the purpose only of Articles 110 and 111(A)-(H):
(i) a conflict of interest includes conflict of interest and duty and a
conflict of duties;
(ii) an interest means a direct or an indirect interest; and
(iii) an interest, transaction or arrangement of which a Director is aware
includes an interest, transaction or arrangement of which that Director ought
reasonably to be aware."
7 By replacing the reference to Article 155 in existing Article 154(G) with
"Article 157".
8 By replacing the reference to Article 154 in existing Article 155 with
"Article 156".
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