Result of Meeting & Special Dividend Announcement

Downing Strategic Micro-Cap IT PLC
03 April 2024

Downing Strategic Micro-Cap Investment Trust plc

3 April 2024


For immediate release.


Downing Strategic Micro-Cap Investment Trust plc (the "Company" or "DSM")

LEI Number: 213800QMYPUW4POFFX69

Results of General Meeting and Announcement of £13.98 million Special Dividend


Executive Summary


At the General Meeting of the Company held today, 56.65 per cent. of the votes cast (including discretionary) were in favour of Resolution 1. As Resolution 1 was proposed as a special resolution (75 per cent.) it was not carried. The Company cannot, therefore, implement its proposed B Share Scheme in order to return cash to Shareholders in accordance with its investment objective and policy.


Other than shares controlled by Milkwood Capital Limited ("Milkwood"), a new investor opposed to the managed wind-down of the Company, less than 0.28 per cent. of the votes cast voted against Resolution 1. Given 56.65 per cent. of the votes cast (including discretionary) were in favour of Resolution 1, showing continued support from the Shareholders for the managed wind-down of the Company and the distribution of cash proceeds, the Board has decided today to declare a special dividend of 30 pence per share (the "First Special Dividend"), equivalent to £13.98 million, with a further special dividend of at least £3.7 million (which would equate to 8 pence per share) expected to be made by 30 June 2024 (together with the First Special Dividend, the "Special Dividends"). The timing of, and reasons for, the Special Dividends are set out below.   


Chairman Hugh Aldous commented: "As a Board we are committed to doing the right thing for all our Shareholders. We believe that the B Share Scheme offered a tax efficient and cost-effective way of giving effect to the wishes as overwhelmingly expressed by our Shareholders on 28 February. However, given today's result and the fact that our preferred proposal has been blocked by a new Shareholder with an agenda of its own, we believe that the correct thing to do is to press ahead with a dividend to Shareholders which, while not our preferred route, has the merit of fulfilling the mandate we were given to wind-down the trust and return cash proceeds forthwith."




As set out in the circular to Shareholders dated 8 March 2024 (the "Circular"), the Resolutions proposed at the General Meeting sought to facilitate the implementation of a B Share Scheme by the Company in order to return cash to Shareholders. The B Share Scheme was to be implemented following the change of the Company's investment policy to that of a managed wind-down of the Company's investment portfolio and the return of cash proceeds to Shareholders to invest as they wish. The investment policy was approved by Shareholders at the general meeting of the Company held on 28 February 2024 (the "February General Meeting") at which approximately 86 per cent. of the votes cast (amounting to approximately 41 per cent. of the Company's issued share capital) voted in favour of adopting the investment policy.

All Resolutions at today's General Meeting were voted on by way of a poll and the results of the poll are shown below. In summary, Shareholders representing approximately 58.09 per cent. of the Company's issued share capital cast votes in respect of Resolution 1, of which 56.65 per cent. were in favour (including discretionary) and 43.35 per cent were against. Accordingly, although Resolution 1 received the support of more than 50 per cent. of the Shareholders who cast votes, as it was proposed as a special resolution (which requires a majority of 75 per cent. of the votes cast to be cast in favour in order to pass) it was not carried. Likewise, despite more than 50 per cent. of the votes cast being in favour of Resolutions 2 and 3, both these Resolutions failed to carry as ordinary resolutions as their passing was conditional on the passing of Resolution 1.


In the light of this result, and in order to give immediate effect to the plan overwhelmingly supported by Shareholders at the February General Meeting to adopt the managed wind-down investment policy  and return cash to Shareholders, the Board has decided to make a distribution to Shareholders by way of the First Special Dividend of 30 pence per share, equivalent to £13.98 million, with a further special dividend of at least £3.7 million (which would equate to 8 pence per share) expected to be made by 30 June 2024.  

The First Special Dividend will be paid on 26 April 2024 to Shareholders on the Company's register of members at close of business on 12 April 2024. The Company's shares will go ex-dividend on 11 April 2024.


Between the February General Meeting and today's General Meeting two institutional Shareholders, who were supportive of the Company's managed wind-down, and who had voted in favour of adopting that investment policy, sold their holdings to Milkwood, an investor opposed to the managed wind-down, and hence to the B Share Scheme. 

The Board has been made aware that Milkwood is seeking to secure the future management of the Company's portfolio for itself. Since the February General Meeting, Milkwood has built up an approximately 28 per cent. shareholding in the Company which allowed it to block the implementation of the proposed B Share Scheme. This shareholding compromises the position of the Company's other Shareholders who had voted in favour of the managed wind-down, but to whom Milkwood has not offered a cash exit. As a proportion of votes cast at today's General Meeting (excluding Milkwood's acquired stake), the votes in favour of returning capital through the B Share Scheme amounted to 99.72 per cent. This indicates that there remains a significant body of Shareholders who still wish the Company to return cash to them in accordance with the Company's investment policy. The Board believes that it has a duty to find a way to permit those Shareholders to exit for cash and to invest that cash as they wish.

The Special Dividends

Cash realisation by DSM's Investment Manager has proceeded well. As announced on 20 March 2024, the level of cash within the Company's portfolio against the Company's net asset value ("NAV") as at 6 March 2024 (being the NAV referred to throughout the Circular) had increased to over 40 per cent. Were it not for the opposition of Milkwood to the B Share Scheme, it had been anticipated that the Company would have been in a position to undertake an issue and redemption of B Shares on or around 4 April 2024, and to return cash representing at least 50 per cent. of the Company's NAV as at 6 March 2024 to Shareholders by 30 June 2024.


Given approximately 86 per cent. of the votes cast at the February General Meeting voted in favour of adopting the managed wind-down investment policy, the Board remains committed to act in the interests of all Shareholders which it believes are best served by returning cash proceeds to Shareholders. Today's vote means the proposed distribution by way of the B Share Scheme cannot proceed, and in order to return cash to Shareholders by the most practicable means the Board has today declared the First Special Dividend. Further realisations are already in hand, or are anticipated over the forthcoming quarter, which should allow a further special dividend of at least 8 pence per share by 30 June 2024.  Payment of the Special Dividends will meet the Board's existing projection to return cash representing at least 50 per cent. of the Company's NAV as at 6 March 2024 by 30 June 2024 and should amount to approximately 60 per cent, of the Company's NAV as at 2 April 2024.


The Board notes that the return of the cash proceeds by means of dividend may be less tax efficient for certain individual Shareholders who do not hold their shares in a tax wrapper (for example, a SIPP or an ISA). The Board encourages Shareholders to consult with their tax adviser to consider what, if any, steps they should take in advance of the ex-dividend date for the payment of the Special Dividends.


Following the payment of the Special Dividends, the Board intends to consult with as many Shareholders as possible in respect of the future of the Company.


Cost reductions


The Board further commits to the following measures to reduce administration costs in line with the reduction in the size of the Company as cash proceeds are paid out to Shareholders: (i) a reduction of the size of the Board, with one Director stepping down; and (ii) a reduction of fees paid to each remaining Director by £5,000 per annum, both with effect from 1 May 2024. The Board is committed, in principle, to further reductions in costs as and when appropriate given the progress of its cash return plan.  


The Board has also agreed with the Investment Manager that the Investment Manager's capital return fee will now be set at 0.5 per cent. of the total value of distributions made during the Company's managed wind-down, instead of its former proposed sliding scale. This change will incentivise the Investment Manager to realise value for Shareholders over the whole of the managed wind-down period.


Results of General Meeting



Votes For (including discretionary)

% (of votes cast excl. withheld)

Votes Against

% (of votes cast excl. withheld)

Total votes






Votes Withheld

1.   To adopt the New Articles of Association in substitution for, and to the exclusion of, the existing articles of association of the Company









2.   To authorise the Directors to capitalise from time to time any sums standing to the credit of any reserve of the Company including the special reserve and to apply such sums in paying up in full up to 100,000,000 B Shares








3.   To authorise the Directors to issue B Shares from time to time up to an aggregate nominal amount of £100,000,000 on a pro rata basis to the holders of Ordinary Shares by way of bonus issues









Shareholders are entitled to one vote per Ordinary Share. Votes withheld are not a vote in law and are therefore not counted in the calculation of the percentages of the votes cast for and against a resolution. Where Shareholders appointed the Chair as their proxy with discretion as to voting, their votes were cast for all Resolutions and their shares have been included in the "votes for" column.


The total number of Ordinary Shares in issue is 46,608,486. The Company has one non-redeemable preference management share of 1 penny in issue. The non-redeemable preference management share does not carry any voting rights. Each Ordinary Share carries a right to one vote at a general meeting of the Company. Therefore, the total number of voting rights in the Company is 46,608,486 votes.


The full text of the Resolutions can be found in the Notice of General Meeting contained in the Circular. The Circular is available for viewing on the National Storage Mechanism at and on the Company's website at


Defined terms used in this announcement have the meanings given to them in the Circular unless the context otherwise requires.


For further information please contact:



Hugh Aldous                             tel: 020 7416 7780


Dickson Minto Advisers LLP

Douglas Armstrong                   tel: 020 7649 6823


Media Contacts - Garfield Advisory

Andrew Garfield                           tel: 07974 982337

Jason Nisse                                tel: 07769 688618



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