Circular Publication & Shareholder Meeting Notices
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13 October 2025
FAIR OAKS INCOME LIMITED
(the "Company")
(Incorporated in Guernsey under The Companies (Guernsey) Law, 2008, as amended, with registered number 58123 and registered as a Registered Closed-ended Collective Investment Scheme with the Guernsey Financial Services Commission)
PUBLICATION OF CIRCULAR AND NOTICES OF SHAREHOLDER MEETINGS
Introduction
Further to the announcement on 30 September 2025 regarding the Board's intention to propose amended liquidity provisions (the "Liquidity Measures"), the Company announces that it has today published a circular (the "Circular") setting out recommended proposals to implement these provisions, including amendments to the Company's articles of incorporation and a resolution for the continuation of the Company as currently constituted.
The Circular contains notices convening the two shareholder meetings to be held on 31 October 2025.
Overview of the Proposals
In summary, the Proposals provide for:
· Liquidity Measures - 2021 Shareholders will be offered the opportunity, every four years (or more frequently), to realise up to an aggregate of 20% of their 2021 Shares at the then-prevailing net asset value, less associated costs.
· Continuation Resolution - The Board proposes to remove the continuation provisions in the Existing Articles, whereby a continuation resolution is scheduled to take place in 2028, and instead provide Shareholders with the opportunity to vote on the continuation of the Company during the Extraordinary General Meeting.
· Exchange Opportunity - Qualified Shareholders that do not wish to extend their investment in the Company will be offered an exchange opportunity to request for their 2021 Shares to be redeemed for a direct holding of limited partnership interests in Master Fund III.
Benefits associated with the Proposals
The Directors consider that the Proposals will offer the following benefits to Shareholders:
· more cost-effective method of providing periodic liquidity opportunities, without the need for a less liquid, long-maturity realisation share class;
· enhanced optionality when considering new portfolio investments, with the ability to call, refinance or reset without the current maturity constraints; and
· continued benefit of discount control measures, in addition to the liquidity option and continuation vote provisions, through the continuation of the Company's share buyback programme and the Investment Adviser's commitment to re-invest 25% of its fees if the share price trades at a discount to the Net Asset Value.
Additional information regarding the Proposals is set out below. Shareholders should read the whole of the Circular and, in particular, the letter from the Chair, which contains the recommendation from the Board that Shareholders vote in favour of the Resolutions to be proposed at the EGM, and Part 2 of the Circular which details the principal amendments to the Existing Articles.
A copy of the Circular (incorporating the Notices of Class Meeting and Extraordinary General Meeting) will be available for inspection on the Company's website at www.fairoaksincome.com and on the National Storage Mechanism from the date of the Circular.
Capitalised terms used in this announcement shall have the same meanings given to them in the Circular unless otherwise defined herein.
Expected Timetable
|
Publication of this Circular and the Notices of the Meetings |
13 October 2025 |
|
Latest time and date for receipt of blue Forms of Proxy for use at the Class Meeting |
10.00 a.m. on 29 October 2025 |
|
Latest time and date for receipt of white Forms of Proxy for use at the Extraordinary General Meeting |
10.15 a.m. on 29 October 2025
|
|
Class Meeting |
10.00 a.m. on 31 October 2025 |
|
Extraordinary General Meeting |
10.15 a.m. on 31 October 2025 |
|
Results of the Meetings announced |
31 October 2025 |
Notes:
(i) The times and dates set out in the timetable above and mentioned throughout this Circular are indicative only and may be adjusted by the Company without further notice. Any changes will be notified to Shareholders through an RIS.
(ii) References to times in this Circular are to Guernsey time unless otherwise stated.
LEI: 2138008KETEC1WM5YP90
For further information:
Fair Oaks Income Limited
Email: contact@fairoaksincome.com
Fair Oaks Capital Limited
Investor Relations
DDI: +44 (0) 20 3034 0400
Email: ir@fairoakscap.com
Apex Fund and Corporate Services (Guernsey) Limited
Email: fairoaksgrp@apexgroup.com
Deutsche Numis
Nathan Brown, Investment Banking
DDI: +44 (0) 20 7547 0569
Email: n.brown@dbnumis.com
Panmure Liberum
Chris Clarke, Investment Banking
DDI: +44 (0) 20 3100 2190
Email: chris.clarke@liberum.com
Fair Oaks Income Limited
Fair Oaks Income Limited is a registered closed-ended investment company incorporated in Guernsey. The Company was admitted to trading on the Specialist Fund Market of the London Stock Exchange (now the Specialist Fund Segment of the Main Market of the London Stock Exchange) on 12 June 2014.
The investment policy of the Company is to invest (either directly and/or indirectly through FOIF II LP and FOMC III LP) in US and European CLOs or other vehicles and structures which provide exposure to portfolios consisting primarily of US and European floating-rate senior secured loans and which may include non-recourse financing.
ADDITIONAL INFORMATION
PART 1 - LETTER FROM THE CHAIR
1 Introduction
On 30 September 2025, the Board announced, following extensive engagement with 2021 Shareholders, its intention to propose amended liquidity provisions (the "Liquidity Measures") in respect of the 2021 Shares, alongside the proposed extension of the life of FOMC III LP ("Master Fund III"), through which the Company invests.
Master Fund III was established in 2021 to allow shareholders of the Company to continue their investment in the Company following the end of FOIF II LP's ("Master Fund II") commitment period. Those shareholders who did not wish to extend the life of their investment in the Company by participating in Master Fund III elected to have their Shares redesignated as Realisation Shares, which continued to participate solely in Master Fund II. A similar reorganisation process also took place in 2017.
As Master Fund III approached the end of its commitment period, the Company undertook an extensive shareholder consultation exercise and the Board was very encouraged by Shareholders' continued commitment to the Company's investment proposition. The Board requested that Fair Oaks Capital Limited (the "Investment Adviser") advise as to the appropriate structure for the Company going forward in the context of this Shareholder support and the status of the CLO (collateralised loan obligation) market.
The Investment Adviser's analysis highlighted that the CLO market has evolved considerably since the Company's launch, and the Board and Investment Adviser believe that the evolution of the CLO market over the past few years would make an evergreen structure the optimal framework for Master Fund III. With CLO investments having become longer term structures, often being reset and extended ("reset"), the Investment Adviser believes that this has transformed CLO equity investing from a finite life strategy into one where extending the life of seasoned portfolios is both cost-efficient and value-accretive. Under the current fixed-life Master Fund III model, investors would be constrained by fund maturities, portfolio transfers, and the recurring costs of establishing new share classes. By contrast, the Investment Adviser believes that an evergreen structure would allow Master Fund III to enhance returns, by (i) having the ability to fully use resets, (ii) avoiding the premature liquidation of attractive portfolios, (iii) avoiding the bid/offer costs of liquidating/acquiring portfolios and (iv) benefitting from lower fees from underwriting banks and other service providers. The Board and the Investment Adviser believe that this flexibility has the potential to enhance returns for Master Fund III, and that it would directly align with current market developments and should position Master Fund III (and accordingly, the Company) to maximise opportunities from the growing reset activity in CLOs.
Therefore, instead of establishing a new fixed maturity master fund and creating another (relatively illiquid) realisation share class, the Board proposes to consent to an amendment of the terms of Master Fund III such that Master Fund III will become an evergreen structure which is more suited to the Investment Adviser's assessment of the prevailing CLO market, subject to Shareholder approval of the Proposals as set out below.
The purpose of this document is to provide Shareholders with details of the proposals to (i) amend the Existing Articles, (ii) vote on the 2025 Continuation Resolution and (iii) approve the redesignation of the 2021 Shares as ordinary shares of nil par value in the capital of the Company ("Ordinary Shares") (the "Proposals"), to convene the Meetings for the purpose of seeking the required Shareholder approvals, and to set out the reasons why the Directors are recommending that Shareholders vote in favour of the Proposals at the Meetings.
2 Proposals
Pursuant to the Liquidity Measures, the Board proposes to provide 2021 Shareholders with an opportunity, every four years (or more frequently), to realise up to an aggregate of 20 per cent. of the outstanding 2021 Shares in issue at the time at the then-prevailing net asset value (less associated costs).
Should the Proposals be approved by Shareholders, the Company will also consent to amend the terms of Master Fund III's current limited partnership agreement to (i) change it to an evergreen structure, (ii) change the name of Master Fund III from FOMC III LP to FOMC LP and (iii) remove the current restrictions around investing in derivatives, as shall be more particularly prescribed under an amended and restated limited partnership agreement. If adopted, such amended and restated limited partnership agreement will also provide Fair Oaks Income Fund (GP) Limited, as the general partner of Master Fund III, the ability to offer the Company (in its capacity as a limited partner of Master Fund III) an equivalent liquidity opportunity to redeem up to 20 per cent. of its then-current limited partnership interests every four years (or more frequently). As a consequence of Master Fund III becoming an evergreen structure, Master Fund III will cease to charge carried interest and will instead charge an annual performance fee (subject to a high water mark) on equivalent economic terms (i.e. in that the fee rate and hurdle will remain the same).
The Board also proposes, in light of the proposed Liquidity Measures, to remove the continuation provisions contained in article 46 of the Existing Articles, whereby a continuation resolution is currently scheduled to take place on or before 12 June 2028 (the "2028 Continuation Resolution"). The Board instead believes that Shareholders should be given an opportunity to vote now on a resolution proposing that the Company continues as a registered closed-ended collective investment scheme (the "2025 Continuation Resolution") and therefore will propose the 2025 Continuation Resolution during the Extraordinary General Meeting. Additionally, the Board is committed to consulting Shareholders on the proposal of further continuation resolutions in the future in the event that the number of 2021 Shareholders electing to exercise each realisation opportunity is significantly in excess of the 20 per cent. realisation limit.
Further, if any Shareholder with a holding of at least 15 million 2021 Shares (a "Qualified Shareholder") does not wish to extend its investment in the Company, the Company intends to offer such Qualified Shareholders an upfront one-off exchange opportunity (the "Exchange Opportunity"), under which they may elect to request for their 2021 Shares to be redeemed for in specie consideration in full (or in part, provided that the partial redemption/exchange request is in respect of at least 15 million 2021 Shares), where such Qualified Shareholder will receive a direct holding of limited partnership interests in Master Fund III. The Exchange Opportunity is subject to such Qualified Shareholder having been determined by the general partner of Master Fund III (in its discretion) to have satisfied the requirements relating to its admission as a limited partner, including, without limitation, know-your-client and anti-money laundering onboarding, investor suitability checks, adherence to the terms of Master Fund III's amended and restated limited partnership agreement and any other legal or regulatory requirements, and further provided that the Company is satisfied that the election does not constitute a breach of any relevant securities legislation in any jurisdiction. Further details of the Exchange Opportunity are expected to be announced shortly after the Meetings, subject to the Proposals being approved by Shareholders at the Meetings.
No changes are proposed to the Company's dividend or share buyback policies, nor to the Investment Adviser's commitment to re-invest 25 per cent. of its fees into 2021 Shares if the Shares are trading at a discount to the Net Asset Value.
Finally, it is proposed that the Shareholders approve by way of ordinary resolution the change of name of the 2021 Shares (currently defined in the Existing Articles as the ordinary shares of nil par value in the capital of the Company) and redesignating the 2021 Shares as ordinary shares of nil par value in the capital of the Company (the "Ordinary Shares") (the "Redesignation" and the "Redesignation Ordinary Resolution"). Should the Proposals be approved by Shareholders, it is expected that the name of Master Fund III will change from FOMC III LP to FOMC LP at the same time as when Master Fund III's amended and restated limited partnership agreement is adopted.
To allow for (i) the Liquidity Measures, (ii) the removal of the 2028 Continuation Vote from the Existing Articles, (iii) the Exchange Opportunity and (iv) the Redesignation, certain amendments are required to be made to the Existing Articles.
3 Summary of the proposed changes to the Existing Articles
Set out below is a summary of the principal amendments to the Existing Articles. This summary is intended only to highlight the principal amendments which the Directors consider are likely to be of interest to Shareholders. It is not intended to be exhaustive and should not be relied upon to identify all amendments or issues which may be of interest to Shareholders. Therefore, this summary is not a substitute for Shareholders' reviewing the full terms of the New Articles for themselves.
· A new article 9.4.1 shall be inserted providing the Board with the ability and discretion to offer a redemption opportunity to the 2021 Shareholders from time to time whereby 2021 Shareholders may elect to redeem up to an aggregate of 20 per cent. of the 2021 Shares in issue at that time at the then-prevailing net asset value of the 2021 Shares less associated costs. As noted above, the Company's expectation and intention is that the 2021 Shareholders will be offered such realisation opportunity every four years (or more frequently).
· A new article 9.4.2 shall be inserted providing the Board with the ability to offer Shareholders with an opportunity to elect to have their Shares in the relevant Share class redeemed in consideration for the in specie transfer to them of assets of the Company as will be notified to such Shareholders at the time of any such offer.
· Article 46 of the Existing Articles shall be removed in its entirety.
· Subject to the successful passing of the Redesignation Ordinary Resolution (as defined above), references to "2021 Shares" in the Existing Articles shall be replaced with references to "Ordinary Shares" in the New Articles.
Your attention is drawn to Part 2 of this document, which sets out the principal amendments proposed in the New Articles. The full form of the proposed New Articles (in the form of a comparison document showing the changes between the proposed New Articles and the Existing Articles) will be available for inspection on the Company's website at www.fairoaksincome.com, on the FCA's National Storage Mechanism and at the Meetings for at least 15 minutes before and during the Meetings.
4 2025 Continuation Resolution
As noted earlier, it is proposed that the existing provisions regarding the continuation of the Company as set out under article 46 of the Existing Articles will be removed and that the 2025 Continuation Resolution will instead be proposed as an ordinary resolution at the Extraordinary General Meeting. The 2025 Continuation Resolution is conditional on the passing of Resolution 1 at the Extraordinary General Meeting to approve the amendments to the Existing Articles and the adoption of the New Articles.
If the 2025 Continuation Resolution is not passed, then the Directors shall draw up proposals for the Company, including but not limited to alternative liquidity provisions, for submission to Shareholders as a special resolution at an extraordinary general meeting to be convened by the Board within ninety (90) days on the date on which the 2025 Continuation Resolution was not passed.
5 Benefits associated with the Proposals
The Directors consider that the Proposals will offer the following benefits to Shareholders:
· a more cost-effective method of providing periodic liquidity opportunities, without the need to launch and administer an additional master fund and listed realisation share class;
· the introduction of a periodic liquidity option available to all holders of 2021 Shares, without the need for a less liquid, long-maturity share class;
· a structure that will allow for enhanced optionality when considering new portfolio investments, with the ability to call, refinance or reset without the current maturity constraints. This could also include the ability to act as a risk-retention holder in CLO structures; and
· the continued benefit of discount control measures, in addition to the liquidity option and continuation vote provisions, through the continuation of the Company's share buyback programme and the Investment Adviser's commitment to re-invest 25 per cent. of its fees if the share price trades at a discount to the Net Asset Value.
6 Considerations associated with the Proposals
Shareholders should have regard to the following when considering the Proposals:
· if Shareholders do not approve the amendments to the Articles at the Meetings, the 2025 Continuation Resolution will not be proposed;
· the offerings of the Exchange Opportunity and the Liquidity Measures are subject to the Resolutions being approved by Shareholders at the Meetings;
· whilst it is the expectation of the Board (and the Board has every intention) to offer the Liquidity Measures to 2021 Shareholders every four years (or more frequently) as mentioned in this document (subject to the Resolutions being approved by Shareholders at the Meetings), the ability of the Company to offer each such realisation opportunity to 2021 Shareholders is dependent upon the general partner of Master Fund III providing the Company an equivalent liquidity opportunity at Master Fund III-level. Whilst the Company fully expects that it will be provided equivalent liquidity opportunities by Master Fund III every four years (or more frequently), the occurrence and/or exact timing of each such opportunity cannot be absolutely guaranteed; and
· Shareholders who are unsure about the tax consequence of the Exchange Opportunity should consult their own professional tax advisers without delay.
7 Class Meeting and the Extraordinary General Meeting
The Directors are convening the Extraordinary General Meeting to seek the approval of Shareholders for the Proposals. The Extraordinary General Meeting will be held at 1 Royal Plaza, Royal Avenue, St Peter Port, Guernsey GY1 2HL on 31 October 2025 at 10.15 a.m., at which the following Resolutions will be put to Shareholders to:
· Resolution 1: as a special resolution of the Company, to adopt the New Articles, as described in paragraph 3 of this Part 1;
· Resolution 2: as an ordinary resolution of the Company, to approve the 2025 Continuation Resolution; and
· Resolution 3: as an ordinary resolution of the Company, to change the name of the 2021 Shares and redesignate them in the New Articles as Ordinary Shares of the Company.
Notice of the Extraordinary General Meeting is set out at the end of this document, at which the Resolutions will be proposed. The full text of the Resolutions is set out in the notice of the Extraordinary General Meeting at the end of this document.
Resolution 1 will be proposed as a special resolution, and Resolutions 2 and 3 will be proposed as ordinary resolutions.
A special resolution requires a majority of at least 75 per cent. of the votes cast by members entitled to vote and present in person or by proxy to be cast in favour in order for it to be passed.
An ordinary resolution requires a simple majority of the votes cast by members entitled to vote and present in person or by proxy to be cast in favour in order for it to be passed.
Resolutions 2 and 3 are conditional upon the passing of Resolution 1. If Resolution 1 is not passed, Resolutions 2 and 3 will not be proposed.
In order to ensure that a quorum is present at the Extraordinary General Meeting, it is necessary for at least two Shareholders entitled to vote to be present, whether in person or by proxy (or, if a corporation, by a representative).
Resolution 1 will result in the varying of the rights of the 2021 Shares and the Realisation Shares. Under the Existing Articles, the rights of a class or group of shares in the Company may only be varied with the sanction of a special resolution passed at a separate meeting of the holders of such class or group of shares (or with the consent in writing from such holders of at least 75 per cent. in value of the issued shares of that class). Currently, the Company has two classes of shares in issue, being the 2021 Shares and the Realisation Shares. Therefore, the Class Meeting will be held at 1 Royal Plaza, Royal Avenue, St Peter Port, Guernsey GY1 2HL on 31 October 2025 at 10.00 a.m., at which the holders of the 2021 Shares and the holders of the Realisation Shares respectively will be asked to consent to the passing of Resolution 1 to be proposed at the Extraordinary General Meeting and any variation of their class rights which might arise under or as a result of the passing and carrying into effect of such Resolution. Notice of the Class Meeting is set out at the end of this document.
8 Action to be taken in respect of the Meetings
Forms of proxy for Shareholders are enclosed as follows:
· for the 2021 Shareholders and the Realisation Shareholders to vote at the Class Meeting, a blue form of proxy; and
· for all eligible, voting Shareholders to vote at the Extraordinary General Meeting, a white form of proxy.
Please submit your vote by proxy electronically using MUFG Corporate Markets' Investor Centre app or by accessing the web browser at https://uk.investorcentre.mpms.mufg.com/ or in hard copy form. In order to be valid, proxy appointments must be submitted using the Investor Centre or in hard copy form to MUFG Corporate Markets at PXS 1, Central Square, 29 Wellington Street, Leeds LS1 4DL, in each case, by no later than 10.00 a.m. on 29 October 2025 in respect of the Class Meeting, 10.15 a.m. on 29 October 2025 in respect of the Extraordinary General Meeting, or 48 hours before any adjourned meeting.
If you hold your Shares in uncertificated form (i.e. in CREST), you may appoint a proxy for the Extraordinary General Meeting by completing and transmitting a CREST Proxy Instruction in accordance with the procedures set out in the CREST Manual issued by Euroclear so that it is received by the Registrar (under CREST Participation ID RA10) by no later than 10.00 a.m. on 29 October 2025 in respect of the Class Meeting or 10.15 a.m. on 29 October 2025 in respect of the Extraordinary General Meeting. The time of receipt will be taken to be the time from which the Registrar is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST.
If you are an institutional investor, you may also be able to appoint a proxy electronically via the Proxymity platform, a process which has been agreed upon by the Company and approved by the Registrar. For further information regarding Proxymity, please go to www.proxymity.io.
Shareholders are strongly urged to appoint the Chairman of the relevant Meeting as their proxy to vote on their behalf. If you appoint someone else (other than the Chairman of the relevant Meeting) to be your proxy, this may result in your vote not being counted if your proxy is unable to attend the relevant Meeting.
The appointment of a proxy will not prevent Shareholders from attending the Meetings and voting in person should they so wish.
Shareholders are invited to direct any questions to the Company Secretary by emailing fairoaksgrp@apexgroup.com.
9 Recommendation
The Board considers that the Proposals are in the best interests of the Company and its Shareholders as a whole. Accordingly, the Board unanimously recommends that Shareholders vote in favour of the Resolutions to be proposed at the relevant Class Meeting and the Extraordinary General Meeting.
PART 2 - EXTRACT OF THE PRINCIPAL AMENDMENTS IN THE NEW ARTICLES
The following article shall be inserted:
"9.4 Subject at all times to the provisions of the Law and these Articles and at the sole discretion of the Directors the Company may:
9.4.1 from time to time offer holders of Ordinary Shares (the "Ordinary Shareholders") the opportunity to redeem in aggregate up to 20 per cent. of the Ordinary Shares at the prevailing net asset value of the Ordinary Shares (less any associated costs) calculated at the time of any such redemption ("Liquidity Redemption");
9.4.2 offer certain holders of shares the opportunity to redeem their shares in specie in consideration for the in specie transfer to them of assets of the Company as will be notified to such holders at the time of any such offer."
The following article shall be removed in its entirety:
"46. CONTINUATION VOTE
The Company shall convene an extraordinary general meeting in 2028 but on or before 12 June 2028 to propose to the Members as an Ordinary Resolution that the Company continues as a registered closed-ended collective investment scheme (the "Continuation Resolution"). If a Continuation Resolution is passed by the Members, a further Continuation Resolution will be proposed on the nearest Business Day falling every 2 years thereafter at an extraordinary general meeting to be convened by the Board in accordance with these Articles and the Law until such Continuation Resolution is not passed. If a Continuation Resolution is not passed, the Board shall draw up proposals for the winding-up of the Company for submission to the Members as a Special Resolution at an extraordinary general meeting to be convened by the Board in accordance with these Articles and the Law for a date not more than ninety (90) days after the date of the extraordinary general meeting at which such Continuation Resolution was not passed."
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Companies
Fair Oaks Income Limited 2021 Shs NPV (FAIR)Fair Oaks Income Limited Realisation Shs NPV (FA17)
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