Downing Planned Exit VCT 2 - G Shares - The Tax Shelter Report

DOWNING 

PLANNED EXIT VCT 2 PLC 

2013 

SECURITIES NOTE (INCLUDING APPLICATION FORM) 

Managed by Downing LLP

Contents 

RiskFactors 

LetterfromtheChairmanoftheCompany 

Page 

1 

2 

PartI – TheOffers 

Introduction 3 

ReasonsfortheOffers 3 

TaxationBenefitstoInvestors 4 

Income 4 

InvestmentPolicy 5 

ShareBuybackPolicy 6 

RealisationPlans 6 

Management 6 

TrackRecordoftheCompany 7 

CoInvestmentPolicy 7 

Directors 7 

Charges 8 

OtherInformation 8 

ForwardLookingStatements 9 

PartII – Taxation 10 

PartIII – FinancialInformation 11 

PartIV – Definitions 13 

PartV – AdditionalInformation 15 

PartVI – TermsandConditionsofApplication 17 

PartVII – OfferDetails&Charges 19 

NotesonApplicationForm 

ApplicationForm 

 

OfferStatistics 

 

 

InitialNAVperGShareatthecloseoftheOffers 

100.00p 

NetproceedsoftheOffers,atFullSubscription,ignoringtheoverallotmentfacility 

£25,000,000 

NumberofGSharesinissue,followingtheOffers,atFullSubscription,ignoringtheoverallotmentfacility 25,000,000 

 

IftheMinimumSubscriptionisnotreceivedby3.00p.m.on5April2013,theOfferswillbewithdrawn.Intheeventthat 

theMinimumSubscriptionisnotreceived,subscriptionmonieswillbereturnedtoInvestorswithinsevendaysof5April 

2013,attheirownrisk,withoutinterest. 

 

EarlyApplications 

InvestorswhosubmitApplicationFormsthatarereceivedandacceptedby5.00p.m.on28February2013willbenefitfrom 

the offer charges being reduced by 1% of the amount subscribed under the Offers (the cost will be met by Downing 

throughanequivalentreductioninitsPromoter’sFee).

Thisdocument,theRegistrationDocumentandtheSummary,whichtogethercomprisetheprospectus(the"Prospectus")relatingtothe 

Company,havebeenpreparedinaccordancewiththeProspectusRulesmadeundersection73Aandinaccordancewithsection84ofthe 

FinancialServicesandMarketsAct2000("FSMA")andhavebeenapprovedby,andfiledwith,theFSA. 

 

ApplicationhasbeenmadetotheUKListingAuthorityforalltheGShares,issuedandtobeissuedinthecapitaloftheCompany,tobe 

admittedtothepremiumsegmentoftheOfficialList.ApplicationwillalsobemadetotheLondonStockExchangeforalltheGShares, 

issuedandtobeissuedinthecapitaloftheCompany,tobeadmittedtotradingonitsmainmarketforlistedsecurities.Subjecttothe 

MinimumSubscriptionbeingreceivedbythen,itisexpectedthatAdmissionofthefirstallotmentofGShareswillbecomeeffective,and 

thatdealingsintheseshareswillcommence,by28March2013andinrespectofsubsequentallotmentsthereafterwithin20BusinessDays 

ofallotment. 

 

TheCompanyanditsDirectors,whosenamesappearonpage7ofthisdocument,acceptresponsibilityfortheinformationcontainedin 

thisdocument.TothebestoftheknowledgeoftheCompanyanditsDirectors(whohavetakenallreasonablecaretoensurethatsuchis 

thecase)theinformationcontainedinthisdocumentisinaccordancewiththefactsanddoesnotomitanythinglikelytoaffecttheimport 

ofsuchinformation. 

 

HowardKennedyCorporateServicesLLPisactingassponsorandDowningLLPisactingaspromoteroftheCompanyinconnectionwiththe 

Offers,andneitherofthemisadvisinganyotherpersonortreatinganyotherpersonasacustomerorclientinrelationtotheOffersor 

(subjecttotheresponsibilitiesandliabilitiesimposedbytheFSMAortheregulatoryregimeestablishedthereunder)willberesponsibleto 

anysuchpersonforprovidingtheprotectionsaffordedtotheirrespectivecustomersorclients,orforprovidingadviceinconnectionwith 

theOffers. 

 

TheCompanyandtheDirectorsconsenttotheuseoftheProspectusandacceptresponsibilityforthecontentoftheProspectus,with 

respecttosubsequentresaleorfinalplacementofsecuritiesbyfinancialintermediaries,fromthedateoftheProspectusuntilthecloseof 

theOffers.TheOffersareexpectedtocloseon30April2013,unlesspreviouslyextendedbytheDirectors,butmaynotextendbeyond9 

January2014.Therearenoconditionsattachingtothisconsent.FinancialintermediariesmayusetheProspectusintheUK. 

 

InformationonthetermsandconditionsoftheOfferswillbegiventoInvestorsbyfinancialintermediariesatthetimethattheOffers 

areintroducedtoInvestors.AnyfinancialintermediaryusingtheProspectusmuststateonitswebsitethatitisusingtheProspectusin 

accordancewiththisconsent. 

 

DowningPlannedExitVCT2plc 

(IncorporatedinEnglandandWalesundertheCompaniesAct1985withregisterednumber05334418) 

 

OffersforSubscription 

forthe2012/13and2013/14taxyears 

ofupto25,000,000GSharesinthecapitaloftheCompany 

 

Sponsor 

Promoter 

HowardKennedyCorporateServicesLLP 

DowningLLP 

 

 

SharecapitaloftheCompanyimmediatelyfollowingtheOffers,assumingFullSubscription,ignoringtheoverallotmentfacility: 

 

 

Issuedandtobeissuedfullypaid 

Shareclass No.ofShares Nominalvalue 

AShares(ISIN:GB00B3D74M80) 10,724,029 £10,724.03 

CShares(ISIN:GB00B3D74S43) 7,131,356 £7,131.36 

DShares(ISIN:GB00B4VR3D16) 10,000,000 £10,000.00 

EShares(ISIN:GB00B4TLF407) 15,000,000 £15,000.00 

FShares(ISIN:GB00B6ZS0J90) 10,822,154 £10,822.15 

GShares(ISIN:GB00B8Y7CS47) 25,000,000 £25,000.00 

 

ThesubscriptionlistfortheOfferswillopenon10January2013andmaycloseatanytimethereafterbut,inanyevent,notlaterthan 

3.00p.m.on5April2013inthecaseofthe2012/13Offerandnotlaterthan3.00p.m.on30April2013inthecaseofthe2013/14Offer, 

unlesspreviouslyextendedbytheDirectors(buttonolaterthan9January2014).ThetermsandconditionsoftheOffersaresetouton 

pages 17 to 18 of this document and are followed by an Application Form for use in connection with the Offers. If the Minimum 

Subscription is not received by 3.00 p.m. on 5 April 2013, the Offers will be withdrawn and application monies will be returnedto 

applicantswithinsevendaysofsuchdate,attheirownrisk,withoutinterest.TheOffersarenotunderwritten. 

 

AssumingFullSubscription,thenetproceedsoftheOfferswillbe£25million.IftheOffersareoversubscribed,theymaybeincreasedat 

thediscretionoftheBoardtonomorethan£35millionintotal. 

 

Yourattentionisdrawntotheriskfactorssetoutonpage1ofthisdocument.AninvestmentintheCompanyisonlysuitableforInvestorswho 

arecapableofevaluatingtherisksandmeritsofsuchaninvestmentandwhohavesufficientresourcestobearanylosswhichmightarise. 

 

ThisdocumentshouldbereadinconjunctionwiththeSummaryandRegistrationDocument,whichmaybeobtainedfromthePromoterof 

theOffers: 


telephone:02074167780 

10LowerGrosvenorPlace 

download:www.downing.co.uk 

LondonSW1W0EN 

email:vct@downing.co.uk

RiskFactors 

 

YourcapitalisatriskifyouinvestintheCompanyandyoumaylosesomeorallofyourinvestment. 

 

The Company's business, financial condition or results could be materially and adversely affected by any of the risks 

describedbelow,innoparticularorderofpriority.Insuchcases,themarketpriceoftheGSharesmaydeclineasaresultof 

anyoftheserisksandInvestorsmayloseallorpartoftheirinvestment.Additionalrisksanduncertaintiesnotpresently 

knowntotheDirectors,orthattheDirectorscurrentlydeemimmaterial,mayalsohaveanadverseeffectontheCompany. 

TheDirectorsconsiderthefollowingtobeallthematerialrisksforpotentialInvestorsintheCompany: 

 

AlthoughitisintendedthattheCompanywillbemanagedsoastocontinuequalifyingasaVCT,thereisnoguarantee 

thatsuchstatuswillbemaintained.FailuretodosocouldresultinadversetaxconsequencesforInvestors,including 

beingrequiredtorepaythe30%incometaxrelief. 

Thelevelsandbasesofreliefsfromtaxationmaychangeandcouldapplyretrospectively.Thetaxreliefsreferredtoin 

thisdocumentarethosecurrentlyavailableandtheirvaluedependsontheindividualcircumstancesofInvestors.The 

Company'sobjectiveshavebeensetonthebasisthatallInvestorsobtain30%incometaxreliefontheirsubscriptions. 

Therefore,thisinvestmentmaynotbesuitableforInvestorswhodonotqualifyforthefull30%incometaxrelief. 

IfanyoftheCompany'sinvestmentsdonotperformtoplan,thentherecouldbeashortfallordelayinreceiptofthe 

ShareholderProceedsandhenceareductioninthereturntoGShareholders.Inaddition,ifthereisachangeinVCT 

legislation, or the interpretation of existing VCT legislation, such that the payment of Shareholder Proceeds has an 

adverseeffectontheCompany'sVCTstatusorGShareholders'VCTstatus,thensuchpaymentsmaynotbemade. 

AlthoughtheGShareswillbeListed,itishighlyunlikelythataliquidmarketintheGShareswilldevelopastheinitial 

incometaxreliefisonlyavailabletothosesubscribingfornewsharesandtheremayneverbetwocompetitivemarket 

makers.Itmay,therefore,provedifficultforGShareholderstoselltheirGShares.Inaddition,thereisnoguarantee 

thatthemarketpriceoftheGShareswillfullyreflecttheirunderlyingNetAssetValueortheabilitytobuyandsellat 

thatprice.ItshouldbenotedthatsharesheldinVCTsusuallytradeatadiscounttotheVCT'snetassetvalue. 

TheabilityoftheCompanytodisposeofinvestmentsafterfiveyearsmaybelimitedatthattimeintheeventofpoor 

prevailingeconomicconditionsand,inparticular,wherethereislimitedavailabilityoffinancetopotentialpurchasers. 

Insuchcircumstances,thepaymentofShareholderProceedscouldbedelayed. 

G Shareholders should be aware that the sale of G Shares within five years of their subscription will require the 

repaymentofsomeorallofthe30%incometaxreliefobtaineduponinvestment.Accordingly,aninvestmentinthe 

Companyisnotsuitableasashortormediumterminvestment. 

MostoftheCompany'sinvestmentsarelikelytobeincompanieswhosesecuritiesarenotpubliclytradedorfreely 

marketableandmay,therefore,bedifficulttorealise. 

InordertocomplywithVCTlegislation,theQualifyingCompanies,inwhichtheCompanywillinvestatleast70%ofits 

capitalwithinthreeyears,willgenerallybesmallcompaniesthathaveahigherriskprofilethanlargercompaniesand 

maynotproducethehopedforreturns.Accordingly,Investorscouldgetbacklessthanthefullamounttheyinvested. 

Additionally, the Qualifying Companies may also have limited trading record, and therefore, may not produce the 

anticipatedreturns. 

There is no guarantee that the Company's objectives will be met or that suitable investment opportunities will be 

identified. 

TheCompany'sabilitytoobtainmaximumvaluefromitsinvestments(forexample,throughtheirsale)maybelimited 

bytherequirementsoftherelevantVCTlegislationinordertomaintaintheVCTstatusoftheCompany(suchasthe 

obligationtohaveatleast70%byvalueofeachVCT'sinvestmentsinQualifyingInvestments). 

The past performance of investments made by the Downing VCTs or Management should not be regarded as an 

indicationoftheperformanceofinvestmentstobemadebytheCompany. 

ChangesinlegislationinrespectofVCTsandQualifyingInvestmentsingeneralandinparticular,qualifyingtrades,may 

restrictoradverselyaffecttheabilityoftheCompanytomeetitsobjectivesand/orreducethelevelofreturnswhich 

wouldotherwisehavebeenachievable. 

ThevalueofGSharesisdependentontheperformanceoftheCompany'sunderlyinginvestments.Thevalueofthe 

investmentsandthedividendstreamcanriseandfall.Inparticular,theBoard'sobjectiveofpayinganannualdividend 

ofatleast5pperGSharemaynotbeachievedandanydividendpaymentswillreducetheNetAssetsattributableto 

theGShares. 

 

 

 

1

LetterfromtheChairmanoftheCompany 

 

 

 

 

 

 

 

DowningPlannedExitVCT2plc 

10LowerGrosvenorPlace 

LondonSW1W0EN 

10January2013 

DearInvestor 

 

SubscriptionstoVCTscurrentlyattractincometaxreliefattherateof30%.Thismeansthatforevery£1investedthe 

netcosttoInvestorsshouldbe70p.SetoutbelowisatableillustratingthehypotheticalreturnstoInvestorsatfive 

differentlevelsofShareholderProceeds,paidoutduringtheperiodapproximatelysixyearsfrominvestment. 

IllustrativereturnsbasedonanOfferPriceof£1perGShare 

ShareholderProceeds 80p 90p 100p 110p 120p 

 

Less:netcostofinvestment 

(70p) (70p) (70p) (70p) (70p) 

(assuming30%incometaxrelief) 

 

Taxfreecashprofit 10p 20p 30p 40p 50p 

 

Taxfreeprofit 

+14% +29% +43% +57% +71% 

(asa%ofnetcostofinvestment) 

 

NetReturn(taxfree) 1 2.9%p.a. 5.4%p.a. 7.6%p.a. 9.6%p.a. 11.5%p.a. 

 

Grossequivalentreturn 2 to 

 

40%taxpayers 4.8%p.a. 9.0%p.a. 12.7%p.a. 16.0%p.a. 19.2%p.a. 

 

Thereturnssetoutaboveareforillustrativepurposesonlyandnoforecastorprojectionisimpliedorshouldbeinferred. 

1 

2 

TheNetReturnistheinternalrateofreturnbasedonaninvestmentof100pdeemedtobemadeon5April2013,30pincometaxrelief 

deemedtobereceivedsixmonthslateron5October2013andeither80p,90p,100p,110por120pofShareholderProceeds,comprising 

dividends of 5p payable on 30 November 2013, 2.5p on 31 July 2014, 30 November 2014, and on the same dates each year until 

30November2017,50%ofthebalanceoftheShareholderProceedson31December2018andtheremainingfundson31July2019. 

ThegrossequivalentreturniscomparedtoasourceofincomethatissubjecttoincometaxatanInvestor'smarginaltaxrate.Ithasbeen 

calculatedbydividingtheNetReturnby0.6for40%taxpayers. 

ThekeypointsforInvestorsare: 

1. Investmentstrategy–Itisintendedthatthefocuswillbeoninvesteecompaniesthat:(i)tradefromfreehold 

premises(e.g.healthclubs,children’snurseries,etc).Thesetypesofbusinessesprovidealevelofprotection 

compared to companies with no tangible assets; and (ii) operate intherenewable energysector (e.g.solar, 

anaerobicdigestion,etc)andusuallybenefitfromUKGovernmentsubsidies. 

2. Exit opportunities – The Directors intend to give Investors the opportunity to either exit or retain their 

investmentsintheCompanyinapproximatelysixyears,subjecttoliquidityandmarketconditions. 

3. Keytaxbenefits 

 

 

 

30%incometaxrelief–isavailableontheamountsubscribedupto£200,000pertaxyear,providedtheG 

Shares are held for at least five years. Tax reliefs are subject to change and their value depends on 

individualcircumstances. 

Taxfreedistributionsandcapitalgains. 

4. AVCTforincome–TheBoardhasastatedobjectiveofpayingannualdividendsofatleast5pperGShare. 

In order to invest pleaseread the Prospectus andthencomplete the Application Formset outattheend ofthis 

document.IfInvestorshaveanyquestionsregardingthisinvestmenttheyshouldcontacttheirfinancialadviser.For 

questions relating to an application, please telephone Downing on 02074167780. Investors should note that no 

investmentadvicecanbegivenbyDowningandtheirattentionisdrawntotheriskfactorssetoutonpage1ofthis 

document. 

 

Yourssincerely 

 

 

 

 

 

HughGillespie 

Chairman 

2

PartI–TheOffers 

 

Introduction 

 

VCTswereintroducedtoencourageindividuals,byofferingthemsubstantialtaxbenefits,toinvestinaportfolioofinvestments 

comprisingatleast70%unquotedUKtradingcompanies.VCTsareinvestmentcompanieswhosesharesarelistedontheOfficial 

ListandtradedontheLondonStockExchangeoraregisteredEuropeanmarket.Todate,over£4billionhasbeenraisedbyover 

100VCTs. 

 

VCTs were created so that their investors could benefit from a spread of Qualifying Investments under the supervision of 

professionalmanagerswhocancontributevaluableexperience,contactsandadvicetothebusinessesinwhichtheyinvest.VCTs 

arerequiredtobeapprovedbyHMRevenue&Customsassetoutintheventurecapitaltrustlegislation.VCTsareentitledto 

exemptionfromcorporationtaxonanygainsarisingonthedisposaloftheirinvestmentsandsuchgainsmaybedistributedtax 

freetoinvestors. 

 

TheCompany'sinitialpublicshareofferraisedgrossaggregateproceedsof£10.15millionduring2005.OrdinaryShareholderswho 

invested in 2005 had a net cost of 60p per share following the receipt of income tax relief of 40p per Ordinary Share. The 

investmentsintheOrdinarySharepoolwereallsoldandthenetproceedsdistributedtoOrdinaryShareholders,withthemajority 

offundsreturnedduring2008and2009.OrdinaryShareholdersreceivedtotaldistributionsof90.4pperOrdinaryShare,equating 

toataxfreereturn,calculatedasanIRR,of11.2%perannum,18.7%grossequivalenttoa40%taxpayer. 

 

Fourfurthershareoffershavesincebeenundertaken.The2008OfferwaslaunchedinSeptember2008,raising£7.15million.The 

initialofferpriceofthe2008Shares(afterissuecosts)was94.5p.Asat31October2012,theTotalReturnwas107.5pper2008 

Share,comprisingaNetAssetValueof92.5pplusdividendsof15.0p. 

 

The2009OfferwaslaunchedinNovember2009,raising£10million.Theinitialofferpriceofthe2009Shares(afterissuecosts) 

was 94.5p. As at 31 October 2012, the Total Return was 91.0p per 2009 Share, comprising a Net Asset Value of 81.0p plus 

dividendsof10.0p. 

 

The2011OfferwaslaunchedinOctober2011,raising£9.8million.Theinitialofferpriceofthe2011Shares(afterissuecosts)was 

94.5p.Asat31October2012,theTotalReturnper2011Sharewas94.6p,comprisingaNetAssetValueof94.6p.Nodividendshad 

beenpaidasat31October2012,butthefirstdividendof5pper2011SharewaspaidinNovember2012. 

 

On24October2012a10%topupofferwaslaunchedtoraiseuptoapproximately£925,000,throughanofferforsubscriptionfor 

furtherFShares,whichwasfullysubscribed. 

 

Asat31December2012,the2008,2009and2011SharepoolsoftheCompanyheldinvestmentsin48companieswithatotal 

unauditedvalueof£20.3million. 

 

TheCompany’sobjectivesaretocontinueinvestinginVCTQualifyingInvestmentsandmaintainVCTstatus. 

 

Historically,theCompanyhasundertakenlinkedfundraisingswitha"linked"VCT,DowningPlannedExitVCT3plc.Upto5April 

2012,VCTswererestrictedtoamaximuminvestmentof£1millionperannuminanyoneinvesteecompanyand,therefore,by 

raising funds simultaneously for two "linked" VCTs it enabled a combined maximum investment of £2 million per investee 

company. This limit has now been removed; therefore, the Company is undertaking the fundraising without its "linked" VCT, 

DowningPlannedExitVCT3plc. 

 

 

ReasonsfortheOffers 

 

TheOffershavebeendesignedforInvestorsseekingaportfolioofunquotedinvestments,whilsttakingadvantageoftheVCTtax 

reliefs. The Offers will also allowthe running costs for all Shareholderstobespread over a larger assetbase.TheCompanyis 

seekingtoraiseadditionalnetproceedsof£25millionundertheOffers,togetherwithanoverallotmentfacilityofafurther£10 

million. 

 

TheGShares 

TheexistinginvestmentsandcashattributabletotheExistingShareswillbekeptseparatefromtheproceedsoftheissueoftheG 

Shares,whichwillbeadministeredasaseparateinvestmentpool.TheholdersofGShareswillhavetherighttoparticipate(byway 

ofdividendsandreturnofcapital)inthoseassetsattributabletotheGSharesbutnotinthoseassetsattributabletotheExisting 

Shares.Conversely,theholdersofExistingShareswillhavetherighttoparticipate(bywayofdividendsandreturnofcapital)inthe 

assetsattributabletotheExistingSharesbutnotinthoseassetsattributabletotheGShares. 

 

 

3

TaxationBenefitstoInvestors(seePartIIforfurtherdetails) 

 

TheprincipalUKVCTtaxreliefs,whichareavailableonamaximuminvestmentof£200,000perindividualineachofthe2012/13 

and2013/14taxyears,aresetoutbelow: 

Income tax relief at 30% of the amount subscribed provided the VCT shares are held for at least five years. Relief is 

restrictedtotheamountwhichreducestheInvestor'sincometaxliabilitytonil. 

TaxfreedividendsandcapitaldistributionsfromaVCT. 

CapitalgainstaxexemptiononanygainsarisingonthedisposalofVCTshares. 

 

Thetablebelowshowstheeffectoftheinitialincometaxreliefusinganassumedgrossissuepriceof105.82pperGShare.The 

actualissuepricewillbedeterminedbythePricingFormuladescribedonpage19. 

 

Effectofinitial30%incometaxrelief 

 

Costofinvestment PerGShare 

GrosssubscriptionbyInvestor 

105.82p 

30%incometaxrelief 

(31.75p) 

 

Netoftaxcostofinvestment 

74.07p 

 

Initialvalueofinvestment 

GrosssubscriptionbyInvestor 

Assumedissuecostsof5.5% 

 

 

105.82p 

(5.82p) 

InitialNetAssetValue 100.00p 

 

Initial"uplift"(pence) 

+25.93p 

 

Initial"uplift"(%) 

+35.00% 

 

Theabovetableshowsthat,assumingincometaxreliefisreceivedat30%,theInvestor'snetoftaxcostofinvestmentis74.07pperGShareand 

theinitialNAVis100p,an"uplift"of25.93pperGShareor+35%.InvestorsshouldnotethattheyarerequiredtoholdtheGSharesforatleast 

fiveyearsinordertoretainthefullamountofincometaxreliefand,assuch,thisinitialupliftcannotbeimmediatelyrealised. 

 

 

ThisisonlyaverybriefsummaryoftheUKtaxpositionofinvestorsinVCTs,basedontheCompany'sunderstandingofcurrent 

lawandpractice.FurtherdetailsaresetoutinPartIIofthisdocument.PotentialInvestorsarerecommendedtoconsulttheir 

ownappropriateprofessionaladvisersastothetaxationconsequencesoftheirinvestinginaVCT.Inaddition,theavailabilityof 

taxreliefsdependsontheCompanymaintainingitsVCTqualifyingstatus. 

 

 

Income 

 

TheBoardhasastatedobjectiveofpayinganannualdividendofatleast5pperGShare,subjecttotheavailabilityofsufficient 

distributable profits and capital resources. Set out below is a table illustrating the returns to G Shareholders assuming annual 

dividendsof5pperGSharearepaid.Investorsshouldnotethatthetargetannualdividendof5pperGShareisanobjectiveand 

isnotguaranteed. 

 

IllustrativeyieldperGShare(after30%incometaxrelief) 

Netoftax 

Targetannual 

Taxfree 

Grossequivalentyield 

offerprice 1 

dividends 

yield 

toa40%taxpayer 2 

 

74.07p 5.0p 6.75%p.a. 9.00%p.a. 

 

1 

2 

Thereturnslistedafter30%incometaxreliefarebasedonanassumedgrossissuepriceof105.82pperGSharemultipliedby70%,toreflect 

theinitialincometaxreliefof30%.Investorsshouldnotethattheywillberequiredtopaythefullissuepriceandclaimtheincometaxrelief 

separately. 

ThegrossequivalentyieldistheyieldonanonVCTUKdividendthatwouldresultinanetyieldof6.75%(beinga5pdividenddividedby 

74.07p,theassumedissuepriceof105.82pperGShareless30%toreflectinitialincometaxrelief),assuminga40%taxpayer. 

 

ThefirstdividendinrespectoftheGSharesistargetedtobe5pperGSharepayableinNovember2013.Thereafter,dividendsof 

2.5pperGSharearetargetedtobepaidbiannuallyaroundtheendofJulyandNovembereachyear. 

4

InvestmentPolicy 

 

TheinvestmentpolicyfortheCompanyisasfollows: 

 

QualifyingInvestments 

QualifyingInvestmentscompriseinvestmentsinUKtradingcompaniesthatownsubstantialassetsorhavepredictablerevenue 

streamsfromfinanciallysoundcustomers. 

 

Nonqualifyinginvestments 

ThefundsnotemployedinQualifyingInvestmentswillbepredominantlyinvestedin: 

securedloans;and/or 

FixedIncomeSecurities. 

 

Secured loans will be secured on property or other assets. Fixed Income Securities will consist of bonds issued by the UK 

Government,majorcompaniesandinstitutionsandwillhavecreditratingsofnotlessthanAminus(Standard&Poor'srated)/A3 

(Moody'srated).BothStandard&Poor'sandMoody'sareindependentratingagencies(neitherisregisteredintheEU). 

 

Borrowingpolicy 

It is not the Company's intention to have any borrowings. Under its Articles, the Company does, however, have the ability to 

borrowamaximumamountequalto50%oftheaggregateamountpaidonanysharesissuedbytheCompany(togetherwithany 

sharepremiumthereon). 

 

Asaconditionofeachofitsinvestments,itisintendedthattheCompanywillhavetheabilitytorestricttheinvesteecompany's 

ability to borrow. Typically, the Downing VCTs' investee companies have no external borrowings ranking ahead (for security 

purposes)oftheVCTs'investments.However,certaininvesteecompaniesmaybepermittedtoborrowlimitedsums(upto25%of 

thevalueoftheirassets)wheretheManagerbelievesitisprudenttodoso. 

 

In accordance with the Listing Rules, the Board will not make a material change to the Company's investment policy without 

Shareholderapproval. 

 

Targetallocation 

Initially, the majority of funds will be invested in nonqualifying investments. The level of funds invested in nonqualifying 

investmentswillbereducedtoprovidefundsforQualifyingInvestmentssuchthatwithinthreeyearsofthecloseoftheOffersthe 

approximateallocationwillbe: 

 

Investmentsplit 

 

Portfoliosplit 

QualifyingInvestments 75% 

Nonqualifyinginvestments 25% 

 

Total 100% 

Note: The above table represents the approximate split of the Company's portfolio. The Board may increase the proportion of Qualifying 

Investmentsabove75%toallowforthepossibilityofearlyrealisationswithoutbreachingtheVCTRegulations. 

 

VentureCapitalTrustRegulations 

IncontinuingtomaintainitsVCTstatus,theCompanycomplieswithanumberofregulationsassetoutinPart6oftheITA.How 

the main regulations apply to the Company is summarised as follows: (i) the Company holds at least 70% by value of its 

investments in Qualifying Companies; (ii) at least 30% of the Company's QualifyingInvestments (by value) areheldin "eligible 

shares"forfundsraisedbefore6April2011andatleast70%in"eligibleshares"forfundsraisedonorafter6April2011;(iii)at 

least10%ofeachinvestmentinaQualifyingCompanyisheldin"eligibleshares"(bycostattimeofinvestment);(iv)noinvestment 

constitutesmorethan15%oftheCompany'sportfolio(byvalueatthetimeofinvestment);(v)theCompany'sincomeforeach 

financialyearisderivedwhollyormainlyfromsharesandsecurities;(vi)theCompanydistributessufficientrevenuedividendsto 

ensurethatnotmorethan15%oftheincomefromsharesandsecuritiesinanyoneyearisretained;and(vii)noinvestmentmade 

bytheCompanycausesaninvesteecompanytoreceivemorethan£5millionofstateaidedinvestments(includingfromVCTs)in 

theyearendingonthedateoftheinvestment. 

 

ListingRules 

InaccordancewiththeListingRules:(i)theCompanymaynotinvestmorethan10%,inaggregate,ofthevalueofitstotalassetsat 

thetimeaninvestmentismadeinotherlistedclosedendedinvestmentfundsexceptlistedclosedendedinvestmentfundsthat 

havepublishedinvestmentpolicieswhichpermitthemtoinvestnomorethan15%oftheirtotalassetsinotherlistedclosedended 

investmentfunds;(ii)theCompanymustnotconductanytradingactivitywhichissignificantinthecontextofitsgroupasawhole; 

and(iii)theCompanymust,atalltimes,investandmanageitsassetsinawaywhichisconsistentwithitsobjectiveofspreading 

investmentriskandinaccordancewithitspublishedinvestmentpolicyassetoutinthisdocument.Thisinvestmentpolicyisinline 

withChapter15oftheListingRulesandPart6oftheITA. 

 

5

ShareBuybackPolicy 

 

TheCompanywillmakemarketpurchasesofitsownGShares,uptoamaximumannualnumberofGSharesequivalentto14.9% 

of the total number of issued G Shares from time to time. The Board intendstooperate apolicyof purchasingGSharesthat 

becomeavailableasdetailedbelow(subjecttoliquidityandregulations).TheproceedsreceivedbyGShareholdersonthesaleof 

theirGSharestotheCompanywillbereducedbycostssuchasthemarketmaker'smarginandstockbroker'scommission. 

 

Sharebuybackpolicy 

DiscounttoNAV 

Fromlaunchto31December2017 

Nil 

1January2018onwards 

Boarddiscretion 

 

Fromlaunchto31December2017 

TheCompanywillbuybackGSharesinthefirstfiveyearsfromlaunch(to31December2017),atnildiscounttoNetAssetValue, 

subjecttoregulationsandhavingsufficientliquiditywithintheCompany.Investorsshouldnotethatincometaxreliefof30%will 

berepayableiftheGSharesarenotheldfortheminimumholdingperiodoffiveyears;however,thereisnoclawbackofthe30% 

incometaxrelieffollowingthedeathofaShareholder.TheBoardanticipatesthattherewillbelimitedsharebuybacksofGShares 

within five years because the only sellers are likely to be deceased G Shareholders' estates and those G Shareholders whose 

circumstanceshavechanged(tosuchanextentthattheyarewillingtorepaythe30%incometaxreliefinordertogainaccessto 

thenetproceedsofsale). 

 

From1January2018onwards 

As stated below, in the section headed "Realisation Plans", after five years the Company will seek to exit from sufficient 

investmentsintheGSharepoolinordertoreturnfundstoGShareholderswishingtoexitatthattime.Therefore,tohelpachieve 

thisobjective,duringthisperiodtheBoardwillreservetherightastowhetheritwillundertakeGSharebuybacksandthelevelof 

discounttoNetAssetValueitwillundertakeanysuchGSharebuybacks. 

 

 

RealisationPlans 

 

ItisintendedthatGShareholderswillbegiventheoptiontoeitherexitorretaintheirinvestmentwithinapproximatelysixyears 

fromthecloseoftheOffers. 

 

Exitmechanism 

ItisintendedthattaxfreecashproceedswillbepaidtoGShareholderswhowishtoexit(netofthePerformanceIncentive,if 

applicable)bywayoftaxfreerevenueandcapitaldividendsand/orsharebuybacks(includingtenderoffers). 

 

Rolloveroption 

TheBoardbelievesthatsomeInvestorsmaywishtostayinvestedforlongtermtaxfreeincome.TheBoard,therefore,intendsto 

providearolloveroptionandwillprovidefulldetailsofthetermsinapproximatelyfiveyearsfromthecloseoftheOffers.Inthe 

eventthatarelativelysmallnumberofGShareholdersopttorollover,suchthatthenetassetsrolledoverforlongtermincome 

would be too low to support the administration costs of the Company, then, in these or other circumstances, the Board may 

decidetodistributeallthenetassetsandwinduptheGShareclass. 

 

 

Management 

 

Manager 

TheCompanyismanagedbytheManager,whoseexecutivesareprovidedbyDowningLLP. 

 


Downing Corporate Finance Limited was incorporated in 1986 and, since 1991 it has specialised in structuring, promoting, 

managing and administering tax efficient products. On 1 June 2011, Downing Corporate Finance Limited transferred all of its 

businessandemployeestoDowningLLP,whichisauthorisedandregulatedbytheFinancialServicesAuthority.DowningLLPis 

responsibleforthemanagementofover£210millionacross16VCTs. 

 

 

6

TrackRecordoftheCompany 

 

TrackrecordoftheOrdinaryShares 

TheCompany’sOrdinaryShares(launchedinthe2004/05taxyear)soldalltheirinvestmentsandreturnedtheproceeds,mainlyin 

2008and2009,whichtotalled90.4pperOrdinaryShareandrepresentedanincreaseof51%onthenetoftaxcostof60pper 

OrdinaryShare.Thecompoundreturn(calculatedasanIRRaftertaxreliefs)was11.2%perannumtaxfree,whichisequivalentto 

18.7%perannumtoa40%taxpayer.TheOrdinaryShare'slistingontheLondonStockExchangewascancelledinAugust2012. 

 

Trackrecordofthe2008Shares,2009Sharesand2011Shares 

ThetrackrecordoftheCompany'sshareissuesin2008,2009and2011aresetoutbelow. 

 

Trackrecordofthe2008Shares,2009Sharesand2011Shares 

 

 

 

 

 

Taxyearof 

Net TotalReturn Increaseover 

launch cost 1 

 

todate 2 

 

netcost(%) 

2008Shares 08/09 70.0p 107.5p +53.6% 



 

1 Net cost is the initial offer price of 100p per share less the income tax relief of 30% available to investors in each of the 

Company'sshareclasses. 

2 TotalReturniscumulativedividendspaidtodateplusthemostrecentlyannounced(unaudited)netassetvalueforeachshare 

classinpencepershare. 

 

Investorsshouldnotethattheyarerequiredtoholdsharesforaminimumperiod(currentlyfiveyears)toretaintheinitialincome 

taxreliefof30%.Inanycase,pastperformanceisnotaguidetofutureperformance. 

 

 

CoinvestmentPolicy 

 

TheCompany'sonlyformalcoinvestmentrelationshipsarewiththeotherDowningVCTs,Downing'sIHTandEISfunds(together 

the"Funds").Ithasbeenagreedthatallocationswillbeofferedtoeachpartyinproportiontotheirrespectivefundsavailablefor 

investment,subjectto:(i)aprioritybeinggiventoanyoftheFundsinordertomaintaintheirtaxstatus;(ii)thetimehorizonofthe 

investmentopportunitybeingcompatiblewiththeexitstrategyofeachFundand(iii)therisk/rewardprofileoftheinvestment 

opportunitybeingcompatiblewiththetargetreturnforeachFund.Intheeventofanyconflictsbetweentheparties,theissueswill 

beresolvedatthediscretionoftheindependentdirectors,designatedmembersandcommitteesoftherelevantFunds. 

 

 

Directors 

 

TheCompanyhasaBoard,comprisingthreeDirectors,allofwhomarenonexecutiveandindependentoftheManager. 

 

HughGillespie(Chairman)isnonexecutivechairmanofDowningPlannedExitVCTs3–9andanonexecutivedirectorofDowning 

IncomeVCT3plcandBurgessGroupplc.HewasformerlyadirectorofHillSamuelBankLimitedandnonexecutivedirectoror 

chairmanofanumberofpubliccompanies. 

 

Dennis Hale was previously an investment director of Financial Management Bureau Limited ("FMB"), a firm of independent 

financialadvisersbasedinCumbria.HewasresponsibleforVCTresearchwithinFMB,whoseclientshaveinvestedinVCTssince 

1997. Prior to founding FMB in 1987, he worked for several life assurance companies. Hewasan Associateof the Institute of 

Actuaries and holds the Investment Management Certificate. He graduated from the University of Hull with a degree in 

Mathematicsin1974.HeisalsoadirectorofanumberofDowningVCTs. 

 

MichaelRobinsonhasover25years'experienceintheprivateequityindustry.Hespent25yearsat3iplc,wherehewaslatterlya 

directormanagingalargeportfolioofequityinvestments.HequalifiedasacharteredaccountantwithDeloitteHaskins&Sellsin 

1979andisalsothenonexecutivechairmanofLimbs&ThingsLimited. 

 

TheDirectorswillbeinvestingatleast£15,000undertheOffersonthesametermsasInvestors.Thetotalinvestedbythepartners 

andemployeesofDowninginDowningVCTsisover£2million. 

 

 

7

Charges 

 

Annualfees 

TheManagerwillreceiveannualinvestmentmanagementfeesof2%oftheNetAssetsattributabletotheGShares.Itwillalso 

receiveanannualfeeof£55,000(plusVAT,ifapplicable,andRPI)foradministrationservices,whichwillbeallocatedacrossall 

sharepools.TheAnnualRunningCostsoftheGSharepoolarecappedat3.5%(includingirrecoverableVAT)oftheCompany'sNet 

AssetsattributabletotheGSharesandanyexcesswillbepaidbytheManager,orrefundedbywayofareductioninitsfees. 

AnnualRunningCostsinclude,interalia,Directors'fees,feesforauditandtaxationadvice,registrar'sfees,costsofcommunicating 

withShareholdersandinvestment management fees, but notthe PerformanceIncentive.Generalrunningcostsnotspecificto 

eithertheExistingSharepoolorGSharepoolwillbeallocatedbasedontheweightedaverageproratanetassetsofeachpool, 

subjecttothediscretionoftheBoard. 

 

Othercosts 

Downingmayreceivefeesfrominvesteecompanies.Inparticular,Downingwillreceivearrangementfees(cappedat1%ofthe 

sums invested by the Company, with any excess paid tothe Company) and monitoring fees (capped at £10,000 per annum in 

respectofeachoftheCompany'sinvestments)frominvesteecompanies.Costsincurredonabortiveinvestmentproposalswillbe 

theresponsibilityofDowning. 

 

PerformanceIncentive 

As is customary in the venture capitalindustry, the Manager will be entitled toreceive a performancerelated incentive based 

uponreturnstoShareholders. 

 

ThePerformanceIncentiveinrespectoftheGShareswillhavenoimpactonExistingShareholders.ThePerformanceIncentiveis 

designedtoencouragesignificantandtimelydistributionstoGShareholders,bothintermsofannualdividendsandrepaymentof 

capitalafterfiveyears.ThePerformanceIncentivewillonlybecomepayableifGShareholders:(i)havetheopportunitytoreceive 

ShareholderProceedsofatleast105.82pperGShare(excludinginitialincometaxrelief);and(ii)achieveataxfreeCompound 

Return of at least 7% per annum (after allowing for income tax relief on investment) (together the "Hurdles"). 105.82p is the 

assumedgrossissuepriceperGSharebasedonaninitialNAVof100pandissuecostsof5.5%. 

 

IftheHurdlesaremet,thePerformanceIncentivewillbe3pperGShareplus20%ofthefundsavailableabove105.82pperG 

Share(fordistributiontoGShareholdersandthepaymentofthePerformanceIncentive).ThePerformanceIncentivewillonlybe 

paidtotheextentthattheHurdlescontinuetobemetandwillbesubjecttoamaximumamount(overtheperiodtowhenanexit 

isprovidedinapproximatelysixyears)equivalentto7pperGShare(basedonthenumberofGSharesinissueatthecloseofthe 

Offers). Investors choosing to roll over rather than exit their investment after five years will be deemed to have received 

ShareholderProceedsforthepurposesofthecalculationofthePerformanceIncentive.AnewPerformanceIncentivewillbeputin 

placeaftersixyears,subjecttoShareholderapproval. 

 

Forexample,ifthetotalfundsavailablefordistributionoversixyearswere115.82pperGShare,thePerformanceIncentivewould 

be5pperGShare(3pplus20%x10p),leavingShareholderProceedsof110.82pperGShare(assumingtheHurdleshavebeenmet 

andignoringanybenefitfromcorporationtaxreliefonthePerformanceIncentive).Ifthetotalfundsavailablefordistributionwere 

instead135pperGShare,thePerformanceIncentivewouldbecappedat7pperGShare,leavingShareholderProceedsof128p 

perGShare. 

 

 

OtherInformation 

 

TaxationandHMRevenue&Customsapproval 

TheDirectorsintendtoconducttheaffairsoftheCompanysoitcontinuestosatisfytheconditionsforapprovalasaVCTandthat 

such approval will be maintained. HM Revenue & Customs has granted the Company provisional approval under the ITA. The 

CompanyintendstocontinuecomplyingwiththeITAandhasretainedPricewaterhouseCoopersLLPtoadviseitonVCTtaxation 

matters. 

 

TheOffersandminimumandmaximumsubscription 

AssumingFullSubscription,maximumnetproceedsof£25millionwillberaisedundertheOffers.IftheOffersareoversubscribed, 

theymaybeincreasedatthediscretionoftheBoardtonomorethan£35million.ThisfacilitymaybeutilisedwhilsttheOffers 

remainopen.Intheeventthatapplicationsarereceivedinexcessofthemaximumsubscription,theDirectorsandtheSponsor 

reservetherighttousetheirabsolutediscretionintheallocationofsuccessfulapplications.Applicantsareencouragedtosubmit 

theirApplicationFormearlyinordertobeconfidentthattheirapplicationswillbesuccessful. 

 

TheminimuminvestmentperApplicantis£5,000(orsuchloweramountattheBoard'sdiscretion).Themaximuminvestment,on 

whichtaxreliefsinVCTsareavailable,is£200,000perApplicantineachofthe2012/13and2013/14taxyears.Spousescaneach 

investupto£200,000ineachtaxyear.ThesubscriptionlistfortheOfferswillopenat9.00a.m.on10January2013andmayclose 

atanytimethereafter,butinanyevent,notlaterthan3.00p.m.on5April2013inrespectofthe2012/13Offerand3.00p.m.on 

30April2013inrespectofthe2013/14Offer,unlessfullysubscribedearlierorpreviouslyextendedbytheDirectors(buttono 

laterthan9January2014).IftheMinimumSubscriptionisnotreceivedby3.00p.m.on5April2013,theOfferswillbewithdrawn 

8

andapplicationmonieswillbereturnedtoapplicantswithinsevendaysofsuchdate,attheirownrisk,withoutinterest.TheOffers 

arenotunderwritten. 

 

GShareswillbeallottedandissuedinrespectofvalidapplicationson5April2013,30April2013andonanyotherdatesonwhich 

theDirectorsdecide. 

 

ApplicationhasbeenmadetotheUKListingAuthorityonbehalfoftheCompanyfortheAdmissionofalloftheGShares.TheG 

Shares will be issued in registered form and be transferable in both certificated and uncertificated form and will rank for all 

dividendsandotherdistributionsdeclared,paidormadebytheCompanyinrespectoftheGSharesthereafter.Subjecttothe 

MinimumSubscriptionbeingreceivedbythen,itisanticipatedthatdealingsinthefirstallotmentofGShareswillcommenceby 

March 2013 and subsequent allotments thereafter within 20 Business Days of allotment. Dealings may not begin before 

notificationofallotmentsismade.RevocationoftheOfferscannotoccurafterdealingsintheGShareshavecommenced.The 

Company has applied for its G Shares to be admitted to CREST and it is expected that the G Shares will be so admitted and, 

accordingly, enabled for settlement in CREST, as soon as practicable after Admission has occurred. Accordingly, settlement of 

transactions in the G Shares following Admission may take place within the CREST system if G Shareholders wish. CREST is a 

voluntarysystemandGShareholderswhowishtoreceiveandretainsharecertificateswillbeabletodoso.Sharecertificates 

(whereapplicable)andcertificatestoenableaclaimforincometaxrelieftobemadeinrespectofGShareswillbepostedtoG 

Shareholderswithin30daysofeachallotment.Nonotificationwillbemadetosuccessfulapplicantspriortodespatchofdefinitive 

sharecertificates. 

 

Prior to despatch of definitive share certificates (where applicable), transfers (if any) will be certified against the register. No 

temporarydocumentsoftitlewillbeissued.TheOffersarenotunderwritten. 

 

TheresultoftheOfferswillbeannouncedthrougharegulatoryinformationserviceproviderauthorisedbytheFSA. 

 

AvailabilityoftheProspectus 

Copies of the Prospectus relating to the Company are available for download at the National Storage Mechanism 

(www.hemscott.com/nsm.do)andmaybeobtained,freeofcharge,fromtheCompany'sregisteredoffice,wheretheyarealsoon 

display,andfromDowningLLP. 

 

 

DowningLLP telephone:02074167780 

10LowerGrosvenorPlace download:www.downing.co.uk 

LondonSW1W0EN email:vct@downing.co.uk 

 

Financialcalendar 

Financialyearend 

31January 

Finalresultsannouncement 

May 

Annualgeneralmeeting 

July 

AnticipatedfirstdividendinrespectoftheGShares 

November2013 

Biannualdividendspaidattheendof 

JulyandNovember 

Halfyearlyresultsannouncement 

September 

Targetforthepaymentofthefinaldistribution 2018/2019 

 

 

ForwardLookingStatements 

 

Youshouldnotplaceunduerelianceonforwardlookingstatements.ThisSecuritiesNoteincludesstatementsthatare(ormaybe 

deemed to be) "forwardlooking statements", which can be identified by the use of forwardlooking terminology including the 

terms "believes", "continues", "expects", "intends", "may", "will", "would", "should" or, in each case, their negative or other 

variationsorcomparableterminology.Theseforwardlookingstatementsincludeallmattersthatarenothistoricalfacts.Forward 

looking statements involve risk and uncertainty because they relate to future events and circumstances. Forwardlooking 

statementscontainedinthisSecuritiesNoteorbasedonpasttrendsoractivities,shouldnotbetakenasarepresentationthat 

such trends or activities will continue in the future. Any such statements do not, nor are intended to qualify the Company’s 

workingcapitalstatement. 

 

TheinformationcontainedinthisdocumentwillbeupdatedifrequiredbytheProspectusRules,theListingRulesandtheDTR,as 

appropriate. 

 

9

PartII–Taxation 

 

VCTs:SummaryoftheapplicablelegislationinrespectofInvestors 

1. TaxationofaVCT 

VCTs are exempt from corporation tax on chargeable gains. 

There is no restriction on the distribution of realised capital 

gainsbyaVCT,subjecttotherequirementsofcompanylaw. 

TheCompanywillbesubjecttocorporationtaxonitsincome 

(excluding dividends received from UK companies) after 

deductionofattributableexpenses. 

2. Taxreliefsforindividualinvestors 

Individuals who subscribe for G Shares must be aged 18 or 

overtoqualifyforthetaxreliefsoutlinedbelow. 

Relieffromincometax 

Aninvestorsubscribingupto£200,000inthe2012/13and/or 

2013/14taxyearsforeligiblesharesinaVCTwillbeentitled 

to claim income tax relief, at the rate of 30%, although this 

reliefwillbewithdrawnifeitherthesharesaresoldwithinfive 

yearsortheinvestortakesoutaloanwhichwouldnothave 

beenmade,orwouldnothavebeenmadeonthesameterms, 

savefortheacquisitionofsuchshares.Reliefisrestrictedto 

theamountwhichreducestheinvestor'sincometaxliability 

to nil. However, tax credits on dividends are notional and 

cannot be repaid and, therefore, investors should take this 

into account when calculating the value of the income tax 

relief. 

Dividendrelief 

Aninvestorwhosubscribesfororacquireseligiblesharesina 

VCT (up to a maximum of £200,000 in each of the 2012/13 

and2013/14taxyears)willnotbeliableforUKincometaxon 

dividends paid by the VCT. The income received by the VCT 

willusuallyconstituteeitherinterest(onwhichtheVCTmay 

besubjecttotax)oradividendfromaUKcompany(onwhich 

the VCT would not be subject to tax). The VCT's income, 

reduced by the payment of tax (if applicable), can then be 

distributed taxfree to investors who benefit from this 

dividendrelief.Thereisnowithholdingtaxondividendspaid 

byaUKcompanyand,consequently,theCompanydoesnot 

assume responsibility for the withholding of tax at source. 

Dividendscarryataxcreditattherateofoneninthofthenet 

dividendwhichisnotrepayableandwhichcannotbeutilised 

inanyotherway. 

Capitalgainstaxrelief 

Adisposalbyanindividualinvestorofhis/hersharesinaVCT 

willneithergiverisetoachargeablegainnoranallowableloss 

for the purposes of UK capital gains tax. This relief is also 

limited to disposals of shares acquired within the £200,000 

limitdescribedabove. 

Lossoftaxreliefs 

(i) If a company which has been granted approval or 

provisional approval as a VCT subsequently fails to 

complywiththeconditionsforapproval,VCTstatusmay 

be withdrawn or treated as never having been given. 

The exemptions from corporation tax on capital gains 

willnotapplytoanygainrealisedafterVCTstatusislost 

(and on any gain realised by the VCT if approval is 

deemednevertohavebeengiven). 

(ii) For investors, the withdrawal of VCT status may 

(dependinguponthetimingofsuchwithdrawal)result 

in: 

repaymentofthe30%incometaxreliefonsubscription 

fornewVCTshares; 

incometaxbecomingpayableonsubsequentpayments 

ofdividendsbythecompany;and 

a liability to tax on capital gains being suffered in the 

normal way on the disposal of shares in the company, 

except that any part of the gain attributable to the 

period for which the VCT was approved would be 

exempt. 

(iii) The consequences for investors in a company which 

neverobtainsfullunconditionalapprovalasaVCTareas 

follows: 

repaymentofthe30%incometaxreliefonsubscriptions 

for new VCT shares and interest on overdue tax may 

arise; 

income tax becoming payable on all payments of 

dividendsbythecompany;and 

any gain arising on a disposal of the shares would be 

liabletocapitalgainstaxandlossesontheshareswould 

be allowable losses for capital gains tax purposes. 

 

TheGSharesareeligibleVCTsharesforthepurposesofthis 

section. 

3. Consequences of an investor dying or a transfer of shares 

betweenspouses 

(i) Initialincometax 

If an investor dies at any time after making an 

investmentinaVCT,thetransferofsharesondeathis 

not treated as a disposal and, therefore, the initial 

incometaxreliefisnotwithdrawn.However,theshares 

will become part of the deceased's estate for 

inheritancetaxpurposes. 

(ii) Taximplicationsforthebeneficiary 

Provided a number of conditions are met, the 

beneficiaryofanyVCTshareswillbeentitledtotaxfree 

dividends and will not pay capital gains tax on any 

disposal,butwillnotbeentitledtoanyinitialincometax 

relief. 

(iii) Transferofsharesbetweenspouses 

Transfers of shares in a VCT between spouses is not 

deemed to be a disposal and, therefore, all tax reliefs 

willberetained. 

4. General 

(i) InvestorswhoarenotresidentintheUK 

Nonresident investors, or investors who may become 

nonresident,shouldseektheirownprofessionaladvice 

astotheconsequencesofmakinganinvestmentinthe 

Company,becausetheymaybesubjecttotaxinother 

jurisdictions. 

(ii) Stampdutyandstampdutyreservetax 

Nostampdutyor(unlesssharesinaVCTareissuedtoa 

nominee for a clearing system or a provider of 

depository receipts) stamp duty reserve tax will be 

payableontheissueofsuchshares.Thetransferonthe 

saleofshareswouldnormallybesubjecttoadvalorem 

stamp duty or (if an unconditional agreement to 

transfersuchsharesisnotcompletedbyadulystamped 

transfer within two months) stamp duty reserve tax 

generally,ineachcaseattherateof50pforevery£100 

or part of £100 of the consideration paid where the 

totalconsiderationexceeds£1,000orifitformspartof 

a series of transactions where the total consideration 

exceeds £1,000. Such duties would be payable by a 

person who purchases such shares from the original 

subscriber. 

(iii) Purchasesinthemarketafterlisting 

Any subsequent purchaser of existing VCT shares, as 

opposed to a subscriber for new VCT shares, will not 

qualify for income tax relief on investment but may 

benefit from dividend relief and from capital gains tax 

reliefonthedisposalofhis/herVCTshares. 

(iv) TheVCTRegulations2004 

The VCT Regulations came into force on 17 

October2004. Under the VCT Regulations, monies 

raisedbyanyfurtherissueofsharesbyanexistingVCT 

mustbeappliedbythatVCTforqualifyingpurposes.If 

anyofthemoneyraised(exceptforamountswhichHM 

Revenue & Customs agrees are insignificant in the 

contextofthewholeissuedordinarysharecapitalofthe 

VCT)isusedbytheVCTtopurchaseitsownsharesthen 

thefundsmaybedeemedtonothavebeenusedfora 

qualifyingpurpose. 

 

Theaboveisonlyasummaryofthetaxpositionofindividual 

investors in VCTs and is based on the Company's 

understanding of current law and practice. Investors are 

recommended to consult a professional adviser as to the 

taxation consequences of their investing in a VCT. All tax 

reliefsreferredtointhisdocumentareUKtaxreliefsandare 

dependent on the Company maintaining its VCT qualifying 

status. 

10

PartIII–FinancialInformation 

 

A summary of the Company's investment portfolio as at 9 January 2013 (being the latest practicable date prior to publication of this 

document)issetoutbelow. 

 

2008SHAREPOOL 

 

Debt(D)/ Cost Valuation* %of 

Equity (E) £'000 £'000 portfolio Sector 

 

BijouWeddingVenuesLimited D&E 815 883 13.6% Leisure,Entertainment&Hotels 

FutureBiogas(SF)Limited D&E 627 703 10.9% RenewableEnergy 

AtlanticDogstarLimited D&E 429 655 10.1% Pubs 

HooleHallCountryClubHoldingsLtd D 581 581 9.0% Leisure,Entertainment&Hotels 

DomesticSolar(ISIS)Limited D&E 500 500 7.7% RenewableEnergy 

TheThamesClubLimited D&E 500 500 7.7% Leisure,Entertainment&Hotels 

RedmedLimited D&E 429 429 6.6% Leisure,Entertainment&Hotels 

WestowHouseLimited D&E 304 395 6.1% Pubs 

EastDulwichTavernLimited D&E 344 386 6.0% Pubs 

QuadrateCateringLimited D&E 330 330 5.1% Leisure,Entertainment&Hotels 

QuadrateSpaLimited D&E 323 323 5.0% Leisure,Entertainment&Hotels 

EcossolLimited D&E 250 250 3.9% RenewableEnergy 

The3DPubCoLimited D&E 267 187 2.9% Pubs 

MosaicSpaandHealthClubsLimited D&E 125 125 1.9% Leisure,Entertainment&Hotels 

HoneycombePubsVCTLimited D&E 175 96 1.5% Pubs 

ChapelStreetFoodandBeverageLimited E 50 50 0.8% Leisure,Entertainment&Hotels 

ChapelStreetServicesLimited E 50 50 0.8% Leisure,Entertainment&Hotels 

VermontDevelopmentsLimited D&E 25 25 0.4% Development&Construction 

ChapelStreetHotelLimited E 2 2 0.0% Leisure,Entertainment&Hotels 

 

6,126 6,470 100.0% 

 

Cashatbankandinhand 0.0% 

 

6,470 100.0% 

 

2009SHAREPOOL 

 


Equity(E) £'000 £'000 portfolio Sector 

 

AminghurstLimited D&E 2,150 2,150 26.9% Development&Construction 

FutureBiogas(ReephamRoad)Limited D 748 748 9.4% RenewableEnergy 

MosaicSpaandHealthClubsLimited D&E 475 475 6.0% Leisure,Entertainment&Hotels 

LiverpoolNurseries(Holdings)Limited D&E 467 467 5.9% Education 

QuadrateCateringLimited D&E 441 441 5.5% Leisure,Entertainment&Hotels 

QuadrateSpaLimited D&E 436 436 5.4% Leisure,Entertainment&Hotels 

DomesticSolarLimited D&E 400 400 5.0% RenewableEnergy 

AlphaSchoolsHoldingsLimited D&E 367 380 4.8% Education 

KidspaceAdventuresHoldingsLimited D&E 375 375 4.7% Education 

AvonSolarEnergyLimited D&E 250 250 3.1% RenewableEnergy 

EcossolLimited D&E 250 250 3.1% RenewableEnergy 

GreenElectricityGenerationLimited D&E 250 250 3.1% RenewableEnergy 

WestcountrySolarSolutionsLimited D&E 250 250 3.1% RenewableEnergy 

RetallackSurfpodsLimited D 250 250 3.1% Development&Construction 

SlopingtacticLimited D&E 196 196 2.4% Pubs 

ProgressiveEnergiesLimited D&E 170 170 2.1% RenewableEnergy 

FenkleStreetLLP D 146 146 1.8% Development&Construction 

RidgewayPubCompanyLimited D&E 136 136 1.7% Pubs 

CamandaleLimited D&E 561 113 1.4% Pubs 

CommercialStreetHotelLimited D&E 100 100 1.3% Leisure,Entertainment&Hotels 

 

8,418 7,983 99.8% 

 

Cashatbankandinhand 15 0.2% 

 

7,998 100.0% 

 

 

11

2011SHAREPOOL 


Equity(E) £'000 £'000 portfolio Sector 

 

 

AminghurstLimited D 1,110 1,110 11.5% Development&Construction 

TorSolarPVLimited D&E 816 816 8.4% RenewableEnergy 

BaronHouseDevelopmentsLLP D 625 625 6.4% Development&Construction 

VulcanRenewablesLimited D&E 560 560 5.8% RenewableEnergy 

ClarevilleStreetLLP D 500 500 5.2% Development&Construction 

CityFalkirkLimited D&E 421 421 4.3% Nightclubs 

SouthamptonHotelDevelopmentsLimited D 300 300 3.1% Development&Construction 

WestTowerHoldingsLimited D 290 290 3.0% Leisure,Entertainment&Hotels 

FubarStirlingLimited D&E 268 268 2.8% Nightclubs 

HooleHallHotelLimited D 265 265 2.7% Leisure,Entertainment&Hotels 

KidspaceAdventureHoldingsLimited D 250 250 2.6% Education 

FreshGreenPowerLimited D&E 200 200 2.1% RenewableEnergy 

GreenEnergyProductionUKLimited D&E 100 100 1.0% RenewableEnergy 

The3DPubCoLimited D 55 55 0.6% Pubs 

CheersDumbartonLimited D&E 48 48 0.5% Nightclubs 

LochriseLimited D&E 13 13 0.1% Nightclubs 

 

5,821 5,821 60.1% 

 

Cashatbankandinhand 3,871 39.9% 

 

9,692 100.0% 

 

 

* Valuation as at 31 October 2012 – extracted from the unaudited management accounts for the Company for the period ended 31 

October2012. 

 

AllvaluationsaredenominatedinUKSterling.AllportfoliocompaniesareUKbasedbusinesses.Investorsshouldnotethatthenet 

proceedsoftheOfferswillbeinvestedinaccordancewiththeCompany'sinvestmentpolicy,assetoutonpage5ofthisdocument. 

Asgeneraleconomiccircumstancesandprospectsmayvaryovertimetherecanbenoguaranteethatfutureinvestmentswillbe 

made in the same sectors or types of company as the present portfolio. The above information is unaudited and has been 

extractedfromthemanagementaccountsoftheCompany. 

 

12

PartIV–Definitions 

 

Where used in this document the following words and expressions will, unless the context otherwise requires, have the following 

meanings: 

 

"2006Act" 

CompaniesAct2006(asamended) 

"2008Offer" 

offerforsubscriptionofup to15,000,000CSharesand15,000,000ASharesoftheCompany onthe 

termssetoutinthesecuritiesnoteissuedbytheCompanyon25September2008 

"2008Shares" 

oneormoreAShares andoneormoreCShares,asthecontextsopermits 

"2009Offer" 

offerforsubscriptionofupto10,000,000DSharesand15,000,000ESharesoftheCompany onthe 

termssetoutinthesecuritiesnoteissuedbytheCompanyon6November2009 


oneormoreDSharesandoneormoreE Shares,asthecontextsopermits 

"2011Offer" 

offer for subscription of up to 10,000,000 F Shares of the Company on the terms set out in the 

securitiesnoteissuedbytheCompanyon12October2011 


oneormoreF Shares 

"2012/13Offer" 

offerforsubscriptionofGSharesinrespectofthe2012/13taxyear,beingmadeonthetermssetout 

inthisdocument 

"2013/14Offer" 

offerforsubscriptionofGSharesinrespectofthe2013/14taxyear,beingmadeonthetermssetout 

inthisdocument 

"AShares" 

Asharesof0.1peachinthecapitaloftheCompany(ISIN:GB00B3D74M80) 

"Admission" 

admissionoftheGShares tothepremiumsegmentoftheOfficialListandtotradingontheLondon 

StockExchange'smainmarketforlistedsecurities 

"AdviserCharge" 

fee, payable to an Intermediary, agreed with the Investor for the provision of a personal 

recommendationand/orrelatedservicesinrelationtoaninvestmentinGShares,anddetailedonthe 


"AnnualRunningCosts" 

annual running costs incurred by the Company in the ordinary course of its business (including 

irrecoverableVATbutexcludinganyamountpayableinrespectofthePerformanceIncentive) 

"Applicant" 

InvestorwhosubscribesforGShares pursuantto theProspectus 

"ApplicationForm(s)" 

formofapplicationforGShares undertheOfferssetoutattheendofthisdocument 

"Articles" 

articlesofassociationoftheCompany asatthedateofthisdocument 

"BusinessDays" 

anyday,otherthanaSaturdayorSunday,onwhichclearingbanksinLondonareopenforallnormal 

bankingbusiness 

"CShares" 

Csharesof0.1peachinthecapitaloftheCompany(ISIN:GB00B3D74S43) 

"ClosingDate" 

30April2013,unlesspreviouslyextendedbytheDirectors(buttonolaterthan9January2014) 

"Company" 

DowningPlannedExitVCT2plc(registerednumber05334418) 

"CREST" 

therelevantsystem(asdefinedintheUncertificatedSecuritiesRegulations2001(SI2001No.3755)) 

for the paperless settlement of transfers and the holding of Shares in uncertificated form which is 

administeredbyEuroclearUK&IrelandLimited(registerednumber02878738) 

"CRESTRegulations" 

UncertificatedSecuritiesRegulations1995(SI1995/3272) 

"DShares" 

Dsharesof0.1peachinthecapitaloftheCompany(ISIN:GB00B4VR3D16) 

"Directors"or"Board" 

directorsoftheCompany 

"Downing" 

DowningLLP,whichisauthorisedandregulatedbytheFinancialServicesAuthority(registerednumber 

OC341575;FSAnumber545025) 

"DowningVCTs" 

allVCTsmanagedoradvisedbyDowningLLPoritsexecutives 

"DTR" 

DisclosureandTransparencyRules,beingtherulespublishedbytheFSAfromtimetotimeandrelating 

tothedisclosureofinformationinrespectoffinancialinstruments 

"EShares" 

Esharesof0.1peachinthecapitaloftheCompany(ISIN:GB00B4TLF407) 

"ExecutiononlyTransaction" 

transactionexecutedbyanFSA authorisedfirmuponthespecificinstructionsofaclientwherethefirm 

doesnotgiveadviceormakeapersonalrecommendation 

"ExistingShareholders" 

holdersofExistingShares 

"ExistingShares" 

ASharesand/orCSharesand/orDSharesand/orESharesand/orFShares 

"FShares" 

Fsharesof0.1peachinthecapitaloftheCompany(ISIN:GB00B6ZS0J90) 

"FixedIncomeSecurities" 

investments made by the Company which do not comprise Qualifying Investments, such as bank 

deposits,loanstock,bonds,preferencesharesandotherdebtinstruments 

"FSA" 

FinancialServicesAuthority 

"FSMA" 

FinancialServicesandMarketsAct2000(asamended) 

"FullSubscription" 

£25millionraisedundertheOffers,ignoringtheoverallotment facility 

"GShareholders" 

holdersofGShares 

"GShares" 

Gsharesof0.1peachinthecapitaloftheCompany(ISIN:GB00B8Y7CS47) 

"GeneralMeeting" 

generalmeetingoftheCompany tobeheldon6March 2013 atwhichtheresolutionsdescribedin 

paragraph4.4ofPartIVoftheRegistrationDocumentwillbeproposed 

"Group" 

DowningPlannedExitVCT2plcanditswhollyownedsubsidiaryDowningManagers2Limited 

"Hurdle" 

achievementcalculatedonaperGShare basisof(a)aCompoundReturnofatleast7%perannumand 

(b)thepaymentordeemedpaymentofShareholderProceedsofatleast105.82pperGShare 

"Intermediary" 

authorisedintermediarywhosignstheApplicationFormandwhosedetailsaresetoutinBox7 ofthe 


"Investor" 

subscriberforGShares undertheOffers 

"IRR" 

internalrateofreturn,which,when appliedtotherelevantcashflows,producesanetpresentvalueof 

zero(expressedasapercentage) 

"ITA" 

IncomeTaxAct2007(asamended) 

"Listed" 

admittedtothepremiumsegmentoftheOfficialListandtotradingontheLondonStockExchange's 

mainmarketforlistedsecurities 

"ListingRules" 

listingrulesissuedby theFSA,actingastheUKListingAuthority,pursuanttoPartVIoftheFSMA 

13

"LondonStockExchange" 

"Management" 

"ManagementAShares" 

"ManagementEShares" 

"Manager" 

"MinimumSubscription" 

"MLRegulations" 

"NAV"or"NetAssetValue" 

"NetAssets" 

"NetReturn"or 

"CompoundReturn" 

"Notice" 

"OfferAgreement" 

"OfferPrice" 

"Offers" 

"OfficialList" 

"OrdinaryShareholders" 

"OrdinaryShares" 

"PerformanceIncentive" 

"PricingFormula" 

"Promoter" 

"Promoter’sFee" 

"Prospectus" 

"ProspectusRules" 

"QualifyingCompany/ies" 

"QualifyingInvestment" 

"Registrar" 

"RegistrationDocument" 

"RPI" 

"SecuritiesNote" 

"ShareholderProceeds" 

"Share(s)" 

"Shareholders" 

"Sponsor" 

"Spouse" 

"Summary" 

"TotalReturn" 

"UKListingAuthority" 

"VCT" 

"VCTRegulations" 

 

 

mainmarketforlistedsecuritiesoftheLondonStockExchangeplc (registerednumber02075721) 

individualsengagedinthebusinessoftheCompany,theManager and/orDowning 

3,587,523ASharesintheCompanyissuedtoManagementinconnectionwiththe2008Offer 

5,000,000ESharesintheCompanyissuedtoManagementinconnectionwiththe2009Offer 

Downing Managers 2 Limited, a wholly owned subsidiary of the Company (registered number 

05330621) 

minimumnetproceedsrequiredtoberaisedundertheOffers,being£1,000,000orsuchotheramount 

astheDirectorsdetermine 

MoneyLaunderingRegulations2007 

netassetvalueperShare 

grossassetslessallliabilities(excludingcontingentliabilities)oftheCompany 

internalrateofreturn,calculatedfromthedateofthelastallotmentofGSharesundertheOffers,on 

thecashflowsarisinginrespectofthegrossamountsubscribedforGSharesbasedonanOfferPriceof 

105.82p per G Share, the deemed receipt of 30% of such amounts (representing income tax relief 

thereon) six months later and the receipt of any Shareholder Proceeds. These cash flows will be 

calculatedonadailybasisandannualisedandareinrespectofGSharesissuedintheCompany 

noticeoftheGeneralMeetingoftheCompany assetoutinthecirculartoholdersofCSharesand/orD 

Sharesand/orFSharesdated10January2013 

agreementdated10 January 2013 betweentheCompany (1),theDirectors(2),theSponsor(3)and 

Downing(4),asummaryofwhichissetoutinparagraph7(a)ofPartIVoftheRegistrationDocument 

priceperGShare undertheOffers asdeterminedbythePricingFormulafromtimetotime 

together,the2012/13Offerandthe2013/14Offer, being offers forsubscriptionofupto35,000,000G 

Shares 

OfficialListoftheUKListingAuthority 

holdersofOrdinaryShares 

ordinarysharesof1peachinthecapitaloftheCompany 

performancerelatedincentivefeepayableintheeventthattheHurdlesareachieved,asdescribedin 

thisdocumentunderthesectionheaded"Charges" 

mechanism by which the pricing of the Offers may be adjusted accordingtothelatestpublished NAV, 

thelevelofthePromoter’sFeeandAdviserCharge,asdescribedonpage19ofthisdocument 

Downing 

fee payable to Downing, by the Company, calculated as a percentage of each Applicant’s gross 

subscriptionintheOffersinreturnforwhichDowningwillpaythelaunchcostsoftheOffers 

thisdocument,theRegistrationDocumentandtheSummarywhichtogetherdescribetheOfferinfull 

prospectusrulesissuedbytheFSA pursuanttoPartVI oftheFSMA 

unquotedcompany carryingonqualifyingtradeswhollyormainlyintheUnitedKingdomandwhich 

satisfycertainotherconditionsasdefinedinChapter4,Part6,oftheITA 

investmentinanunquotedtradingcompany,whichcomprisesaqualifyingholdingforaVCTasdefined 

inChapter4,Part6,oftheITA 

CapitaRegistrarsLimited (registerednumber02605568) 

documentwhichhasbeenpreparedinaccordancewiththeProspectusRulesinconnectionwiththe 

Offer 

inflationmeasuredbytheRetailPriceIndex 

thisdocumentwhichhasbeenpreparedinaccordancewiththeProspectusRulesinconnectionwith 

theOffers 

amounts paid by way of dividends or other distributions, share buybacks, proceeds on a sale or 

liquidationoftheCompanyandanyotherproceedsorvaluereceived,ordeemedtobereceived,byG 

ShareholdersintheCompany,excludinganyincometaxreliefonsubscription 

ASharesand/orCSharesand/orDSharesand/orE Sharesand/orFSharesand/orGShares (excluding 

ManagementASharesandManagementEShares),asapplicable 

holdersofShares 

HowardKennedyCorporateServicesLLP 

spouseorcivilpartner 

summaryoftheOfferspreparedinaccordancewiththeProspectusRules 

NAV,togetherwithcumulativedividendspaidorproposed, includingtaxcreditswherereclaimable 

FSAactinginitscapacityasthecompetentauthorityforthepurposesofPartVIoftheFSMA 

companyapprovedasaventurecapitaltrustunderSection274oftheITA 

TheVentureCapitalTrust(WindingUpandMergers)(Tax)Regulations2004(asamended) 

14

PartV–AdditionalInformation 

 

1. TheCompany 

1.1 Incorporation 

DowningPlannedExitVCT2plcwasincorporatedinEngland 

and Wales as a public limited company on 17 January 2005 

with registered number 05334418. The principle legislation 

under which the Company operates and under which the A 

Shares, C Shares, D Shares, E Shares, F Shares and G Shares 

have been created is the 2006 Act (together with statutory 

instrumentscreatedpursuantthereto). 

1.2 Borrowingpolicy 

TheDirectorsmayexerciseallthepowersoftheCompanyto 

borrow money and to mortgage or charge its undertakings, 

propertyanduncalledcapital.TheDirectorsshallrestrictthe 

borrowings of the Company and, by the exercise of the 

Company'svotingandotherrightsorpowersofcontrolover 

its subsidiary undertakings (if any), secure that they restrict 

their borrowings, so that the aggregate amount at any time 

outstanding in respect of money borrowed by the Group, 

being the Company and its subsidiary undertakings for the 

time being (excluding intragroup borrowings), shall not, 

withouttheprevioussanctionofanordinaryresolutionofthe 

Company, exceed a sum equal to 50% of the aggregate 

amountpaidonanysharesissuedbytheCompany(together 

withanypremiumpaidthereon). 

1.3 Cancellationofthesharepremiumaccount 

TheDirectorsareawareofthepossibilitythattheCompany's 

Shares may trade at a discount to their net asset value at 

somepoint.TheDirectorsconsiderthattheCompanyshould 

have the ability to purchase its Shares in the market (such 

Sharestobeautomaticallycancelled)withtheaimofreducing 

anydiscountandincreasingthenetassetvalueperShareof 

the remaining Shares. In the view of the Directors, the 

awarenessofInvestorsthattheCompanyhassuchacapability 

may tend to moderate the scale of any discount which may 

emergeandtheactionofbuyinginsharesshouldenableany 

suchdiscounttobenarrowed. 

 

 

The 2006 Act provides that a public company may only 

purchaseitsownsharesoutofdistributableprofitsoroutof 

theproceedsofafreshissueofSharesmadeforthepurpose 

ofthepurchase.SubjecttoconfirmationfromHMRevenue& 

Customs that such proposals will not adversely affect the 

Company’sVCTstatusandCourtapproval,theCompanymay 

decide to reduce and/or cancel the share premium account 

(createdontheissueoftheGSharespursuanttotheOffers) 

and to transfer the balance of the special reserve, which is 

establishedbythecancellationofaprevioussharepremium 

account,whichmaybetreatedasadistributableprofit,outof 

which purchases of Shares can be made, subject to 

regulations,VCTRulesandcompanylegislation. 

1.4 Stampdutyandclosecompanystatus 

TheCompanyhasbeenadvisedthatnostampdutyorstamp 

dutyreservetaxwillbepayableontheissueoftheGShares 

undertheOffers.OntheissueoftheGSharespursuanttothe 

Offers, the Company will not be a close company for tax 

purposes. 

1.5 Materialinterests 

TheManagerwillbepaidanannualinvestmentmanagement 

feeof2.0%oftheNetAssetsattributabletotheGShares.In 

linewithnormalVCTpractice,theManagerwillbeentitledto 

receive a Performance Incentive. Further details of these 

arrangementsaresetoutinPartIofthisdocument. 

 

1.6 Investorprofile 

AtypicalInvestorwillbearetailclient(notacorporate),who 

isaged18oroverandpaysUKincometax,whoalreadyhasa 

portfolio of nonVCT investments such as unit trusts/OEICs, 

investmenttrustsanddirectshareholdingsinlistedcompanies 

and has sufficient income and capital so that his/her 

investment in the Company can be held for over five years. 

The individual's income tax liability should be more than 

sufficienttoutilisealltheinitialincometaxreliefavailableon 

theinvestment.Theindividualshouldbewillingtoinvestover 

themediumtolongtermandbecomfortablewithhigherrisk 

investments. 

1.7 ResultsoftheOffers 

The results of the Offers will be announced through a 

regulatoryinformationserviceprovider. 

 

2. TaxationandHMRevenue&Customsapproval 

TheDirectorsintendtoconducttheaffairsoftheCompanyso 

thatitcontinuestosatisfytheconditionsforapprovalasaVCT 

and that such approval will be maintained. HM Revenue & 

CustomshasgrantedtheCompanyprovisionalapprovalasa 

VCTunderPart6oftheITA.TheCompanyintendstocomply 

with section 274 of the ITA and has retained 

PricewaterhouseCoopers LLP to advise it on VCT taxation 

matters. 

 

3. Working capital and capitalisation and indebtedness 

statements 

3.1 Workingcapital 

IntheopinionoftheCompany,theworkingcapitalavailable 

totheGroupissufficientforitspresentrequirements,thatis, 

foratleast12monthsfromthedateofthisdocument. 

3.2 Statementofcapitalisationandindebtedness 

ThetablebelowshowsthecapitalisationoftheCompanyasat 

31October2012(extractedfromtheunauditedmanagement 

accounts of the Company for the period ended 31 October 

2012). 

 

 

£'000 

Totalcurrentdebt 

 

Guaranteed 

 

Secured 

 

Unguaranteed/secured 

 

Totalnoncurrentdebt 

 

Guaranteed 

 

Secured 

 

Unguaranteed/secured 

 

Shareholders'equity 

 

Sharecapital 

53 

Otherreserves 23,991 

24,044 

 

Therehasbeennomaterialchangeinthecapitalisationofthe 

Company,totaldebtorshareholderequitysince31October 

2012,otherthanallotmentsofFSharesadding£982toshare 

capitaland£981,636tootherreserves. 

15

ThefollowingtableshowstheCompany'snetindebtednessasat 

31 October 2012 (extracted from the unaudited management 

accountsoftheCompanyfortheperiodended31October2012). 

 

 

£'000 

A Cash 3,948 

B Cashequivalent 

C TradingSecurities 

D Liquidity(A+B+C) 3,948 

 

 

E Currentfinancialreceivables 125 

F Currentbankdebt 

G Currentpositionofnoncurrentdebt 

H Othercurrentfinancialdebt 

 

 

I Currentfinancialdebt(F+G+H) 

 

 

J Netcurrentfinancialindebtedness 

(4,073) 

(IED) 

 

 

K Noncurrentbankloans 

L Bondsissued 

M Othernoncurrentloans 

N Noncurrentfinancialindebtedness 

 

(K+L+M) 

 

 

O Netfinancialindebtedness(J+N) (4,073) 

 

 

The Company does not have any contingent or indirect 

indebtedness. 

 

4. CreationoftheGShares 

The Company has issued a circular dated 10 January 2013 to 

holdersofCSharesand/orDSharesand/orFSharesconveninga 

generalmeetingon6March2013.Thefollowingresolutionswillbe 

proposed and are all conditional upon the passing of the other 

resolutionscontainedintheNotice: 

 

OrdinaryResolutions: 

1) to create G Shares having the rightsand being subject to 

the restrictions set out in the Articles, to be altered 

pursuanttoresolution5describedbelow; 

2) to authorise the Directors to allot up to an aggregate 

nominal amount of £38,500. The allotments referred to 

represent,inaggregate,approximately71.7%oftheissued 

share capital of the Company as at the date of this 

document. Such authority will expire on the later of 15 

monthsfromthedatetheresolutionispassedandtheend 

oftheCompany’snextannualgeneralmeeting; 

3) toapprovetheOfferAgreement; 

 

Specialresolutions: 

4) toauthorisetheDirectorstoallotthesharesreferredtoin 

resolution 2 as if section 561(1) of the 2006 Act did not 

apply.Thisdisapplicationrepresentsapproximately71.7% 

of the Company's current issued share capital. This 

authority will expire on the later of 15 months from the 

datetheresolutionispassedandtheendoftheCompany’s 

nextannualgeneralmeeting; 

5) to alter the Articles to, inter alia, provide for the rights 

attachingtotheGShares; 

6) to authorise the Board to make market purchases of G 

Shares;and 

7) toauthorisethecancellationofthesharepremiumaccount 

 

 

arisingontheissueoftheGShares. 

5. DetailsoftheGShares 

5.1 Distributionsofincomeandcapital 

G Shareholders shall be entitled to receive, in that capacity, 

dividends and any other distributions or a return of capital 

(otherwisethanonamarketpurchasebytheCompanyofanyof 

itsshares)outoftheassetsattributabletotheGShares,prorata 

totheirrespectiveholdingsofGShares. 

 

5.2 Distributionsofassetsonawindingup 

The capital and assets attributable to the G Shares shall on a 

windingupbedistributedonthesamebasisassetoutunderthe 

heading"Distributionsofincomeandcapital". 

 

5.3 Votingrights 

G Shareholders will be entitled to receive notice of, to attend, 

speak and vote at any general meeting, pari passu, in such 

respects with the holders of C Shares, D Shares and F Shares. 

EveryGShareholderpresentinpersonorbyproxyshallupona 

showofhandsoruponapoll,haveonevoteforeveryGShare 

heldbyhim/her. 

 

7. OverseasInvestors 

(a) No person receiving a copy of this document or an 

Application Form in any territory other than the UK may 

treat the same as constituting an offer or invitation to 

him/her to subscribe for or purchase G Shares unless, in 

such territory, such offer or invitation could lawfully be 

made. 

(b) Noactionhasbeentakentopermitthedistributionofthis 

document in any jurisdiction outside the UK where such 

action is required to be taken. All Applicants will be 

required to warrant that they are not a US person as 

definedinparagraph5(x)ofPartVIofthisdocumentora 

residentofCanada. 

 

7. Informationsourcedfromthirdparties 

Where information set out in this document has been sourced 

fromthirdpartiesthesourcehasbeenidentifiedattherelevant 

place in the document and the Company confirms that this 

information has been accurately reproduced and, as far as the 

Company is aware and able to ascertain from information 

published, no facts have been omitted which wouldrender the 

reproducedinformationinaccurateormisleading. 

 

10January2013 

16

PartVI–TermsandConditionsofApplication 

 

1. In these Terms and Conditions of Application, the expression 

"Prospectus"meansthisdocument,theRegistrationDocument 

andtheSummary,eachdated10January2013.Theexpression 

"Application Form" means the application form for use in 

accordance with these Terms and Conditions of Application. 

Savewherethecontentotherwiserequires,thetermsusedin 

the Application Form bear the same meaning as in the 

Prospectus. 

2. Therightisreservedtorejectanyapplicationortoacceptany 

applicationinpartonly.Multipleapplicationsarepermitted.If 

any application is not accepted, or if any contract created by 

acceptance does not become unconditional, or if any 

application is accepted for fewer G Shares than the number 

appliedfor,orifinanyothercircumstancesthereisanexcess 

paymentinrelationtoanapplication,theapplicationmoniesor 

the balance of the amount paid or the excess paid on 

applicationwillbereturnedwithoutinterestbypostattherisk 

of the Applicant. In the meantime application monies will be 

retainedintheCompany'sbankaccount. 

3. You may pay for your application for G Shares by cheque or 

bankers'draftsubmittedwiththeApplicationForm. 

4. The contract created by the acceptance of applications in 

respectofthefirstallotmentofGSharesundertheOfferswill 

beconditionalon: 

(a) theMinimumSubscriptionbeingreceivedby3.00p.m.onthe5 

April2013; 

(b) allresolutionsbeingpassedattheCompany'sGeneralMeeting 

to be held on 6 March 2013 or at a subsequent meeting, if 

adjourned;and 

(c) admissionoftheGShares(inrespectofsuchfirstallotmentof 

Shares)beinggrantednotlaterthan5:00p.m.on7May2013. 

Iftheconditionsarenotmet,theOfferswillbewithdrawnand 

subscriptionmonieswillbereturnedtoInvestorswithinseven 

days of 7 May 2013, at their own risk, without interest. The 

Offersarenotunderwritten. 

5. BycompletinganddeliveringanApplicationForm,you: 

(a) offertosubscribefortheamountspecifiedonyourApplication 

Form plus any commission waived for extra shares or any 

smallersumforwhichsuchapplicationisacceptedattheOffer 

Price, the Prospectus, these Terms and Conditions of 

Application, the memorandum ofassociation of the Company 

anditsArticles; 

(b) acknowledgethat,ifyoursubscriptionisaccepted,youwillbe 

allocated such number of G Shares as determined by the 

PricingFormula; 

(c) authorise your financial adviser, or whoever he or she may 

direct, the Registrar or the Company to send a document of 

titlefor,orcredityourCRESTaccountinrespectof,thenumber 

of G Shares for which your application is accepted, and/or a 

crossedchequeforanymoniesreturnable,bypostatyourrisk 

toyouraddressassetoutonyourApplicationForm; 

(d) agreethatyour application may notberevokedandthatthis 

paragraph constitutes a collateral contract between you and 

theCompanywhichwillbecomebindingupondespatchbypost 

or delivery of your duly completed Application Form to the 

Companyortoyourfinancialadviser; 

(e) warrant that your remittance will be honoured on first 

presentation and agree that, if such remittance is not so 

honoured,youwillnotbeentitledtoreceivesharecertificates 

fortheGSharesappliedforortoenjoyorreceiveanyrightsor 

distributions inrespect of such G Shares unless and until you 

make payment in cleared funds for such G Shares and such 

paymentisacceptedbytheCompany(suchacceptanceshallbe 

in its absolute discretion and may be on the basis that you 

indemnify it against all costs, damages, losses, expenses and 

liabilitiesarisingoutoforinconnectionwiththefailureofyour 

remittance to be honoured on first presentation) and that at 

anytimepriortounconditionalacceptancebytheCompanyof 

such late payment in respect of such G Shares, the Company 

may(withoutprejudicetoitsotherrights)treattheagreement 

toallotsuchGSharesasvoidandmayallotsuchGSharesto 

some other person, in which case you will not be entitled to 

anyrefundorpaymentinrespectofsuchGShares(otherthan 

returnofsuchlatepaymentatyourriskandwithoutinterest); 

(f) agree that all cheques and bankers' drafts may be presented for 

paymentontheduedatesandanydefinitivedocumentoftitleand 

anymoniesreturnabletoyoumayberetainedpendingclearanceof 

your remittance and the verification of identity required by the ML 

Regulationsandthatsuchmonieswillnotbearinterest; 

(g) undertake to provide satisfactory evidence of identity within such 

reasonable time (in each case to be determined in the absolute 

discretion of the Company and the Sponsor) to ensure compliance 

withtheMLRegulations; 

(h) agree that, in respect of those G Shares for which your application 

has been received and processed and not rejected, acceptance of 

your application shall be constituted by the Company instructing 

DowningortheRegistrartoenteryournameontheshareregister; 

(i) agree that all documents in connection with the Offer and any 

returnedmonieswillbesentatyourriskandmaybesenttoyouat 

youraddressassetoutintheApplicationForm; 

(j) agreethat,havinghadtheopportunitytoreadtheProspectus,you 

shall be deemed to have had notice of all information and 

representationsincludingtheriskfactorscontainedtherein; 

(k) confirmthat(saveforadvicereceivedfromyourfinancialadviser)in 

makingsuchapplicationyouarenotrelyingonanyinformationand 

representationotherthanthosecontainedintheProspectusandyou 

accordinglyagreethatnopersonresponsiblesolelyorjointlyforthe 

Prospectusoranypartthereoforinvolvedinthepreparationthereof 

will have any liability for any such other information or 

representation; 

(l) agreethatallapplications,acceptancesofapplicationsandcontracts 

resulting therefrom under the Offers shall be governed by and 

construedinaccordancewithEnglishLawandthatyousubmittothe 

jurisdictionoftheEnglishCourtsandagreethatnothingshalllimitthe 

rightoftheCompanytobringanyaction,suitorproceedingsarising 

out of or in connection with any such applications, acceptances of 

applicationsandcontractsinanyothermannerpermittedbylawor 

inanycourtofcompetentjurisdiction; 

(m) irrevocablyauthorisetheCompany,theRegistrarorDowningorany 

other person authorised by any of them, as your agent, to do all 

thingsnecessarytoeffectregistrationofanyGSharessubscribedby 

orissuedtoyouintoyournameandauthoriseanyrepresentativesof 

the Company, the Registrar or Downing to execute any documents 

required therefore and to enter your name on the register of 

membersoftheCompany; 

(n) agree to provide the Company with any information which it may 

request in connection with your application or to comply with the 

VCT Regulations or other relevant legislation (as the same may be 

amendedfromtimetotime)includingwithoutlimitationsatisfactory 

evidenceofidentitytoensurecompliancewiththeMLRegulations; 

(o) warrantthat,inconnectionwithyourapplication,youhaveobserved 

the laws of all requisite territories, obtained any requisite 

governmental or other consents, complied with all requisite 

formalities and paid any issue, transfer or other taxes due in 

connectionwithyourapplicationinanyterritoryandthatyouhave 

not taken any action which will or may result in the Company, 

Downing or the Sponsor acting in breach of the regulatory or legal 

requirements of any territory in connection with the Offer or your 

application; 

(p) confirmthatyouhavereadandcompliedwithparagraph6below; 

(q) confirm that you have reviewed the restrictions contained in 

paragraph7below; 

(r) warrantthatyouarenotundertheageof18years; 

(s) warrant that, if the laws of any territory or jurisdiction outside the 

United Kingdom are applicable to your application, you have 

compliedwithallsuchlawsandnoneoftheCompany,Downing or 

theSponsororanyoftheirrespectiveagentswillinfringeanylawsof 

anysuchterritoryorjurisdictiondirectlyorindirectlyasaresultorin 

consequenceofanyacceptanceofyourapplication; 

(t) agreethatDowningandtheSponsorareactingfortheCompanyin 

connectionwiththeOfferandfornooneelseandthattheywillnot 

treat you as their customer by virtue of such application being 

accepted or owe you any duties or responsibilities concerning the 

priceofGSharesorconcerningthesuitabilityofGSharesforyouor 

beresponsibletoyoufortheprotectionsaffordedtotheircustomers; 

 

17

(u) warrant that if you sign the Application Form on behalf of 

somebody else or yourself and another or others jointly or a 

corporation you have the requisite power to make such 

investmentsaswellastheauthoritytodosoandsuchperson 

willalsobeboundaccordinglyandwillbedeemedalsotohave 

given the confirmations, warranties and undertakings 

contained in these terms and conditions of application and 

undertake (save in the case of signature by an authorised 

financialadviseronbehalfoftheInvestor)toencloseapower 

ofattorneyoracopythereofdulycertifiedbyasolicitorwith 

theApplicationForm; 

(v) warrantthatyouarenotsubscribingfortheGSharesusinga 

loanwhichwouldnothavebeengiventoyouoranyassociate, 

ornotgiventoyouonsuchfavourableterms,ifyouhadnot 

beenproposingtosubscribefortheGShares; 

(w) warrantthattheGSharesarebeingacquiredbyyouforbona 

fide investment purposes and not as part of a scheme or 

arrangement the main purpose of which, or one of the main 

purposesofwhich,istheavoidanceoftax.Obtainingtaxreliefs 

given under the applicable VCT legislation is not of itself tax 

avoidance; 

(x) warrantthatyouarenota"USperson"asdefinedintheUnited 

States Securities Act of 1933 (as amended) nor a resident of 

Canada and that you are not applying for any G Shares on 

behalfoforwithaviewtotheiroffer,saleordelivery,directly 

orindirectly,toorforthebenefitofanyUSpersonorresident 

ofCanada;and 

(y) warrantthattheinformationcontainedintheApplicationForm 

isaccurate. 

6. NopersonreceivingacopyoftheProspectus,oranApplication 

Form,inanyterritoryotherthantheUnitedKingdommaytreat 

the same as constituting an invitation or offer to him or her, 

nor shouldhe or she in any event use such ApplicationForm 

unless, in the relevant territory, such an invitation or offer 

couldlawfullybemadetohimorherorsuchApplicationForm 

could lawfully be used without contravention of any 

registrationorotherlegalrequirements.Itistheresponsibility 

ofanypersonoutsidetheUnitedKingdomwishingtomakean 

applicationhereundertosatisfyhimselforherselfastothefull 

observanceofthelawsofanyrelevantterritoryinconnection 

therewith, including obtaining any requisite governmental or 

otherconsents,observinganyoftheformalitiesrequiringtobe 

observed in such territory and paying any issue, transfer or 

othertaxesrequiredtobepaidinsuchterritory. 

7. TheGShareshavenotbeenandwillnotberegisteredunderthe 

United States Securities Act 1933, as amended, or under the 

securities laws of any state or other political subdivision of the 

UnitedStates,andmaynotbeofferedorsoldintheUnitedStates 

ofAmerica,itsterritoriesorpossessionsorotherareassubjecttoits 

jurisdiction(the"USA").Inaddition,theCompanyhasnotbeenand 

willnotberegisteredundertheUnitedStatesInvestmentCompany 

Actof1940,asamended.TheManagerwillnotberegisteredunder 

theUnitedStatesInvestmentAdviserActof1940(asamended).No 

applicationwillbeacceptedifitbearsanaddressintheUSA. 

8. This application is addressed to the Company and the Sponsor. 

TherightsandremediesoftheCompanyandtheSponsorunder 

theseTermsandConditionsofApplicationareinadditiontoany 

rightsandremedieswhichwouldotherwisebeavailabletoeither 

of them, and the exercise or partial exercise of one will not 

preventtheexerciseofothers. 

9. ThedatesandtimesreferredtointheseTermsandConditionsof 

ApplicationmaybealteredbytheCompanywiththeagreement 

oftheSponsor. 

10. Intermediarieswhohavenotprovidedpersonalrecommendationsor 

advice to UK retail clients on the Offer Shares and who, acting on 

behalf of their clients, return valid Application Forms bearing their 

stamp and FSA number may be entitled to commission on the 

amountpayableinrespectoftheOfferSharesallocatedforeachsuch 

Application Form at the rates specified in the paragraph headed 

"Commission"inPartVIIofthisdocument.Intermediariesmayagree 

to waive part or all of their initial commission in respect of an 

application for Shares under the Offers. If this isthe case, then the 

offer charges will be adjusted, in accordance with the Pricing 

Formula. Intermediaries should keep a record of Application Forms 

submitted bearing their stamp to substantiate any claim for their 

commission. 

11. Thesectionheaded"NotesonApplicationForm"formspartofthese 

TermsandConditionsofApplication. 

12. It is a condition of the Offers to ensure compliance with the ML 

Regulations.Downingisthereforeentitledtorequire,atitsabsolute 

discretion, verification of identity from any Applicant including, 

withoutlimitation,anypersonwhoeither(i)tenderspaymentbyway 

ofachequeorbankers'draftdrawnonanaccountinthenameofa 

personorpersonsotherthantheApplicantor(ii)appearstoDowning 

tobeactingonbehalfofsomeotherperson.Pendingtheprovisionof 

evidencesatisfactorytoDowningastotheidentityoftheApplicant 

and/or any person on whose behalf the Applicant appears to be 

acting,Downingmay,initsabsolutediscretion,retainanApplication 

FormlodgedbyanApplicantand/orthechequeorotherremittance 

relatingtheretoand/ortheRegistrarmaynotentertheApplicanton 

theregisterofmembersorissueanysharecertificatesinrespectof 

suchapplication.Ifverificationofidentityisrequired,thismayresult 

in delay in dealing with an application and in rejection of the 

application. The Company reserves the right, in its absolute 

discretion, for it or Downing to reject any application in respect of 

which Downing considers that, having requested verification of 

identity,ithasnotreceivedevidenceofsuchidentitysatisfactorytoit 

by such time as was specified in the request for verification of 

identityorinanyeventwithinareasonableperiod.Intheeventofan 

application being rejected in any such circumstances, the Company 

reserves the right in its absolute discretion, but shall have no 

obligation, to terminate any contract of allotment relating to or 

constituted by such Application Form (in which event the money 

payableorpaidinrespectoftheapplicationwillbereturned(without 

interest) to the account of the drawee bank from which such sums 

were originally debited) and/or to endeavour to procure other 

subscribers for the G Shares in question (but in each case without 

prejudicetoanyrightstheCompanymayhavetotakeproceedingsto 

recoverinrespectoflossordamagesufferedorincurredbyitasa 

result of the failure to produce satisfactory evidence as aforesaid). 

ThesubmissionofanApplicationFormwillconstituteanundertaking 

bytheApplicanttoprovidepromptlytoDowningsuchinformationas 

may be specified by it as being required for the purpose of the 

MLRegulations. 

13. Therightisalsoreservedtotreatasvalidandbindinganyapplication 

notcomplyingfullywiththeseTermsandConditionsofApplicationor 

notinallrespectscomplyingwiththeNotesonApplicationForm.In 

particular, but without limitation, the Company may accept 

applications made otherwise than by completion of an Application 

Form where the Applicant has agreed in some other manner 

acceptabletotheCompanytoapplyinaccordancewiththeseTerms 

andConditionsofApplication. 

14. The Company and/or Downing may use the information you give for 

administration, research and/or statistical purposes. Your details may 

beusedbytheCompanyand/orDowning(butwillnotbesoldtothird 

parties) to send you information on other potential investment 

opportunities(maximumsixcommunicationsperannum).Ifyouwould 

prefernottoreceivesuchinformation,pleasewritetoDowning. 

15. Theminimumsubscriptionis£5,000subjecttotheBoard'sdiscretion. 

16. The application of the subscription proceeds is subject to the 

absolutediscretionoftheDirectors. 

 

18

PartVII–OfferDetails&Charges 

 

AdviserCharges,pricingoftheOffersandcommission 

CommissionisgenerallynotpermittedtobepaidtoIntermediarieswhoprovideapersonalrecommendationtoUKretailclientson 

investments in VCTs after 30 December 2012. Instead of commission being paid by the Company, a fee will usually be agreed 

betweentheIntermediaryandInvestorfortheadviceandrelatedservices(“AdviserCharge”).Thisfeecaneitherbepaiddirectly 

bytheInvestortotheIntermediaryor,ifitisaninitialoneofffee,thepaymentofsuchfeemaybefacilitatedbyDowningPlanned 

ExitVCT2.OngoingfeestoIntermediarieswillnotbefacilitatedbytheCompany.IfthepaymentoftheAdviserChargeistobe 

facilitatedbytheCompany,thentheInvestorisrequiredtospecifytheamountofthechargeontheApplicationForm(seeBox3). 

TheInvestorwillbeissuedfewerGShares(totheequivalentvalueoftheAdviserCharge)throughthePricingFormulasetout 

below.TheAdviserChargeisinclusiveofVAT,ifapplicable. 

 

Commission is permitted to be paid to Intermediaries in certain limited situations, such as in respect of executiononly clients 

(where no advice orpersonal recommendation has been provided). The level of the Promoter’s Fee appliedtoeachInvestor’s 

applicationreflectswhetherornotcommissionispayable. 

 

Promoter’sFee(noIntermediarycommissionpayable) 

DowningwillchargetheCompanyaPromoter’sFeeof3.5%ofthemoniessubscribed,whereitisnotrequiredtopaycommission 

toanIntermediary. 

 

Promoter’sFee(Intermediarycommissionpayable) 

DowningwillchargetheCompanyaPromoter’sFeeof5.5%ofthemoniessubscribed,whereitisrequiredtopaycommissiontoan 

Intermediary.OutofitsPromoter’sFees,Downing(notInvestors)willberesponsibleforpayingallthecostsoftheOffers,including 

initialandtrailcommission(asdescribedundertheparagraphheaded"Commission"below)toIntermediaries(whereapplicable). 

 

PricingoftheOffers 

ThenumberofGSharestobeissuedtoeachApplicantwillbecalculatedbasedonthefollowingPricingFormula(roundeddownto 

thenearestwholeGShare): 

 

NumberofGShares = 

 

 

Amountsubscribed,less: 

(i)initialPromoter’sFee 1 ;and(ii)AdviserCharge(ifany) 

÷ 

1 lessanyreductionfortheearlyapplicationsand/orcommissionwaivedbyIntermediaries(whereapplicable) 

2 adjustedforanydividendsdeclaredandexdividendbutnotyetpaid,asappropriate 

 

Illustrativeexamples(basedonasubscriptionundertheOffersof£10,000andaNAVperGShareof£1) 

 

(i) 

(ii) 

(iii) 

 

 

(iv) 

Promoter’sFee(commissionpayable)5.5%=£550 

NumberofGShares=(10,000–550–0)÷1=9,450 

 

Promoter’sFee(nocommission)3.5%=£350 

ExampleAdviserCharge=£225 


 

Promoter’sFee(nocommission)3.5%=£350 

ExampleAdviserCharge=£400 


 

Promoter’sFee(nocommission)applicationreceivedby28February2013*2.5%=£250 

ExampleAdviserCharge=nil(feebeingpaiddirectlybyclienttoIntermediaryordirectapplication) 


19 

LatestpublishedNAV 

perGShare 2 

 

applicationsreceivedandacceptedby28February2013benefitfroma1%reductioninthePromoter’sFee. 

 

ItshouldbenotedthattheexampleAdviserChargessetoutabovehavebeenprovidedtoillustratethepricingoftheOffersand 

shouldnotbeconsideredasarecommendationastotheappropriatelevelsofAdviserCharges. 

 

Incometaxreliefisavailableonthetotalamountsubscribed,subjecttoVCTRulesandpersonalcircumstances,whichineachof 

theaboveexampleswouldbe£3,000(£10,000at30%). 

 

ThenumberofGSharesissuedundertheOfferswillbeaffectedbya“blended”issuecost,becauseApplicantswillhaveadifferent 

issue cost attributable to their application forG Shares undertheOffers depending upon whethertheir Applicationisreceived 

directly,throughanexecutiononlybrokerorthroughanIntermediaryprovidingadvice. 

 

Commission 

CommissionmaybepayablewherethereisanExecutiononlyTransactionandnoadvicehasbeenprovidedbytheIntermediaryto 

the Investor or where the Investor is a professional client of the Intermediary. Commission is payable by Downing out of its 

Promoter’sFee.ThoseIntermediarieswhoarepermittedtoreceivecommissionwillusuallyreceiveaninitialcommissionof2%of 

the amount invested by their clients under the Offers. Additionally, provided that the Intermediary continues to act for the 

Investor and the Investor continues to be the beneficial owner of the G Shares, and subject to applicable regulations, the 

Intermediarywillusuallybepaidanannualtrailcommissionof0.25%oftheNetAssetValueoftheirclients'holdingsforthelifeof 

thisinvestment(subjecttoacaponthecumulativetrailcommissionof4.5%onthegrossproceedsoftheOffers).Trailcommission 

willbepaidannuallyinJune(commencingJune2014basedontheauditedNetAssetValueatthepreceding31January).Boththe 

initialandannualtrailcommissionwillbepayablebyDowningoutofitsfees.

THISPAGEISINTENTIONALLYBLANK

1 

2 

3 

4 

5 

6 

7 

NotesonApplicationForm 

 

BeforemakinganapplicationtoacquireGSharesyouarestronglyrecommendedtoconsultanappropriatefinancialadviserauthorisedunderthe 

FinancialServicesandMarketsAct2000.ItisessentialthatyoucompleteallpartsoftheApplicationForminaccordancewiththeinstructionsin 

thesenotes.PleasesendthecompletedApplicationForm,togetherwithyourchequeorbankers'draft,bypost,ordeliveritbyhand,toDowning 

LLP,10LowerGrosvenorPlace,LondonSW1W0EN.IfyouhaveanyquestionsonhowtocompletetheApplicationFormpleasecontactDowningLLP 

on02074167780oryourfinancialadviser. 

 

ThefollowingnotesshouldbereadinconjunctionwiththeApplicationFormandtheTermsandConditionsofApplication. 

 

InsertinBox1inBLOCKCAPITALSyourfullname,permanentaddress,daytimetelephonenumber,dateofbirth,NationalInsurancenumberand,if 

youhaveone,youremailaddress.Jointapplicationsarenotpermitted. 

 

 

Insert(infigures)inBoxAthetotalamountyouwishtoinvestundertheOffersinrespectofthe2012/13taxyear(statenilifappropriate).Insert(in 

figures)inBoxBtheamountyouwishtoinvestundertheOffersinrespectofthe2013/14taxyear(statenilappropriate).Insert(infigures)thetotal 

of Boxes A and B in Box C. This is the total amount you are subscribing under the Offers. Share subscriptions will be adjusted to reflect any 

commissionwaived(byagents)asextraGShares. 

 

Pleasenotethattheminimuminvestmentis£5,000(orsuchloweramountattheBoard'sdiscretion).Themaximuminvestment,onwhichtax 

reliefsoninvestmentsinVCTsareavailable,is£200,000ineachofthe2012/13and2013/14taxyears. 

 

Attachyourchequeorbankers'drafttotheApplicationFormfortheexactamountshowninBoxC.Yourchequeorbankers'draftmustbemade 

payableto"DowningPlannedExitVCT2plc".Yourpaymentmustrelatesolelytothisapplication. 

 

 

MoneyLaunderingRegulations2007–Importantnoteforapplicationsof£12,000ormore 

Ifthevalueofthesharesappliedforis£12,000ormore(orisoneofaseriesoflinkedapplications,thevalueofwhichexceedsthatamount) 

paymentshouldbemadebymeansofachequedrawnonanaccountinthenameoftheApplicant.Ifthisisnotpracticableandyouusea 

chequedrawnbyathirdpartyorabuildingsocietychequeorbankers'draft,youshouldwritethename,addressanddateofbirthofthe 

Applicantonthebackofthechequeorbankers'draftand: 

(a) ifabuildingsocietychequeorbankers'draftisused,thebuildingsocietyorbankmustalsoendorseonthechequeordraftthename 

andaccountnumberofthepersonwhoseaccountisbeingdebited;or 

(b) ifachequeisdrawnbyathirdparty,youmustensurethatoneitemfromeachofListAandListB(seebelow)isenclosedwiththeform. 

Alternatively,verificationoftheApplicant'sidentitymaybeprovidedbymeansofa"LetterofIntroduction"intheprescribedformfromaUK 

orEuropeanEconomicAreafinancialinstitution(suchasabankorstockbroker)orotherregulatedperson(suchasasolicitor,accountantor 

appropriatefinancialadviser)whoisrequiredtocomplywiththeMLRegulations.Therelevantfinancialinstitutionorregulatedpersonwill 

befamiliarwiththerequirementsandtherelevantform. 

 

ListA(VerificationofIdentity) 

Currentsignedpassport 

CurrentUKDrivingLicence 

HMRevenueandCustomsTaxNotification 

FirearmsCertificate 

Forapplicationsof£12,000ormoreandsubscriptionbywayofachequedrawnbyathirdparty 

(oneitemfromListAANDoneitemfromListB) 

ListB(VerificationofAddress) 

Recent*utilitybill(butnotamobiletelephonebill) 

Recent*localauthoritytaxbill 

Recent*bankorbuildingsocietystatement 

Recent*mortgagestatementfromarecognisedlender 

Pleasesendoriginal(notpassportordriving licence) or certified copies ofthedocuments.CertifiedasatruecopyoftheoriginalbyaUKlawyer, 

banker, authorised financial intermediary (e.g. financial adviser or an FSA authorised mortgage broker), accountant, teacher, doctor, minister of 

religion,postmasterorsubpostmaster.Thepersoncertifyingthedocumentshouldstatethatthecopyisatruecopyoftheoriginal,printtheirname, 

address,telephonenumberandprofessionandsignanddatethecopy.*"Recent"meansdatedwithinthelastthreemonths. 

 

 

Nomoneylaunderingverificationisrequiredtobeenclosediftheapplicationisforlessthan£12,000orifpaymentisbymeansofacheque 

drawnonanaccountinthenameoftheApplicant(providedthat(a)thechequeincludesdetailsoftheApplicant'sbankaccountorbuildingsociety 

account(asapplicable)and(b)thechequeisdrawnonaUKorEuropeanUnionauthorisedbankorcreditinstitution).Pleasenote,however,that 

Downing may, in its absolute discretion, require Money Laundering verification and that Money Laundering verification will be required by 

introducingfinancialadvisers. 

 

IfyouhaveagreedanupfrontAdviserChargeforpersonaladviceprovidedinrespectofthisinvestmentandwouldliketheCompanytofacilitatethe 

paymentofsuchfee,pleasesetouttheamount,eitherasapercentageoftheamountinvested(e.g.“3%”)oranamountinpounds(e.g.“£500”)in 

Box3.Pleasenote,theCompanydoesnotfacilitateongoingAdviserCharges.TheAdviserChargeisinclusiveofVAT,ifapplicable. 

 

Read the declaration and sign and date the Application Form in Box 4. If someone other than the Applicant named in Box 1 signs on such 

Applicant'sbehalf,suchsignatorymustensurethatthedeclarationgivenonbehalfofsuchApplicantiscorrect. 

 

 

 

Ifyouwishtohavedividendspaidintoyournominatedbankorbuildingsocietyaccount,pleasecompletethemandateinstructionform. 

 

 

 

 

Leaveblankifyouwishtoreceiveasharecertificateinrespectofyourinvestment.IfyourequireyoursharestobeissuedelectronicallytoaCREST 

account,pleasecompletetheboxes. 

 

 

TobecompletedbyIntermediariesonly.Intermediarieswhoareentitledtoreceivecommissionshouldstampandcompletetheagent'sbox,giving 

theirfullnameandaddress,telephonenumberanddetailsoftheirauthorisationundertheFinancialServicesandMarketsAct2000.Therightis 

reservedtowithholdpaymentofcommissioniftheCompanyisnot,atitssolediscretion,satisfiedthattheagentissoauthorised,orthatpaymentof 

suchcommissionisormaybeinbreachofanyapplicablerulesorregulations.InorderforcommissionorAdviserChargetobepaidbyBACS,please 

completetherelevantboxes. 

 

Investors and their Intermediaries should provide an email address if they require the receipt of the Application Form to be 

acknowledged.

DOWNINGPLANNEDEXITVCT2PLC 


 

Makeyourchequeorbankers'draftoutto"DowningPlannedExitVCT2plc"andreturnthisformassoonaspossibleto 

DowningLLP,10LowerGrosvenorPlace,LondonSW1W0EN.Theclosingdateforthe2012/13Offerwillbe3.00p.m.on5April2013and, 

forthe2013/14Offerwillbe3.00p.m.on30April2013(unlessextendedorfullysubscribedearlier). 

 

1 

Titleandnameinfull 

Permanentaddress 

 

 

ExistingDowningVCT 

shareholder?Y/N 

 

 

Postcode 

 

Daytimetel 

 

Emailaddress 

 

Dateofbirth 

NationalInsuranceno 

 

 

InvestorsandtheirIntermediariesarerequiredtoprovideanemailaddressiftheyrequirethereceiptoftheApplicationFormtobeacknowledged. 

 

IamapplyingforGSharesasfollows: 

2 

2012/13taxyear 2013/14taxyear Total(A+B) 

 

A £ B £ C £ 

Min£5,000 

 

OrsuchlessersumforwhichthisapplicationmaybeacceptedontheTermsandConditionsofApplicationsetoutinPartVIofthisdocument. 

Pleasesendmeacertificate(s)confirmingmyentitlementtoVCTtaxreliefs. 

 

3 

AdviserCharge 

IfyouhaveagreedanAdviserChargewithyourIntermediaryandrequestthatthe 

Company pays that fee, please insert the fee in this box. Please note that the 

number of G Shares issued to you will be reduced by the amount of the Adviser 

Charge.ThispaymentisinclusiveofVAT,ifapplicable. 

Stateaseitherasumofmoney 

(in £) or as a % of the amount 

subscribedinBoxCabove 

 

 

BYSIGNINGTHISFORMIHEREBYDECLARETHAT:(i)IhavehadanopportunitytoreceivetheProspectusdated10January2013andtoreadthe 

termsandconditionsofapplicationtherein;(ii)IwillbethebeneficialowneroftheGSharesinDowningPlannedExitVCT2plcissuedtome 

pursuanttotheOffers;and(iii)tothebestofmyknowledgeandbelief,theparticularsIhavegiventoDowningPlannedExitVCT2plcarecorrect. 

 

 

4 

5 

 

Signature 

HMRevenue&CustomsmayinspectthisApplicationForm.Itisaseriousoffencetomakeafalsedeclaration. 

 

 

 

 

 

Date / / 

DIVIDENDMANDATE 

DividendsmaybepaiddirectlyintoShareholders'bankorbuildingsocietyaccounts.Inordertofacilitatethis,pleasecompletethe 

mandateinstructionformbelow.PleasenotethatifyouareanExistingShareholderthisinstructionappliestoallofyourshareholdings 

intheCompanyandcompletingtheformbelowwilldirecttheCompanytosendalldividendpaymentsdueonallyourshareholdingsin 

the Company to this bank account. Dividends paid directly to your account will be paid in cleared funds on the dividend payment 

dates. Your bank or building society statement will identify details of the dividend as well as the dates and amounts paid. By 

completingthedetailsbelowIaminstructingtheCompanytoforward,untilfurthernotice,alldividendsthatmayfromtimetotime 

becomedueonanySharesnowstanding,orwhichmayhereafterstand,inmynameintheregisterofmembersofDowningPlanned 

ExitVCT2plctothebankorbuildingsocietyaccountlistedbelow. 

Nameofbankorbuildingsociety: 

Branch: 

Branchaddress: 

Accountname: 

 

Sort 

code: 

 

 

 

 

 

 

Accountnumber: 

(pleasequotealldigitsandzeros) 

 

Signed: 

 

 

TheCompanyandDowningLLPdonotacceptresponsibilityifanydetailsprovidedbyyouareincorrect. 

ForOfficialUseOnly ML TT

6 

CREST 

CompletethisboxonlyifyourequireyoursharestobeissuedelectronicallytoaCRESTaccount. 

 

CRESTparticipantID: 

 

CRESTmemberaccountID: 

Participantname: 

Participantaddress: 

Participantpostcode: 

 

 

 

 

 

7 

ContactnameforCRESTqueries: Contacttelephone: 

Signed: 

TOBECOMPLETEDBYINTERMEDIARIESONLY 

Contactname: 

(foradministration) 

Intermediaryname: 

 

 

 

 

Firmname: 

Address: 

 

Allenbridge 

6 Grosvenor Street 

Mayfair, London 

Postcode: W1K 4PZ Tel: 

FSANo: 197107 Email: 

 

 

Tickthisboxifyouarepermittedtoreceive 

commissioninrespectofthisapplicationin 

compliancewithCOBS6.1AoftheFSAHandbook. 

 

() 

Reason: 

TickthisboxiftheAdviserChargestatedinBox3hasbeenagreedwithyourclientandcomplieswithCOBS6.1A 

oftheFSAHandbook. 

 

PleaseprovidedetailsofyourbankorbuildingsocietyaccountsothatcommissionortheAdviserCharge(asapplicable)can 

bepaidtoyouviaBACS. 

 

Nameofbankorbuildingsociety: 

Branch: 

Accountname: 

 

Sortcode: 

 

 

Emailaddressforcommission 

statements: 

 

 

 

 

 

 

 

Accountnumber: 

(pleasequotealldigitsandzeros) 

TheCompanyandDowningLLPdonotacceptresponsibilityifanydetailsprovidedbyyouareincorrect. 

 

 

 

Signed: 

 

 

 

Position: 

()

10 Lower Grosvenor Place 

London SW1W 0EN 

Tel: 020 7416 7780 

Email: vct@downing.co.uk 

Web: www.downing.co.uk 

Downing LLP is authorised and regulated by the Financial Services Authority

Downing Planned Exit VCT 2 - G Shares - The Tax Shelter Report

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