Downing Planned Exit VCT 2 - G Shares - The Tax Shelter Report
Downing Planned Exit VCT 2 - G Shares - The Tax Shelter Report
Downing Planned Exit VCT 2 - G Shares - The Tax Shelter Report
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Charges<br />
<br />
Annualfees<br />
<strong>The</strong>Managerwillreceiveannualinvestmentmanagementfeesof2%oftheNetAssetsattributabletotheG<strong>Shares</strong>.Itwillalso<br />
receiveanannualfeeof£55,000(plusVAT,ifapplicable,andRPI)foradministrationservices,whichwillbeallocatedacrossall<br />
sharepools.<strong>The</strong>AnnualRunningCostsoftheGSharepoolarecappedat3.5%(includingirrecoverableVAT)oftheCompany'sNet<br />
AssetsattributabletotheG<strong>Shares</strong>andanyexcesswillbepaidbytheManager,orrefundedbywayofareductioninitsfees.<br />
AnnualRunningCostsinclude,interalia,Directors'fees,feesforauditandtaxationadvice,registrar'sfees,costsofcommunicating<br />
withShareholdersandinvestment management fees, but notthe PerformanceIncentive.Generalrunningcostsnotspecificto<br />
eithertheExistingSharepoolorGSharepoolwillbeallocatedbasedontheweightedaverageproratanetassetsofeachpool,<br />
subjecttothediscretionoftheBoard.<br />
<br />
Othercosts<br />
<strong>Downing</strong>mayreceivefeesfrominvesteecompanies.Inparticular,<strong>Downing</strong>willreceivearrangementfees(cappedat1%ofthe<br />
sums invested by the Company, with any excess paid tothe Company) and monitoring fees (capped at £10,000 per annum in<br />
respectofeachoftheCompany'sinvestments)frominvesteecompanies.Costsincurredonabortiveinvestmentproposalswillbe<br />
theresponsibilityof<strong>Downing</strong>.<br />
<br />
PerformanceIncentive<br />
As is customary in the venture capitalindustry, the Manager will be entitled toreceive a performancerelated incentive based<br />
uponreturnstoShareholders.<br />
<br />
<strong>The</strong>PerformanceIncentiveinrespectoftheG<strong>Shares</strong>willhavenoimpactonExistingShareholders.<strong>The</strong>PerformanceIncentiveis<br />
designedtoencouragesignificantandtimelydistributionstoGShareholders,bothintermsofannualdividendsandrepaymentof<br />
capitalafterfiveyears.<strong>The</strong>PerformanceIncentivewillonlybecomepayableifGShareholders:(i)havetheopportunitytoreceive<br />
ShareholderProceedsofatleast105.82pperGShare(excludinginitialincometaxrelief);and(ii)achieveataxfreeCompound<br />
Return of at least 7% per annum (after allowing for income tax relief on investment) (together the "Hurdles"). 105.82p is the<br />
assumedgrossissuepriceperGSharebasedonaninitialNAVof100pandissuecostsof5.5%.<br />
<br />
IftheHurdlesaremet,thePerformanceIncentivewillbe3pperGShareplus20%ofthefundsavailableabove105.82pperG<br />
Share(fordistributiontoGShareholdersandthepaymentofthePerformanceIncentive).<strong>The</strong>PerformanceIncentivewillonlybe<br />
paidtotheextentthattheHurdlescontinuetobemetandwillbesubjecttoamaximumamount(overtheperiodtowhenanexit<br />
isprovidedinapproximatelysixyears)equivalentto7pperGShare(basedonthenumberofG<strong>Shares</strong>inissueatthecloseofthe<br />
Offers). Investors choosing to roll over rather than exit their investment after five years will be deemed to have received<br />
ShareholderProceedsforthepurposesofthecalculationofthePerformanceIncentive.AnewPerformanceIncentivewillbeputin<br />
placeaftersixyears,subjecttoShareholderapproval.<br />
<br />
Forexample,ifthetotalfundsavailablefordistributionoversixyearswere115.82pperGShare,thePerformanceIncentivewould<br />
be5pperGShare(3pplus20%x10p),leavingShareholderProceedsof110.82pperGShare(assumingtheHurdleshavebeenmet<br />
andignoringanybenefitfromcorporationtaxreliefonthePerformanceIncentive).Ifthetotalfundsavailablefordistributionwere<br />
instead135pperGShare,thePerformanceIncentivewouldbecappedat7pperGShare,leavingShareholderProceedsof128p<br />
perGShare.<br />
<br />
<br />
OtherInformation<br />
<br />
<strong>Tax</strong>ationandHMRevenue&Customsapproval<br />
<strong>The</strong>DirectorsintendtoconducttheaffairsoftheCompanysoitcontinuestosatisfytheconditionsforapprovalasa<strong>VCT</strong>andthat<br />
such approval will be maintained. HM Revenue & Customs has granted the Company provisional approval under the ITA. <strong>The</strong><br />
CompanyintendstocontinuecomplyingwiththeITAandhasretainedPricewaterhouseCoopersLLPtoadviseiton<strong>VCT</strong>taxation<br />
matters.<br />
<br />
<strong>The</strong>Offersandminimumandmaximumsubscription<br />
AssumingFullSubscription,maximumnetproceedsof£25millionwillberaisedundertheOffers.IftheOffersareoversubscribed,<br />
theymaybeincreasedatthediscretionoftheBoardtonomorethan£35million.ThisfacilitymaybeutilisedwhilsttheOffers<br />
remainopen.Intheeventthatapplicationsarereceivedinexcessofthemaximumsubscription,theDirectorsandtheSponsor<br />
reservetherighttousetheirabsolutediscretionintheallocationofsuccessfulapplications.Applicantsareencouragedtosubmit<br />
theirApplicationFormearlyinordertobeconfidentthattheirapplicationswillbesuccessful.<br />
<br />
<strong>The</strong>minimuminvestmentperApplicantis£5,000(orsuchloweramountattheBoard'sdiscretion).<strong>The</strong>maximuminvestment,on<br />
whichtaxreliefsin<strong>VCT</strong>sareavailable,is£200,000perApplicantineachofthe2012/13and2013/14taxyears.Spousescaneach<br />
investupto£200,000ineachtaxyear.<strong>The</strong>subscriptionlistfortheOfferswillopenat9.00a.m.on10January2013andmayclose<br />
atanytimethereafter,butinanyevent,notlaterthan3.00p.m.on5April2013inrespectofthe2012/13Offerand3.00p.m.on<br />
30April2013inrespectofthe2013/14Offer,unlessfullysubscribedearlierorpreviouslyextendedbytheDirectors(buttono<br />
laterthan9January2014).IftheMinimumSubscriptionisnotreceivedby3.00p.m.on5April2013,theOfferswillbewithdrawn<br />
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