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
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
DOWNING<br />
PLANNED EXIT <strong>VCT</strong> 2 PLC<br />
2013<br />
SECURITIES NOTE (INCLUDING APPLICATION FORM)<br />
Managed by <strong>Downing</strong> LLP
Contents<br />
RiskFactors<br />
LetterfromtheChairmanoftheCompany<br />
Page<br />
1<br />
2<br />
PartI – <strong>The</strong>Offers <br />
Introduction 3<br />
ReasonsfortheOffers 3<br />
<strong>Tax</strong>ationBenefitstoInvestors 4<br />
Income 4<br />
InvestmentPolicy 5<br />
ShareBuybackPolicy 6<br />
RealisationPlans 6<br />
Management 6<br />
TrackRecordoftheCompany 7<br />
CoInvestmentPolicy 7<br />
Directors 7<br />
Charges 8<br />
OtherInformation 8<br />
ForwardLookingStatements 9<br />
PartII – <strong>Tax</strong>ation 10<br />
PartIII – FinancialInformation 11<br />
PartIV – Definitions 13<br />
PartV – AdditionalInformation 15<br />
PartVI – TermsandConditionsofApplication 17<br />
PartVII – OfferDetails&Charges 19<br />
NotesonApplicationForm<br />
ApplicationForm<br />
<br />
OfferStatistics<br />
<br />
<br />
InitialNAVperGShareatthecloseoftheOffers<br />
100.00p<br />
NetproceedsoftheOffers,atFullSubscription,ignoringtheoverallotmentfacility<br />
£25,000,000<br />
NumberofG<strong>Shares</strong>inissue,followingtheOffers,atFullSubscription,ignoringtheoverallotmentfacility 25,000,000<br />
<br />
IftheMinimumSubscriptionisnotreceivedby3.00p.m.on5April2013,theOfferswillbewithdrawn.Intheeventthat<br />
theMinimumSubscriptionisnotreceived,subscriptionmonieswillbereturnedtoInvestorswithinsevendaysof5April<br />
2013,attheirownrisk,withoutinterest.<br />
<br />
EarlyApplications<br />
InvestorswhosubmitApplicationFormsthatarereceivedandacceptedby5.00p.m.on28February2013willbenefitfrom<br />
the offer charges being reduced by 1% of the amount subscribed under the Offers (the cost will be met by <strong>Downing</strong><br />
throughanequivalentreductioninitsPromoter’sFee).
Thisdocument,theRegistrationDocumentandtheSummary,whichtogethercomprisetheprospectus(the"Prospectus")relatingtothe<br />
Company,havebeenpreparedinaccordancewiththeProspectusRulesmadeundersection73Aandinaccordancewithsection84ofthe<br />
FinancialServicesandMarketsAct2000("FSMA")andhavebeenapprovedby,andfiledwith,theFSA.<br />
<br />
ApplicationhasbeenmadetotheUKListingAuthorityforalltheG<strong>Shares</strong>,issuedandtobeissuedinthecapitaloftheCompany,tobe<br />
admittedtothepremiumsegmentoftheOfficialList.ApplicationwillalsobemadetotheLondonStockExchangeforalltheG<strong>Shares</strong>,<br />
issuedandtobeissuedinthecapitaloftheCompany,tobeadmittedtotradingonitsmainmarketforlistedsecurities.Subjecttothe<br />
MinimumSubscriptionbeingreceivedbythen,itisexpectedthatAdmissionofthefirstallotmentofG<strong>Shares</strong>willbecomeeffective,and<br />
thatdealingsintheseshareswillcommence,by28March2013andinrespectofsubsequentallotmentsthereafterwithin20BusinessDays<br />
ofallotment.<br />
<br />
<strong>The</strong>CompanyanditsDirectors,whosenamesappearonpage7ofthisdocument,acceptresponsibilityfortheinformationcontainedin<br />
thisdocument.TothebestoftheknowledgeoftheCompanyanditsDirectors(whohavetakenallreasonablecaretoensurethatsuchis<br />
thecase)theinformationcontainedinthisdocumentisinaccordancewiththefactsanddoesnotomitanythinglikelytoaffecttheimport<br />
ofsuchinformation.<br />
<br />
HowardKennedyCorporateServicesLLPisactingassponsorand<strong>Downing</strong>LLPisactingaspromoteroftheCompanyinconnectionwiththe<br />
Offers,andneitherofthemisadvisinganyotherpersonortreatinganyotherpersonasacustomerorclientinrelationtotheOffersor<br />
(subjecttotheresponsibilitiesandliabilitiesimposedbytheFSMAortheregulatoryregimeestablishedthereunder)willberesponsibleto<br />
anysuchpersonforprovidingtheprotectionsaffordedtotheirrespectivecustomersorclients,orforprovidingadviceinconnectionwith<br />
theOffers.<br />
<br />
<strong>The</strong>CompanyandtheDirectorsconsenttotheuseoftheProspectusandacceptresponsibilityforthecontentoftheProspectus,with<br />
respecttosubsequentresaleorfinalplacementofsecuritiesbyfinancialintermediaries,fromthedateoftheProspectusuntilthecloseof<br />
theOffers.<strong>The</strong>Offersareexpectedtocloseon30April2013,unlesspreviouslyextendedbytheDirectors,butmaynotextendbeyond9<br />
January2014.<strong>The</strong>rearenoconditionsattachingtothisconsent.FinancialintermediariesmayusetheProspectusintheUK.<br />
<br />
InformationonthetermsandconditionsoftheOfferswillbegiventoInvestorsbyfinancialintermediariesatthetimethattheOffers<br />
areintroducedtoInvestors.AnyfinancialintermediaryusingtheProspectusmuststateonitswebsitethatitisusingtheProspectusin<br />
accordancewiththisconsent.<br />
<br />
<strong>Downing</strong><strong>Planned</strong><strong>Exit</strong><strong>VCT</strong>2plc<br />
(IncorporatedinEnglandandWalesundertheCompaniesAct1985withregisterednumber05334418)<br />
<br />
OffersforSubscription<br />
forthe2012/13and2013/14taxyears<br />
ofupto25,000,000G<strong>Shares</strong>inthecapitaloftheCompany<br />
<br />
Sponsor<br />
Promoter<br />
HowardKennedyCorporateServicesLLP<br />
<strong>Downing</strong>LLP<br />
<br />
<br />
SharecapitaloftheCompanyimmediatelyfollowingtheOffers,assumingFullSubscription,ignoringtheoverallotmentfacility:<br />
<br />
<br />
Issuedandtobeissuedfullypaid<br />
Shareclass No.of<strong>Shares</strong> Nominalvalue<br />
A<strong>Shares</strong>(ISIN:GB00B3D74M80) 10,724,029 £10,724.03<br />
C<strong>Shares</strong>(ISIN:GB00B3D74S43) 7,131,356 £7,131.36<br />
D<strong>Shares</strong>(ISIN:GB00B4VR3D16) 10,000,000 £10,000.00<br />
E<strong>Shares</strong>(ISIN:GB00B4TLF407) 15,000,000 £15,000.00<br />
F<strong>Shares</strong>(ISIN:GB00B6ZS0J90) 10,822,154 £10,822.15<br />
G<strong>Shares</strong>(ISIN:GB00B8Y7CS47) 25,000,000 £25,000.00<br />
<br />
<strong>The</strong>subscriptionlistfortheOfferswillopenon10January2013andmaycloseatanytimethereafterbut,inanyevent,notlaterthan<br />
3.00p.m.on5April2013inthecaseofthe2012/13Offerandnotlaterthan3.00p.m.on30April2013inthecaseofthe2013/14Offer,<br />
unlesspreviouslyextendedbytheDirectors(buttonolaterthan9January2014).<strong>The</strong>termsandconditionsoftheOffersaresetouton<br />
pages 17 to 18 of this document and are followed by an Application Form for use in connection with the Offers. If the Minimum<br />
Subscription is not received by 3.00 p.m. on 5 April 2013, the Offers will be withdrawn and application monies will be returnedto<br />
applicantswithinsevendaysofsuchdate,attheirownrisk,withoutinterest.<strong>The</strong>Offersarenotunderwritten.<br />
<br />
AssumingFullSubscription,thenetproceedsoftheOfferswillbe£25million.IftheOffersareoversubscribed,theymaybeincreasedat<br />
thediscretionoftheBoardtonomorethan£35millionintotal.<br />
<br />
Yourattentionisdrawntotheriskfactorssetoutonpage1ofthisdocument.AninvestmentintheCompanyisonlysuitableforInvestorswho<br />
arecapableofevaluatingtherisksandmeritsofsuchaninvestmentandwhohavesufficientresourcestobearanylosswhichmightarise.<br />
<br />
ThisdocumentshouldbereadinconjunctionwiththeSummaryandRegistrationDocument,whichmaybeobtainedfromthePromoterof<br />
theOffers:<br />
<strong>Downing</strong>LLP<br />
telephone:02074167780<br />
10LowerGrosvenorPlace<br />
download:www.downing.co.uk<br />
LondonSW1W0EN<br />
email:vct@downing.co.uk
RiskFactors<br />
<br />
YourcapitalisatriskifyouinvestintheCompanyandyoumaylosesomeorallofyourinvestment.<br />
<br />
<strong>The</strong> Company's business, financial condition or results could be materially and adversely affected by any of the risks<br />
describedbelow,innoparticularorderofpriority.Insuchcases,themarketpriceoftheG<strong>Shares</strong>maydeclineasaresultof<br />
anyoftheserisksandInvestorsmayloseallorpartoftheirinvestment.Additionalrisksanduncertaintiesnotpresently<br />
knowntotheDirectors,orthattheDirectorscurrentlydeemimmaterial,mayalsohaveanadverseeffectontheCompany.<br />
<strong>The</strong>DirectorsconsiderthefollowingtobeallthematerialrisksforpotentialInvestorsintheCompany:<br />
<br />
AlthoughitisintendedthattheCompanywillbemanagedsoastocontinuequalifyingasa<strong>VCT</strong>,thereisnoguarantee<br />
thatsuchstatuswillbemaintained.FailuretodosocouldresultinadversetaxconsequencesforInvestors,including<br />
beingrequiredtorepaythe30%incometaxrelief.<br />
<strong>The</strong>levelsandbasesofreliefsfromtaxationmaychangeandcouldapplyretrospectively.<strong>The</strong>taxreliefsreferredtoin<br />
thisdocumentarethosecurrentlyavailableandtheirvaluedependsontheindividualcircumstancesofInvestors.<strong>The</strong><br />
Company'sobjectiveshavebeensetonthebasisthatallInvestorsobtain30%incometaxreliefontheirsubscriptions.<br />
<strong>The</strong>refore,thisinvestmentmaynotbesuitableforInvestorswhodonotqualifyforthefull30%incometaxrelief.<br />
IfanyoftheCompany'sinvestmentsdonotperformtoplan,thentherecouldbeashortfallordelayinreceiptofthe<br />
ShareholderProceedsandhenceareductioninthereturntoGShareholders.Inaddition,ifthereisachangein<strong>VCT</strong><br />
legislation, or the interpretation of existing <strong>VCT</strong> legislation, such that the payment of Shareholder Proceeds has an<br />
adverseeffectontheCompany's<strong>VCT</strong>statusorGShareholders'<strong>VCT</strong>status,thensuchpaymentsmaynotbemade.<br />
AlthoughtheG<strong>Shares</strong>willbeListed,itishighlyunlikelythataliquidmarketintheG<strong>Shares</strong>willdevelopastheinitial<br />
incometaxreliefisonlyavailabletothosesubscribingfornewsharesandtheremayneverbetwocompetitivemarket<br />
makers.Itmay,therefore,provedifficultforGShareholderstoselltheirG<strong>Shares</strong>.Inaddition,thereisnoguarantee<br />
thatthemarketpriceoftheG<strong>Shares</strong>willfullyreflecttheirunderlyingNetAssetValueortheabilitytobuyandsellat<br />
thatprice.Itshouldbenotedthatsharesheldin<strong>VCT</strong>susuallytradeatadiscounttothe<strong>VCT</strong>'snetassetvalue.<br />
<strong>The</strong>abilityoftheCompanytodisposeofinvestmentsafterfiveyearsmaybelimitedatthattimeintheeventofpoor<br />
prevailingeconomicconditionsand,inparticular,wherethereislimitedavailabilityoffinancetopotentialpurchasers.<br />
Insuchcircumstances,thepaymentofShareholderProceedscouldbedelayed.<br />
G Shareholders should be aware that the sale of G <strong>Shares</strong> within five years of their subscription will require the<br />
repaymentofsomeorallofthe30%incometaxreliefobtaineduponinvestment.Accordingly,aninvestmentinthe<br />
Companyisnotsuitableasashortormediumterminvestment.<br />
MostoftheCompany'sinvestmentsarelikelytobeincompanieswhosesecuritiesarenotpubliclytradedorfreely<br />
marketableandmay,therefore,bedifficulttorealise.<br />
Inordertocomplywith<strong>VCT</strong>legislation,theQualifyingCompanies,inwhichtheCompanywillinvestatleast70%ofits<br />
capitalwithinthreeyears,willgenerallybesmallcompaniesthathaveahigherriskprofilethanlargercompaniesand<br />
maynotproducethehopedforreturns.Accordingly,Investorscouldgetbacklessthanthefullamounttheyinvested.<br />
Additionally, the Qualifying Companies may also have limited trading record, and therefore, may not produce the<br />
anticipatedreturns.<br />
<strong>The</strong>re is no guarantee that the Company's objectives will be met or that suitable investment opportunities will be<br />
identified.<br />
<strong>The</strong>Company'sabilitytoobtainmaximumvaluefromitsinvestments(forexample,throughtheirsale)maybelimited<br />
bytherequirementsoftherelevant<strong>VCT</strong>legislationinordertomaintainthe<strong>VCT</strong>statusoftheCompany(suchasthe<br />
obligationtohaveatleast70%byvalueofeach<strong>VCT</strong>'sinvestmentsinQualifyingInvestments).<br />
<strong>The</strong> past performance of investments made by the <strong>Downing</strong> <strong>VCT</strong>s or Management should not be regarded as an<br />
indicationoftheperformanceofinvestmentstobemadebytheCompany.<br />
Changesinlegislationinrespectof<strong>VCT</strong>sandQualifyingInvestmentsingeneralandinparticular,qualifyingtrades,may<br />
restrictoradverselyaffecttheabilityoftheCompanytomeetitsobjectivesand/orreducethelevelofreturnswhich<br />
wouldotherwisehavebeenachievable.<br />
<strong>The</strong>valueofG<strong>Shares</strong>isdependentontheperformanceoftheCompany'sunderlyinginvestments.<strong>The</strong>valueofthe<br />
investmentsandthedividendstreamcanriseandfall.Inparticular,theBoard'sobjectiveofpayinganannualdividend<br />
ofatleast5pperGSharemaynotbeachievedandanydividendpaymentswillreducetheNetAssetsattributableto<br />
theG<strong>Shares</strong>.<br />
<br />
<br />
<br />
1
LetterfromtheChairmanoftheCompany<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<strong>Downing</strong><strong>Planned</strong><strong>Exit</strong><strong>VCT</strong>2plc<br />
10LowerGrosvenorPlace<br />
LondonSW1W0EN<br />
10January2013<br />
DearInvestor<br />
<br />
Subscriptionsto<strong>VCT</strong>scurrentlyattractincometaxreliefattherateof30%.Thismeansthatforevery£1investedthe<br />
netcosttoInvestorsshouldbe70p.SetoutbelowisatableillustratingthehypotheticalreturnstoInvestorsatfive<br />
differentlevelsofShareholderProceeds,paidoutduringtheperiodapproximatelysixyearsfrominvestment.<br />
IllustrativereturnsbasedonanOfferPriceof£1perGShare<br />
ShareholderProceeds 80p 90p 100p 110p 120p<br />
<br />
Less:netcostofinvestment<br />
(70p) (70p) (70p) (70p) (70p)<br />
(assuming30%incometaxrelief)<br />
<br />
<strong>Tax</strong>freecashprofit 10p 20p 30p 40p 50p<br />
<br />
<strong>Tax</strong>freeprofit<br />
+14% +29% +43% +57% +71%<br />
(asa%ofnetcostofinvestment)<br />
<br />
NetReturn(taxfree) 1 2.9%p.a. 5.4%p.a. 7.6%p.a. 9.6%p.a. 11.5%p.a.<br />
<br />
Grossequivalentreturn 2 to<br />
<br />
40%taxpayers 4.8%p.a. 9.0%p.a. 12.7%p.a. 16.0%p.a. 19.2%p.a.<br />
<br />
<strong>The</strong>returnssetoutaboveareforillustrativepurposesonlyandnoforecastorprojectionisimpliedorshouldbeinferred.<br />
1<br />
2<br />
<strong>The</strong>NetReturnistheinternalrateofreturnbasedonaninvestmentof100pdeemedtobemadeon5April2013,30pincometaxrelief<br />
deemedtobereceivedsixmonthslateron5October2013andeither80p,90p,100p,110por120pofShareholderProceeds,comprising<br />
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<br />
30November2017,50%ofthebalanceoftheShareholderProceedson31December2018andtheremainingfundson31July2019.<br />
<strong>The</strong>grossequivalentreturniscomparedtoasourceofincomethatissubjecttoincometaxatanInvestor'smarginaltaxrate.Ithasbeen<br />
calculatedbydividingtheNetReturnby0.6for40%taxpayers.<br />
<strong>The</strong>keypointsforInvestorsare:<br />
1. Investmentstrategy–Itisintendedthatthefocuswillbeoninvesteecompaniesthat:(i)tradefromfreehold<br />
premises(e.g.healthclubs,children’snurseries,etc).<strong>The</strong>setypesofbusinessesprovidealevelofprotection<br />
compared to companies with no tangible assets; and (ii) operate intherenewable energysector (e.g.solar,<br />
anaerobicdigestion,etc)andusuallybenefitfromUKGovernmentsubsidies.<br />
2. <strong>Exit</strong> opportunities – <strong>The</strong> Directors intend to give Investors the opportunity to either exit or retain their<br />
investmentsintheCompanyinapproximatelysixyears,subjecttoliquidityandmarketconditions.<br />
3. Keytaxbenefits<br />
<br />
<br />
<br />
30%incometaxrelief–isavailableontheamountsubscribedupto£200,000pertaxyear,providedtheG<br />
<strong>Shares</strong> are held for at least five years. <strong>Tax</strong> reliefs are subject to change and their value depends on<br />
individualcircumstances.<br />
<strong>Tax</strong>freedistributionsandcapitalgains.<br />
4. A<strong>VCT</strong>forincome–<strong>The</strong>Boardhasastatedobjectiveofpayingannualdividendsofatleast5pperGShare.<br />
In order to invest pleaseread the Prospectus andthencomplete the Application Formset outattheend ofthis<br />
document.IfInvestorshaveanyquestionsregardingthisinvestmenttheyshouldcontacttheirfinancialadviser.For<br />
questions relating to an application, please telephone <strong>Downing</strong> on 02074167780. Investors should note that no<br />
investmentadvicecanbegivenby<strong>Downing</strong>andtheirattentionisdrawntotheriskfactorssetoutonpage1ofthis<br />
document.<br />
<br />
Yourssincerely<br />
<br />
<br />
<br />
<br />
<br />
HughGillespie<br />
Chairman<br />
2
PartI–<strong>The</strong>Offers<br />
<br />
Introduction<br />
<br />
<strong>VCT</strong>swereintroducedtoencourageindividuals,byofferingthemsubstantialtaxbenefits,toinvestinaportfolioofinvestments<br />
comprisingatleast70%unquotedUKtradingcompanies.<strong>VCT</strong>sareinvestmentcompanieswhosesharesarelistedontheOfficial<br />
ListandtradedontheLondonStockExchangeoraregisteredEuropeanmarket.Todate,over£4billionhasbeenraisedbyover<br />
100<strong>VCT</strong>s.<br />
<br />
<strong>VCT</strong>s were created so that their investors could benefit from a spread of Qualifying Investments under the supervision of<br />
professionalmanagerswhocancontributevaluableexperience,contactsandadvicetothebusinessesinwhichtheyinvest.<strong>VCT</strong>s<br />
arerequiredtobeapprovedbyHMRevenue&Customsassetoutintheventurecapitaltrustlegislation.<strong>VCT</strong>sareentitledto<br />
exemptionfromcorporationtaxonanygainsarisingonthedisposaloftheirinvestmentsandsuchgainsmaybedistributedtax<br />
freetoinvestors.<br />
<br />
<strong>The</strong>Company'sinitialpublicshareofferraisedgrossaggregateproceedsof£10.15millionduring2005.OrdinaryShareholderswho<br />
invested in 2005 had a net cost of 60p per share following the receipt of income tax relief of 40p per Ordinary Share. <strong>The</strong><br />
investmentsintheOrdinarySharepoolwereallsoldandthenetproceedsdistributedtoOrdinaryShareholders,withthemajority<br />
offundsreturnedduring2008and2009.OrdinaryShareholdersreceivedtotaldistributionsof90.4pperOrdinaryShare,equating<br />
toataxfreereturn,calculatedasanIRR,of11.2%perannum,18.7%grossequivalenttoa40%taxpayer.<br />
<br />
Fourfurthershareoffershavesincebeenundertaken.<strong>The</strong>2008OfferwaslaunchedinSeptember2008,raising£7.15million.<strong>The</strong><br />
initialofferpriceofthe2008<strong>Shares</strong>(afterissuecosts)was94.5p.Asat31October2012,theTotalReturnwas107.5pper2008<br />
Share,comprisingaNetAssetValueof92.5pplusdividendsof15.0p.<br />
<br />
<strong>The</strong>2009OfferwaslaunchedinNovember2009,raising£10million.<strong>The</strong>initialofferpriceofthe2009<strong>Shares</strong>(afterissuecosts)<br />
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<br />
dividendsof10.0p.<br />
<br />
<strong>The</strong>2011OfferwaslaunchedinOctober2011,raising£9.8million.<strong>The</strong>initialofferpriceofthe2011<strong>Shares</strong>(afterissuecosts)was<br />
94.5p.Asat31October2012,theTotalReturnper2011Sharewas94.6p,comprisingaNetAssetValueof94.6p.Nodividendshad<br />
beenpaidasat31October2012,butthefirstdividendof5pper2011SharewaspaidinNovember2012.<br />
<br />
On24October2012a10%topupofferwaslaunchedtoraiseuptoapproximately£925,000,throughanofferforsubscriptionfor<br />
furtherF<strong>Shares</strong>,whichwasfullysubscribed.<br />
<br />
Asat31December2012,the2008,2009and2011SharepoolsoftheCompanyheldinvestmentsin48companieswithatotal<br />
unauditedvalueof£20.3million.<br />
<br />
<strong>The</strong>Company’sobjectivesaretocontinueinvestingin<strong>VCT</strong>QualifyingInvestmentsandmaintain<strong>VCT</strong>status.<br />
<br />
Historically,theCompanyhasundertakenlinkedfundraisingswitha"linked"<strong>VCT</strong>,<strong>Downing</strong><strong>Planned</strong><strong>Exit</strong><strong>VCT</strong>3plc.Upto5April<br />
2012,<strong>VCT</strong>swererestrictedtoamaximuminvestmentof£1millionperannuminanyoneinvesteecompanyand,therefore,by<br />
raising funds simultaneously for two "linked" <strong>VCT</strong>s it enabled a combined maximum investment of £2 million per investee<br />
company. This limit has now been removed; therefore, the Company is undertaking the fundraising without its "linked" <strong>VCT</strong>,<br />
<strong>Downing</strong><strong>Planned</strong><strong>Exit</strong><strong>VCT</strong>3plc.<br />
<br />
<br />
ReasonsfortheOffers<br />
<br />
<strong>The</strong>OffershavebeendesignedforInvestorsseekingaportfolioofunquotedinvestments,whilsttakingadvantageofthe<strong>VCT</strong>tax<br />
reliefs. <strong>The</strong> Offers will also allowthe running costs for all Shareholderstobespread over a larger assetbase.<strong>The</strong>Companyis<br />
seekingtoraiseadditionalnetproceedsof£25millionundertheOffers,togetherwithanoverallotmentfacilityofafurther£10<br />
million.<br />
<br />
<strong>The</strong>G<strong>Shares</strong><br />
<strong>The</strong>existinginvestmentsandcashattributabletotheExisting<strong>Shares</strong>willbekeptseparatefromtheproceedsoftheissueoftheG<br />
<strong>Shares</strong>,whichwillbeadministeredasaseparateinvestmentpool.<strong>The</strong>holdersofG<strong>Shares</strong>willhavetherighttoparticipate(byway<br />
ofdividendsandreturnofcapital)inthoseassetsattributabletotheG<strong>Shares</strong>butnotinthoseassetsattributabletotheExisting<br />
<strong>Shares</strong>.Conversely,theholdersofExisting<strong>Shares</strong>willhavetherighttoparticipate(bywayofdividendsandreturnofcapital)inthe<br />
assetsattributabletotheExisting<strong>Shares</strong>butnotinthoseassetsattributabletotheG<strong>Shares</strong>.<br />
<br />
<br />
3
<strong>Tax</strong>ationBenefitstoInvestors(seePartIIforfurtherdetails)<br />
<br />
<strong>The</strong>principalUK<strong>VCT</strong>taxreliefs,whichareavailableonamaximuminvestmentof£200,000perindividualineachofthe2012/13<br />
and2013/14taxyears,aresetoutbelow:<br />
Income tax relief at 30% of the amount subscribed provided the <strong>VCT</strong> shares are held for at least five years. Relief is<br />
restrictedtotheamountwhichreducestheInvestor'sincometaxliabilitytonil.<br />
<strong>Tax</strong>freedividendsandcapitaldistributionsfroma<strong>VCT</strong>.<br />
Capitalgainstaxexemptiononanygainsarisingonthedisposalof<strong>VCT</strong>shares.<br />
<br />
<strong>The</strong>tablebelowshowstheeffectoftheinitialincometaxreliefusinganassumedgrossissuepriceof105.82pperGShare.<strong>The</strong><br />
actualissuepricewillbedeterminedbythePricingFormuladescribedonpage19.<br />
<br />
Effectofinitial30%incometaxrelief<br />
<br />
Costofinvestment PerGShare<br />
GrosssubscriptionbyInvestor<br />
105.82p<br />
30%incometaxrelief<br />
(31.75p)<br />
<br />
Netoftaxcostofinvestment<br />
74.07p<br />
<br />
Initialvalueofinvestment<br />
GrosssubscriptionbyInvestor<br />
Assumedissuecostsof5.5%<br />
<br />
<br />
105.82p<br />
(5.82p)<br />
InitialNetAssetValue 100.00p<br />
<br />
Initial"uplift"(pence)<br />
+25.93p<br />
<br />
Initial"uplift"(%)<br />
+35.00%<br />
<br />
<strong>The</strong>abovetableshowsthat,assumingincometaxreliefisreceivedat30%,theInvestor'snetoftaxcostofinvestmentis74.07pperGShareand<br />
theinitialNAVis100p,an"uplift"of25.93pperGShareor+35%.InvestorsshouldnotethattheyarerequiredtoholdtheG<strong>Shares</strong>foratleast<br />
fiveyearsinordertoretainthefullamountofincometaxreliefand,assuch,thisinitialupliftcannotbeimmediatelyrealised.<br />
<br />
<br />
ThisisonlyaverybriefsummaryoftheUKtaxpositionofinvestorsin<strong>VCT</strong>s,basedontheCompany'sunderstandingofcurrent<br />
lawandpractice.FurtherdetailsaresetoutinPartIIofthisdocument.PotentialInvestorsarerecommendedtoconsulttheir<br />
ownappropriateprofessionaladvisersastothetaxationconsequencesoftheirinvestingina<strong>VCT</strong>.Inaddition,theavailabilityof<br />
taxreliefsdependsontheCompanymaintainingits<strong>VCT</strong>qualifyingstatus.<br />
<br />
<br />
Income<br />
<br />
<strong>The</strong>Boardhasastatedobjectiveofpayinganannualdividendofatleast5pperGShare,subjecttotheavailabilityofsufficient<br />
distributable profits and capital resources. Set out below is a table illustrating the returns to G Shareholders assuming annual<br />
dividendsof5pperGSharearepaid.Investorsshouldnotethatthetargetannualdividendof5pperGShareisanobjectiveand<br />
isnotguaranteed.<br />
<br />
IllustrativeyieldperGShare(after30%incometaxrelief)<br />
Netoftax<br />
Targetannual<br />
<strong>Tax</strong>free<br />
Grossequivalentyield<br />
offerprice 1<br />
dividends<br />
yield<br />
toa40%taxpayer 2 <br />
<br />
74.07p 5.0p 6.75%p.a. 9.00%p.a.<br />
<br />
1<br />
2<br />
<strong>The</strong>returnslistedafter30%incometaxreliefarebasedonanassumedgrossissuepriceof105.82pperGSharemultipliedby70%,toreflect<br />
theinitialincometaxreliefof30%.Investorsshouldnotethattheywillberequiredtopaythefullissuepriceandclaimtheincometaxrelief<br />
separately.<br />
<strong>The</strong>grossequivalentyieldistheyieldonanon<strong>VCT</strong>UKdividendthatwouldresultinanetyieldof6.75%(beinga5pdividenddividedby<br />
74.07p,theassumedissuepriceof105.82pperGShareless30%toreflectinitialincometaxrelief),assuminga40%taxpayer.<br />
<br />
<strong>The</strong>firstdividendinrespectoftheG<strong>Shares</strong>istargetedtobe5pperGSharepayableinNovember2013.<strong>The</strong>reafter,dividendsof<br />
2.5pperGSharearetargetedtobepaidbiannuallyaroundtheendofJulyandNovembereachyear.<br />
4
InvestmentPolicy<br />
<br />
<strong>The</strong>investmentpolicyfortheCompanyisasfollows:<br />
<br />
QualifyingInvestments<br />
QualifyingInvestmentscompriseinvestmentsinUKtradingcompaniesthatownsubstantialassetsorhavepredictablerevenue<br />
streamsfromfinanciallysoundcustomers.<br />
<br />
Nonqualifyinginvestments<br />
<strong>The</strong>fundsnotemployedinQualifyingInvestmentswillbepredominantlyinvestedin:<br />
securedloans;and/or<br />
FixedIncomeSecurities.<br />
<br />
Secured loans will be secured on property or other assets. Fixed Income Securities will consist of bonds issued by the UK<br />
Government,majorcompaniesandinstitutionsandwillhavecreditratingsofnotlessthanAminus(Standard&Poor'srated)/A3<br />
(Moody'srated).BothStandard&Poor'sandMoody'sareindependentratingagencies(neitherisregisteredintheEU).<br />
<br />
Borrowingpolicy<br />
It is not the Company's intention to have any borrowings. Under its Articles, the Company does, however, have the ability to<br />
borrowamaximumamountequalto50%oftheaggregateamountpaidonanysharesissuedbytheCompany(togetherwithany<br />
sharepremiumthereon).<br />
<br />
Asaconditionofeachofitsinvestments,itisintendedthattheCompanywillhavetheabilitytorestricttheinvesteecompany's<br />
ability to borrow. Typically, the <strong>Downing</strong> <strong>VCT</strong>s' investee companies have no external borrowings ranking ahead (for security<br />
purposes)ofthe<strong>VCT</strong>s'investments.However,certaininvesteecompaniesmaybepermittedtoborrowlimitedsums(upto25%of<br />
thevalueoftheirassets)wheretheManagerbelievesitisprudenttodoso.<br />
<br />
In accordance with the Listing Rules, the Board will not make a material change to the Company's investment policy without<br />
Shareholderapproval.<br />
<br />
Targetallocation<br />
Initially, the majority of funds will be invested in nonqualifying investments. <strong>The</strong> level of funds invested in nonqualifying<br />
investmentswillbereducedtoprovidefundsforQualifyingInvestmentssuchthatwithinthreeyearsofthecloseoftheOffersthe<br />
approximateallocationwillbe:<br />
<br />
Investmentsplit<br />
<br />
Portfoliosplit<br />
QualifyingInvestments 75%<br />
Nonqualifyinginvestments 25%<br />
<br />
Total 100%<br />
Note: <strong>The</strong> above table represents the approximate split of the Company's portfolio. <strong>The</strong> Board may increase the proportion of Qualifying<br />
Investmentsabove75%toallowforthepossibilityofearlyrealisationswithoutbreachingthe<strong>VCT</strong>Regulations.<br />
<br />
VentureCapitalTrustRegulations<br />
Incontinuingtomaintainits<strong>VCT</strong>status,theCompanycomplieswithanumberofregulationsassetoutinPart6oftheITA.How<br />
the main regulations apply to the Company is summarised as follows: (i) the Company holds at least 70% by value of its<br />
investments in Qualifying Companies; (ii) at least 30% of the Company's QualifyingInvestments (by value) areheldin "eligible<br />
shares"forfundsraisedbefore6April2011andatleast70%in"eligibleshares"forfundsraisedonorafter6April2011;(iii)at<br />
least10%ofeachinvestmentinaQualifyingCompanyisheldin"eligibleshares"(bycostattimeofinvestment);(iv)noinvestment<br />
constitutesmorethan15%oftheCompany'sportfolio(byvalueatthetimeofinvestment);(v)theCompany'sincomeforeach<br />
financialyearisderivedwhollyormainlyfromsharesandsecurities;(vi)theCompanydistributessufficientrevenuedividendsto<br />
ensurethatnotmorethan15%oftheincomefromsharesandsecuritiesinanyoneyearisretained;and(vii)noinvestmentmade<br />
bytheCompanycausesaninvesteecompanytoreceivemorethan£5millionofstateaidedinvestments(includingfrom<strong>VCT</strong>s)in<br />
theyearendingonthedateoftheinvestment.<br />
<br />
ListingRules<br />
InaccordancewiththeListingRules:(i)theCompanymaynotinvestmorethan10%,inaggregate,ofthevalueofitstotalassetsat<br />
thetimeaninvestmentismadeinotherlistedclosedendedinvestmentfundsexceptlistedclosedendedinvestmentfundsthat<br />
havepublishedinvestmentpolicieswhichpermitthemtoinvestnomorethan15%oftheirtotalassetsinotherlistedclosedended<br />
investmentfunds;(ii)theCompanymustnotconductanytradingactivitywhichissignificantinthecontextofitsgroupasawhole;<br />
and(iii)theCompanymust,atalltimes,investandmanageitsassetsinawaywhichisconsistentwithitsobjectiveofspreading<br />
investmentriskandinaccordancewithitspublishedinvestmentpolicyassetoutinthisdocument.Thisinvestmentpolicyisinline<br />
withChapter15oftheListingRulesandPart6oftheITA.<br />
<br />
5
ShareBuybackPolicy<br />
<br />
<strong>The</strong>CompanywillmakemarketpurchasesofitsownG<strong>Shares</strong>,uptoamaximumannualnumberofG<strong>Shares</strong>equivalentto14.9%<br />
of the total number of issued G <strong>Shares</strong> from time to time. <strong>The</strong> Board intendstooperate apolicyof purchasingG<strong>Shares</strong>that<br />
becomeavailableasdetailedbelow(subjecttoliquidityandregulations).<strong>The</strong>proceedsreceivedbyGShareholdersonthesaleof<br />
theirG<strong>Shares</strong>totheCompanywillbereducedbycostssuchasthemarketmaker'smarginandstockbroker'scommission.<br />
<br />
Sharebuybackpolicy<br />
DiscounttoNAV<br />
Fromlaunchto31December2017<br />
Nil<br />
1January2018onwards<br />
Boarddiscretion<br />
<br />
Fromlaunchto31December2017<br />
<strong>The</strong>CompanywillbuybackG<strong>Shares</strong>inthefirstfiveyearsfromlaunch(to31December2017),atnildiscounttoNetAssetValue,<br />
subjecttoregulationsandhavingsufficientliquiditywithintheCompany.Investorsshouldnotethatincometaxreliefof30%will<br />
berepayableiftheG<strong>Shares</strong>arenotheldfortheminimumholdingperiodoffiveyears;however,thereisnoclawbackofthe30%<br />
incometaxrelieffollowingthedeathofaShareholder.<strong>The</strong>BoardanticipatesthattherewillbelimitedsharebuybacksofG<strong>Shares</strong><br />
within five years because the only sellers are likely to be deceased G Shareholders' estates and those G Shareholders whose<br />
circumstanceshavechanged(tosuchanextentthattheyarewillingtorepaythe30%incometaxreliefinordertogainaccessto<br />
thenetproceedsofsale).<br />
<br />
From1January2018onwards<br />
As stated below, in the section headed "Realisation Plans", after five years the Company will seek to exit from sufficient<br />
investmentsintheGSharepoolinordertoreturnfundstoGShareholderswishingtoexitatthattime.<strong>The</strong>refore,tohelpachieve<br />
thisobjective,duringthisperiodtheBoardwillreservetherightastowhetheritwillundertakeGSharebuybacksandthelevelof<br />
discounttoNetAssetValueitwillundertakeanysuchGSharebuybacks.<br />
<br />
<br />
RealisationPlans<br />
<br />
ItisintendedthatGShareholderswillbegiventheoptiontoeitherexitorretaintheirinvestmentwithinapproximatelysixyears<br />
fromthecloseoftheOffers.<br />
<br />
<strong>Exit</strong>mechanism<br />
ItisintendedthattaxfreecashproceedswillbepaidtoGShareholderswhowishtoexit(netofthePerformanceIncentive,if<br />
applicable)bywayoftaxfreerevenueandcapitaldividendsand/orsharebuybacks(includingtenderoffers).<br />
<br />
Rolloveroption<br />
<strong>The</strong>BoardbelievesthatsomeInvestorsmaywishtostayinvestedforlongtermtaxfreeincome.<strong>The</strong>Board,therefore,intendsto<br />
providearolloveroptionandwillprovidefulldetailsofthetermsinapproximatelyfiveyearsfromthecloseoftheOffers.Inthe<br />
eventthatarelativelysmallnumberofGShareholdersopttorollover,suchthatthenetassetsrolledoverforlongtermincome<br />
would be too low to support the administration costs of the Company, then, in these or other circumstances, the Board may<br />
decidetodistributeallthenetassetsandwinduptheGShareclass.<br />
<br />
<br />
Management<br />
<br />
Manager<br />
<strong>The</strong>CompanyismanagedbytheManager,whoseexecutivesareprovidedby<strong>Downing</strong>LLP.<br />
<br />
<strong>Downing</strong>LLP<br />
<strong>Downing</strong> Corporate Finance Limited was incorporated in 1986 and, since 1991 it has specialised in structuring, promoting,<br />
managing and administering tax efficient products. On 1 June 2011, <strong>Downing</strong> Corporate Finance Limited transferred all of its<br />
businessandemployeesto<strong>Downing</strong>LLP,whichisauthorisedandregulatedbytheFinancialServicesAuthority.<strong>Downing</strong>LLPis<br />
responsibleforthemanagementofover£210millionacross16<strong>VCT</strong>s.<br />
<br />
<br />
6
TrackRecordoftheCompany<br />
<br />
TrackrecordoftheOrdinary<strong>Shares</strong><br />
<strong>The</strong>Company’sOrdinary<strong>Shares</strong>(launchedinthe2004/05taxyear)soldalltheirinvestmentsandreturnedtheproceeds,mainlyin<br />
2008and2009,whichtotalled90.4pperOrdinaryShareandrepresentedanincreaseof51%onthenetoftaxcostof60pper<br />
OrdinaryShare.<strong>The</strong>compoundreturn(calculatedasanIRRaftertaxreliefs)was11.2%perannumtaxfree,whichisequivalentto<br />
18.7%perannumtoa40%taxpayer.<strong>The</strong>OrdinaryShare'slistingontheLondonStockExchangewascancelledinAugust2012.<br />
<br />
Trackrecordofthe2008<strong>Shares</strong>,2009<strong>Shares</strong>and2011<strong>Shares</strong><br />
<strong>The</strong>trackrecordoftheCompany'sshareissuesin2008,2009and2011aresetoutbelow.<br />
<br />
Trackrecordofthe2008<strong>Shares</strong>,2009<strong>Shares</strong>and2011<strong>Shares</strong><br />
<br />
<br />
<br />
<br />
<br />
<strong>Tax</strong>yearof<br />
Net TotalReturn Increaseover <br />
launch cost 1<br />
<br />
todate 2 <br />
<br />
netcost(%)<br />
2008<strong>Shares</strong> 08/09 70.0p 107.5p +53.6% <br />
2009<strong>Shares</strong> 09/10 70.0p 91.0p +30.0% <br />
2011<strong>Shares</strong> 11/12 70.0p 94.6p +35.1% <br />
<br />
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<br />
Company'sshareclasses.<br />
2 TotalReturniscumulativedividendspaidtodateplusthemostrecentlyannounced(unaudited)netassetvalueforeachshare<br />
classinpencepershare.<br />
<br />
Investorsshouldnotethattheyarerequiredtoholdsharesforaminimumperiod(currentlyfiveyears)toretaintheinitialincome<br />
taxreliefof30%.Inanycase,pastperformanceisnotaguidetofutureperformance.<br />
<br />
<br />
CoinvestmentPolicy<br />
<br />
<strong>The</strong>Company'sonlyformalcoinvestmentrelationshipsarewiththeother<strong>Downing</strong><strong>VCT</strong>s,<strong>Downing</strong>'sIHTandEISfunds(together<br />
the"Funds").Ithasbeenagreedthatallocationswillbeofferedtoeachpartyinproportiontotheirrespectivefundsavailablefor<br />
investment,subjectto:(i)aprioritybeinggiventoanyoftheFundsinordertomaintaintheirtaxstatus;(ii)thetimehorizonofthe<br />
investmentopportunitybeingcompatiblewiththeexitstrategyofeachFundand(iii)therisk/rewardprofileoftheinvestment<br />
opportunitybeingcompatiblewiththetargetreturnforeachFund.Intheeventofanyconflictsbetweentheparties,theissueswill<br />
beresolvedatthediscretionoftheindependentdirectors,designatedmembersandcommitteesoftherelevantFunds.<br />
<br />
<br />
Directors<br />
<br />
<strong>The</strong>CompanyhasaBoard,comprisingthreeDirectors,allofwhomarenonexecutiveandindependentoftheManager.<br />
<br />
HughGillespie(Chairman)isnonexecutivechairmanof<strong>Downing</strong><strong>Planned</strong><strong>Exit</strong><strong>VCT</strong>s3–9andanonexecutivedirectorof<strong>Downing</strong><br />
Income<strong>VCT</strong>3plcandBurgessGroupplc.HewasformerlyadirectorofHillSamuelBankLimitedandnonexecutivedirectoror<br />
chairmanofanumberofpubliccompanies.<br />
<br />
Dennis Hale was previously an investment director of Financial Management Bureau Limited ("FMB"), a firm of independent<br />
financialadvisersbasedinCumbria.Hewasresponsiblefor<strong>VCT</strong>researchwithinFMB,whoseclientshaveinvestedin<strong>VCT</strong>ssince<br />
1997. Prior to founding FMB in 1987, he worked for several life assurance companies. Hewasan Associateof the Institute of<br />
Actuaries and holds the Investment Management Certificate. He graduated from the University of Hull with a degree in<br />
Mathematicsin1974.Heisalsoadirectorofanumberof<strong>Downing</strong><strong>VCT</strong>s.<br />
<br />
MichaelRobinsonhasover25years'experienceintheprivateequityindustry.Hespent25yearsat3iplc,wherehewaslatterlya<br />
directormanagingalargeportfolioofequityinvestments.HequalifiedasacharteredaccountantwithDeloitteHaskins&Sellsin<br />
1979andisalsothenonexecutivechairmanofLimbs&ThingsLimited.<br />
<br />
<strong>The</strong>Directorswillbeinvestingatleast£15,000undertheOffersonthesametermsasInvestors.<strong>The</strong>totalinvestedbythepartners<br />
andemployeesof<strong>Downing</strong>in<strong>Downing</strong><strong>VCT</strong>sisover£2million.<br />
<br />
<br />
7
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 />
8
andapplicationmonieswillbereturnedtoapplicantswithinsevendaysofsuchdate,attheirownrisk,withoutinterest.<strong>The</strong>Offers<br />
arenotunderwritten.<br />
<br />
G<strong>Shares</strong>willbeallottedandissuedinrespectofvalidapplicationson5April2013,30April2013andonanyotherdatesonwhich<br />
theDirectorsdecide.<br />
<br />
ApplicationhasbeenmadetotheUKListingAuthorityonbehalfoftheCompanyfortheAdmissionofalloftheG<strong>Shares</strong>.<strong>The</strong>G<br />
<strong>Shares</strong> will be issued in registered form and be transferable in both certificated and uncertificated form and will rank for all<br />
dividendsandotherdistributionsdeclared,paidormadebytheCompanyinrespectoftheG<strong>Shares</strong>thereafter.Subjecttothe<br />
MinimumSubscriptionbeingreceivedbythen,itisanticipatedthatdealingsinthefirstallotmentofG<strong>Shares</strong>willcommenceby<br />
March 2013 and subsequent allotments thereafter within 20 Business Days of allotment. Dealings may not begin before<br />
notificationofallotmentsismade.RevocationoftheOfferscannotoccurafterdealingsintheG<strong>Shares</strong>havecommenced.<strong>The</strong><br />
Company has applied for its G <strong>Shares</strong> to be admitted to CREST and it is expected that the G <strong>Shares</strong> will be so admitted and,<br />
accordingly, enabled for settlement in CREST, as soon as practicable after Admission has occurred. Accordingly, settlement of<br />
transactions in the G <strong>Shares</strong> following Admission may take place within the CREST system if G Shareholders wish. CREST is a<br />
voluntarysystemandGShareholderswhowishtoreceiveandretainsharecertificateswillbeabletodoso.Sharecertificates<br />
(whereapplicable)andcertificatestoenableaclaimforincometaxrelieftobemadeinrespectofG<strong>Shares</strong>willbepostedtoG<br />
Shareholderswithin30daysofeachallotment.Nonotificationwillbemadetosuccessfulapplicantspriortodespatchofdefinitive<br />
sharecertificates.<br />
<br />
Prior to despatch of definitive share certificates (where applicable), transfers (if any) will be certified against the register. No<br />
temporarydocumentsoftitlewillbeissued.<strong>The</strong>Offersarenotunderwritten.<br />
<br />
<strong>The</strong>resultoftheOfferswillbeannouncedthrougharegulatoryinformationserviceproviderauthorisedbytheFSA.<br />
<br />
AvailabilityoftheProspectus<br />
Copies of the Prospectus relating to the Company are available for download at the National Storage Mechanism<br />
(www.hemscott.com/nsm.do)andmaybeobtained,freeofcharge,fromtheCompany'sregisteredoffice,wheretheyarealsoon<br />
display,andfrom<strong>Downing</strong>LLP.<br />
<br />
<br />
<strong>Downing</strong>LLP telephone:02074167780<br />
10LowerGrosvenorPlace download:www.downing.co.uk<br />
LondonSW1W0EN email:vct@downing.co.uk<br />
<br />
Financialcalendar<br />
Financialyearend<br />
31January<br />
Finalresultsannouncement<br />
May<br />
Annualgeneralmeeting<br />
July<br />
AnticipatedfirstdividendinrespectoftheG<strong>Shares</strong><br />
November2013<br />
Biannualdividendspaidattheendof<br />
JulyandNovember<br />
Halfyearlyresultsannouncement<br />
September<br />
Targetforthepaymentofthefinaldistribution 2018/2019<br />
<br />
<br />
ForwardLookingStatements<br />
<br />
Youshouldnotplaceunduerelianceonforwardlookingstatements.ThisSecuritiesNoteincludesstatementsthatare(ormaybe<br />
deemed to be) "forwardlooking statements", which can be identified by the use of forwardlooking terminology including the<br />
terms "believes", "continues", "expects", "intends", "may", "will", "would", "should" or, in each case, their negative or other<br />
variationsorcomparableterminology.<strong>The</strong>seforwardlookingstatementsincludeallmattersthatarenothistoricalfacts.Forward<br />
looking statements involve risk and uncertainty because they relate to future events and circumstances. Forwardlooking<br />
statementscontainedinthisSecuritiesNoteorbasedonpasttrendsoractivities,shouldnotbetakenasarepresentationthat<br />
such trends or activities will continue in the future. Any such statements do not, nor are intended to qualify the Company’s<br />
workingcapitalstatement.<br />
<br />
<strong>The</strong>informationcontainedinthisdocumentwillbeupdatedifrequiredbytheProspectusRules,theListingRulesandtheDTR,as<br />
appropriate.<br />
<br />
9
PartII–<strong>Tax</strong>ation<br />
<br />
<strong>VCT</strong>s:SummaryoftheapplicablelegislationinrespectofInvestors<br />
1. <strong>Tax</strong>ationofa<strong>VCT</strong><br />
<strong>VCT</strong>s are exempt from corporation tax on chargeable gains.<br />
<strong>The</strong>re is no restriction on the distribution of realised capital<br />
gainsbya<strong>VCT</strong>,subjecttotherequirementsofcompanylaw.<br />
<strong>The</strong>Companywillbesubjecttocorporationtaxonitsincome<br />
(excluding dividends received from UK companies) after<br />
deductionofattributableexpenses.<br />
2. <strong>Tax</strong>reliefsforindividualinvestors<br />
Individuals who subscribe for G <strong>Shares</strong> must be aged 18 or<br />
overtoqualifyforthetaxreliefsoutlinedbelow.<br />
Relieffromincometax<br />
Aninvestorsubscribingupto£200,000inthe2012/13and/or<br />
2013/14taxyearsforeligiblesharesina<strong>VCT</strong>willbeentitled<br />
to claim income tax relief, at the rate of 30%, although this<br />
reliefwillbewithdrawnifeitherthesharesaresoldwithinfive<br />
yearsortheinvestortakesoutaloanwhichwouldnothave<br />
beenmade,orwouldnothavebeenmadeonthesameterms,<br />
savefortheacquisitionofsuchshares.Reliefisrestrictedto<br />
theamountwhichreducestheinvestor'sincometaxliability<br />
to nil. However, tax credits on dividends are notional and<br />
cannot be repaid and, therefore, investors should take this<br />
into account when calculating the value of the income tax<br />
relief.<br />
Dividendrelief<br />
Aninvestorwhosubscribesfororacquireseligiblesharesina<br />
<strong>VCT</strong> (up to a maximum of £200,000 in each of the 2012/13<br />
and2013/14taxyears)willnotbeliableforUKincometaxon<br />
dividends paid by the <strong>VCT</strong>. <strong>The</strong> income received by the <strong>VCT</strong><br />
willusuallyconstituteeitherinterest(onwhichthe<strong>VCT</strong>may<br />
besubjecttotax)oradividendfromaUKcompany(onwhich<br />
the <strong>VCT</strong> would not be subject to tax). <strong>The</strong> <strong>VCT</strong>'s income,<br />
reduced by the payment of tax (if applicable), can then be<br />
distributed taxfree to investors who benefit from this<br />
dividendrelief.<strong>The</strong>reisnowithholdingtaxondividendspaid<br />
byaUKcompanyand,consequently,theCompanydoesnot<br />
assume responsibility for the withholding of tax at source.<br />
Dividendscarryataxcreditattherateofoneninthofthenet<br />
dividendwhichisnotrepayableandwhichcannotbeutilised<br />
inanyotherway.<br />
Capitalgainstaxrelief<br />
Adisposalbyanindividualinvestorofhis/hersharesina<strong>VCT</strong><br />
willneithergiverisetoachargeablegainnoranallowableloss<br />
for the purposes of UK capital gains tax. This relief is also<br />
limited to disposals of shares acquired within the £200,000<br />
limitdescribedabove.<br />
Lossoftaxreliefs<br />
(i) If a company which has been granted approval or<br />
provisional approval as a <strong>VCT</strong> subsequently fails to<br />
complywiththeconditionsforapproval,<strong>VCT</strong>statusmay<br />
be withdrawn or treated as never having been given.<br />
<strong>The</strong> exemptions from corporation tax on capital gains<br />
willnotapplytoanygainrealisedafter<strong>VCT</strong>statusislost<br />
(and on any gain realised by the <strong>VCT</strong> if approval is<br />
deemednevertohavebeengiven).<br />
(ii) For investors, the withdrawal of <strong>VCT</strong> status may<br />
(dependinguponthetimingofsuchwithdrawal)result<br />
in:<br />
repaymentofthe30%incometaxreliefonsubscription<br />
fornew<strong>VCT</strong>shares;<br />
incometaxbecomingpayableonsubsequentpayments<br />
ofdividendsbythecompany;and<br />
a liability to tax on capital gains being suffered in the<br />
normal way on the disposal of shares in the company,<br />
except that any part of the gain attributable to the<br />
period for which the <strong>VCT</strong> was approved would be<br />
exempt.<br />
(iii) <strong>The</strong> consequences for investors in a company which<br />
neverobtainsfullunconditionalapprovalasa<strong>VCT</strong>areas<br />
follows:<br />
repaymentofthe30%incometaxreliefonsubscriptions<br />
for new <strong>VCT</strong> shares and interest on overdue tax may<br />
arise;<br />
income tax becoming payable on all payments of<br />
dividendsbythecompany;and<br />
any gain arising on a disposal of the shares would be<br />
liabletocapitalgainstaxandlossesontheshareswould<br />
be allowable losses for capital gains tax purposes.<br />
<br />
<strong>The</strong>G<strong>Shares</strong>areeligible<strong>VCT</strong>sharesforthepurposesofthis<br />
section.<br />
3. Consequences of an investor dying or a transfer of shares<br />
betweenspouses<br />
(i) Initialincometax<br />
If an investor dies at any time after making an<br />
investmentina<strong>VCT</strong>,thetransferofsharesondeathis<br />
not treated as a disposal and, therefore, the initial<br />
incometaxreliefisnotwithdrawn.However,theshares<br />
will become part of the deceased's estate for<br />
inheritancetaxpurposes.<br />
(ii) <strong>Tax</strong>implicationsforthebeneficiary<br />
Provided a number of conditions are met, the<br />
beneficiaryofany<strong>VCT</strong>shareswillbeentitledtotaxfree<br />
dividends and will not pay capital gains tax on any<br />
disposal,butwillnotbeentitledtoanyinitialincometax<br />
relief.<br />
(iii) Transferofsharesbetweenspouses<br />
Transfers of shares in a <strong>VCT</strong> between spouses is not<br />
deemed to be a disposal and, therefore, all tax reliefs<br />
willberetained.<br />
4. General<br />
(i) InvestorswhoarenotresidentintheUK<br />
Nonresident investors, or investors who may become<br />
nonresident,shouldseektheirownprofessionaladvice<br />
astotheconsequencesofmakinganinvestmentinthe<br />
Company,becausetheymaybesubjecttotaxinother<br />
jurisdictions.<br />
(ii) Stampdutyandstampdutyreservetax<br />
Nostampdutyor(unlesssharesina<strong>VCT</strong>areissuedtoa<br />
nominee for a clearing system or a provider of<br />
depository receipts) stamp duty reserve tax will be<br />
payableontheissueofsuchshares.<strong>The</strong>transferonthe<br />
saleofshareswouldnormallybesubjecttoadvalorem<br />
stamp duty or (if an unconditional agreement to<br />
transfersuchsharesisnotcompletedbyadulystamped<br />
transfer within two months) stamp duty reserve tax<br />
generally,ineachcaseattherateof50pforevery£100<br />
or part of £100 of the consideration paid where the<br />
totalconsiderationexceeds£1,000orifitformspartof<br />
a series of transactions where the total consideration<br />
exceeds £1,000. Such duties would be payable by a<br />
person who purchases such shares from the original<br />
subscriber.<br />
(iii) Purchasesinthemarketafterlisting<br />
Any subsequent purchaser of existing <strong>VCT</strong> shares, as<br />
opposed to a subscriber for new <strong>VCT</strong> shares, will not<br />
qualify for income tax relief on investment but may<br />
benefit from dividend relief and from capital gains tax<br />
reliefonthedisposalofhis/her<strong>VCT</strong>shares.<br />
(iv) <strong>The</strong><strong>VCT</strong>Regulations2004<br />
<strong>The</strong> <strong>VCT</strong> Regulations came into force on 17<br />
October2004. Under the <strong>VCT</strong> Regulations, monies<br />
raisedbyanyfurtherissueofsharesbyanexisting<strong>VCT</strong><br />
mustbeappliedbythat<strong>VCT</strong>forqualifyingpurposes.If<br />
anyofthemoneyraised(exceptforamountswhichHM<br />
Revenue & Customs agrees are insignificant in the<br />
contextofthewholeissuedordinarysharecapitalofthe<br />
<strong>VCT</strong>)isusedbythe<strong>VCT</strong>topurchaseitsownsharesthen<br />
thefundsmaybedeemedtonothavebeenusedfora<br />
qualifyingpurpose.<br />
<br />
<strong>The</strong>aboveisonlyasummaryofthetaxpositionofindividual<br />
investors in <strong>VCT</strong>s and is based on the Company's<br />
understanding of current law and practice. Investors are<br />
recommended to consult a professional adviser as to the<br />
taxation consequences of their investing in a <strong>VCT</strong>. All tax<br />
reliefsreferredtointhisdocumentareUKtaxreliefsandare<br />
dependent on the Company maintaining its <strong>VCT</strong> qualifying<br />
status.<br />
10
PartIII–FinancialInformation<br />
<br />
A summary of the Company's investment portfolio as at 9 January 2013 (being the latest practicable date prior to publication of this<br />
document)issetoutbelow.<br />
<br />
2008SHAREPOOL<br />
<br />
Debt(D)/ Cost Valuation* %of<br />
Equity (E) £'000 £'000 portfolio Sector<br />
<br />
BijouWeddingVenuesLimited D&E 815 883 13.6% Leisure,Entertainment&Hotels<br />
FutureBiogas(SF)Limited D&E 627 703 10.9% RenewableEnergy<br />
AtlanticDogstarLimited D&E 429 655 10.1% Pubs<br />
HooleHallCountryClubHoldingsLtd D 581 581 9.0% Leisure,Entertainment&Hotels<br />
DomesticSolar(ISIS)Limited D&E 500 500 7.7% RenewableEnergy<br />
<strong>The</strong>ThamesClubLimited D&E 500 500 7.7% Leisure,Entertainment&Hotels<br />
RedmedLimited D&E 429 429 6.6% Leisure,Entertainment&Hotels<br />
WestowHouseLimited D&E 304 395 6.1% Pubs<br />
EastDulwichTavernLimited D&E 344 386 6.0% Pubs<br />
QuadrateCateringLimited D&E 330 330 5.1% Leisure,Entertainment&Hotels<br />
QuadrateSpaLimited D&E 323 323 5.0% Leisure,Entertainment&Hotels<br />
EcossolLimited D&E 250 250 3.9% RenewableEnergy<br />
<strong>The</strong>3DPubCoLimited D&E 267 187 2.9% Pubs<br />
MosaicSpaandHealthClubsLimited D&E 125 125 1.9% Leisure,Entertainment&Hotels<br />
HoneycombePubs<strong>VCT</strong>Limited D&E 175 96 1.5% Pubs<br />
ChapelStreetFoodandBeverageLimited E 50 50 0.8% Leisure,Entertainment&Hotels<br />
ChapelStreetServicesLimited E 50 50 0.8% Leisure,Entertainment&Hotels<br />
VermontDevelopmentsLimited D&E 25 25 0.4% Development&Construction<br />
ChapelStreetHotelLimited E 2 2 0.0% Leisure,Entertainment&Hotels<br />
<br />
6,126 6,470 100.0%<br />
<br />
Cashatbankandinhand 0.0%<br />
<br />
6,470 100.0%<br />
<br />
2009SHAREPOOL<br />
<br />
Debt(D)/ Cost Valuation* %of<br />
Equity(E) £'000 £'000 portfolio Sector<br />
<br />
AminghurstLimited D&E 2,150 2,150 26.9% Development&Construction<br />
FutureBiogas(ReephamRoad)Limited D 748 748 9.4% RenewableEnergy<br />
MosaicSpaandHealthClubsLimited D&E 475 475 6.0% Leisure,Entertainment&Hotels<br />
LiverpoolNurseries(Holdings)Limited D&E 467 467 5.9% Education<br />
QuadrateCateringLimited D&E 441 441 5.5% Leisure,Entertainment&Hotels<br />
QuadrateSpaLimited D&E 436 436 5.4% Leisure,Entertainment&Hotels<br />
DomesticSolarLimited D&E 400 400 5.0% RenewableEnergy<br />
AlphaSchoolsHoldingsLimited D&E 367 380 4.8% Education<br />
KidspaceAdventuresHoldingsLimited D&E 375 375 4.7% Education<br />
AvonSolarEnergyLimited D&E 250 250 3.1% RenewableEnergy<br />
EcossolLimited D&E 250 250 3.1% RenewableEnergy<br />
GreenElectricityGenerationLimited D&E 250 250 3.1% RenewableEnergy<br />
WestcountrySolarSolutionsLimited D&E 250 250 3.1% RenewableEnergy<br />
RetallackSurfpodsLimited D 250 250 3.1% Development&Construction<br />
SlopingtacticLimited D&E 196 196 2.4% Pubs<br />
ProgressiveEnergiesLimited D&E 170 170 2.1% RenewableEnergy<br />
FenkleStreetLLP D 146 146 1.8% Development&Construction<br />
RidgewayPubCompanyLimited D&E 136 136 1.7% Pubs<br />
CamandaleLimited D&E 561 113 1.4% Pubs<br />
CommercialStreetHotelLimited D&E 100 100 1.3% Leisure,Entertainment&Hotels<br />
<br />
8,418 7,983 99.8%<br />
<br />
Cashatbankandinhand 15 0.2%<br />
<br />
7,998 100.0%<br />
<br />
<br />
11
2011SHAREPOOL<br />
Debt(D)/ Cost Valuation* %of<br />
Equity(E) £'000 £'000 portfolio Sector<br />
<br />
<br />
AminghurstLimited D 1,110 1,110 11.5% Development&Construction<br />
TorSolarPVLimited D&E 816 816 8.4% RenewableEnergy<br />
BaronHouseDevelopmentsLLP D 625 625 6.4% Development&Construction<br />
VulcanRenewablesLimited D&E 560 560 5.8% RenewableEnergy<br />
ClarevilleStreetLLP D 500 500 5.2% Development&Construction<br />
CityFalkirkLimited D&E 421 421 4.3% Nightclubs<br />
SouthamptonHotelDevelopmentsLimited D 300 300 3.1% Development&Construction<br />
WestTowerHoldingsLimited D 290 290 3.0% Leisure,Entertainment&Hotels<br />
FubarStirlingLimited D&E 268 268 2.8% Nightclubs<br />
HooleHallHotelLimited D 265 265 2.7% Leisure,Entertainment&Hotels<br />
KidspaceAdventureHoldingsLimited D 250 250 2.6% Education<br />
FreshGreenPowerLimited D&E 200 200 2.1% RenewableEnergy<br />
GreenEnergyProductionUKLimited D&E 100 100 1.0% RenewableEnergy<br />
<strong>The</strong>3DPubCoLimited D 55 55 0.6% Pubs<br />
CheersDumbartonLimited D&E 48 48 0.5% Nightclubs<br />
LochriseLimited D&E 13 13 0.1% Nightclubs<br />
<br />
5,821 5,821 60.1%<br />
<br />
Cashatbankandinhand 3,871 39.9%<br />
<br />
9,692 100.0%<br />
<br />
<br />
* Valuation as at 31 October 2012 – extracted from the unaudited management accounts for the Company for the period ended 31<br />
October2012.<br />
<br />
AllvaluationsaredenominatedinUKSterling.AllportfoliocompaniesareUKbasedbusinesses.Investorsshouldnotethatthenet<br />
proceedsoftheOfferswillbeinvestedinaccordancewiththeCompany'sinvestmentpolicy,assetoutonpage5ofthisdocument.<br />
Asgeneraleconomiccircumstancesandprospectsmayvaryovertimetherecanbenoguaranteethatfutureinvestmentswillbe<br />
made in the same sectors or types of company as the present portfolio. <strong>The</strong> above information is unaudited and has been<br />
extractedfromthemanagementaccountsoftheCompany.<br />
<br />
12
PartIV–Definitions<br />
<br />
Where used in this document the following words and expressions will, unless the context otherwise requires, have the following<br />
meanings:<br />
<br />
"2006Act"<br />
CompaniesAct2006(asamended)<br />
"2008Offer"<br />
offerforsubscriptionofup to15,000,000C<strong>Shares</strong>and15,000,000A<strong>Shares</strong>oftheCompany onthe<br />
termssetoutinthesecuritiesnoteissuedbytheCompanyon25September2008<br />
"2008<strong>Shares</strong>"<br />
oneormoreA<strong>Shares</strong> andoneormoreC<strong>Shares</strong>,asthecontextsopermits<br />
"2009Offer"<br />
offerforsubscriptionofupto10,000,000D<strong>Shares</strong>and15,000,000E<strong>Shares</strong>oftheCompany onthe<br />
termssetoutinthesecuritiesnoteissuedbytheCompanyon6November2009<br />
"2009<strong>Shares</strong>"<br />
oneormoreD<strong>Shares</strong>andoneormoreE <strong>Shares</strong>,asthecontextsopermits<br />
"2011Offer"<br />
offer for subscription of up to 10,000,000 F <strong>Shares</strong> of the Company on the terms set out in the<br />
securitiesnoteissuedbytheCompanyon12October2011<br />
"2011<strong>Shares</strong>"<br />
oneormoreF <strong>Shares</strong><br />
"2012/13Offer"<br />
offerforsubscriptionofG<strong>Shares</strong>inrespectofthe2012/13taxyear,beingmadeonthetermssetout<br />
inthisdocument<br />
"2013/14Offer"<br />
offerforsubscriptionofG<strong>Shares</strong>inrespectofthe2013/14taxyear,beingmadeonthetermssetout<br />
inthisdocument<br />
"A<strong>Shares</strong>"<br />
Asharesof0.1peachinthecapitaloftheCompany(ISIN:GB00B3D74M80)<br />
"Admission"<br />
admissionoftheG<strong>Shares</strong> tothepremiumsegmentoftheOfficialListandtotradingontheLondon<br />
StockExchange'smainmarketforlistedsecurities<br />
"AdviserCharge"<br />
fee, payable to an Intermediary, agreed with the Investor for the provision of a personal<br />
recommendationand/orrelatedservicesinrelationtoaninvestmentinG<strong>Shares</strong>,anddetailedonthe<br />
ApplicationForm<br />
"AnnualRunningCosts"<br />
annual running costs incurred by the Company in the ordinary course of its business (including<br />
irrecoverableVATbutexcludinganyamountpayableinrespectofthePerformanceIncentive)<br />
"Applicant"<br />
InvestorwhosubscribesforG<strong>Shares</strong> pursuantto theProspectus<br />
"ApplicationForm(s)"<br />
formofapplicationforG<strong>Shares</strong> undertheOfferssetoutattheendofthisdocument<br />
"Articles"<br />
articlesofassociationoftheCompany asatthedateofthisdocument<br />
"BusinessDays"<br />
anyday,otherthanaSaturdayorSunday,onwhichclearingbanksinLondonareopenforallnormal<br />
bankingbusiness<br />
"C<strong>Shares</strong>"<br />
Csharesof0.1peachinthecapitaloftheCompany(ISIN:GB00B3D74S43)<br />
"ClosingDate"<br />
30April2013,unlesspreviouslyextendedbytheDirectors(buttonolaterthan9January2014)<br />
"Company"<br />
<strong>Downing</strong><strong>Planned</strong><strong>Exit</strong><strong>VCT</strong>2plc(registerednumber05334418)<br />
"CREST"<br />
therelevantsystem(asdefinedintheUncertificatedSecuritiesRegulations2001(SI2001No.3755))<br />
for the paperless settlement of transfers and the holding of <strong>Shares</strong> in uncertificated form which is<br />
administeredbyEuroclearUK&IrelandLimited(registerednumber02878738)<br />
"CRESTRegulations"<br />
UncertificatedSecuritiesRegulations1995(SI1995/3272)<br />
"D<strong>Shares</strong>"<br />
Dsharesof0.1peachinthecapitaloftheCompany(ISIN:GB00B4VR3D16)<br />
"Directors"or"Board"<br />
directorsoftheCompany<br />
"<strong>Downing</strong>"<br />
<strong>Downing</strong>LLP,whichisauthorisedandregulatedbytheFinancialServicesAuthority(registerednumber<br />
OC341575;FSAnumber545025)<br />
"<strong>Downing</strong><strong>VCT</strong>s"<br />
all<strong>VCT</strong>smanagedoradvisedby<strong>Downing</strong>LLPoritsexecutives<br />
"DTR"<br />
DisclosureandTransparencyRules,beingtherulespublishedbytheFSAfromtimetotimeandrelating<br />
tothedisclosureofinformationinrespectoffinancialinstruments<br />
"E<strong>Shares</strong>"<br />
Esharesof0.1peachinthecapitaloftheCompany(ISIN:GB00B4TLF407)<br />
"ExecutiononlyTransaction"<br />
transactionexecutedbyanFSA authorisedfirmuponthespecificinstructionsofaclientwherethefirm<br />
doesnotgiveadviceormakeapersonalrecommendation<br />
"ExistingShareholders"<br />
holdersofExisting<strong>Shares</strong><br />
"Existing<strong>Shares</strong>"<br />
A<strong>Shares</strong>and/orC<strong>Shares</strong>and/orD<strong>Shares</strong>and/orE<strong>Shares</strong>and/orF<strong>Shares</strong><br />
"F<strong>Shares</strong>"<br />
Fsharesof0.1peachinthecapitaloftheCompany(ISIN:GB00B6ZS0J90)<br />
"FixedIncomeSecurities"<br />
investments made by the Company which do not comprise Qualifying Investments, such as bank<br />
deposits,loanstock,bonds,preferencesharesandotherdebtinstruments<br />
"FSA"<br />
FinancialServicesAuthority<br />
"FSMA"<br />
FinancialServicesandMarketsAct2000(asamended)<br />
"FullSubscription"<br />
£25millionraisedundertheOffers,ignoringtheoverallotment facility<br />
"GShareholders"<br />
holdersofG<strong>Shares</strong><br />
"G<strong>Shares</strong>"<br />
Gsharesof0.1peachinthecapitaloftheCompany(ISIN:GB00B8Y7CS47)<br />
"GeneralMeeting"<br />
generalmeetingoftheCompany tobeheldon6March 2013 atwhichtheresolutionsdescribedin<br />
paragraph4.4ofPartIVoftheRegistrationDocumentwillbeproposed<br />
"Group"<br />
<strong>Downing</strong><strong>Planned</strong><strong>Exit</strong><strong>VCT</strong>2plcanditswhollyownedsubsidiary<strong>Downing</strong>Managers2Limited<br />
"Hurdle"<br />
achievementcalculatedonaperGShare basisof(a)aCompoundReturnofatleast7%perannumand<br />
(b)thepaymentordeemedpaymentofShareholderProceedsofatleast105.82pperGShare<br />
"Intermediary"<br />
authorisedintermediarywhosignstheApplicationFormandwhosedetailsaresetoutinBox7 ofthe<br />
ApplicationForm<br />
"Investor"<br />
subscriberforG<strong>Shares</strong> undertheOffers<br />
"IRR"<br />
internalrateofreturn,which,when appliedtotherelevantcashflows,producesanetpresentvalueof<br />
zero(expressedasapercentage)<br />
"ITA"<br />
Income<strong>Tax</strong>Act2007(asamended)<br />
"Listed"<br />
admittedtothepremiumsegmentoftheOfficialListandtotradingontheLondonStockExchange's<br />
mainmarketforlistedsecurities<br />
"ListingRules"<br />
listingrulesissuedby theFSA,actingastheUKListingAuthority,pursuanttoPartVIoftheFSMA<br />
13
"LondonStockExchange"<br />
"Management"<br />
"ManagementA<strong>Shares</strong>"<br />
"ManagementE<strong>Shares</strong>"<br />
"Manager"<br />
"MinimumSubscription"<br />
"MLRegulations"<br />
"NAV"or"NetAssetValue"<br />
"NetAssets"<br />
"NetReturn"or<br />
"CompoundReturn"<br />
"Notice"<br />
"OfferAgreement"<br />
"OfferPrice"<br />
"Offers"<br />
"OfficialList"<br />
"OrdinaryShareholders"<br />
"Ordinary<strong>Shares</strong>"<br />
"PerformanceIncentive"<br />
"PricingFormula"<br />
"Promoter"<br />
"Promoter’sFee"<br />
"Prospectus"<br />
"ProspectusRules"<br />
"QualifyingCompany/ies"<br />
"QualifyingInvestment"<br />
"Registrar"<br />
"RegistrationDocument"<br />
"RPI"<br />
"SecuritiesNote"<br />
"ShareholderProceeds"<br />
"Share(s)"<br />
"Shareholders"<br />
"Sponsor"<br />
"Spouse"<br />
"Summary"<br />
"TotalReturn"<br />
"UKListingAuthority"<br />
"<strong>VCT</strong>"<br />
"<strong>VCT</strong>Regulations"<br />
<br />
<br />
mainmarketforlistedsecuritiesoftheLondonStockExchangeplc (registerednumber02075721)<br />
individualsengagedinthebusinessoftheCompany,theManager and/or<strong>Downing</strong><br />
3,587,523A<strong>Shares</strong>intheCompanyissuedtoManagementinconnectionwiththe2008Offer<br />
5,000,000E<strong>Shares</strong>intheCompanyissuedtoManagementinconnectionwiththe2009Offer<br />
<strong>Downing</strong> Managers 2 Limited, a wholly owned subsidiary of the Company (registered number<br />
05330621)<br />
minimumnetproceedsrequiredtoberaisedundertheOffers,being£1,000,000orsuchotheramount<br />
astheDirectorsdetermine<br />
MoneyLaunderingRegulations2007<br />
netassetvalueperShare<br />
grossassetslessallliabilities(excludingcontingentliabilities)oftheCompany<br />
internalrateofreturn,calculatedfromthedateofthelastallotmentofG<strong>Shares</strong>undertheOffers,on<br />
thecashflowsarisinginrespectofthegrossamountsubscribedforG<strong>Shares</strong>basedonanOfferPriceof<br />
105.82p per G Share, the deemed receipt of 30% of such amounts (representing income tax relief<br />
thereon) six months later and the receipt of any Shareholder Proceeds. <strong>The</strong>se cash flows will be<br />
calculatedonadailybasisandannualisedandareinrespectofG<strong>Shares</strong>issuedintheCompany<br />
noticeoftheGeneralMeetingoftheCompany assetoutinthecirculartoholdersofC<strong>Shares</strong>and/orD<br />
<strong>Shares</strong>and/orF<strong>Shares</strong>dated10January2013<br />
agreementdated10 January 2013 betweentheCompany (1),theDirectors(2),theSponsor(3)and<br />
<strong>Downing</strong>(4),asummaryofwhichissetoutinparagraph7(a)ofPartIVoftheRegistrationDocument<br />
priceperGShare undertheOffers asdeterminedbythePricingFormulafromtimetotime<br />
together,the2012/13Offerandthe2013/14Offer, being offers forsubscriptionofupto35,000,000G<br />
<strong>Shares</strong><br />
OfficialListoftheUKListingAuthority<br />
holdersofOrdinary<strong>Shares</strong><br />
ordinarysharesof1peachinthecapitaloftheCompany<br />
performancerelatedincentivefeepayableintheeventthattheHurdlesareachieved,asdescribedin<br />
thisdocumentunderthesectionheaded"Charges"<br />
mechanism by which the pricing of the Offers may be adjusted accordingtothelatestpublished NAV,<br />
thelevelofthePromoter’sFeeandAdviserCharge,asdescribedonpage19ofthisdocument<br />
<strong>Downing</strong><br />
fee payable to <strong>Downing</strong>, by the Company, calculated as a percentage of each Applicant’s gross<br />
subscriptionintheOffersinreturnforwhich<strong>Downing</strong>willpaythelaunchcostsoftheOffers<br />
thisdocument,theRegistrationDocumentandtheSummarywhichtogetherdescribetheOfferinfull<br />
prospectusrulesissuedbytheFSA pursuanttoPartVI oftheFSMA<br />
unquotedcompany carryingonqualifyingtradeswhollyormainlyintheUnitedKingdomandwhich<br />
satisfycertainotherconditionsasdefinedinChapter4,Part6,oftheITA<br />
investmentinanunquotedtradingcompany,whichcomprisesaqualifyingholdingfora<strong>VCT</strong>asdefined<br />
inChapter4,Part6,oftheITA<br />
CapitaRegistrarsLimited (registerednumber02605568)<br />
documentwhichhasbeenpreparedinaccordancewiththeProspectusRulesinconnectionwiththe<br />
Offer<br />
inflationmeasuredbytheRetailPriceIndex<br />
thisdocumentwhichhasbeenpreparedinaccordancewiththeProspectusRulesinconnectionwith<br />
theOffers<br />
amounts paid by way of dividends or other distributions, share buybacks, proceeds on a sale or<br />
liquidationoftheCompanyandanyotherproceedsorvaluereceived,ordeemedtobereceived,byG<br />
ShareholdersintheCompany,excludinganyincometaxreliefonsubscription<br />
A<strong>Shares</strong>and/orC<strong>Shares</strong>and/orD<strong>Shares</strong>and/orE <strong>Shares</strong>and/orF<strong>Shares</strong>and/orG<strong>Shares</strong> (excluding<br />
ManagementA<strong>Shares</strong>andManagementE<strong>Shares</strong>),asapplicable<br />
holdersof<strong>Shares</strong><br />
HowardKennedyCorporateServicesLLP<br />
spouseorcivilpartner<br />
summaryoftheOfferspreparedinaccordancewiththeProspectusRules<br />
NAV,togetherwithcumulativedividendspaidorproposed, includingtaxcreditswherereclaimable<br />
FSAactinginitscapacityasthecompetentauthorityforthepurposesofPartVIoftheFSMA<br />
companyapprovedasaventurecapitaltrustunderSection274oftheITA<br />
<strong>The</strong>VentureCapitalTrust(WindingUpandMergers)(<strong>Tax</strong>)Regulations2004(asamended)<br />
14
PartV–AdditionalInformation<br />
<br />
1. <strong>The</strong>Company<br />
1.1 Incorporation<br />
<strong>Downing</strong><strong>Planned</strong><strong>Exit</strong><strong>VCT</strong>2plcwasincorporatedinEngland<br />
and Wales as a public limited company on 17 January 2005<br />
with registered number 05334418. <strong>The</strong> principle legislation<br />
under which the Company operates and under which the A<br />
<strong>Shares</strong>, C <strong>Shares</strong>, D <strong>Shares</strong>, E <strong>Shares</strong>, F <strong>Shares</strong> and G <strong>Shares</strong><br />
have been created is the 2006 Act (together with statutory<br />
instrumentscreatedpursuantthereto).<br />
1.2 Borrowingpolicy<br />
<strong>The</strong>DirectorsmayexerciseallthepowersoftheCompanyto<br />
borrow money and to mortgage or charge its undertakings,<br />
propertyanduncalledcapital.<strong>The</strong>Directorsshallrestrictthe<br />
borrowings of the Company and, by the exercise of the<br />
Company'svotingandotherrightsorpowersofcontrolover<br />
its subsidiary undertakings (if any), secure that they restrict<br />
their borrowings, so that the aggregate amount at any time<br />
outstanding in respect of money borrowed by the Group,<br />
being the Company and its subsidiary undertakings for the<br />
time being (excluding intragroup borrowings), shall not,<br />
withouttheprevioussanctionofanordinaryresolutionofthe<br />
Company, exceed a sum equal to 50% of the aggregate<br />
amountpaidonanysharesissuedbytheCompany(together<br />
withanypremiumpaidthereon).<br />
1.3 Cancellationofthesharepremiumaccount<br />
<strong>The</strong>DirectorsareawareofthepossibilitythattheCompany's<br />
<strong>Shares</strong> may trade at a discount to their net asset value at<br />
somepoint.<strong>The</strong>DirectorsconsiderthattheCompanyshould<br />
have the ability to purchase its <strong>Shares</strong> in the market (such<br />
<strong>Shares</strong>tobeautomaticallycancelled)withtheaimofreducing<br />
anydiscountandincreasingthenetassetvalueperShareof<br />
the remaining <strong>Shares</strong>. In the view of the Directors, the<br />
awarenessofInvestorsthattheCompanyhassuchacapability<br />
may tend to moderate the scale of any discount which may<br />
emergeandtheactionofbuyinginsharesshouldenableany<br />
suchdiscounttobenarrowed.<br />
<br />
<br />
<strong>The</strong> 2006 Act provides that a public company may only<br />
purchaseitsownsharesoutofdistributableprofitsoroutof<br />
theproceedsofafreshissueof<strong>Shares</strong>madeforthepurpose<br />
ofthepurchase.SubjecttoconfirmationfromHMRevenue&<br />
Customs that such proposals will not adversely affect the<br />
Company’s<strong>VCT</strong>statusandCourtapproval,theCompanymay<br />
decide to reduce and/or cancel the share premium account<br />
(createdontheissueoftheG<strong>Shares</strong>pursuanttotheOffers)<br />
and to transfer the balance of the special reserve, which is<br />
establishedbythecancellationofaprevioussharepremium<br />
account,whichmaybetreatedasadistributableprofit,outof<br />
which purchases of <strong>Shares</strong> can be made, subject to<br />
regulations,<strong>VCT</strong>Rulesandcompanylegislation.<br />
1.4 Stampdutyandclosecompanystatus<br />
<strong>The</strong>Companyhasbeenadvisedthatnostampdutyorstamp<br />
dutyreservetaxwillbepayableontheissueoftheG<strong>Shares</strong><br />
undertheOffers.OntheissueoftheG<strong>Shares</strong>pursuanttothe<br />
Offers, the Company will not be a close company for tax<br />
purposes.<br />
1.5 Materialinterests<br />
<strong>The</strong>Managerwillbepaidanannualinvestmentmanagement<br />
feeof2.0%oftheNetAssetsattributabletotheG<strong>Shares</strong>.In<br />
linewithnormal<strong>VCT</strong>practice,theManagerwillbeentitledto<br />
receive a Performance Incentive. Further details of these<br />
arrangementsaresetoutinPartIofthisdocument.<br />
<br />
1.6 Investorprofile<br />
AtypicalInvestorwillbearetailclient(notacorporate),who<br />
isaged18oroverandpaysUKincometax,whoalreadyhasa<br />
portfolio of non<strong>VCT</strong> investments such as unit trusts/OEICs,<br />
investmenttrustsanddirectshareholdingsinlistedcompanies<br />
and has sufficient income and capital so that his/her<br />
investment in the Company can be held for over five years.<br />
<strong>The</strong> individual's income tax liability should be more than<br />
sufficienttoutilisealltheinitialincometaxreliefavailableon<br />
theinvestment.<strong>The</strong>individualshouldbewillingtoinvestover<br />
themediumtolongtermandbecomfortablewithhigherrisk<br />
investments.<br />
1.7 ResultsoftheOffers<br />
<strong>The</strong> results of the Offers will be announced through a<br />
regulatoryinformationserviceprovider.<br />
<br />
2. <strong>Tax</strong>ationandHMRevenue&Customsapproval<br />
<strong>The</strong>DirectorsintendtoconducttheaffairsoftheCompanyso<br />
thatitcontinuestosatisfytheconditionsforapprovalasa<strong>VCT</strong><br />
and that such approval will be maintained. HM Revenue &<br />
CustomshasgrantedtheCompanyprovisionalapprovalasa<br />
<strong>VCT</strong>underPart6oftheITA.<strong>The</strong>Companyintendstocomply<br />
with section 274 of the ITA and has retained<br />
PricewaterhouseCoopers LLP to advise it on <strong>VCT</strong> taxation<br />
matters.<br />
<br />
3. Working capital and capitalisation and indebtedness<br />
statements<br />
3.1 Workingcapital<br />
IntheopinionoftheCompany,theworkingcapitalavailable<br />
totheGroupissufficientforitspresentrequirements,thatis,<br />
foratleast12monthsfromthedateofthisdocument.<br />
3.2 Statementofcapitalisationandindebtedness<br />
<strong>The</strong>tablebelowshowsthecapitalisationoftheCompanyasat<br />
31October2012(extractedfromtheunauditedmanagement<br />
accounts of the Company for the period ended 31 October<br />
2012).<br />
<br />
<br />
£'000<br />
Totalcurrentdebt<br />
<br />
Guaranteed<br />
<br />
Secured<br />
<br />
Unguaranteed/secured<br />
<br />
Totalnoncurrentdebt<br />
<br />
Guaranteed<br />
<br />
Secured<br />
<br />
Unguaranteed/secured<br />
<br />
Shareholders'equity<br />
<br />
Sharecapital<br />
53<br />
Otherreserves 23,991<br />
24,044<br />
<br />
<strong>The</strong>rehasbeennomaterialchangeinthecapitalisationofthe<br />
Company,totaldebtorshareholderequitysince31October<br />
2012,otherthanallotmentsofF<strong>Shares</strong>adding£982toshare<br />
capitaland£981,636tootherreserves.<br />
15
<strong>The</strong>followingtableshowstheCompany'snetindebtednessasat<br />
31 October 2012 (extracted from the unaudited management<br />
accountsoftheCompanyfortheperiodended31October2012).<br />
<br />
<br />
£'000<br />
A Cash 3,948<br />
B Cashequivalent <br />
C TradingSecurities <br />
D Liquidity(A+B+C) 3,948<br />
<br />
<br />
E Currentfinancialreceivables 125<br />
F Currentbankdebt <br />
G Currentpositionofnoncurrentdebt <br />
H Othercurrentfinancialdebt <br />
<br />
<br />
I Currentfinancialdebt(F+G+H) <br />
<br />
<br />
J Netcurrentfinancialindebtedness<br />
(4,073)<br />
(IED)<br />
<br />
<br />
K Noncurrentbankloans <br />
L Bondsissued <br />
M Othernoncurrentloans <br />
N Noncurrentfinancialindebtedness<br />
<br />
(K+L+M)<br />
<br />
<br />
O Netfinancialindebtedness(J+N) (4,073)<br />
<br />
<br />
<strong>The</strong> Company does not have any contingent or indirect<br />
indebtedness.<br />
<br />
4. CreationoftheG<strong>Shares</strong><br />
<strong>The</strong> Company has issued a circular dated 10 January 2013 to<br />
holdersofC<strong>Shares</strong>and/orD<strong>Shares</strong>and/orF<strong>Shares</strong>conveninga<br />
generalmeetingon6March2013.<strong>The</strong>followingresolutionswillbe<br />
proposed and are all conditional upon the passing of the other<br />
resolutionscontainedintheNotice:<br />
<br />
OrdinaryResolutions:<br />
1) to create G <strong>Shares</strong> having the rightsand being subject to<br />
the restrictions set out in the Articles, to be altered<br />
pursuanttoresolution5describedbelow;<br />
2) to authorise the Directors to allot up to an aggregate<br />
nominal amount of £38,500. <strong>The</strong> allotments referred to<br />
represent,inaggregate,approximately71.7%oftheissued<br />
share capital of the Company as at the date of this<br />
document. Such authority will expire on the later of 15<br />
monthsfromthedatetheresolutionispassedandtheend<br />
oftheCompany’snextannualgeneralmeeting;<br />
3) toapprovetheOfferAgreement;<br />
<br />
Specialresolutions:<br />
4) toauthorisetheDirectorstoallotthesharesreferredtoin<br />
resolution 2 as if section 561(1) of the 2006 Act did not<br />
apply.Thisdisapplicationrepresentsapproximately71.7%<br />
of the Company's current issued share capital. This<br />
authority will expire on the later of 15 months from the<br />
datetheresolutionispassedandtheendoftheCompany’s<br />
nextannualgeneralmeeting;<br />
5) to alter the Articles to, inter alia, provide for the rights<br />
attachingtotheG<strong>Shares</strong>;<br />
6) to authorise the Board to make market purchases of G<br />
<strong>Shares</strong>;and<br />
7) toauthorisethecancellationofthesharepremiumaccount<br />
<br />
<br />
arisingontheissueoftheG<strong>Shares</strong>.<br />
5. DetailsoftheG<strong>Shares</strong><br />
5.1 Distributionsofincomeandcapital<br />
G Shareholders shall be entitled to receive, in that capacity,<br />
dividends and any other distributions or a return of capital<br />
(otherwisethanonamarketpurchasebytheCompanyofanyof<br />
itsshares)outoftheassetsattributabletotheG<strong>Shares</strong>,prorata<br />
totheirrespectiveholdingsofG<strong>Shares</strong>.<br />
<br />
5.2 Distributionsofassetsonawindingup<br />
<strong>The</strong> capital and assets attributable to the G <strong>Shares</strong> shall on a<br />
windingupbedistributedonthesamebasisassetoutunderthe<br />
heading"Distributionsofincomeandcapital".<br />
<br />
5.3 Votingrights<br />
G Shareholders will be entitled to receive notice of, to attend,<br />
speak and vote at any general meeting, pari passu, in such<br />
respects with the holders of C <strong>Shares</strong>, D <strong>Shares</strong> and F <strong>Shares</strong>.<br />
EveryGShareholderpresentinpersonorbyproxyshallupona<br />
showofhandsoruponapoll,haveonevoteforeveryGShare<br />
heldbyhim/her.<br />
<br />
7. OverseasInvestors<br />
(a) No person receiving a copy of this document or an<br />
Application Form in any territory other than the UK may<br />
treat the same as constituting an offer or invitation to<br />
him/her to subscribe for or purchase G <strong>Shares</strong> unless, in<br />
such territory, such offer or invitation could lawfully be<br />
made.<br />
(b) Noactionhasbeentakentopermitthedistributionofthis<br />
document in any jurisdiction outside the UK where such<br />
action is required to be taken. All Applicants will be<br />
required to warrant that they are not a US person as<br />
definedinparagraph5(x)ofPartVIofthisdocumentora<br />
residentofCanada.<br />
<br />
7. Informationsourcedfromthirdparties<br />
Where information set out in this document has been sourced<br />
fromthirdpartiesthesourcehasbeenidentifiedattherelevant<br />
place in the document and the Company confirms that this<br />
information has been accurately reproduced and, as far as the<br />
Company is aware and able to ascertain from information<br />
published, no facts have been omitted which wouldrender the<br />
reproducedinformationinaccurateormisleading.<br />
<br />
10January2013<br />
16
PartVI–TermsandConditionsofApplication<br />
<br />
1. In these Terms and Conditions of Application, the expression<br />
"Prospectus"meansthisdocument,theRegistrationDocument<br />
andtheSummary,eachdated10January2013.<strong>The</strong>expression<br />
"Application Form" means the application form for use in<br />
accordance with these Terms and Conditions of Application.<br />
Savewherethecontentotherwiserequires,thetermsusedin<br />
the Application Form bear the same meaning as in the<br />
Prospectus.<br />
2. <strong>The</strong>rightisreservedtorejectanyapplicationortoacceptany<br />
applicationinpartonly.Multipleapplicationsarepermitted.If<br />
any application is not accepted, or if any contract created by<br />
acceptance does not become unconditional, or if any<br />
application is accepted for fewer G <strong>Shares</strong> than the number<br />
appliedfor,orifinanyothercircumstancesthereisanexcess<br />
paymentinrelationtoanapplication,theapplicationmoniesor<br />
the balance of the amount paid or the excess paid on<br />
applicationwillbereturnedwithoutinterestbypostattherisk<br />
of the Applicant. In the meantime application monies will be<br />
retainedintheCompany'sbankaccount.<br />
3. You may pay for your application for G <strong>Shares</strong> by cheque or<br />
bankers'draftsubmittedwiththeApplicationForm.<br />
4. <strong>The</strong> contract created by the acceptance of applications in<br />
respectofthefirstallotmentofG<strong>Shares</strong>undertheOfferswill<br />
beconditionalon:<br />
(a) theMinimumSubscriptionbeingreceivedby3.00p.m.onthe5<br />
April2013;<br />
(b) allresolutionsbeingpassedattheCompany'sGeneralMeeting<br />
to be held on 6 March 2013 or at a subsequent meeting, if<br />
adjourned;and<br />
(c) admissionoftheG<strong>Shares</strong>(inrespectofsuchfirstallotmentof<br />
<strong>Shares</strong>)beinggrantednotlaterthan5:00p.m.on7May2013.<br />
Iftheconditionsarenotmet,theOfferswillbewithdrawnand<br />
subscriptionmonieswillbereturnedtoInvestorswithinseven<br />
days of 7 May 2013, at their own risk, without interest. <strong>The</strong><br />
Offersarenotunderwritten.<br />
5. BycompletinganddeliveringanApplicationForm,you:<br />
(a) offertosubscribefortheamountspecifiedonyourApplication<br />
Form plus any commission waived for extra shares or any<br />
smallersumforwhichsuchapplicationisacceptedattheOffer<br />
Price, the Prospectus, these Terms and Conditions of<br />
Application, the memorandum ofassociation of the Company<br />
anditsArticles;<br />
(b) acknowledgethat,ifyoursubscriptionisaccepted,youwillbe<br />
allocated such number of G <strong>Shares</strong> as determined by the<br />
PricingFormula;<br />
(c) authorise your financial adviser, or whoever he or she may<br />
direct, the Registrar or the Company to send a document of<br />
titlefor,orcredityourCRESTaccountinrespectof,thenumber<br />
of G <strong>Shares</strong> for which your application is accepted, and/or a<br />
crossedchequeforanymoniesreturnable,bypostatyourrisk<br />
toyouraddressassetoutonyourApplicationForm;<br />
(d) agreethatyour application may notberevokedandthatthis<br />
paragraph constitutes a collateral contract between you and<br />
theCompanywhichwillbecomebindingupondespatchbypost<br />
or delivery of your duly completed Application Form to the<br />
Companyortoyourfinancialadviser;<br />
(e) warrant that your remittance will be honoured on first<br />
presentation and agree that, if such remittance is not so<br />
honoured,youwillnotbeentitledtoreceivesharecertificates<br />
fortheG<strong>Shares</strong>appliedforortoenjoyorreceiveanyrightsor<br />
distributions inrespect of such G <strong>Shares</strong> unless and until you<br />
make payment in cleared funds for such G <strong>Shares</strong> and such<br />
paymentisacceptedbytheCompany(suchacceptanceshallbe<br />
in its absolute discretion and may be on the basis that you<br />
indemnify it against all costs, damages, losses, expenses and<br />
liabilitiesarisingoutoforinconnectionwiththefailureofyour<br />
remittance to be honoured on first presentation) and that at<br />
anytimepriortounconditionalacceptancebytheCompanyof<br />
such late payment in respect of such G <strong>Shares</strong>, the Company<br />
may(withoutprejudicetoitsotherrights)treattheagreement<br />
toallotsuchG<strong>Shares</strong>asvoidandmayallotsuchG<strong>Shares</strong>to<br />
some other person, in which case you will not be entitled to<br />
anyrefundorpaymentinrespectofsuchG<strong>Shares</strong>(otherthan<br />
returnofsuchlatepaymentatyourriskandwithoutinterest);<br />
(f) agree that all cheques and bankers' drafts may be presented for<br />
paymentontheduedatesandanydefinitivedocumentoftitleand<br />
anymoniesreturnabletoyoumayberetainedpendingclearanceof<br />
your remittance and the verification of identity required by the ML<br />
Regulationsandthatsuchmonieswillnotbearinterest;<br />
(g) undertake to provide satisfactory evidence of identity within such<br />
reasonable time (in each case to be determined in the absolute<br />
discretion of the Company and the Sponsor) to ensure compliance<br />
withtheMLRegulations;<br />
(h) agree that, in respect of those G <strong>Shares</strong> for which your application<br />
has been received and processed and not rejected, acceptance of<br />
your application shall be constituted by the Company instructing<br />
<strong>Downing</strong>ortheRegistrartoenteryournameontheshareregister;<br />
(i) agree that all documents in connection with the Offer and any<br />
returnedmonieswillbesentatyourriskandmaybesenttoyouat<br />
youraddressassetoutintheApplicationForm;<br />
(j) agreethat,havinghadtheopportunitytoreadtheProspectus,you<br />
shall be deemed to have had notice of all information and<br />
representationsincludingtheriskfactorscontainedtherein;<br />
(k) confirmthat(saveforadvicereceivedfromyourfinancialadviser)in<br />
makingsuchapplicationyouarenotrelyingonanyinformationand<br />
representationotherthanthosecontainedintheProspectusandyou<br />
accordinglyagreethatnopersonresponsiblesolelyorjointlyforthe<br />
Prospectusoranypartthereoforinvolvedinthepreparationthereof<br />
will have any liability for any such other information or<br />
representation;<br />
(l) agreethatallapplications,acceptancesofapplicationsandcontracts<br />
resulting therefrom under the Offers shall be governed by and<br />
construedinaccordancewithEnglishLawandthatyousubmittothe<br />
jurisdictionoftheEnglishCourtsandagreethatnothingshalllimitthe<br />
rightoftheCompanytobringanyaction,suitorproceedingsarising<br />
out of or in connection with any such applications, acceptances of<br />
applicationsandcontractsinanyothermannerpermittedbylawor<br />
inanycourtofcompetentjurisdiction;<br />
(m) irrevocablyauthorisetheCompany,theRegistraror<strong>Downing</strong>orany<br />
other person authorised by any of them, as your agent, to do all<br />
thingsnecessarytoeffectregistrationofanyG<strong>Shares</strong>subscribedby<br />
orissuedtoyouintoyournameandauthoriseanyrepresentativesof<br />
the Company, the Registrar or <strong>Downing</strong> to execute any documents<br />
required therefore and to enter your name on the register of<br />
membersoftheCompany;<br />
(n) agree to provide the Company with any information which it may<br />
request in connection with your application or to comply with the<br />
<strong>VCT</strong> Regulations or other relevant legislation (as the same may be<br />
amendedfromtimetotime)includingwithoutlimitationsatisfactory<br />
evidenceofidentitytoensurecompliancewiththeMLRegulations;<br />
(o) warrantthat,inconnectionwithyourapplication,youhaveobserved<br />
the laws of all requisite territories, obtained any requisite<br />
governmental or other consents, complied with all requisite<br />
formalities and paid any issue, transfer or other taxes due in<br />
connectionwithyourapplicationinanyterritoryandthatyouhave<br />
not taken any action which will or may result in the Company,<br />
<strong>Downing</strong> or the Sponsor acting in breach of the regulatory or legal<br />
requirements of any territory in connection with the Offer or your<br />
application;<br />
(p) confirmthatyouhavereadandcompliedwithparagraph6below;<br />
(q) confirm that you have reviewed the restrictions contained in<br />
paragraph7below;<br />
(r) warrantthatyouarenotundertheageof18years;<br />
(s) warrant that, if the laws of any territory or jurisdiction outside the<br />
United Kingdom are applicable to your application, you have<br />
compliedwithallsuchlawsandnoneoftheCompany,<strong>Downing</strong> or<br />
theSponsororanyoftheirrespectiveagentswillinfringeanylawsof<br />
anysuchterritoryorjurisdictiondirectlyorindirectlyasaresultorin<br />
consequenceofanyacceptanceofyourapplication;<br />
(t) agreethat<strong>Downing</strong>andtheSponsorareactingfortheCompanyin<br />
connectionwiththeOfferandfornooneelseandthattheywillnot<br />
treat you as their customer by virtue of such application being<br />
accepted or owe you any duties or responsibilities concerning the<br />
priceofG<strong>Shares</strong>orconcerningthesuitabilityofG<strong>Shares</strong>foryouor<br />
beresponsibletoyoufortheprotectionsaffordedtotheircustomers;<br />
<br />
17
(u) warrant that if you sign the Application Form on behalf of<br />
somebody else or yourself and another or others jointly or a<br />
corporation you have the requisite power to make such<br />
investmentsaswellastheauthoritytodosoandsuchperson<br />
willalsobeboundaccordinglyandwillbedeemedalsotohave<br />
given the confirmations, warranties and undertakings<br />
contained in these terms and conditions of application and<br />
undertake (save in the case of signature by an authorised<br />
financialadviseronbehalfoftheInvestor)toencloseapower<br />
ofattorneyoracopythereofdulycertifiedbyasolicitorwith<br />
theApplicationForm;<br />
(v) warrantthatyouarenotsubscribingfortheG<strong>Shares</strong>usinga<br />
loanwhichwouldnothavebeengiventoyouoranyassociate,<br />
ornotgiventoyouonsuchfavourableterms,ifyouhadnot<br />
beenproposingtosubscribefortheG<strong>Shares</strong>;<br />
(w) warrantthattheG<strong>Shares</strong>arebeingacquiredbyyouforbona<br />
fide investment purposes and not as part of a scheme or<br />
arrangement the main purpose of which, or one of the main<br />
purposesofwhich,istheavoidanceoftax.Obtainingtaxreliefs<br />
given under the applicable <strong>VCT</strong> legislation is not of itself tax<br />
avoidance;<br />
(x) warrantthatyouarenota"USperson"asdefinedintheUnited<br />
States Securities Act of 1933 (as amended) nor a resident of<br />
Canada and that you are not applying for any G <strong>Shares</strong> on<br />
behalfoforwithaviewtotheiroffer,saleordelivery,directly<br />
orindirectly,toorforthebenefitofanyUSpersonorresident<br />
ofCanada;and<br />
(y) warrantthattheinformationcontainedintheApplicationForm<br />
isaccurate.<br />
6. NopersonreceivingacopyoftheProspectus,oranApplication<br />
Form,inanyterritoryotherthantheUnitedKingdommaytreat<br />
the same as constituting an invitation or offer to him or her,<br />
nor shouldhe or she in any event use such ApplicationForm<br />
unless, in the relevant territory, such an invitation or offer<br />
couldlawfullybemadetohimorherorsuchApplicationForm<br />
could lawfully be used without contravention of any<br />
registrationorotherlegalrequirements.Itistheresponsibility<br />
ofanypersonoutsidetheUnitedKingdomwishingtomakean<br />
applicationhereundertosatisfyhimselforherselfastothefull<br />
observanceofthelawsofanyrelevantterritoryinconnection<br />
therewith, including obtaining any requisite governmental or<br />
otherconsents,observinganyoftheformalitiesrequiringtobe<br />
observed in such territory and paying any issue, transfer or<br />
othertaxesrequiredtobepaidinsuchterritory.<br />
7. <strong>The</strong>G<strong>Shares</strong>havenotbeenandwillnotberegisteredunderthe<br />
United States Securities Act 1933, as amended, or under the<br />
securities laws of any state or other political subdivision of the<br />
UnitedStates,andmaynotbeofferedorsoldintheUnitedStates<br />
ofAmerica,itsterritoriesorpossessionsorotherareassubjecttoits<br />
jurisdiction(the"USA").Inaddition,theCompanyhasnotbeenand<br />
willnotberegisteredundertheUnitedStatesInvestmentCompany<br />
Actof1940,asamended.<strong>The</strong>Managerwillnotberegisteredunder<br />
theUnitedStatesInvestmentAdviserActof1940(asamended).No<br />
applicationwillbeacceptedifitbearsanaddressintheUSA.<br />
8. This application is addressed to the Company and the Sponsor.<br />
<strong>The</strong>rightsandremediesoftheCompanyandtheSponsorunder<br />
theseTermsandConditionsofApplicationareinadditiontoany<br />
rightsandremedieswhichwouldotherwisebeavailabletoeither<br />
of them, and the exercise or partial exercise of one will not<br />
preventtheexerciseofothers.<br />
9. <strong>The</strong>datesandtimesreferredtointheseTermsandConditionsof<br />
ApplicationmaybealteredbytheCompanywiththeagreement<br />
oftheSponsor.<br />
10. Intermediarieswhohavenotprovidedpersonalrecommendationsor<br />
advice to UK retail clients on the Offer <strong>Shares</strong> and who, acting on<br />
behalf of their clients, return valid Application Forms bearing their<br />
stamp and FSA number may be entitled to commission on the<br />
amountpayableinrespectoftheOffer<strong>Shares</strong>allocatedforeachsuch<br />
Application Form at the rates specified in the paragraph headed<br />
"Commission"inPartVIIofthisdocument.Intermediariesmayagree<br />
to waive part or all of their initial commission in respect of an<br />
application for <strong>Shares</strong> under the Offers. If this isthe case, then the<br />
offer charges will be adjusted, in accordance with the Pricing<br />
Formula. Intermediaries should keep a record of Application Forms<br />
submitted bearing their stamp to substantiate any claim for their<br />
commission.<br />
11. <strong>The</strong>sectionheaded"NotesonApplicationForm"formspartofthese<br />
TermsandConditionsofApplication.<br />
12. It is a condition of the Offers to ensure compliance with the ML<br />
Regulations.<strong>Downing</strong>isthereforeentitledtorequire,atitsabsolute<br />
discretion, verification of identity from any Applicant including,<br />
withoutlimitation,anypersonwhoeither(i)tenderspaymentbyway<br />
ofachequeorbankers'draftdrawnonanaccountinthenameofa<br />
personorpersonsotherthantheApplicantor(ii)appearsto<strong>Downing</strong><br />
tobeactingonbehalfofsomeotherperson.Pendingtheprovisionof<br />
evidencesatisfactoryto<strong>Downing</strong>astotheidentityoftheApplicant<br />
and/or any person on whose behalf the Applicant appears to be<br />
acting,<strong>Downing</strong>may,initsabsolutediscretion,retainanApplication<br />
FormlodgedbyanApplicantand/orthechequeorotherremittance<br />
relatingtheretoand/ortheRegistrarmaynotentertheApplicanton<br />
theregisterofmembersorissueanysharecertificatesinrespectof<br />
suchapplication.Ifverificationofidentityisrequired,thismayresult<br />
in delay in dealing with an application and in rejection of the<br />
application. <strong>The</strong> Company reserves the right, in its absolute<br />
discretion, for it or <strong>Downing</strong> to reject any application in respect of<br />
which <strong>Downing</strong> considers that, having requested verification of<br />
identity,ithasnotreceivedevidenceofsuchidentitysatisfactorytoit<br />
by such time as was specified in the request for verification of<br />
identityorinanyeventwithinareasonableperiod.Intheeventofan<br />
application being rejected in any such circumstances, the Company<br />
reserves the right in its absolute discretion, but shall have no<br />
obligation, to terminate any contract of allotment relating to or<br />
constituted by such Application Form (in which event the money<br />
payableorpaidinrespectoftheapplicationwillbereturned(without<br />
interest) to the account of the drawee bank from which such sums<br />
were originally debited) and/or to endeavour to procure other<br />
subscribers for the G <strong>Shares</strong> in question (but in each case without<br />
prejudicetoanyrightstheCompanymayhavetotakeproceedingsto<br />
recoverinrespectoflossordamagesufferedorincurredbyitasa<br />
result of the failure to produce satisfactory evidence as aforesaid).<br />
<strong>The</strong>submissionofanApplicationFormwillconstituteanundertaking<br />
bytheApplicanttoprovidepromptlyto<strong>Downing</strong>suchinformationas<br />
may be specified by it as being required for the purpose of the<br />
MLRegulations.<br />
13. <strong>The</strong>rightisalsoreservedtotreatasvalidandbindinganyapplication<br />
notcomplyingfullywiththeseTermsandConditionsofApplicationor<br />
notinallrespectscomplyingwiththeNotesonApplicationForm.In<br />
particular, but without limitation, the Company may accept<br />
applications made otherwise than by completion of an Application<br />
Form where the Applicant has agreed in some other manner<br />
acceptabletotheCompanytoapplyinaccordancewiththeseTerms<br />
andConditionsofApplication.<br />
14. <strong>The</strong> Company and/or <strong>Downing</strong> may use the information you give for<br />
administration, research and/or statistical purposes. Your details may<br />
beusedbytheCompanyand/or<strong>Downing</strong>(butwillnotbesoldtothird<br />
parties) to send you information on other potential investment<br />
opportunities(maximumsixcommunicationsperannum).Ifyouwould<br />
prefernottoreceivesuchinformation,pleasewriteto<strong>Downing</strong>.<br />
15. <strong>The</strong>minimumsubscriptionis£5,000subjecttotheBoard'sdiscretion.<br />
16. <strong>The</strong> application of the subscription proceeds is subject to the<br />
absolutediscretionoftheDirectors.<br />
<br />
18
PartVII–OfferDetails&Charges<br />
<br />
AdviserCharges,pricingoftheOffersandcommission<br />
CommissionisgenerallynotpermittedtobepaidtoIntermediarieswhoprovideapersonalrecommendationtoUKretailclientson<br />
investments in <strong>VCT</strong>s after 30 December 2012. Instead of commission being paid by the Company, a fee will usually be agreed<br />
betweentheIntermediaryandInvestorfortheadviceandrelatedservices(“AdviserCharge”).Thisfeecaneitherbepaiddirectly<br />
bytheInvestortotheIntermediaryor,ifitisaninitialoneofffee,thepaymentofsuchfeemaybefacilitatedby<strong>Downing</strong><strong>Planned</strong><br />
<strong>Exit</strong><strong>VCT</strong>2.OngoingfeestoIntermediarieswillnotbefacilitatedbytheCompany.IfthepaymentoftheAdviserChargeistobe<br />
facilitatedbytheCompany,thentheInvestorisrequiredtospecifytheamountofthechargeontheApplicationForm(seeBox3).<br />
<strong>The</strong>InvestorwillbeissuedfewerG<strong>Shares</strong>(totheequivalentvalueoftheAdviserCharge)throughthePricingFormulasetout<br />
below.<strong>The</strong>AdviserChargeisinclusiveofVAT,ifapplicable.<br />
<br />
Commission is permitted to be paid to Intermediaries in certain limited situations, such as in respect of executiononly clients<br />
(where no advice orpersonal recommendation has been provided). <strong>The</strong> level of the Promoter’s Fee appliedtoeachInvestor’s<br />
applicationreflectswhetherornotcommissionispayable.<br />
<br />
Promoter’sFee(noIntermediarycommissionpayable)<br />
<strong>Downing</strong>willchargetheCompanyaPromoter’sFeeof3.5%ofthemoniessubscribed,whereitisnotrequiredtopaycommission<br />
toanIntermediary.<br />
<br />
Promoter’sFee(Intermediarycommissionpayable)<br />
<strong>Downing</strong>willchargetheCompanyaPromoter’sFeeof5.5%ofthemoniessubscribed,whereitisrequiredtopaycommissiontoan<br />
Intermediary.OutofitsPromoter’sFees,<strong>Downing</strong>(notInvestors)willberesponsibleforpayingallthecostsoftheOffers,including<br />
initialandtrailcommission(asdescribedundertheparagraphheaded"Commission"below)toIntermediaries(whereapplicable).<br />
<br />
PricingoftheOffers<br />
<strong>The</strong>numberofG<strong>Shares</strong>tobeissuedtoeachApplicantwillbecalculatedbasedonthefollowingPricingFormula(roundeddownto<br />
thenearestwholeGShare):<br />
<br />
NumberofG<strong>Shares</strong> =<br />
<br />
<br />
Amountsubscribed,less:<br />
(i)initialPromoter’sFee 1 ;and(ii)AdviserCharge(ifany)<br />
÷<br />
1 lessanyreductionfortheearlyapplicationsand/orcommissionwaivedbyIntermediaries(whereapplicable)<br />
2 adjustedforanydividendsdeclaredandexdividendbutnotyetpaid,asappropriate<br />
<br />
Illustrativeexamples(basedonasubscriptionundertheOffersof£10,000andaNAVperGShareof£1)<br />
<br />
(i)<br />
(ii)<br />
(iii)<br />
<br />
<br />
(iv)<br />
Promoter’sFee(commissionpayable)5.5%=£550<br />
NumberofG<strong>Shares</strong>=(10,000–550–0)÷1=9,450<br />
<br />
Promoter’sFee(nocommission)3.5%=£350<br />
ExampleAdviserCharge=£225<br />
NumberofG<strong>Shares</strong>=(10,000–350–225)÷1=9,425<br />
<br />
Promoter’sFee(nocommission)3.5%=£350<br />
ExampleAdviserCharge=£400<br />
NumberofG<strong>Shares</strong>=(10,000–350–400)÷1=9,250<br />
<br />
Promoter’sFee(nocommission)applicationreceivedby28February2013*2.5%=£250<br />
ExampleAdviserCharge=nil(feebeingpaiddirectlybyclienttoIntermediaryordirectapplication)<br />
NumberofG<strong>Shares</strong>=(10,000–250–0)÷1=9,750<br />
19<br />
LatestpublishedNAV<br />
perGShare 2<br />
<br />
applicationsreceivedandacceptedby28February2013benefitfroma1%reductioninthePromoter’sFee.<br />
<br />
ItshouldbenotedthattheexampleAdviserChargessetoutabovehavebeenprovidedtoillustratethepricingoftheOffersand<br />
shouldnotbeconsideredasarecommendationastotheappropriatelevelsofAdviserCharges.<br />
<br />
Incometaxreliefisavailableonthetotalamountsubscribed,subjectto<strong>VCT</strong>Rulesandpersonalcircumstances,whichineachof<br />
theaboveexampleswouldbe£3,000(£10,000at30%).<br />
<br />
<strong>The</strong>numberofG<strong>Shares</strong>issuedundertheOfferswillbeaffectedbya“blended”issuecost,becauseApplicantswillhaveadifferent<br />
issue cost attributable to their application forG <strong>Shares</strong> undertheOffers depending upon whethertheir Applicationisreceived<br />
directly,throughanexecutiononlybrokerorthroughanIntermediaryprovidingadvice.<br />
<br />
Commission<br />
CommissionmaybepayablewherethereisanExecutiononlyTransactionandnoadvicehasbeenprovidedbytheIntermediaryto<br />
the Investor or where the Investor is a professional client of the Intermediary. Commission is payable by <strong>Downing</strong> out of its<br />
Promoter’sFee.ThoseIntermediarieswhoarepermittedtoreceivecommissionwillusuallyreceiveaninitialcommissionof2%of<br />
the amount invested by their clients under the Offers. Additionally, provided that the Intermediary continues to act for the<br />
Investor and the Investor continues to be the beneficial owner of the G <strong>Shares</strong>, and subject to applicable regulations, the<br />
Intermediarywillusuallybepaidanannualtrailcommissionof0.25%oftheNetAssetValueoftheirclients'holdingsforthelifeof<br />
thisinvestment(subjecttoacaponthecumulativetrailcommissionof4.5%onthegrossproceedsoftheOffers).Trailcommission<br />
willbepaidannuallyinJune(commencingJune2014basedontheauditedNetAssetValueatthepreceding31January).Boththe<br />
initialandannualtrailcommissionwillbepayableby<strong>Downing</strong>outofitsfees.
THISPAGEISINTENTIONALLYBLANK
1<br />
2<br />
3<br />
4<br />
5<br />
6<br />
7<br />
NotesonApplicationForm<br />
<br />
BeforemakinganapplicationtoacquireG<strong>Shares</strong>youarestronglyrecommendedtoconsultanappropriatefinancialadviserauthorisedunderthe<br />
FinancialServicesandMarketsAct2000.ItisessentialthatyoucompleteallpartsoftheApplicationForminaccordancewiththeinstructionsin<br />
thesenotes.PleasesendthecompletedApplicationForm,togetherwithyourchequeorbankers'draft,bypost,ordeliveritbyhand,to<strong>Downing</strong><br />
LLP,10LowerGrosvenorPlace,LondonSW1W0EN.IfyouhaveanyquestionsonhowtocompletetheApplicationFormpleasecontact<strong>Downing</strong>LLP<br />
on02074167780oryourfinancialadviser.<br />
<br />
<strong>The</strong>followingnotesshouldbereadinconjunctionwiththeApplicationFormandtheTermsandConditionsofApplication.<br />
<br />
InsertinBox1inBLOCKCAPITALSyourfullname,permanentaddress,daytimetelephonenumber,dateofbirth,NationalInsurancenumberand,if<br />
youhaveone,youremailaddress.Jointapplicationsarenotpermitted.<br />
<br />
<br />
Insert(infigures)inBoxAthetotalamountyouwishtoinvestundertheOffersinrespectofthe2012/13taxyear(statenilifappropriate).Insert(in<br />
figures)inBoxBtheamountyouwishtoinvestundertheOffersinrespectofthe2013/14taxyear(statenilappropriate).Insert(infigures)thetotal<br />
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<br />
commissionwaived(byagents)asextraG<strong>Shares</strong>.<br />
<br />
Pleasenotethattheminimuminvestmentis£5,000(orsuchloweramountattheBoard'sdiscretion).<strong>The</strong>maximuminvestment,onwhichtax<br />
reliefsoninvestmentsin<strong>VCT</strong>sareavailable,is£200,000ineachofthe2012/13and2013/14taxyears.<br />
<br />
Attachyourchequeorbankers'drafttotheApplicationFormfortheexactamountshowninBoxC.Yourchequeorbankers'draftmustbemade<br />
payableto"<strong>Downing</strong><strong>Planned</strong><strong>Exit</strong><strong>VCT</strong>2plc".Yourpaymentmustrelatesolelytothisapplication.<br />
<br />
<br />
MoneyLaunderingRegulations2007–Importantnoteforapplicationsof£12,000ormore<br />
Ifthevalueofthesharesappliedforis£12,000ormore(orisoneofaseriesoflinkedapplications,thevalueofwhichexceedsthatamount)<br />
paymentshouldbemadebymeansofachequedrawnonanaccountinthenameoftheApplicant.Ifthisisnotpracticableandyouusea<br />
chequedrawnbyathirdpartyorabuildingsocietychequeorbankers'draft,youshouldwritethename,addressanddateofbirthofthe<br />
Applicantonthebackofthechequeorbankers'draftand:<br />
(a) ifabuildingsocietychequeorbankers'draftisused,thebuildingsocietyorbankmustalsoendorseonthechequeordraftthename<br />
andaccountnumberofthepersonwhoseaccountisbeingdebited;or<br />
(b) ifachequeisdrawnbyathirdparty,youmustensurethatoneitemfromeachofListAandListB(seebelow)isenclosedwiththeform.<br />
Alternatively,verificationoftheApplicant'sidentitymaybeprovidedbymeansofa"LetterofIntroduction"intheprescribedformfromaUK<br />
orEuropeanEconomicAreafinancialinstitution(suchasabankorstockbroker)orotherregulatedperson(suchasasolicitor,accountantor<br />
appropriatefinancialadviser)whoisrequiredtocomplywiththeMLRegulations.<strong>The</strong>relevantfinancialinstitutionorregulatedpersonwill<br />
befamiliarwiththerequirementsandtherelevantform.<br />
<br />
ListA(VerificationofIdentity)<br />
Currentsignedpassport<br />
CurrentUKDrivingLicence<br />
HMRevenueandCustoms<strong>Tax</strong>Notification<br />
FirearmsCertificate<br />
Forapplicationsof£12,000ormoreandsubscriptionbywayofachequedrawnbyathirdparty<br />
(oneitemfromListAANDoneitemfromListB)<br />
ListB(VerificationofAddress)<br />
Recent*utilitybill(butnotamobiletelephonebill)<br />
Recent*localauthoritytaxbill<br />
Recent*bankorbuildingsocietystatement<br />
Recent*mortgagestatementfromarecognisedlender<br />
Pleasesendoriginal(notpassportordriving licence) or certified copies ofthedocuments.CertifiedasatruecopyoftheoriginalbyaUKlawyer,<br />
banker, authorised financial intermediary (e.g. financial adviser or an FSA authorised mortgage broker), accountant, teacher, doctor, minister of<br />
religion,postmasterorsubpostmaster.<strong>The</strong>personcertifyingthedocumentshouldstatethatthecopyisatruecopyoftheoriginal,printtheirname,<br />
address,telephonenumberandprofessionandsignanddatethecopy.*"Recent"meansdatedwithinthelastthreemonths.<br />
<br />
<br />
Nomoneylaunderingverificationisrequiredtobeenclosediftheapplicationisforlessthan£12,000orifpaymentisbymeansofacheque<br />
drawnonanaccountinthenameoftheApplicant(providedthat(a)thechequeincludesdetailsoftheApplicant'sbankaccountorbuildingsociety<br />
account(asapplicable)and(b)thechequeisdrawnonaUKorEuropeanUnionauthorisedbankorcreditinstitution).Pleasenote,however,that<br />
<strong>Downing</strong> may, in its absolute discretion, require Money Laundering verification and that Money Laundering verification will be required by<br />
introducingfinancialadvisers.<br />
<br />
IfyouhaveagreedanupfrontAdviserChargeforpersonaladviceprovidedinrespectofthisinvestmentandwouldliketheCompanytofacilitatethe<br />
paymentofsuchfee,pleasesetouttheamount,eitherasapercentageoftheamountinvested(e.g.“3%”)oranamountinpounds(e.g.“£500”)in<br />
Box3.Pleasenote,theCompanydoesnotfacilitateongoingAdviserCharges.<strong>The</strong>AdviserChargeisinclusiveofVAT,ifapplicable.<br />
<br />
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<br />
Applicant'sbehalf,suchsignatorymustensurethatthedeclarationgivenonbehalfofsuchApplicantiscorrect. <br />
<br />
<br />
<br />
Ifyouwishtohavedividendspaidintoyournominatedbankorbuildingsocietyaccount,pleasecompletethemandateinstructionform.<br />
<br />
<br />
<br />
<br />
Leaveblankifyouwishtoreceiveasharecertificateinrespectofyourinvestment.IfyourequireyoursharestobeissuedelectronicallytoaCREST<br />
account,pleasecompletetheboxes.<br />
<br />
<br />
TobecompletedbyIntermediariesonly.Intermediarieswhoareentitledtoreceivecommissionshouldstampandcompletetheagent'sbox,giving<br />
theirfullnameandaddress,telephonenumberanddetailsoftheirauthorisationundertheFinancialServicesandMarketsAct2000.<strong>The</strong>rightis<br />
reservedtowithholdpaymentofcommissioniftheCompanyisnot,atitssolediscretion,satisfiedthattheagentissoauthorised,orthatpaymentof<br />
suchcommissionisormaybeinbreachofanyapplicablerulesorregulations.InorderforcommissionorAdviserChargetobepaidbyBACS,please<br />
completetherelevantboxes.<br />
<br />
Investors and their Intermediaries should provide an email address if they require the receipt of the Application Form to be<br />
acknowledged.
DOWNINGPLANNEDEXIT<strong>VCT</strong>2PLC<br />
ApplicationForm<br />
<br />
Makeyourchequeorbankers'draftoutto"<strong>Downing</strong><strong>Planned</strong><strong>Exit</strong><strong>VCT</strong>2plc"andreturnthisformassoonaspossibleto<br />
<strong>Downing</strong>LLP,10LowerGrosvenorPlace,LondonSW1W0EN.<strong>The</strong>closingdateforthe2012/13Offerwillbe3.00p.m.on5April2013and,<br />
forthe2013/14Offerwillbe3.00p.m.on30April2013(unlessextendedorfullysubscribedearlier).<br />
<br />
1<br />
Titleandnameinfull<br />
Permanentaddress<br />
<br />
<br />
Existing<strong>Downing</strong><strong>VCT</strong><br />
shareholder?Y/N<br />
<br />
<br />
Postcode<br />
<br />
Daytimetel<br />
<br />
Emailaddress<br />
<br />
Dateofbirth<br />
NationalInsuranceno<br />
<br />
<br />
InvestorsandtheirIntermediariesarerequiredtoprovideanemailaddressiftheyrequirethereceiptoftheApplicationFormtobeacknowledged.<br />
<br />
IamapplyingforG<strong>Shares</strong>asfollows:<br />
2<br />
2012/13taxyear 2013/14taxyear Total(A+B) <br />
<br />
A £ B £ C £<br />
Min£5,000<br />
<br />
OrsuchlessersumforwhichthisapplicationmaybeacceptedontheTermsandConditionsofApplicationsetoutinPartVIofthisdocument.<br />
Pleasesendmeacertificate(s)confirmingmyentitlementto<strong>VCT</strong>taxreliefs.<br />
<br />
3<br />
AdviserCharge<br />
IfyouhaveagreedanAdviserChargewithyourIntermediaryandrequestthatthe<br />
Company pays that fee, please insert the fee in this box. Please note that the<br />
number of G <strong>Shares</strong> issued to you will be reduced by the amount of the Adviser<br />
Charge.ThispaymentisinclusiveofVAT,ifapplicable.<br />
Stateaseitherasumofmoney<br />
(in £) or as a % of the amount<br />
subscribedinBoxCabove<br />
<br />
<br />
BYSIGNINGTHISFORMIHEREBYDECLARETHAT:(i)IhavehadanopportunitytoreceivetheProspectusdated10January2013andtoreadthe<br />
termsandconditionsofapplicationtherein;(ii)IwillbethebeneficialowneroftheG<strong>Shares</strong>in<strong>Downing</strong><strong>Planned</strong><strong>Exit</strong><strong>VCT</strong>2plcissuedtome<br />
pursuanttotheOffers;and(iii)tothebestofmyknowledgeandbelief,theparticularsIhavegivento<strong>Downing</strong><strong>Planned</strong><strong>Exit</strong><strong>VCT</strong>2plcarecorrect.<br />
<br />
<br />
4<br />
5<br />
<br />
Signature<br />
HMRevenue&CustomsmayinspectthisApplicationForm.Itisaseriousoffencetomakeafalsedeclaration.<br />
<br />
<br />
<br />
<br />
<br />
Date / / <br />
DIVIDENDMANDATE<br />
DividendsmaybepaiddirectlyintoShareholders'bankorbuildingsocietyaccounts.Inordertofacilitatethis,pleasecompletethe<br />
mandateinstructionformbelow.PleasenotethatifyouareanExistingShareholderthisinstructionappliestoallofyourshareholdings<br />
intheCompanyandcompletingtheformbelowwilldirecttheCompanytosendalldividendpaymentsdueonallyourshareholdingsin<br />
the Company to this bank account. Dividends paid directly to your account will be paid in cleared funds on the dividend payment<br />
dates. Your bank or building society statement will identify details of the dividend as well as the dates and amounts paid. By<br />
completingthedetailsbelowIaminstructingtheCompanytoforward,untilfurthernotice,alldividendsthatmayfromtimetotime<br />
becomedueonany<strong>Shares</strong>nowstanding,orwhichmayhereafterstand,inmynameintheregisterofmembersof<strong>Downing</strong><strong>Planned</strong><br />
<strong>Exit</strong><strong>VCT</strong>2plctothebankorbuildingsocietyaccountlistedbelow.<br />
Nameofbankorbuildingsociety: <br />
Branch:<br />
Branchaddress:<br />
Accountname:<br />
<br />
Sort<br />
code: <br />
<br />
<br />
<br />
<br />
<br />
<br />
Accountnumber:<br />
(pleasequotealldigitsandzeros) <br />
<br />
Signed:<br />
<br />
<br />
<strong>The</strong>Companyand<strong>Downing</strong>LLPdonotacceptresponsibilityifanydetailsprovidedbyyouareincorrect.<br />
ForOfficialUseOnly ML TT
6<br />
CREST<br />
CompletethisboxonlyifyourequireyoursharestobeissuedelectronicallytoaCRESTaccount.<br />
<br />
CRESTparticipantID:<br />
<br />
CRESTmemberaccountID:<br />
Participantname:<br />
Participantaddress:<br />
Participantpostcode:<br />
<br />
<br />
<br />
<br />
<br />
7<br />
ContactnameforCRESTqueries: Contacttelephone: <br />
Signed:<br />
TOBECOMPLETEDBYINTERMEDIARIESONLY<br />
Contactname:<br />
(foradministration)<br />
Intermediaryname:<br />
<br />
<br />
<br />
<br />
Firmname:<br />
Address:<br />
<br />
Allenbridge<br />
6 Grosvenor Street<br />
Mayfair, London<br />
Postcode: W1K 4PZ Tel: <br />
FSANo: 197107 Email: <br />
<br />
<br />
Tickthisboxifyouarepermittedtoreceive<br />
commissioninrespectofthisapplicationin<br />
compliancewithCOBS6.1AoftheFSAHandbook.<br />
<br />
()<br />
Reason: <br />
TickthisboxiftheAdviserChargestatedinBox3hasbeenagreedwithyourclientandcomplieswithCOBS6.1A<br />
oftheFSAHandbook.<br />
<br />
PleaseprovidedetailsofyourbankorbuildingsocietyaccountsothatcommissionortheAdviserCharge(asapplicable)can<br />
bepaidtoyouviaBACS.<br />
<br />
Nameofbankorbuildingsociety: <br />
Branch:<br />
Accountname:<br />
<br />
Sortcode:<br />
<br />
<br />
Emailaddressforcommission<br />
statements:<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
Accountnumber:<br />
(pleasequotealldigitsandzeros) <br />
<strong>The</strong>Companyand<strong>Downing</strong>LLPdonotacceptresponsibilityifanydetailsprovidedbyyouareincorrect.<br />
<br />
<br />
<br />
Signed:<br />
<br />
<br />
<br />
Position: <br />
()
10 Lower Grosvenor Place<br />
London SW1W 0EN<br />
Tel: 020 7416 7780<br />
Email: vct@downing.co.uk<br />
Web: www.downing.co.uk<br />
<strong>Downing</strong> LLP is authorised and regulated by the Financial Services Authority