OAM2681 OVCT 2 Prospectus aw12 - Clubfinance

PART ONE –
INTRODUCTION TO THE OFFER
BACKGROUND
VCTs were introduced by the UK government in 1995 to encourage
individuals to invest in UK smaller companies. The government
achieved this by offering VCT investors a series of attractive tax
benefits. As a result of these tax benefits, the total invested in VCTs
between 1995 and 31 December 2010 was more than £3.9 billion.
Recently, investment in VCTs has surged, with industry
commentators, such as the Financial Times, noting that “Investors
have been flocking to these schemes since the government
introduced restrictions on pensions”.
THE OFFER AND THE OVER-ALLOTMENT FACILITY
It is proposed to allot pursuant to the Offer up to 30 million
Ordinary Shares to the public. If there proves to be excess demand
from investors, the Directors may increase the size of the Offer by a
further 10,000,000 Ordinary Shares under an authority already
available to them. The over-allotment facility may only be utilised
whilst the Offer is open and will be notified through an
announcement.
The Ordinary Shares (including Ordinary Shares offered under the
over-allotment facility) are being offered at 100p per Ordinary Share
payable in full, by cheque, banker’s draft or bank transfer, on application.
Application has been made to the UK Listing Authority for the
Ordinary Shares to be admitted to the Official List. Application has
also been made to the London Stock Exchange for Admission of the
Ordinary Shares to trading on the London Stock Exchange’s market
for listed securities.
The Offer will be open from 28 January 2011 until:
■ 2.00 pm on 5 April 2011 (in the case of applications for the
2010/11 tax year); and
■ 12.00 pm on 28 April 2011 (in the case of applications for the
2011/12 tax year)
unless fully subscribed earlier or extended by the Directors (in the
case of applications for the 2011/12 tax year) to a date no later than
30 June 2011.
Confirmation that applications have been received will be sent to
applicants. Applicants should note that dealings may begin in
Ordinary Shares allotted to them prior to confirmation of receipt of
the application.
The Offer is conditional on valid applications being received
amounting to, in aggregate, £1 million (which would result in the
Minimum Net Proceeds being raised) by 5 April 2011. If this is not
reached, the Offer will be withdrawn and application monies which
have been received will be returned without interest by post at the
risk of the applicant. The minimum application level under the Offer,
upon which the Offer is conditional, will not be reduced. In the event
that the Offer is oversubscribed, allotment will generally be made to
investors on a first come, first served basis (but subject always to the
discretion of the Directors). Any excess amounts of more than £1
paid by applicants will be refunded by cheque to the person named
in Section 1 of the Application Form, without delay. The Offer is not
underwritten.
The Ordinary Shares will be issued on a fully paid up basis in
registered form. Ordinary Shares will be allotted and issued in respect
of valid applications under the Offer as soon as the minimum
subscription of £1 million has been reached and at any subsequent
times on or prior to 28 April 2011 on which the Directors decide.
Details of any such allotments will be announced through a
Regulatory Information Service provider by no later than the end of
the Business Day following the allotment and dealings in such
Ordinary Shares are expected to commence within ten Business
Days of allotment.
If the VCT is required to publish a supplementary prospectus,
subscribers who have yet to be entered on to the VCT’s register of
members will be given two days to withdraw from their subscription.
In the event that notification of withdrawal is given by post, such
notification will be effected at the time the subscriber posts such
notification rather than at the time of receipt by the VCT.
The terms and conditions of application are set out in Part Eleven
of this document along with Application Forms and details of the
application procedure.
MINIMUM AND MAXIMUM INVESTMENT
The minimum subscription level under the Offer will be £3,000. The
maximum investment in VCTs on which income tax relief can be
claimed is £200,000 in each of the 2010/11 and 2011/12 tax years.
TAX BENEFITS FOR INVESTORS
Octopus VCT 2 is structured as a VCT to allow qualifying investors
to take advantage of substantial tax benefits, including up to 30%
income tax relief on the amount invested. The income tax relief
means that taxpayers should benefit from a £3,000 reduction in their
tax bill for every £10,000 invested, provided the Ordinary Shares are
held for a period of five years. In addition, qualifying investors will
benefit from dividends paid by the VCT being tax free and no capital
gains tax on a disposal of Ordinary Shares.
The following shows the effect of the income tax relief for a qualifying
investor who invests £10,000:
Initial investment £10,000
Less income tax relief £3,000
Effective cost to investor £7,000
i.e. An investment of £10,000 only costs £7,000 after taking into
account the 30% income tax relief, providing an effective return of
35% after initial costs before the VCT makes its first investment.
Investors can elect to have their Ordinary Shares allotted in either the
2010/11 or 2011/12 tax years or both.
The above is only a brief summary of the UK tax position for
investors in VCTs and is based on the VCT’s understanding of
current law and practice. Further details are set out in Part Eight
of this document.
CLAIMING THE INCOME TAX RELIEF
The process for obtaining the income tax relief is both quick and
easy. First, Octopus will send you a share certificate and a tax
certificate a few weeks after you make the investment. You then have
two options on how to reclaim the tax relief:
■ You can write to your HM Revenue & Customs office and ask
them to change your tax coding under the PAYE system (this is
the system that calculates how much tax you pay each month) –
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