OAM2681 OVCT 2 Prospectus aw12 - Clubfinance

(b)
fees will be rolled up (interest free) and will only be paid
to Octopus once Shareholders have received back a
minimum of 105p per Ordinary Share (in the form of
dividends and other distributions) either during the life of
the Company or through other returns (including
liquidation distributions and tender offers but excluding
normal share buybacks). In addition, Octopus will only be
entitled to receive an annual management fee for the
period up to the date on which the annual general meeting
in 2016 is held (expected to be in June 2016) if
Shareholders approve the Company being wound-up at
that meeting.
Octopus retains the right to charge arrangement, exit and
syndication fees to investee companies, and will be
responsible for all costs of an investment that does not
proceed. Octopus may also receive ongoing directors’
fees and monitoring fees from the investee companies
as appropriate.
Under the agreement, annual running costs of Octopus
VCT 2 (excluding irrecoverable VAT, management fees
(including fees rolled-up) and trail commission) will be
capped at 1.2% per annum of its net assets of the VCT and
any excess will be met by Octopus out of the rolled up
management fee should it become, and to the extent,
payable. Such costs will include the accounting and
administration fees, Directors’ fees, company secretarial
fees, audit, taxation and advice, VCT monitoring fees,
regulatory, broker’s and registrar’s fees and the costs of
communicating with Shareholders. Given the targeted
lower-risk nature of the VCT, there are no performance
incentive fees for this VCT.
Octopus has, pursuant to the same agreement, agreed to
provide or procure the provision of certain administrative
and accounting services to Octopus VCT 2 for an
additional annual fee of 0.3% (plus VAT, if any, at the
applicable rate) of the net assets of the Company and
company secretarial services for an annual fee of £15,000
(plus VAT, if any, at the applicable rate) in each case
payable quarterly in advance and not rolled up.
Octopus VCT 2 has agreed to indemnify the Investment
Manager against all or any actions, proceedings, losses,
claims, demands and liabilities whatsoever arising out of the
proper performance of the Investment Manager’s duties.
There are no value or time limits attached to the
indemnity other than the statutory time limit of 12 years
which applies to agreements signed as deeds.
An offer agreement dated 28 January 2011 between the
Company (1), the Directors (2), Octopus (3) and Singer
(4) whereby Octopus has agreed to act as promoter in
connection with the Offer and Singer has agreed to act as
sponsor to the Company in connection with the Offer.
The Company shall pay to Octopus a commission of 5.5%
of the gross amount subscribed under the Offer out of
which will be paid all costs, charges and expenses of or
incidental to the Offer including the fees of Singer, but
excluding annual trail commission which will be borne by
the Company. The Company and the Directors have given
customary representations and warranties to, and in the
case of the Company alone, an indemnity, to Octopus and
Singer. The liability of each Director under the warranties
is limited to one times their annual directors’ fee. The
Company, the Directors and Singer under the agreement
have the benefit of a warranty from Octopus (as
(c)
investment manager) in relation to the information
contained in this document in relation to Octopus. There
are no value or time limits attached to the indemnity other
than the statutory limit of six years. Singer may terminate
the agreement at any time prior to Admission if it
becomes aware of any material breach of warranty prior
to Admission. Under the terms of the agreement, any
interest received by the Company or the Registrars in
respect of applications for Ordinary Shares prior to the
dates such Ordinary Shares are allotted will be for the
benefit of Octopus and shall be applied to defray the costs
of the Offer.
By letters dated 17 January 2011 the Directors agreed to act
as non-executive directors of the Company on the terms set
out at paragraph 3(f) above.
6. Taxation and Close Company Status
The following paragraphs, which are intended as a general guide
only and are based on current legislation and HMRC practice,
summarise advice received by the Directors as to the position
of Shareholders who hold Ordinary Shares other than for
trading purposes. Any person who is in any doubt as to his
taxation position or is subject to taxation in any jurisdiction
other than the UK should consult his professional advisers.
(a)
Taxation of dividends – under current law, no tax will be
withheld by the Company when it pays a dividend.
(b) The Company has been advised that no stamp duty reserve
tax (“SDRT”) will be payable on the issue of the Ordinary
Shares. The transfer on sale of any Ordinary Shares will be
liable to ad valorem stamp duty normally at the rate of
0.5% of the amount or value of the consideration (rounded
up to the nearest £5). An unconditional agreement to
transfer Ordinary Shares also gives rise to an obligation to
account for SDRT, which is payable within seven days of
the start of the month following that in which the
agreement was entered into. The payment of stamp duty
gives rise to a right to repayment of any SDRT paid. There
will be no stamp duty or SDRT on a transfer of Ordinary
Shares into CREST unless such a transfer is made for a
consideration in money or money’s worth, in which case a
liability to SDRT will arise at a rate of 0.5%. A transfer of
Ordinary Shares effected on a paperless basis through
CREST will generally be subject to SDRT at a rate of 0.5%
of the value of the consideration
(c) On the issue of the Ordinary Shares pursuant to the Offer,
the Company is unlikely to be a close company for tax
purposes. If the Company was a close company in any
accounting period, approval as a VCT would be withdrawn.
7. Overseas Investors
(a) No person receiving a copy of this document in any
territory other than the UK may treat the same as
constituting an offer or invitation to him to subscribe for or
purchase Ordinary Shares in the Company.
(b) No action has been taken to permit the distribution of this
document in any jurisdiction outside the UK where such
action is required to be taken.
8. Related Party Disclosures
The following related party transactions have taken place since
incorporation of the Company to the date of this document:
(a)
Octopus, as investment manager to the Company which is
a closed-ended investment fund, is regarded as a related
party. Octopus will receive an up-front fee of 5.5% of the
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