Northern 3 VCT PLC Application Form - Clubfinance

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Part III – Taxation VCTs:Summaryoftheapplicablelegislationinrespectofinvestors 1. TaxationofaVCT VCTsareexemptfromcorporationtaxonchargeablegains.ThereisnorestrictiononthedistributionofrealisedcapitalgainsbyaVCT,subjecttothe requirementsofcompanylaw.TheCompanywillbesubjecttocorporationtaxonitsincome(excludingdividendsreceivedfromUKcompanies)after deductionofattributableexpenses. 2. Taxreliefsforindividualinvestors IndividualswhosubscribeforOfferSharesmustbeaged18orovertoqualifyforthetaxreliefsoutlinedbelow. Relieffromincometax Aninvestorsubscribingupto£200,000inthe2011/12taxyearforeligiblesharesinaVCTwillbeentitledtoclaimincometaxrelief,attherateof30%, althoughthisreliefwillbewithdrawnifeitherthesharesaresoldwithinfiveyearsortheinvestortakesoutaloanwhichwouldnothavebeenmade,or wouldnothavebeenmadeonthesameterms,savefortheacquisitionofsuchshares.Reliefisrestrictedtotheamountwhichreducestheinvestor's incometaxliabilitytonil.However,taxcreditsondividendsarenotionalandcannotberepaidand,therefore,investorsshouldtakethisintoaccount whencalculatingthevalueoftheincometaxrelief. Claimingincometaxrelief InvestorswillreceiveacertificatefromtheCompanywithin30daysoftheirSharesbeingissued,whichwillenablethemtoclaimthetaxrelief.Income taxreliefcanbeclaimedbyanInvestorwritingtotheirHMRevenue&Customsoffice,requestingthattheirtaxcodebeamended,sothatthetaxrelief isreceivedeachmonththroughthePAYEsystem.Investorswhopaytheirtaxininstalmentsmaybeabletoapplyforareductionintheirpaymentson account.Alternatively,anInvestorcanclaimthereliefthroughtheirtaxreturninrespectofthetaxyearinwhichtheShareshavebeensubscribed. Dividendrelief AninvestorwhosubscribesfororacquireseligiblesharesinaVCT(uptoamaximumof£200,000inthe2011/12taxyear)willnotbeliableforUK incometaxondividendspaidbytheVCT.TheincomereceivedbytheVCTwillusuallyconstituteeitherinterest(onwhichtheVCTmaybesubjecttotax) or dividends from UK companies (on which the VCT would not be subject to tax). The VCT's income, reduced by the payment of tax (if applicable) togetherwithitsrealisedcapitalgains,canthenbedistributedtaxfreetoinvestorswhobenefitfromthisdividendrelief.Thereisnowithholdingtaxon dividendspaidbyaUKcompanyandconsequentlytheCompanydoesnotassumeresponsibilityforthewithholdingoftaxatsource.Dividendscarrya taxcreditattherateofoneninthofthenetdividendwhichisnotrepayableandwhichcannotbeutilisedinanyotherway. Capitalgainstaxrelief AdisposalbyanindividualinvestorofhissharesinaVCTwillgiverisetoneitherachargeablegainnoranallowablelossforthepurposesofUKcapital gainstax.Thisreliefisalsolimitedtodisposalsofsharesacquiredwithinthe£200,000limitdescribedabove. Lossoftaxreliefs (i) IfacompanywhichhasbeengrantedapprovalorprovisionalapprovalasaVCTsubsequentlyfailstocomplywiththeconditionsforapproval,VCT statusmaybewithdrawnortreatedasneverhavingbeengiven.Theexemptionsfromcorporationtaxoncapitalgainswillnotapplytoanygain realisedafterVCTstatusislost(nortoanygainrealisedbytheVCTifapprovalisdeemednevertohavebeengiven). (ii) Forinvestors,thewithdrawalofVCTstatusmay(dependinguponthetimingofsuchwithdrawal)resultin: repaymentofthe30%incometaxreliefonsubscriptionfornewVCTshares; incometaxbecomingpayableonsubsequentpaymentsofdividendsbythecompany;and aliabilitytotaxoncapitalgainsbeingsufferedinthenormalwayonthedisposalofsharesinthecompany,exceptthat anypartofthegain attributabletotheperiodforwhichtheVCTwasapprovedwouldbeexempt. (iii) TheconsequencesforinvestorsinacompanywhichneverobtainsfullunconditionalapprovalasaVCTareasfollows: repaymentofthe30%incometaxreliefonsubscriptionsfornewVCTsharesandinterestonoverduetaxmayarise; incometaxbecomingpayableonallpaymentsofdividendsbythecompany;and anygainarisingonadisposaloftheshareswouldbeliabletocapitalgainstaxandlossesontheshareswouldbeallowablelossesforcapitalgains taxpurposes. TheOfferSharesareeligibleVCTsharesforthepurposesofthissection. 3. ConsequencesofaninvestordyingoratransferofSharesbetweenspouses (i) Initialincometax IfaninvestordiesatanytimeaftermakinganinvestmentinaVCT,thetransferofsharesondeathisnottreatedasadisposaland,therefore,the initialincometaxreliefisnotwithdrawn.However,theshareswillbecomepartofthedeceased'sestateforinheritancetaxpurposes. (ii) Taximplicationsforthebeneficiary Providedanumberofconditionsaremet,thebeneficiaryofanyVCTshareswillbeentitledtotaxfreedividendsandwillnotpaycapitalgainstax onanydisposal,butwillnotbeentitledtoanyinitialincometaxrelief. (iii) Transferofsharesbetweenspouses TransfersofsharesinaVCTbetweenspousesisnotdeemedtobeadisposalandthereforealltaxreliefswillberetained. 4. General (i) InvestorswhoarenotresidentintheUK Nonresidentinvestors,orinvestorswhomaybecomenonresident,shouldseektheirownprofessionaladviceastotheconsequencesofmaking aninvestmentintheCompany,becausetheymaybesubjecttotaxinotherjurisdictions. (ii) Stampdutyandstampdutyreservetax Nostampdutyor(unlesssharesinaVCTareissuedtoanomineeforaclearingsystemoraproviderofdepositoryreceipts)stampdutyreservetax willbepayableontheissueofsuchshares.Thetransferonthesaleofshareswouldnormallybesubjecttoadvaloremstampdutyor(ifan unconditional agreement to transfer such shares is not completed by a duly stamped transfer within two months) stamp duty reserve tax generally,ineachcaseattherateof50pforevery£100orpartof£100oftheconsiderationpaidwherethetotalconsiderationexceeds£1,000or ifitformspartofaseriesoftransactionswherethetotalconsiderationexceeds£1,000.Suchdutieswouldbepayablebyapersonwhopurchases suchsharesfromtheoriginalsubscriber. (iii) Purchasesinthemarketafterlisting Any subsequent purchaser of existing VCT shares, as opposed to a subscriber for new VCT shares, will not qualify for income tax relief on investmentbutmaybenefitfromdividendreliefandfromcapitalgainstaxreliefonthedisposalofhisVCTshares. (iv) TheVCTRegulations2004 TheVCTRegulationscameintoforceon17October2004.UndertheVCTRegulations,moniesraisedbyanyfurtherissueofsharesbyanexisting VCTmustbeappliedbythatVCTforqualifyingpurposes.Ifanyofthemoneyraised(exceptforamountswhichHMRevenue&Customsagreesare insignificantinthecontextofthewholeissuedordinarysharecapitaloftheVCT)isusedbytheVCTtopurchaseitsownsharesthenthefundsmay bedeemedtonothavebeenusedforaqualifyingpurpose. TheaboveisonlyasummaryofthetaxpositionofindividualinvestorsinVCTsandisbasedontheCompany’sunderstandingofcurrentlawand practice.InvestorsarerecommendedtoconsultaprofessionaladviserastothetaxationconsequencesoftheirinvestinginaVCT.Alltaxreliefs referredtointhisdocumentareUKtaxreliefsandaredependentoninvesteecompaniesmaintainingtheirVCTqualifyingstatus. Northern 3 VCT PLC 9
Part IV – Definitions Where used in this document the following words and expressions will, unless the context otherwise requires, have the followingmeanings: "Act" CompaniesAct2006 "Admission" "AIM" "AnnualRunningCosts" "Applicant" "ApplicationForm" "Articles" "Company"or"Northern3" "CREST" "Directors"or"Board" "Downing" "ExistingShares" "FSA" "InitialOfferPrice" "Investor" "ITA" "LondonStockExchange" "MLRegulations" "NAV"or“NetAssetValue” "NVM"or"Manager"or "NVMPrivateEquity" "Offer" "OfferDocument" "OfferShares" "OfficialList" "PricingFormula" "QualifyingInvestment" "Registrar" "RIS" "Shareholders" "Shares" "TotalReturn" "UKListingAuthority" "VCT" "VCTRegulations" admissionoftheOfferSharestotheOfficialListoftheUKListingAuthorityand to trading on the premium segment of the London Stock Exchange’s main marketforlistedsecurities AIM,amarketoperatedbytheLondonStockExchange annualcostsandexpensesincurredbytheCompanyintheordinarycourseofits business(includingirrecoverableVAT) InvestorwhosubscribesforOfferSharespursuanttotheOfferDocument formofapplicationforOfferSharesundertheOfferattachedtothisdocument articlesofassociationoftheCompany,asamendedfromtimetotime Northern3VCTPLC relevantsystem(asdefinedintheUncertificatedSecuritiesRegulations2001(SI 2001 No. 3755)) for the paperless settlement of transfers and the holding of sharesinuncertificatedformwhichisadministeredbyEuroclearUK&Ireland Limited directorsoftheCompanyfromtimetotime Downing LLP, which is authorised and regulated by the Financial Services Authority ordinarysharesof5peachinthecapitalofNorthern3issuedatthedateofthis document(ISIN:GB0031152027) FinancialServicesAuthority 99.0pperShare,beingthepriceatthedateoftheOfferDocument subscriberofShares IncomeTaxAct2007 LondonStockExchangeplc MoneyLaunderingRegulations2007 netassetvalueinpenceperShare NVMPrivateEquityLimitedwhichisauthorisedandregulatedbytheFinancial ServicesAuthority offerforsubscriptiontoraiseupto£2,000,000(beforeissuecosts) thisdocument new ordinary shares of 5p each in the capital of Northern 3 (ISIN: GB0031152027) to be issued pursuant to this or subsequent offers in the 2011/12taxyear officiallistoftheUKListingAuthority mechanismbywhichthepricingoftheOffermaybeadjustedaccordingtothe latestpublishedNAV,asdescribedonpage7ofthisdocument investment in an unquoted trading company, which comprises a qualifying holdingforaVCTasdefinedinChapter4Part6ITA EquinitiLimited,AspectHouse,SpencerRoad,LancingBN996DA regulatoryinformationservice holdersofShares ExistingSharesorOfferShares,asthecontextmayrequire sumofNAVandthecumulativedividendspaidtoShareholdersperShare FSAactinginitscapacityasthecompetentauthorityforthepurposesofPartVI oftheFinancialServicesandMarketsAct2000 venturecapitaltrustasdefinedinSection259ITA TheVentureCapitalTrust(WindingUpandMergers)(Tax)Regulations2004 Northern 3 VCT PLC 10
Page 1 and 2: Northern3VCT PLC Offer Document (in
Page 3 and 4: Thisdocument,whichconstitutesafinan
Page 5 and 6: Letter from the Chairman Northern3
Page 7 and 8: OnlyaverybriefsummaryoftheUKtaxposi
Page 9 and 10: ThefullinvestmentpolicyfortheCompan
Page 11: PART II - Track record of the Compa
Page 15 and 16: (w) warrantthatyouarenota“USperso
Page 17 and 18: Northern 3 VCT PLC ApplicationForm
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