Circular and Notice of Extraordinary General Meeting - The Ottoman ...

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Further details of the New Investment Adviser and its contract with the Company and details regarding Kazikli are set out in Part III. Copies of the New Investment Advisory Agreement and the Administration Agreement are on display during normal office hours on Business Days at the offices of the Administrator at 8 Hill Street, St Helier, Jersey, JE4 9XB and will remain on display until the date of the EGM. 3. Proposed Changes to the Investment Policy The initial investment strategy of the Company was written in connection with its admission to AIM in the Company's admission document and no longer reflects the phase in the investment-divestment cycle in which the Company is operating. The Board does not currently intend to make any further acquisitions. The initially stated investment policy and criteria of the Company were generally only to be varied by way of ordinary resolution of the Shareholders. Accordingly, Shareholders are being asked to approve by ordinary resolution at the EGM a change in the Investment Policy such that the new policy is as follows: "The Company shall only make investments in Turkey with a view to enabling a future sale of the Assets in whole or in part. To the extent investments have been or are made, the Company will actively manage those investments and seek to realise its assets in a managed way at an appropriate time, returning proceeds to Shareholders as and when it does. Save as set out above, there are no restrictions on the investments which the Company may make or the leverage it may employ (up to a value of no more than 100% of the net asset value of the Company in relation to leverage) save as provided by the Listed Fund Guide and the Offering Document. Shareholder returns are expected to be delivered by way of return of capital on their Shares, whether by dividend, repurchase or otherwise." The Board is of the view that the New Investment Policy is in the best interests of the Shareholders, particularly in light of the current market conditions in Turkey and globally. 4. Proposed Reclassification of the Company to "Listed Fund" Status When the Company was incorporated in 2005, it was established as an “unclassified” fund in accordance with the CIF Law. The authorisation process for the Company required the JFSC to review and approve the offering document, constitutional documents and material contracts of the Company. The regulatory requirements for the structure of the Company (as a closed ended unclassified collective investment fund pursuant to the CIF Law) were such that a Jersey based manager be appointed by the Company to perform an investment management role and carry out the administration of the Company (although this function was delegated to the Administrator). This provides the background to the appointment of the Manager and the nature of its current duties under the Management Agreement. 10
In January 2007, the JFSC issued the “Jersey Listed Funds Guide” which was re-issued in April 2008 and subsequently updated in January 2009. The purpose of the Listed Fund Guide was to enable a streamlined authorisation process for the establishment or reclassification of unclassified collective investment listed closed ended funds, provided that the fund complies with the requirements of the Listed Fund Guide. The regulatory approach to a Listed Fund differs from the approach in relation to unclassified funds, because it relies on certification by a Jersey based functionary that the relevant fund complies with the requirements of the Listed Fund Guide. In this case, the Administrator has provided the relevant confirmation to the JFSC in respect of the Company. In certain cases, the Listed Fund Guide enables collective investment funds to be established without a manager, provided that a Jersey based administrator is appointed. There is more flexibility regarding investment policy and borrowing powers, providing adequate disclosure is made with the offering document of the Company. There is a requirement for a majority of the directors of the investment fund to be independent of the manager or investment manager (if appointed). In summary, the reclassification of the Company to Listed Fund status provides a suitable regulatory framework within which the proposed Internalisation may be effected. The reclassification amounts to a change in the regulatory treatment of the Company and, other than as set out in the Proposals, the general characteristics of the Company (including the investment policy and objectives) will remain the same in all material respects. It is worth noting that the Company would probably not have been established as an ordinary unclassified collective investment fund today but either as a listed fund or an unregulated exchange traded fund. Unfortunately, it is not possible, for legal and regulatory reasons to convert an existing unclassified collective investment fund to an unregulated exchange traded fund. Further information in relation to the regulatory treatment of Listed Funds domiciled in Jersey may be found on the website of the JFSC at www.jerseyfsc.org 5. Financial Impact of the Internalisation The Directors are of the view, that the financial saving on implementation of the Internalisation will be significant. 6. Tax The following is a high-level analysis of the Jersey and Turkish tax implications of the proposed restructuring for the Company and its subsidiary undertakings and is provided by the auditors of the Company. It is not intended to advise individual investors of their tax position, and individual investors should seek advice as to the impact on their affairs of the proposed restructuring. The information given below is based on current law and practice, and may be subject to change. Turkish tax position A change in the Company’s regulatory status will not affect the liability of its Turkish subsidiaries to Turkish tax. Steps will be taken to ensure that the Company cannot be considered to be trading in Turkey through a permanent establishment, and therefore liable to 11
Page 1 and 2: THIS DOCUMENT IS IMPORTANT AND REQU
Page 3 and 4: CONTENTS Expected Timetable of Even
Page 5 and 6: “FSA” the UK Financial Services
Page 7 and 8: PART I LETTER FROM THE CHAIRMAN OF
Page 9: Changes to investment management an
Page 13 and 14: should treat the Admission Document
Page 15 and 16: PART II RISK FACTORS Shareholders s
Page 17 and 18: Currency Risk. The Company will tra
Page 19 and 20: Regulatory requirements which may b
Page 21 and 22: elsewhere outside the Island of Jer
Page 23 and 24: 4.7 The New Investment Advisory Agr
Page 25 and 26: Andrew Wignall is an independent me
Page 27 and 28: The Ottoman Fund Limited (a public

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