Notice of Extraordinary General Meeting

RNS Number : 5794B

Alternative Liquidity Fund Limited

20 June 2016

 

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000 immediately.

If you have sold or otherwise transferred all your shares in Alternative Liquidity Fund Limited (the "Company"), please send this document and the accompanying documentation at once to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was effected for onward delivery to the purchaser or transferee.

Neither the Guernsey Financial Services Commission nor the States of Guernsey Policy Council has reviewed this Circular and neither of them takes any responsibility for the financial soundness of the Company or for the correctness of any of the statements made or opinions expressed with regard to it.

ALTERNATIVE LIQUIDITY FUND LIMITED (incorporated in the Island of Guernsey under the Companies (Guernsey) Law, 2008, as amended, as a non-cellular company limited by shares with registered number 60552 and registered as a registered closed-ended investment scheme with the GFSC) Proposed amendment to the Articles to allow for the return of capital to Shareholders and Notice of Extraordinary General Meeting

Notice of an Extraordinary General Meeting of the Company to be held at Sarnia House, Le Truchot, St Peter Port, Guernsey GY1 1GR on 14 July 2016 at 10 a.m. (the "EGM") is set out at the end of this document. The accompanying form of proxy for use at the EGM should be completed and returned as soon as possible and, to be valid, must arrive at Capita Asset Services, PXS 1, 34 Beckenham Road, Beckenham BR3 4ZF not less than 48 hours before the time of the EGM.

No application will be made to the UK Listing Authority or to the London Stock Exchange for any of the B Shares to be admitted to the Official List or to the London Stock Exchange for those B shares to be admitted to trading on the London Stock Exchange's Main Market.

Your attention is drawn to the section headed "Action to be taken" on page 4 of this document.

CONTENTS
	Page
EXPECTED TIMETABLE	2
PART 1          LETTER FROM THE CHAIRMAN OF THE COMPANY	3
PART 2          DETAILS OF THE RETURN OF CAPITAL	6
PART 3          RIGHTS AND RESTRICTIONS ATTACHED TO THE B SHARES	7
PART 4          TAXATION	8
DEFINITIONS	10
NOTICE OF EXTRAORDINARY GENERAL MEETING	11

EXPECTED TIMETABLE
Latest time and date for receipt of Forms of Proxy for the Extraordinary General Meeting	48 hours prior to the Extraordinary General Meeting
Extraordinary General Meeting	10 a.m. on 14 July 2016
Each of the dates and times in the above timetable is subject to change by the Board. The Company will notify Shareholders of any such changes to these dates and times by making an announcement via a Regulatory Information Service. References to times are to London time unless otherwise stated.

PART 1
LETTER FROM THE CHAIRMAN OF THE COMPANY
ALTERNATIVE LIQUIDITY FUND LIMITED (incorporated in the Island of Guernsey under the Companies (Guernsey) Law, 2008, as amended, as a non-cellular company limited by shares with registered number 60552 and registered as a registered closed-ended investment scheme with the GFSC)
Directors Quentin Spicer (Chairman) Richard Berman Anthony Pickford	Registered Office Sarnia House Le Truchot St Peter Port Guernsey GY1 1GR
20 June 2016
Dear Shareholder
Proposed amendment to the Articles to allow for the return of capital to Shareholders
Introduction
As announced in the Company's interim report and unaudited financial statements for the period from incorporation to 31 December 2015 the Company has a cash balance of approximately US$6.0 million following underlying manager redemption payments of approximately US$2.0 million since the Company was launched.
Following discussions with the Investment Manager the Board has agreed that the most efficient way to return cash to Shareholders is by issuing redeemable B Shares (the "Return of Capital"). The purpose of this Circular is to provide Shareholders with further details on the proposed mechanism for the Return of Capital and to give notice of the EGM at which the Company will seek the necessary Shareholder approval to amend the Articles to provide for the issue of B Shares.
In addition, the Board is aware that a number of Shareholders still hold their Shares in certificated form which can cause delays in corresponding with Shareholders and other administration issues. Due to this, the Board is recommending to Shareholders that they consider dematerialising their holdings.
In order to provide the relevant Shareholders with sufficient time to make the necessary arrangements to transfer their shareholding to CREST the Board will announce further details in relation to the first Return of Capital to Shareholders in due course.
Return of Capital
Under the terms of the Return of Capital, Shareholders will receive B Shares pro rata to their holding of Ordinary Shares at the time of the issue of the B Shares. Each B Share will be redeemed by the Company on the Redemption Date (without any further action from Shareholders) for the Redemption Price. Following redemption each B share will be cancelled.
The Board intend to announce further details of each Return of Capital including the relevant Record Dates, the Redemption Price and the Redemption Dates in due course.
The structure of the Return of Capital should result in the majority of UK taxpayers receiving their cash proceeds on redemption of the B Shares as capital for taxation purposes. You should read Part 4 of this Circular which sets out a summary guide to certain potential tax consequences in the UK. If you are subject to taxation in a jurisdiction other than the UK, are non-UK domiciled or are in any doubt as to your tax position, you should consult an appropriate independent professional adviser.
Further details of the Return of Capital and the rights and restrictions attached to the B Shares are set out in Parts 2 and 3 of this Circular.
Proposed changes to the Articles
At the EGM a Resolution will be proposed to adopt new Articles which provide for the issue of B Shares. The new Articles will include the rights and restrictions attaching to the B Shares, further details of which are set out in Part 3 of this document. The resolution will be proposed as a special resolution and will require the approval of at least 75 per cent. of the votes cast in respect of it.  In order to avoid the need for a further resolution at a later date, the new Articles will also reflect changes made to the Companies (Guernsey) Law, 2008 as a result of the Companies (Guernsey) Law, 2008 (Amendment) Ordinance, 2015.
A copy of the existing Articles and the proposed new Articles marked to show the changes will be available for inspection at the registered office of the Company and at the offices of Dickson Minto W.S. at Broadgate Tower, 20 Primrose Street, London EC2A 2EW during normal business hours (Saturdays, Sundays and pubic holidays excepted) up to the close of the EGM.
Dematerialisation of Shares
In order to simplify Shareholder administration the Board is recommending that Shareholders take steps to dematerialise their holdings on the Company's share register.
Shareholders who wish to dematerialise their shareholding should contact their broker/custodian and request that they send a dematerialisation form together with the relevant share certificate(s) to Euroclear for processing.
If the Shareholder is an entity rather than an individual the Registrar may require a copy of the Shareholder's articles of association as evidence that the person that has signed the dematerialisation form has the authority to sign on behalf of the Shareholder.
If further assistance is required please contact the Registrar's Customer Support Centre:
By phone - UK - 0871 664 0300 calls cost 12p per minute plus your phone company's access charge. From overseas - [phone] calls outside the United Kingdom will be charged at the applicable international rate. Lines are open between 9.00am - 5.30pm, Monday to Friday excluding public holidays in England and Wales.
By email - [e-mail]
Extraordinary General Meeting
Implementation of the Return of Capital is conditional on the approval of Shareholders at the EGM. Notice of the Extraordinary General Meeting to be held at 10 a.m. on 14 July 2016, at which the Company will seek the necessary Shareholder approval to amend the Articles to provide for the issue of B Shares is set out at the end of this Circular.
Action to be taken
You will find enclosed with this document a Form of Proxy for use at the EGM. Whether or not you intend to be present at the EGM, you are requested to complete the Form of Proxy in accordance with the instructions printed on it and return it to Capita Asset Services, PXS 1, 34 Beckenham Road, Beckenham BR3 4ZF as soon as possible, but in any event so as to be received no later than 48 hours before the time of the EGM. Completion of a Form of Proxy will not prevent a Shareholder attending and voting at the EGM in person.
Recommendation
The Board unanimously recommend that Shareholders vote in favour of the Resolution to be put to the EGM as they intend to do so, or procure, in respect of their own beneficial holdings held at the time of the EGM.
Yours faithfully
Quentin Spicer Chairman

PART 2

DETAILS OF THE RETURN OF CAPITAL

1.            Return of Capital to Shareholders

The Return of Capital consists of the allotment and issue of B Shares to Shareholders and the redemption of the B Shares by the Company.

The Board intend to announce further details of each Return of Capital including the relevant Record Dates, the Redemption Price and the Redemption Dates in due course.

2.            Allotment, issue and redemption of B Shares

Shareholders will receive B Shares pro rata to their holding of Ordinary Shares at the time of the issue of the B Shares. The rights and restrictions attached to the B Shares are more fully set out in Part 3 of this Circular.

Each B Share will be redeemed by the Company on the relevant Redemption Date without any further action from the Shareholders. Each B Share will be cancelled by the Company on redemption.

The B Shares will not be admitted to the Official List or to trading on the London Stock Exchange's Main Market, nor will they be listed or admitted to trading on any other recognised investment exchange.

No share certificates will be issued in respect of the B Shares.

3.            Overseas Shareholders

Shareholders who are not resident in the United Kingdom or Guernsey or who are citizens, residents or nationals of other countries should consult their professional advisers to ascertain whether the Return of Capital (including, as may be relevant in each case, the issue, holding or redemption of the B Shares) will be subject to any restrictions or require compliance with any formalities imposed by the laws or regulations of, or any body or authority located in, the jurisdiction in which they are resident or to which they are subject. In particular, it is the responsibility of any Shareholder to satisfy himself as to full observance of the laws of each relevant jurisdiction in connection with the Return of Capital, including the obtaining of any government, exchange control or other consents which may be required, or the compliance with other necessary formalities needing to be observed and the payment of any issue, transfer or other taxes or duties in such jurisdiction.

The distribution of this document in certain jurisdictions may be restricted by law. Persons into whose possession this document comes should inform themselves about and observe any such restrictions. Neither this document nor any other document issued or to be issued by or on behalf of the Company in connection with the Return of Capital constitutes an invitation, offer or other action on the part of the Company in any jurisdiction in which such invitation, offer or other action is unlawful.

Each Shareholder irrevocably represents, warrants, undertakes and agrees to and with the Company that such Shareholder has observed the laws of all relevant territories, obtained any requisite governmental or other consents, complied with all requisite formalities and paid any issue, transfer or other taxes due from such Shareholder in any territory in connection with the Return of Capital and such Shareholder has not taken or omitted to take any action which may result in the Company or any other person acting in breach of the legal or regulatory requirements of any territory in connection with the Return of Capital (or any transaction resulting therefrom).

PART 3

RIGHTS AND RESTRICTIONS ATTACHED TO THE B SHARES

In order to effect the proposed Return of Capital as described in this Circular the Articles will need to be amended. Details of the rights of the B Shares and the restrictions which they are subject to are set out below. These will be reflected in the new Articles proposed to be adopted at the EGM.

General

The B Shares may be issued in such classes and denominated in such currency as the Directors may determine. The B Shares will only be issued to existing Shareholders pro rata to their shareholding of Ordinary Shares at the time of the issue of B Shares.

Income and Capital

The holders of B Shares have no right to any dividends, any other income distributions or any capital distribution, other than the right to redemption set out below.

The B Shares do not entitle any holder to any surplus assets of the Company remaining after payment of all creditors of the Company apart from a distribution in respect of any capital paid up on the B Shares which shall rank behind any amounts due in respect of other classes of shares and such distribution shall be distributed pro rata.

Attendance and voting at general meetings

The B Shares carry no right to receive notice of, or attend or vote at, any general meeting of the Company or any right to vote on a written resolution of the Company.

Redemption of B Shares

The B Shares will be issued on terms that each B share shall be redeemable at the option of the Board and on such terms as the Board shall determine. The redemption monies payable in respect of the redemption of any B Share will be paid to the holder by such method of payment as the Board shall determine at such time as the Board, in its discretion, determines is appropriate. Where the B Shares are held by joint holders, the monies payable in respect of the redemption of any B Share will be paid to the holder whose name stands first in the register in respect of the B Shares.

On a redemption of the B Shares the Board shall have the power to divide in specie the whole or any part of the assets of the relevant value (which shall be conclusively determined by the Board in good faith) of the Company and appropriate such assets in satisfaction of the redemption price and any other sums payable on redemption as provided in the Articles and provided any such appropriation does not materially prejudice the interest of the remaining members.

Transfer

The B Shares will not be transferable.

Share Certificates

The B Shares will not be listed or traded on any stock exchange, nor shall any share certificates be issued in respect of the B Shares.

PART 4

TAXATION

This Part 4 is a summary guide of information received by the Company in relation to taxation laws in the UK and Guernsey and does not constitute tax or financial advice. The Company cannot itself advise Shareholders to take a particular course of action. If you are subject to taxation in a jurisdiction other than the UK or Guernsey, are non-UK domiciled or are in any doubt as to your tax position, you should consult an appropriate independent professional adviser.

These statements are based on current UK/Guernsey legislation and what is understood to be the current practice of HMRC and the Guernsey Income Tax Office as at the date of this document, both of which may change, possibly with retroactive effect.

UK taxation

Issuance of B Shares

For the purposes of United Kingdom taxation of capital gains and corporation tax on chargeable gains (collectively "UK CGT"), the issue of the B Shares should constitute a reorganisation of the share capital of the Company. Accordingly, the B Shares should be treated as the same asset as the Shareholder's holding of existing Ordinary Shares, and as having been acquired at the same time as the Shareholder's holding of existing Ordinary Shares was acquired. A Shareholder's combined holding of Ordinary Shares and B Shares should have the same aggregate base cost as the Shareholder's holding of Ordinary Shares immediately before the issue of B Shares. The aggregate base cost should be apportioned between the B Shares and the Ordinary Shares held by the Shareholder by reference to their respective market values on the first day of trading after the issue of B  Shares.

On the basis that the B Shares should be treated, for United Kingdom tax purposes, as being paid up for "new consideration" received by the Company, the issue of the B Shares should not give rise to any liability to United Kingdom income tax or corporation tax in a Shareholder's  hands.

The proposed allotment and issue of the B Shares by the Company should not give rise to a charge to UK stamp duty or SDRT.

Redemption of the B Shares

On redemption of all or any of the B Shares, an individual Shareholder may, depending on his or her individual circumstances, be subject to UK CGT on the amount of any chargeable gain realised. Any gain will be measured by reference to the excess of the redemption price above the Shareholder's tax base cost for the B Shares redeemed. The Shareholder's allowable expenditure in relation to his or her existing Ordinary Shares should be apportioned between the Ordinary Shares and the B Shares in the manner described above.

The amount of UK CGT, if any, payable by an individual Shareholder in relation to the chargeable gain will depend on their personal tax position. No tax should be payable on any gain realised on the redemption if the amount of the net chargeable gain, when aggregated with other net chargeable gains realised by the Shareholder in the year of assessment in question and allowable losses, does not exceed the annual exemption for UK CGT purposes (£11,100 for the tax year ending 5 April 2017). Broadly, any gains in excess of this amount should be taxed at the individual's relevant UK CGT rate (10 or 20 per cent). A UK resident individual is subject to UK CGT at a rate of 10 per cent. to the extent that he/she is a basic rate taxpayer (and the gain does not arise on the disposal of either residential property or carried interest). If the gain exceeds the unused part of an individual's basic rate band for income tax the excess should be taxed at 20 per cent for the excess. If an individual is subject to income tax at a rate in excess of the basic rate then the net gain should be taxable at 20 per   cent.

The proceeds received by a Shareholder on redemption of the B Shares for an amount equal to their nominal value should not be treated as an income distribution in the Shareholder's hands. Finance Act 2015 enacted legislation which, broadly, treats amounts paid on the redemption of shares as income in the hands of an individual shareholder, rather than a capital gain, where a company gives the shareholder a choice of whether to receive either a distribution or an "alternative receipt" of broadly the same value but which is not charged to income tax. The Company is of the view that this legislation does not apply to the Return of Capital on the basis that it does not provide Shareholders with a choice as to the form of any amounts they are entitled to receive.

As the subsequent redemption of the B Shares will take place under the Company's Articles of Association (and not under s.690 Companies Act 2006) the redemption of the B Share should not give rise to stamp duty or SDRT.

UK offshore fund rules

The Directors have been advised that, under current law, the Company should not be an "offshore fund" for the purposes of UK taxation and that the legislation, contained in Part 8 of the Taxation (International and Other Provisions) Act 2010, should not apply.

Accordingly, Shareholders (other than those holding Shares are dealing stock, who are subject to separate rules) who are resident in the UK, or who carry on business in the UK through a branch, agency or permanent establishment with which their investment in the Company is connected, may, depending on their circumstances, be liable to UK tax on chargeable gains realised on the disposal of their Shares or the redemption of the B Shares.

Guernsey taxation

Guernsey currently does not levy taxes upon capital inheritances, capital gains, gifts, sales or turnover (unless the varying of investments and the turning of such investments to account is a business or part of a business), nor are there any estate duties (save for registration fees and ad valorem duty for Guernsey Grant of Representation where the deceased dies leaving assets in Guernsey which require presentation of such a grant).

No stamp duty is chargeable in Guernsey on the issue, transfer, disposal or redemption of shares.

DEFINITIONS
Articles	the articles of incorporation of the Company, as amended from time to time
B Shares	the redeemable shares of US$0.01 each in the Company carrying the rights and restrictions set out in Part 3 of this Circular
Board or Directors	the current directors of the Company
Company	Alternative Liquidity Fund Limited
CREST	the system for the paperless settlement of trades in securities and the holding of uncertificated securities operated by Euroclear UK & Ireland Limited in accordance with the Uncertificated Securities Regulations 2001 (SI 2001/3755) (as amended)
EGM or Extraordinary General Meeting	the extraordinary general meeting of the Company to be held at 10 a.m. on 14 July 2016
Form of Proxy	the form of proxy for use at the EGM
Record Date	the dates to be determined by the Board, at their absolute discretion, being the dates on which Shareholders' entitlement to B Shares are calculated
Redemption Date	the dates to be determined by the Board, at their absolute discretion, being the dates on which the B Shares allotted under each Return of Capital will be redeemed
Redemption Price	the price at which the B Shares are to be redeemed as to be determined by the Board, at their absolute discretion
Registrars	Capita Registrars (Guernsey) Limited
Resolution	the resolution to be proposed at the EGM
Return of Capital	a return of capital to Shareholders pursuant to the allotment and redemption of the B Shares
Shareholders	holders of Shares
Shares or Ordinary Shares	ordinary shares of US$0.01 each in the capital of the Company

ALTERNATIVE LIQUIDITY FUND LIMITED (incorporated in the Island of Guernsey under the Companies (Guernsey) Law, 2008, as amended, as a non-cellular company limited by shares with registered number 60552 and registered as a registered closed-ended investment scheme with the GFSC)
NOTICE OF EXTRAORDINARY GENERAL MEETING
NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of Alternative Liquidity Fund Limited (the "Company") will be held at Sarnia House, Le Truchot, St Peter Port, Guernsey GY1 1GR on 14 July 2016 at 10 a.m. for the purpose of considering and, if thought fit, passing the following special resolution.
Special Resolution
THAT the draft regulations produced to the meeting and for the purposes of identification initialed by the Chairman of the meeting be adopted as articles of incorporation of the Company in substitution for, and to the entire exclusion of, the existing articles of incorporation of the Company.
By Order of the Board Praxis Fund Services Limited Secretary	Registered Office Sarnia House Le Truchot St Peter Port Guernsey GY1 1GR
Dated: 20 June 2016
Notes:
1.             The Special Resolution requires not less than 75% of those Shareholders voting at the meeting, either in person or by proxy, to vote in favour of the resolution for it to be passed.
2.             A member who is entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend, speak and vote instead of him or her. A proxy need not be a member of the Company. More than one proxy may be appointed provided that each proxy is appointed to exercise the rights attached to different shares.
3.             A Form of Proxy is enclosed for use at the meeting. The Form of Proxy should be completed and sent, together with the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of such power or authority, so as to reach Capita Asset Services at, PXS 1, 34 Beckenham Road, Beckenham BR3 4ZF, not later than 48 hours before the time of the meeting or if the meeting is adjourned, not less than 48 hours before the time for holding the adjourned meeting at which the person named in the instrument proposes to vote, or in the case of a poll taken more than 48 hours after it is demanded, not less than 24 hours before the time appointed for the taking of the poll and in default unless the Board directs otherwise the Form of Proxy shall not be treated as valid.
4.             In order to revoke a proxy instruction you will need to inform the Company by sending a signed hard copy notice clearly stating your intention to revoke your proxy appointment to Capita Asset Services at, PXS 1, 34 Beckenham Road, Beckenham BR3 4ZF. In the case of a member who is an individual, the revocation notice must be under the hand of the appointer or of his attorney duly authorised in writing. In the case of a member which is a company, the revocation notice must be executed under its common seal or under the hand of an officer of the company or an attorney duly authorised. Any power of attorney or any other authority under which the revocation notice is signed (or a notarially certified copy of such power or authority) must be included with the revocation notice. The revocation notice must be received by Capita Asset Services not less than 24 hours (excluding any part of a day that is not a Working Day) before the time fixed for the holding of the meeting, or any adjourned meeting. If you attempt to revoke your proxy appointment but the revocation is received alter the time specified then, subject to the paragraph directly below, your proxy appointment will remain valid. The completion and return of the Form of Proxy will not preclude you from attending the meeting. If you have appointed a proxy and attend the meeting in person your proxy appointment will remain valid and you may not vote at the meeting in person unless you have provided a hard copy notice to revoke the proxy to Capita Asset Services at, PXS 1, 34 Beckenham Road, Beckenham BR3 4ZF not less than 24 hours (excluding any part of a day that is not a Working Day) prior to the commencement of the meeting as set out above.
5.             To have the right to attend and vote at the meeting (and also for the purposes of calculating how many votes a member may cast on it poll) a member must first have his or her name entered on the register of members not later than close of business on 11 July 2016. Changes to entries in the register after that time shall be disregarded in determining the rights of any member to attend and vote at the meeting.
6.             As at 5.00 p.m. on 16 June 2016, the Company's issued share capital comprised 146,056,635 Ordinary Shares with a total of 146,056,635 voting rights.
7.             Any person holding 5 per cent, or more of the total voting rights in the Company who appoints a person other than the Chairman as his proxy will need to ensure that both he and such other party complies with their respective disclosure obligations under the Disclosure and Transparency Rules.

 

END

 

 

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