Discount Management Policy

RNS Number : 3659D

Montanaro European Smaller C.TstPLC

01 December 2009

Montanaro European Smaller Companies Trust plc

1 December 2009

Discount Management Policy

Since September 2006, the Board's stated intention has been to apply an active discount management policy, buying back shares if the Company's discount of share price to net asset value ('NAV') is greater than 5% for a sustained period of time. During this period, the Company has purchased 875,000 ordinary shares at discounts of between 7.6% and 17.4% and at a weighted average discount of 10.3%. These buy backs have provided a cumulative enhancement of 7.8p to the NAV per share. All of the shares bought back are held in treasury for subsequent re-issue or cancellation in accordance with the Company's policy on treasury shares.

The Board remains committed to an active discount management policy, but the abnormal market conditions and significant stock market volatility during 2008 and 2009 have made it difficult to maintain the discount at the targeted level. Therefore, following consultation with a number of the Company's larger shareholders, the Board now announces a change to the Company's discount management policy such that the Company will target a buy back of shares if the discount is greater than 10% for a sustained period of time.

Shares which are bought back by the Company may be cancelled or held in treasury and subsequently re-issued, subject to a maximum of 10% of the Company's issued share capital being held in treasury at any time.

It remains the Board's policy that shares will only be re-issued from treasury either at a price representing a premium to the NAV per share at the time of re-issue, or at a discount to the NAV per share at the time of re-issue provided that such discount is lower than the weighted average discount to the NAV per share of the relevant shares when they were bought by the Company.

It is also the Board's policy that, subject to the maximum limit referred to above, shares may be held in treasury indefinitely.

The Board believes that the treasury shares policy will improve liquidity in the shares and help to maintain the size of the Company. Furthermore, the Board believes that the re-issuance of shares from treasury at a discount to the NAV per share within the parameters described above will, in conjunction with the Company's share buy-back policy, ensure that the overall effect of the 'round trip' of repurchasing shares and subsequently re-issuing them from treasury will be an enhancement to the NAV per share.