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Oxford Technology 2 VCT PLC  -  OXH   

Proposed offer for subscription of a new class of shares, adoption of new articles of association, adoption of investment policy for new class of shares and Notice of General Meeting

Released 07:00 22-Oct-2018

Proposed offer for subscription of a new class of shares, adoption of new articles of association, adoption of investment policy for new class of shares and Notice of General Meeting

oxford technology 2
venture capital trust plc

Proposed offer for subscription of a new class of
shares, adoption of new articles of association, adoption of investment
policy for new class of shares and Notice of General Meeting

The Company announces that it is today posting a circular to Shareholders convening a general meeting at 11:00 a.m. on 19 November 2018 at Magdalen Centre, Oxford Science Park, Oxford, OX4 4GA to consider the proposals as described further below. The Circular will also be available on the OTM website (www.oxfordtechnology.com) and will shortly be available from the National Storage Mechanism.

1.         Introduction

The Board of Oxford Technology 2 Venture Capital Trust Plc today announces its intention, subject to Shareholders’ approval, to launch an offer for subscription of a new class of shares (the B Shares) and to appoint a third party, Chelverton Asset Management Limited (Chelverton) to manage this new share class. It is proposed that the new funds raised under this Offer will be invested using a more generalist investment policy than the one that currently applies to the Company for its Ordinary Shares.

2.         Background and Summary

As the Company’s portfolio has developed and been realised, the NAV of the Company has reached a point where covering the fixed costs required to maintain the VCT as a going concern is becoming increasingly uneconomic, despite (in the Directors’ understanding) the Company having the lowest level of costs of any VCT. Oxford Technology Management Limited (OTM) provides the Company with a cost cap, but this is unsustainable in the long term.

The Directors have regularly reviewed this position and considered the options available to the Company and its Shareholders.

One option considered was to place the VCT into voluntary wind up.  However, this would eventually crystallise the capital gains which are currently sheltered for certain Shareholders who subscribed for Shares when the Company was launched, as well as probably forcing a sale of the remaining 9 investments earlier than would be optimal to maximise Shareholder value, since a distribution in specie is neither practical nor tax efficient.  The Directors do not consider this is in the interests of Shareholders, and have therefore looked at alternative solutions.

The Directors considered looking to merge the Company with another VCT.  This had two disadvantages:  the possibility that existing Shareholders would lose some or all of the potential upside associated with their legacy portfolio, and the costs associated with a merger would have represented several years of additional cost to existing Shareholders.  The Directors could not find a merger route which was economically beneficial for Shareholders, whilst maintaining the Ordinary Share Pool as a distinct set of assets.

The better solution was to find a way of enlarging the asset base of the Company to spread costs across a wider asset base.  The Directors reviewed the option of raising new funds via OTM, but OTM’s focus is now on their SEIS/EIS portfolio, given OTM’s view that this is a better wrapper for such investments these days; and as the existing portfolio shows, the types of investment that OTM invest in tend to have a much longer than average time horizon for eventual realisation of assets than the majority of investors in a VCT want, as demonstrated by the relatively small amount raised by the Company’s top-up offers.

The alternative that the Directors determined as the most efficient mechanism was to raise a new B Share class under a new Investment Manager with all the costs of the fund raise being met by the new Investment Manager.  This allows time for the existing portfolio to be realised for the benefit of existing Shareholders, whilst making the costs to enable this more manageable. Any new investments will be for the benefit of Investors in the new B Share class.

3.         Offer of B Shares

For the reasons set out above, the Directors believe that the most attractive solution for Shareholders is a proposal by Chelverton Asset Management Limited, an experienced team with a strong track record. For some time Chelverton has been looking into the possibility of establishing a VCT as a new offering for their existing client base. Following discussions on various matters (including the costs of establishing a new VCT and the level of annual running costs of such a new VCT), Chelverton has proposed that a new share class (the B Shares) is created in the Company, with Chelverton appointed Investment Manager of the Company.  Chelverton would manage the investments of the B Share Pool which will have a more generalist investment policy than the one that applies to the existing Ordinary Share.

As regards the Company’s current portfolio for existing Ordinary Shares (the Ordinary Share Pool), the investment policy of the Company will remain unchanged and OTM, the existing investment adviser, will continue as Investment Adviser to the Ordinary Share Pool. It remains the Board’s intention to make distributions from the Ordinary Share Pool to Ordinary Shareholders when appropriate realisation opportunities arise.

Chelverton is a boutique asset management business founded in 1998 with a specialist focus on smaller quoted UK equities and unquoted SMEs.  Further detail on Chelverton and its track record is set out in section 4 below.

Both the Board and Chelverton see considerable advantages in this proposal. One advantage to Investors in the B Shares is that the Company is already an established VCT and raising of further funds will allow the Company’s fixed running costs to be spread over a greater asset base, thus reducing the burden for all Shareholders.  As the Company has not undertaken a fundraising for a number of years, the Board also believes that some existing Shareholders may be interested in subscribing for the new class of shares in their Company.

The Company and Chelverton propose to launch an offer for subscription in late November to early December 2018 to raise up to gross proceeds of approximately £5 million through the issue of up to 5,000,000 new B Shares (the Offer), together with an over-allotment facility of up to approximately further £5 million. Existing Shareholders will be offered the opportunity to subscribe for B Shares under the Offer at a discount, plus an additional discount for Shareholders who subscribe for B Shares prior to 22 March 2019.  It is the intention that Shareholders will have the option to apply for B Shares under the Offer in one or both of tax years 2018/19 and 2019/20. 

Following Admission, the name of the Company will be changed to “Chelverton VCT Plc”.

The purpose of the Circular is therefore to explain and seek Shareholders’ approval under the Act and the Listing Rules for the necessary authorities to enable the Offer to be made, including Resolutions to:

•           adopt new articles of association of the Company inter alia to create B Shares and enable the Directors to change the Company’s name;

•           grant authorities to allot B Shares;

•           cancel the Company’s share premium account;

•           adopt a new investment policy of the Company in respect of B Shares;

•           cancel the Company’s capital redemption reserve; and

•           grant authority to make market purchases of B Shares.

The full text of the Resolutions is set out in the Notice of General Meeting.

It is proposed that the B Share class will form a separate pool of capital (distinct from the Ordinary Share Pool) that will be managed by Chelverton on behalf of the Company. The funds in the B Share Pool will be invested in accordance with a more generalist investment policy for the B Shares, proposed to be adopted by the Company as described in section 6 below and set out in full at the end of this announcement, which will reflect the expertise and experience of Chelverton.

Conditional on Admission of the B Shares, the Company proposes to appoint Chelverton as the Company’s Investment Manager and ISCA as administrators and company secretary to the Company.  Following Admission, the Company would apply to the FCA to be registered as a small self-managed AIFM.

Subject to Shareholders passing the Resolutions set out in the Notice of General Meeting the Directors propose to launch the Offer through the issue of a prospectus.  It is expected that the Prospectus launching the Offer will be published in late November to early December 2018.

4.   Chelverton

Founded in 1998, Chelverton is a boutique asset management business with a specialist focus on investing in UK listed mid and small cap equities and unquoted SMEs. It is an independent asset management business which is majority employee owned, with offices in Bath, Edinburgh and London and it has 11 employees with an experienced team of 8 fund managers. Chelverton is authorised and regulated by the FCA.

Chelverton launched its first investment trust (Chelverton Growth Trust PLC) focused on companies traded on the Main Market and AIM with a market capitalisation at the time of investment of up to £50 million and which are believed to be at a point of change, while also investing in unquoted investments where it is believed that there is a likelihood of the shares becoming listed on the Official List or traded on AIM or the investee company being sold. Chelverton then launched its flagship investment trust with a UK Mid & Small Cap progressive income strategy in 1999, Chelverton UK Dividend Trust PLC.

Chelverton launched its first open ended vehicle Chelverton UK Equity Income Fund in December 2006 and then Chelverton UK Equity Growth Fund in October 2014, each of which have become award-winning UK small and mid-cap OEICs.  Chelverton recently expanded by taking on two well-known investment managers to run a European focused fund, Chelverton European Select Fund.  The firm currently manages 2 Investment Trusts and 3 open-ended Investment Companies investing in quoted equities, with over £1bn in total assets (as at 30 September 2018).

On the unquoted side, Chelverton manages Chelverton Investor Club (the “Club”) which was established in 2009 as a specialist investor in unquoted UK small companies. As well as managing funds, Chelverton has invested some £50m in a range of privately owned SMEs.

Chelverton’s unquoted investment team has developed the Club to offer discerning investors a simple and discrete route to investing directly in private UK companies, using its strong pedigree in managing the acquisition of, and investment in, unquoted SMEs. This is founded on years of extensive experience structuring bespoke investments for a range of exacting clients, including a large family office, an AIM traded holding company (CEPS plc) and a group of individual private investors looking for a diversified portfolio.

Investments in which the Club has participated include Tufwell, a glass processing and merchanting Crawley-based company, which was sold in 2018 after a four year hold, delivering just under 3x return for investors, and Hickton, the UK’s leading independent provider of specialist Clerk of Works services in respect of building construction, civil and structural engineering, and historic building refurbishment work.

Other recent investments, representative of the type that the B Share Pool will be invested in include Qualification Check, the leading provider of degree and other professional award verifications in the UK, VeloVixen, the UK’s pre-eminent on-line retailer of apparel for female cyclists, and iDefigo, an Internet of Things business focused on ‘smart’ surveillance cameras.

Many of these transactions have been sourced through proprietary/off-market introductions, and deal-flow has been unable to be satisfied by the investment capacity of the Club alone. Investors in the B Share Pool will have access to the VCT-qualifying element of these opportunities, leveraging the incremental funding capability of the Club participants.

Chelverton believes that making a direct equity investment does not have to be a risky, complex endeavour. They only pursue companies that present proven business models, are backed by talented management teams and operate in sectors with significant growth opportunities.

Biographies of the key personnel of the Investment Manager who will be involved in the provision of services to the Company are as follows:

David Horner (Managing Director)

David is an acclaimed fund manager, specialising in small- to mid-cap quoted investments and SME unquoted investments. He has 30 years’ experience in corporate finance assignments, identifying, structuring and managing investments as well as purchasing and managing private equity, specialist listed and AIM portfolios. He qualified as a chartered accountant in 1985 and has held senior positions in Deloitte, 3i Corporate Finance and Strand Partners Limited, with several public and private company directorships. David set up Chelverton to provide the investment management for the investment trust now known as Chelverton Growth Trust PLC, and was responsible for launching that company in May 1999 and is still its manager. He has also co-managed MI Chelverton UK Equity Income Fund since its launch, the success of which consistently earns him a Citywire AAA fund manager rating.

Richard Bucknell (Investment Director)

Richard is a highly experienced private equity investment professional who has led in excess of 30 investments into smaller companies since 1998, and has gone on to represent investor interests on the boards of many of those companies following investment. Richard has helped to shape the strategic development of these companies over time, through to managing the realisation process on behalf of investors.

Prior to joining Chelverton, Richard held a number of senior investment management positions at firms including Barclays Ventures, Livingbridge (formerly ISIS Equity Partners), where he was a senior member of the team investing on behalf of the Baronsmead VCTs, and Catapult Venture Managers.

5.         Changes to the Board and Audit Committee, Company Secretary and Management and Administration

Conditional on, and with effect from, Admission, Ian Clifton has agreed to join the Board.  Ian has worked in investment banking including at IBJ, ABN AMRO and West LB.  He then worked for Mercer and Scottish Widows Investment Partnership and was a founding partner of C-Suite, advising boards of directors and senior management on strategies for pension funding.  He also provides management consultancy to a number of companies in the disruptive technology sector.

Conditional on, and with effect from, Admission, David Livesley will retire from the Board and James Gordon will resign as company secretary.  Robin Goodfellow will remain on the Board following Admission and retire from the Board and the Audit Committee at the end of the next annual general meeting of the Company.  The Board is grateful for their respective contributions to the Board.

Conditional on Admission, Alex Starling and Ian Clifton will join the Audit Committee. It is anticipated that Richard Roth will retire from the Audit Committee at the end of the Company’s 2019 annual general meeting and Ian Clifton will become chairman of the Audit Committee.

Conditional on Admission, ISCA will be appointed to provide administration and company secretarial services.  ISCA provides accounting, fund administration and company secretarial services to a number of investment trust companies including a VCT.

Conditional on Admission, the Company’s management agreement with OT2 Managers Limited will be terminated and OT2 Managers Limited will terminate its back-to-back agreement with OTM. If Shareholders approve the Proposals by voting in favour of the Resolutions at the General Meeting, the Company would enter into an investment management agreement with Chelverton (conditional on Admission) immediately before the Prospectus is published.  Chelverton would be paid a management fee of 2% of the Net Asset Value of the B Share Pool with no performance fee and would agree to pay the Company’s annual running costs above a cost-cap calculated at 3.5% of the Company’s Net Asset Value as set out in the latest audited accounts, so long as Chelverton remains the Company’s investment manager.  Chelverton’s appointment would be for an initial fixed term of five years, terminable thereafter on 12 months’ notice and terminable at any time on the usual events of default.  OTM would continue to act as investment adviser to the Ordinary Share Pool and would receive an investment advisory fee of 0.5% of the Net Asset Value of the Ordinary Share Pool (a reduction of 0.5% in their current fee in recognition of the fact that they will no longer be responsible for the administration of the company or subject to a cost cap).   No change to the existing performance fee arrangements in relation to the Ordinary Shares is being proposed, other than a waiver of such entitlements by Alex Starling and Richard Roth.

6.         Investment Policy for the B Shares

As well as the proposal to appoint Chelverton as Investment Manager of the Company, the Directors propose that a separate investment policy be adopted in respect of the B Shares to allow the Company to invest the proceeds of the Offer and any subsequent fundraisings in a wider range of Qualifying Investments than is possible under the investment policy for the Ordinary Shares.

The investment policy for the B Shares will be to invest in a broad range of Qualifying Investments and that the non-qualifying portfolio will comprise units or shares in UCITS or AIF (in each case redeemable on not more than 7 days’ notice), or short term cash deposits or shares or securities acquired on a recognised investment exchange (within the meaning of Part XVIII FSMA).

In accordance with the Listing Rules, the Company requires Shareholders’ approval to make a material change to its investment policy. Since the Directors believe that the adoption of a separate investment policy for the B Shares constitutes a material change, a resolution to adopt the investment policy, for the B shares, will be proposed at the General Meeting.

The investment policy for the Ordinary Shares will be unchanged. Under the New Articles, the Company’s records and accounts will be kept on the basis that the assets and liabilities of the Ordinary Share Pool can be separately identified from those of the B Share Pool.

7.         Benefits of the Offer

The Board believes that the launch of the Offer will benefit existing Shareholders as follows:

•           spreading the fixed annual running costs of the Company over a larger capital base;

•           providing the opportunity to invest in a generalist VCT qualifying pool with ongoing oversight from two of the existing Directors, allowing existing Shareholders to benefit from 30% income tax relief and tax-free distributions;

•           offering existing Shareholders (and new Investors) a share class with a different investment focus and with a new Investment Manager;

•           reducing the effective cost cap (which currently excludes Directors’ fees) for existing Shareholders;

•           potentially enabling some cash retained for working capital to be released in the form of a small special additional dividend to existing Shareholders*;

•           offering existing Shareholders (and shareholders in the 3 other VCTs that have OTM as Investment Adviser) a loyalty incentive discount on the Offer price;

•           allowing the Company to co-invest alongside other funds managed by Chelverton in attractive investment opportunities; and

•           all the costs of the proposed Offer will be paid for by Chelverton.

*   this is not a profit forecast; there can be no guarantee that any additional special dividend would be paid or of its amount but the Board will look at this in detail following the closing of the Offer

The making of the Offer and raising of funds into the new B Share class will necessarily extend the life of the Company since the Company will need to continue and Investors will need to retain their shareholdings for at least another five years after the last allotment of B Shares under the Offer so that the B Shareholders can preserve any initial income tax relief they may receive on their subscription for B Shares. The extension of the life of the Company will also benefit any Ordinary Shareholders who took advantage of capital gains tax deferral when they subscribed for their Ordinary Shares.  Once B Shares have been issued, Ordinary Shareholders will no longer have an annual continuation vote and the next continuation vote will be in 2025.

8.         Timing of the Offer

It is intended that, subject to the passing of the Resolutions and FCA approval of the Prospectus, the Company will launch the Offer in late November to early December 2018. 

Full details of the Offer will be set out in the Prospectus, and Shareholders interested in investing in the Offer should read the Prospectus in full once it is published.  An announcement will be made when the Prospectus is published.  Any decision to participate in the Offer should be made solely by reference to the information and the terms and conditions contained in that Prospectus.

It is proposed that a first allotment of B Shares will take place on or before 4 April 2019. Subject to the terms and conditions of the Offer, it is the intention that Shareholders will have the option to apply for B Shares under the Offer in one or both of tax years 2018/19 and 2019/20.

9.         General Meeting

The General Meeting has been convened for 11.00 a.m. on 19 November 2018 at Magdalen Centre, Oxford Science Park, Oxford OX4 4GA. At the General Meeting, Resolutions 2 and 5 will be proposed as ordinary resolutions, requiring the approval of more than 50% of the votes cast. Resolutions 1, 3, 4, 6 and 7 will be proposed as special resolutions, requiring the approval of not less than 75% of the votes cast.

The Resolutions set out in the Notice are summarised below:

Resolution 1 - Adopt the New Articles of the Company (special resolution)

Resolution 1 will, if passed, adopt the New Articles in substitution for the current Articles.  The New Articles are in a form which is appropriate for a premium listed Main Market traded VCT and in conformity with the Companies Act 2006.  The New Articles also include the rights attaching to the B Shares.  A summary of the key differences between the current Articles of the Company and the New Articles which, in the opinion of the Directors, are relevant for Shareholders, is set out in Part III to the Circular.

A copy of the proposed New Articles is available for inspection from the date of this Circular at the registered office of the Company and for at least 15 minutes prior to and during the General Meeting at the place of the General Meeting, Magdalen Centre, Oxford Science Park, Oxford OX4 4GA.  A copy is also available on the OTM website (http://www.oxfordtechnology.com).

Resolution 2 - Authority for the Board to allot shares (ordinary resolution)

Resolution 2 will, if passed and conditional on the passing of Resolution 1 above, give the Board authority with immediate effect to allot shares up to an aggregate nominal amount of £120,000 representing, in aggregate, approximately 22.5% of the issued share capital of the Company as at the date of the Circular. This authority will expire on the later of 15 months after the date this resolution is passed and the end of the Company's next annual general meeting. The Directors intend to allot up to 5,000,000 B Shares of 1p each under the Offer plus up to an additional 5,000,000 under the over-allotment facility, and are also seeking approval to allot up to an additional 20% outside the Offer, being up to a further 2,000,000 B Shares. The Directors have no current intention of allotting further B Shares outside the Offer and do not intend to make any further allotments of Ordinary Shares.

Resolution 3 - Disapply statutory pre-emption rights (special resolution)

Resolution 3 will, if passed, disapply the statutory pre-emption rights contained in section 561 of the Act to enable the Directors to allot equity securities for cash pursuant to the authority given under Resolution 2 above.  This authority will expire on the later of 15 months after the date this resolution is passed and the end of the Company's next annual general meeting. The authority conferred by this resolution will be limited to:

(i) the allotment of B Shares in connection with the Offer; and

(ii) otherwise than as set out in (i) above, an aggregate nominal amount of 20 per cent. of the issued ordinary share capital of the Company immediately following closing of the Offer.

Resolution 4 - Cancellation of share premium account (special resolution)

Resolution 4 will, if passed and subject to the sanction of the Court and conditional on the issue of B Shares by the Company pursuant to the Offer, cancel all amounts standing to the credit of the share premium account. The Act places restrictions on distributions by a public limited company which can only make a distribution to the extent that the amount of its net assets is not less than the aggregate of its called up share capital and undistributable reserves.  The share premium account is an undistributable reserve.  Currently the Company has £376,000 in its share premium account relating to past issues of Ordinary Shares and, as a result of the B Shares being issued under the Offer, additional share premium will be created.

The additional new reserve created by the cancellation of the share premium account will allow the Company to create a special reserve that can be used to pay dividends, assist in writing off losses or finance market purchases of the Company’s Shares. The opportunity to cancel the share premium account at this stage is being taken in order to save the costs of convening a further general meeting following the closing of the Offer. In addition, the reserve created by the cancellation may also be used by the Company to purchase shares in the capital of the Company, whether in the market or by a tender offer, although the Company has no current intention of doing so.

Resolution 5 – Adoption of investment policy for the B Share Pool (ordinary resolution)

Resolution 5, if passed, will adopt the Company's investment policy in respect of the B Shares. Resolution 5 is conditional on the passing of Resolutions 1, 2 and 3 and on Admission.

Resolution 6 – Cancellation of capital redemption reserve (special resolution)

Resolution 6 will, if passed and subject to the sanction of the Court and conditional on the issue of B Shares by the Company pursuant to the Offer, cancel all amounts standing to the credit of the capital redemption of the Company.  The capital redemption reserve was created on the repurchase of the Company’s Ordinary Shares under the tender offer in 2017.

The cancellation of this reserve, like the cancellation of share premium account, will create further distributable reserves to assist in the payment of dividends or to assist in the return of funds to Shareholders.

Resolution 7 – Authorise the Company to make market purchases of B Shares (special resolution)

Resolution 7 will, if passed, permit the Company to make market purchases of its own B Shares at the Directors’ discretion.

The Directors will only use this authority in circumstances where a holder of B Shares has died.  This authority does not authorise or permit the Company to make market purchases of Ordinary Shares.

10.       Action to be taken

Included with the Circular is a Form of Proxy for use at the General Meeting. Whether or not Shareholders propose to attend, they are requested to complete and return the Form of Proxy, by post or hand, to Neville Registrars, Neville House, Steelpark Road, Halesowen B62 8HD, so as to be received as soon as possible, in each case to arrive not later than 48 hours before the time of the meeting. Completion and return of a Form of Proxy will not affect a Shareholder's right to attend and vote at the General Meeting should he or she wish to do so.

11.       Recommendation

The Board considers that the Proposals relating to the Company are in the best interests of the Company and its Shareholders as a whole and the Board unanimously recommends that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting, as the Directors intend to do in respect of their own beneficial holdings of 58,033 Ordinary Shares (representing approximately 1.09% of the issued share capital as at 19 October 2018, being the latest practicable date prior to publication of this announcement).

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

Enquiries:  Richard Roth, Oxford Technology 2 Venture Capital Trust Plc; richardaroth@yahoo.co.uk

Investment Policy for B Shares

Subject to Shareholders’ approval of Resolution 5 to adopt the investment policy, the investment policy of the Company in respect of the B Shares shall be as follows:

Investment Objectives and Policy

The investment objective of the Company for the B Shares is to provide private investors with attractive returns from a portfolio of investments in unquoted companies including existing AIM and NEX Exchange Growth Market (NEX) quoted companies in the United Kingdom.  It is the intention to maximise tax-free income available to Investors from a combination of dividends and interest received on investments and the distribution of capital gains arising from sale of assets.

By virtue of the legislative framework governing the Company, the Company’s investment policy for the B Shares has been designed to be aligned with the need to comply with VCT legislation which is key to the proposition being offered to Investors.

The Company will target investments in UK unquoted companies through a range of securities including, but not limited to, ordinary and preference shares, loan stock, convertible securities and fixed interest securities. Unquoted investments are likely to be structured as a combination of ordinary shares and loan stock. The Company may also invest in stocks that are traded on the London Stock Exchange (including AIM) and on NEX; such stocks may include ordinary shares, preference shares and/or loan stock.  As well as quoted securities, the Company may hold investments in permitted funds, including interest bearing money market open-ended investments companies in addition to cash on deposit.

Qualifying Investments

Compliance with the VCT rules and regulations is to be considered in respect of all investment decisions made.  While it is recognised that venture capital investments carry a significant risk of capital loss, the Company will aim to ameliorate that risk as far as possible by targeting investee companies that are carrying out a qualifying trade and have assets.

Non-Qualifying Investments

Funds not yet employed in Qualifying Investments will be managed in accordance with VCT Rules for non-qualifying investments with the intention of ensuring the Company has sufficient liquidity to invest in Qualifying Investments as and when opportunities arise. The non-qualifying portfolio will comprise units or shares in UCITS or AIFs (in each case redeemable on not more than 7 days’ notice), or short term cash deposits or shares or securities acquired on a recognised investment exchange (within the meaning of Part XVIII FSMA).

Risk Diversification

The Directors will control the overall risk of the Company. Chelverton, as Investment Manager, will ensure that the B Share Pool has exposure to a diversified range of VCT Qualifying Investments from different sectors and that no more than 15% of the Company's assets are invested in any one company, measured at the time of investment.

Borrowing Policy

There will be no set limit or restriction on the Company’s borrowing. However, it is not the Company's intention to have any borrowings of more than 20% of gross assets at the time any such borrowing is undertaken.

Changes to the Investment Policy for the B Shares

Any material change to the investment policy of the Company for the B Shares will require the approval of Shareholders pursuant to the Listing Rules.

Appendix

Definitions

The following defined terms apply throughout this announcement and are extracted from the Circular, unless the context requires otherwise:

  
the ActCompanies Act 2006 (as amended)
Admissionadmission of the B Shares to the premium segment of the Official List and to trading on the London Stock Exchange’s main market for listed securities
AIMAlternative Investment Market of London Stock Exchange plc
current Articlesthe current articles of association of the Company adopted on 2 March 2000
B Shareholdersholders of B Shares
B SharesB ordinary shares of 1 pence each in the capital of the Company
B Share Poolassets and liabilities of the Company attributable to the B Shares
ChelvertonChelverton Asset Management Limited
Circularthe circular letter dated 22 October 2018 to the Shareholders of the Company
CompanyOxford Technology 2 Venture Capital Trust Plc (registered number 3928569)
Directors or Boardthe directors of the Company and, collectively, the Board
DTRthe Disclosure Guidance and Transparency Rules published by the FCA pursuant to Part VI of FSMA
FCAFinancial Conduct Authority, acting in its capacity as the competent authority for the purposes of Part VI of FSMA
Form of Proxyform of proxy for use in connection with the General Meeting
FSMAthe Financial Services and Markets Act 2000 (as amended)
General Meetingthe general meeting of the Company to be held on 19 November 2018
Investment ManagerChelverton, conditionally on Admission
Investoran individual aged 18 or over who is resident in the United Kingdom and who subscribes for B Shares under the terms of the Offer
ISCAISCA Administration Services Limited
ITAIncome Tax Act 2007 (as amended)
Listing RulesListing Rules published by the FCA pursuant to Part VI of FSMA
Main Marketthe Main Market for listed securities of London Stock Exchange plc
NAV or Net Asset Valuethe aggregate of the gross assets of the Company less its gross liabilities
Net Assetsgross assets less all liabilities (excluding contingent liabilities) of the Company
New Articlesthe form of articles of association of the Company to be adopted pursuant to a special resolution to be passed at the General Meeting
Noticethe notice of the General Meeting set out at the end of the Circular
Offerthe proposed public offer for subscription of B Shares in respect of the 2018/19 and 2019/20 tax years on the terms to be set out in the Prospectus which it is proposed will offer prospective Investors the opportunity to subscribe for up to 5,000,000 B Shares (with an over-allotment facility for up an additional 5,000,000 B Shares)
Official ListOfficial List of the FCA
OTM or Investment AdviserOxford Technology Management Limited, the investment adviser to the Company and the investment adviser in relation to the Ordinary Share Pool following Admission
OT2 ManagersOT2 Managers Limited, the Company’s wholly-owned subsidiary, which provides investment management services to the Company
Ordinary Shareholdersholders of Ordinary Shares
Ordinary Share Poolassets and liabilities of the Company attributable to the Ordinary Shares
Ordinary Sharesexisting ordinary shares of 10p each in the capital of the Company (ISIN: GB0003105052)
Proposalsall of the proposals described in the Circular, including the proposed resolutions relating to: (i) the adoption of the New Articles, (ii) the authority to allot B Shares, (iii) the authority to issue such shares on a non-pre-emptive basis, (iv) the cancellation of the Company’s share premium account (both existing and that which is to be created upon the issue of B Shares) (v) adoption of the Company's investment policy in respect of B Shares, (vi) the cancellation of the Company’s capital redemption reserve, and (vii) authority to make market purchases of B Shares.
Prospectusthe prospectus proposed to be issued by the Company in respect of the Offer in accordance with Section 84 of FSMA in late November to early December 2018
Qualifying Investmentinvestment in an unquoted trading company, which comprises a qualifying holding for a VCT as defined in Chapter 4, Part 6, of the ITA
Resolutionsthe ordinary and special resolutions set out in the Notice
Shareholdersholders of Shares in the Company
Sharesshares in the capital of the Company
VCTa company which is approved as a venture capital trust by Her Majesty's Revenue and Customs pursuant to section 274 ITA
VCT RegulationsVenture Capital Trust (Winding Up and Merger) (Tax) Regulations 2004 SI 2004/2199 as amended from time to time
VCT RulesPart 6 ITA and every other statute (including any orders, regulations or other subordinate legislation made under them) for the time being in force concerning VCTs, as amended from time to time


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Proposed offer for subscription of a new class of shares, adoption of new articles of association, adoption of investment policy for new class of shares and Notice of General Meeting - RNS