REG - Braemar PLC - Publication of Circular & General Meeting Notice
29/03/2023 11:45
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RNS Number : 6377U Braemar PLC 29 March 2023
29 March 2023
BRAEMAR PLC
("Braemar" or the "Company" or the "Group")
Publication of Circular and Notice of General Meeting
Braemar Plc (LSE: BMS), a provider of expert investment, chartering, and risk
management advice to the shipping and energy markets, announces that a
circular and notice of general meeting (the "Circular") has today been
published and posted to shareholders. The general meeting will be held at the
Company's offices at One Strand, Trafalgar Square, London, WC2N 5HR at 10 a.m.
on 18 April 2023.
Following the Company's announcement dated 14 February 2023, which set out
inter alia the Company's intention to convene a general meeting. The Circular
sets out the details of a proposed capital reduction (which will support the
Company's ability to pay dividends in future and provide the Company with
flexibility to continue with the existing progressive dividend policy),
proposed rectification of the relevant dividends and proposed related party
transaction. The expected timetable of principal events and the Chairman's
letter are set out below.
The notice will be available on the Company's website (www.braemar.com
(http://www.braemar.com) ) and, together with the Form of Proxy will be
submitted to the National Storage Mechanism and will shortly be available for
inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) . Copies of these
documents have also been posted today to those of the Company's shareholders
that have elected to continue to receive hard copies.
Unless otherwise indicated, all capitalised terms used but not defined in this
announcement shall have the same meaning as described in the Circular.
For further information, contact:
Braemar Plc
Nick Stone, Group Chief Financial Officer Tel +44 (0) 20 3142 4100
Rebecca-Joy Wekwete, Company Secretary
Investec Bank plc
Gary Clarence / Harry Hargreaves / Alice King Tel +44 (0) 20 7597 5970
Cenkos Securities plc
Tel +44 (0) 20 7397 8900
Ben Jeynes / Max Gould (Corporate Finance)
Alex Pollen / Leif Powis (Sales)
Buchanan
Charles Ryland / Jamie Hooper / Jack Devoy Tel +44 (0) 20 7466 5000
Notes to Editors:
About Braemar Plc
Braemar provides expert investment, chartering, and risk management advice
that enable its clients to secure sustainable returns and mitigate risk in the
volatile world of shipping and energy. Our experienced brokers work in tandem
with specialist professionals to form teams tailored to our customers' needs,
and provide an integrated service supported by a collaborative culture.
Braemar joined the Official List of the London Stock Exchange in November 1997
and trades under the symbol BMS.
For more information, including our investor presentation, visit
www.Braemar.com (http://www.Braemar.com) and follow Braemar on LinkedIn
(https://www.linkedin.com/company/braemar-ltd) .
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Publication of the Circular 29 March 2023
Latest time and date for receipt of Forms of Proxy for the General Meeting 10 a.m. on 14 April 2023
General Meeting 10 a.m. on 18 April 2023
Expected date of initial directions hearing of the Court 28 April 2023
Expected date of Court Hearing to confirm the Capital Reduction 9 May 2023
Expected effective date for the Capital Reduction 10 May 2023
DEFINITIONS
"Act" Companies Act 2006;
"B Ordinary Share Issue" the issue of one B Ordinary Share for each one Ordinary Share held by each
Shareholder, as described in the Circular;
"B Ordinary Shares" the shares in the capital of the Company to be created
by the B Ordinary Share Issue, where the nominal value of
such shares is equal to the sum that is obtained by
dividing the number of B Ordinary Shares to be issued into
£19,754,926;
"Board" or "Directors" the directors of the Company or any duly appointed committee thereof;
"Capital Redemption Reserve" the capital redemption reserve of the Company;
"Capital Redemption Reserve Reduction" the cancellation of the full amount outstanding to the credit of the Capital
Redemption Reserve;
"Capital Reduction" the proposed cancellation of the Company's Capital Redemption Reserve and
Share Premium Account, and the Merger Reserve Reduction pursuant
to the Resolutions as set out in the Notice of General Meeting;
"Capital Reduction Record Time" 6.00 p.m. on the date immediately preceding the date of the Court Hearing;
"Capital Reduction Resolutions" the resolutions (as set out in full in the Notice of General Meeting
at resolutions 1 to 5 (inclusive)) to be proposed at the General Meeting in
relation to the proposed Capital Redemption Reserve Reduction, Share Premium
Account Reduction and Merger Reserve Reduction;
"Company" or "Braemar" Braemar Plc, a company incorporated in England and Wales
with registered number 02286034 and having its registered office
at One Strand, Trafalgar Square, London England WC2N 5HR;
"Court" the High Court of Justice in England and Wales;
"Court Hearing" the hearing by the Court to confirm the Capital Reduction;
"Court Order" the order of the Court confirming the Capital Reduction;
"CREST" the relevant system (as defined in the CREST Regulations) in respect of which
Euroclear UK & International Limited is the Operator (as defined in
the CREST Regulations);
"CREST Regulations" the Uncertificated Securities Regulations 2001 (as amended);
"Directors' Deed of Release" as defined in paragraph 4.2.3 of Part IV of the Circular;
"Dividend Rectification Resolutions" the resolutions (as set out in full in the Notice of General Meeting
at resolutions 6, 7 and 8) to be proposed at the General Meeting to ratify
the accounting entries in respect of unlawful dividends such that profits
are appropriated, to ratify and approve the entry into the Shareholders' Deed
of Release and to ratify and approve the entry into the Directors' Deed of
Release;
"Effective Date" the date of the Court Order;
"FCA Handbook" the FCA's Handbook of Rules and Guidance;
"Financial Conduct Authority" or "FCA" the Financial Conduct Authority of the United Kingdom;
"Form of Proxy" the form of proxy accompanying the Circular relating to the General Meeting;
"FSMA" the Financial Services and Markets Act 2000, as amended;
LETTER FROM THE CHAIRMAN OF THE COMPANY
Braemar Plc
(incorporated and registered in England and Wales under company registration
number 02286034)
Directors: Registered office:
Nigel Payne (Non-executive Chairman One Strand
James Gundy (Chief Executive Officer) Trafalgar Square
Nicholas Stone (Chief Financial Officer) London
Tristram Simmonds (Chief Operating Officer WC2N 5HR
Elizabeth Gooch (Non-executive Director)
Joanne Lake (Non-executive Director)
PROPOSED CAPITAL REDUCTION
and
PROPOSED RECTIFICATION OF RELEVANT DIVIDENDS
and
RELATED PARTY TRANSACTIONS
and
NOTICE OF GENERAL MEETING
1. Introduction
I am writing to provide you with details of a proposal to enhance the
Company's ability to return value to Shareholders in the future and to address
the payment of unlawful dividends that have been identified as part of an
exercise which has been undertaken by the Company to increase the Group's
capacity to pay future dividends.
The Circular also provides the details of a General Meeting that will be held
at One Strand, Trafalgar Square, London WC2N 5HR at 10 a.m. on 18 April 2023
to consider the Resolutions that will be put to Shareholders to approve them.
The purpose of the Circular is to provide you with information about the
Capital Reduction, the proposed rectification of Relevant Dividends and the
related party transaction and to explain why the Board considers all the
Resolutions to be in the best interests of the Company and its Shareholders as
a whole and unanimously recommends that you vote in favour of the Capital
Reduction Resolutions to be proposed at the General Meeting. Given the
interests of the Board in the Dividend Rectification Resolutions, and as
required by the Listing Rules, the Board are unable to take part in the
consideration of the matters dealt with by the Dividend Rectification
Resolutions and therefore cannot recommend that shareholders vote in favour of
the Dividend Rectification Resolutions but do recommend that shareholders vote
on them. Shareholders should note that, unless:
A) all Capital Reduction Resolutions are approved at the General Meeting
(and the Court subsequently confirms the Capital Reduction), the Capital
Reduction will not take place and the declaration and payment of unlawful
dividends will not be rectified; and
B) the Capital Reduction takes place and all Dividend Rectification
Resolutions approved;
the payment of unlawful dividends will not be rectified, and the Company will
have potential claims against Shareholders and Relevant
Directors.
If Resolution 7 set out in the Notice of General Meeting is not approved, then
the Company has a potential right to make claims against the Recipient
Shareholders for recovery of the payment of the Relevant Dividends. There is
no certainty as to the amounts that could be recovered if the Company sought
to pursue these potential claims.
If Resolution 8 set out in the Notice of General Meeting is not approved, then
the Company has a potential right to bring claims against the Relevant
Directors in relation to the payment of the Relevant Dividends. There is no
certainty as to the amounts that could be recovered if the Company sought to
pursue these potential claims.
Part II of the Circular contains definitions of words and terms that have been
used throughout it. Please refer to Part II as you review the Circular.
2. Background to, and reasons for the Capital Reduction
Under the Act, a company may, with the sanction of a special resolution passed
by its shareholders and confirmation of the Court, reduce or cancel its share
capital, share premium account, capital redemption reserve and other reserves.
It may then apply the sums resulting from such reduction to its distributable
reserves. These sums may then be treated as distributable for the purposes of
making future returns to Shareholders.
The Company currently has:
2.1 a Share Premium Account standing to the credit of £53,795,563;
2.2 a Capital Redemption Reserve standing to the credit of £396,382;
2.3 a Merger Reserve of £23,366,000;
The Act requires that if a company issues shares at a premium to the nominal
value of those shares for cash or otherwise, a sum equal to the aggregate
amount of or value of the premiums must be transferred to the company's share
premium account. A share premium account can only be used in very limited
circumstances. The Company intends to reduce the Share Premium Account in
full.
The Company currently has a Capital Redemption Reserve which arose as a result
of the accounting treatment applicable to a number of historical share buy
backs (and associated cancellations of shares). The Company plans to reduce
the Capital Redemption Reserve in full.
In certain circumstances such as where shares are issued in consideration for
the acquisition of shares in another company, instead of creating a share
premium, an amount is credited to the merger reserve. The Merger Reserve arose
principally in 2001 in relation to the acquisitions of Braemar Shipbrokers
Limited and Braemar Tankers Limited. Further additions to the Merger Reserve
arose in respect of Naves and Atlantic Brokers.
The Share Premium Account and the Capital Redemption Reserve are statutory
reserves in respect of which the Court has the power to sanction the reduction
or cancellation. The Merger Reserve is a non-statutory reserve which cannot be
reduced in the same way as the Share Premium Account and Capital Redemption
Reserve. It is therefore proposed to capitalise £19,754,926 standing to the
credit of the Merger Reserve by applying £19,754,926 in paying up in full new
B Ordinary Shares of £0.10 each.
The B Ordinary Shares will be allotted and issued on the Business Day prior to
the day of the Court Hearing, credited as fully paid, to the persons holding
Ordinary Shares as at the Capital Reduction Record Time, on the basis of six B
Ordinary Shares for each Ordinary Share held by Shareholders.
The B Ordinary Shares will not be admitted to trading on the London Stock
Exchange, or any other market or stock exchange. It is a condition of issue of
the B Ordinary Shares that no share certificates will be issued in respect of
them. The B Ordinary Shares will have extremely limited rights and will not
carry any rights to participate in the profits of the Company and have no
rights to participate in the capital of the Company except on a winding up.
The B Ordinary Shares will be transferable, but no market will exist for them
and it is anticipated that the Court will confirm at the Court Hearing that
they may be cancelled the day after they are issued.
The Capital Reduction, if approved, will provide the Company with the
flexibility to continue with its existing progressive dividend policy and will
allow the rectification of certain unlawful dividends which have been paid as
described in paragraph 3 and Part IV of the Circular.
3. Payment of Relevant Dividends
In December 2022, the Company commenced a project to research options for
increasing the distributable reserves available to the Company in order to
support the Group's stated progressive dividend policy.
The initial focus was on short term options that would increase the
distributable reserves as at 28 February 2023 in order to allow a final
dividend recommendation with the publication of year end results later in
2023.
A review of these short-term identified that charges taken to retained
earnings in recent years for the impairment of the value of certain preference
shares held by the Company represented unrealised losses and could therefore
potentially be excluded from the calculation of distributable reserves.
Whilst reviewing the possibility that the impairment losses could be
determined as unrealised losses for the purpose of measuring distributable
reserves, a broader review of other gains and losses that had been recorded in
retained earnings in recent years was carried out. This review identified
certain gains that had been recorded regularly relating to share-based
payments charges.
The gains in question arose when shares were awarded to employees of other
group companies and the cost of those shares was debited to the cost of
investment of those group companies and credited to retained earnings. This is
an accounting practice that has been ongoing within the Company since the
introduction of IFRS 2 in 2005. The only way therefore that those gains could
be considered to be realised is if the group companies concerned had been
sold. The consequence of this is that a significant balance within retained
earnings (that was not previously identified as created by unrealised gains)
was incorrectly used by the Company in the calculation of its distributable
reserves. This means that the Company has therefore paid several dividends
between 2016 and 2023 without having sufficient distributable reserves from
which to lawfully pay such dividends.
Details of the Relevant Dividends are set out below:
Payment date and type of dividend payment (interim or final) Amount per ordinary share Total aggregate amount of dividend paid
FY 2016 - Interim dividend - 18 December 2015 9.0 pence £2,659,000
FY 2017 - Final dividend - 29 July 2016 17.0 pence £5,020,000
FY 2017 - Interim dividend - 16 December 2016 9.0 pence £2,838,000
FY 2019 - Final dividend - 27 July 2018 10.0 pence £3,076,000
FY 2019 - Interim dividend - 14 December 2018 5.0 pence £1,540,000
FY 2020 - Final dividend - 26 July 2019 10.0 pence £3,064,000
FY 2020 - Interim dividend - 13 December 2019 5.0 pence £1,566,000
FY 2022 - Final dividend - 1 September 2021 5.0 pence £1,482,000
FY 2022 - Interim dividend - 16 December 2021 2.0 pence £627,000
FY 2023 - Final dividend - 14 October 2022 7.0 pence £2,017,000
FY 2023 - Interim dividend - 4 January 2023 4.0 pence £1,158,000
Total aggregate value £25,047,000
Part IV of the Circular sets out details of how the Relevant Dividends are
unlawful as well as the proposals for rectification.
The consequence of such dividends being paid otherwise than in accordance with
the Act is that the Company may have a claim against all shareholders (former
or present) who received any such dividends (up to the maximum value of
cumulative dividends received by each shareholder) as well as a claim against
all Directors (former or present, individually or in aggregate) who approved
the declaration and payment of such dividends, up to the total aggregate value
of £25,047,000.
The Group entered into deeds of release with related parties in connection
with another dividend rectification process, relating to the Company's
1 September 2021 final dividend and 16 December 2021 interim dividend (shown
above). In that instance, the Company identified that it had not properly
prepared and filed unaudited interim accounts at Companies House, as required
by the Companies Act 2006, prior to declaring and paying distributions to
shareholders in respect of the Company's 1 September 2021 final dividend and
16 December 2021 interim dividend, and therefore sought to rectify that
administrative oversight. Such dividend rectification was announced by the
Company on 27 July 2022, classified as a smaller related party transaction
pursuant to LR 11.1.10 R, and was approved by the Company's shareholders on 6
October 2022. However, as the Company has since identified through its
analysis of historical IFRS 2 accounting treatment (as described above) that
it did not in fact have sufficient distributable reserves at the time (and
therefore that the filing of unaudited interim accounts at Companies House
alone did not appropriately address the issue), and accordingly the dividend
rectification was invalid and/or ineffectual and it is therefore necessary to
redo this rectification.
Accordingly, the Company has entered into the Shareholders' Deed of Release
and the Directors' Deed of Release. The consequence of the entry into these
deeds by the Company is that the Company will be unable to make any claims
against: (a) the recipient Shareholders; and (b) the Directors and former
Directors, in each case in respect of the payment of the Relevant Dividends
otherwise than in accordance with the Act.
The entry by the Company into the Directors' Deed of Release will constitute a
related party transaction (as defined in the Listing Rules). This is because
each of the Relevant Directors (comprising persons who are, or were within the
last 12 months, directors of the Company, being James Gundy, Tristram
Simmonds, Nicholas Stone, Nigel Payne, Elizabeth Gooch, Joanne Lake, Stephen
Kunzer and Lesley Watkins) is deemed to be a related party under LR 11.1.4 R
and they will be released from any liability to repay any amounts of the
Relevant Dividends pursuant to the Directors' Deed of Release (as applicable).
Therefore, Resolution 8 will seek the specific approval of the Company's
shareholders for the entry into the Directors' Deed of Release as related
party transactions in accordance with the requirements of the Listing Rules.
The technical issues identified in this paragraph and Part IV of the Circular
in respect of the Relevant Dividends are of a historical nature and there is
no change to the financial outlook of the Company as a consequence.
The Company has taken appropriate steps and has the necessary procedures in
place to avoid the payment of any further unlawful dividends. In this regard
the Company took steps to strengthen its financial reporting resources during
2022, including the hiring of a new experienced financial controller. A
project, also utilising external consultants, to assess approaches to improve
the distributable reserves position of Braemar Plc, led to the discovery of
the current situation, resulting in the process that is now being undertaken.
In future periods, more detailed reconciliations of opening to closing
distributable reserves will be undertaken in order to identify unrealised
gains and profits relating to the accounting treatment arising from the
application of IFRS2 or any other accounting standard will be maintained to
ensure there is no repeat of the identified error.
Accordingly, we do not believe any further remedial action is required. For
avoidance of doubt, the Company continues to deem its procedures, systems and
controls to be sufficient to enable it to comply with its obligations under
the listing rules, disclosure requirements, transparency rules and corporate
governance rules, and in particular its obligations under LR 10 and LR 11 as
well as its requirement to make timely and accurate disclosure to the market.
4. The Capital Reduction
As a result of the Company's stated desire to continue with its existing
progressive dividend policy, and in order to rectify the declaration and
payment of unlawful dividends, the Company must undertake the Capital
Reduction to provide it with the necessary distributable reserves.
In addition to the approval by Shareholders of the Capital Reduction
Resolutions, the Capital Reduction requires the approval of the Court.
Accordingly, following the General Meeting, an application will be made to the
Court in order to confirm and approve the Capital Reduction.
In providing its approval of the Capital Reduction, the Court may require
measures to be put in place for the protection of creditors (including
contingent creditors) of the Company whose debts remain outstanding on the
relevant date, except in the case of creditors who have consented to the
Capital Reduction. Such creditor protection measures may include seeking the
consent of the Company's creditors to the Capital Reduction or the provision
by the Company to the Court of an undertaking to deposit a sum of money into a
blocked account created for the purpose of discharging the non-consenting
creditors of the Company or an undertaking to treat as undistributable for the
time being certain sums representing the realisation of "hidden value" in the
balance sheet as at the Effective Date.
It is anticipated that the initial directions hearing in relation to the
Capital Reduction will take place on 28 April 2023, with the final Court
Hearing taking place on 9 May 2023 and the Capital Reduction becoming
effective on the following day, following the necessary registration of the
Court Order at Companies House.
There will be no change in the number of Ordinary Shares in issue (or their
nominal value) following the implementation of the Capital Reduction and no
new share certificates will be issued as a result of the Capital Reduction.
The Capital Reduction itself will not involve any distribution or repayment of
capital or share premium by the Company and will not reduce the underlying net
assets of the Company. The distributable reserves arising on the Capital
Reduction will, subject to the discharge of any undertakings required by the
Court as explained above, support the Company's ability to pay dividends
should circumstances in the future make it desirable to do so and
appropriation of profits to ratify relevant accounting entries.
Shareholders should note that if, for any reason, the Court declines to
approve the Capital Reduction, the Capital Reduction will not take place. The
Board reserves the right to abandon or to discontinue (in whole or in part)
the application to the Court in the event that the Board considers that the
terms on which the Capital Reduction would be (or would be likely to be)
confirmed by the Court would not be in the best interests of the Company
and/or its Shareholders as a whole. The Board has undertaken a thorough and
extensive review of the Company's liabilities (including contingent
liabilities) and considers that the Company will be able to satisfy the Court
that there is no real likelihood that any creditor of the Company would be
prejudiced by the Capital Reduction.
5. General Meeting and Resolutions
The Notice of General Meeting is set out in Part VI of the Circular.
The General Meeting will take place at the Company's offices at One Strand,
Trafalgar Square, London WC2N 5HR at 10 a.m. on 18 April 2023. At the General
Meeting, the Resolutions set out in Part VI of the Circular will be proposed
to Shareholders.
The Resolutions will be passed if 75% or more of the votes cast (in person or
by proxy) at the General Meeting are in favour of the Resolutions.
The Resolutions, which are special resolutions, are summarised below:
Resolution 1 - this a resolution to approve, subject to confirmation of the
Court, the cancellation of the Share Premium Account.
Resolution 2 - this is a resolution to approve, subject to confirmation of the
Court, the cancellation of the Capital Redemption Reserve.
Resolutions 3, 4 and 5 - these resolutions provide authority to the directors
to allot and issue the B Ordinary Shares, describe the rights attaching to the
B Ordinary Shares and propose that the B Ordinary Shares created by the B
Ordinary Share Issue be cancelled.
Resolution 6 - this is a resolution that, subject to the passing of
resolutions 1 - 5 (inclusive) and the Capital Reduction becoming effective,
distributable profits of the Company be appropriated to the relevant
accounting periods during which the Relevant Dividends were declared and paid.
Resolution 7 - this is a resolution that is conditional upon the passing of
resolutions 1 to 6 (inclusive) that releases and waives all claims which the
Company may have in respect of the Relevant Dividends against previous and
current shareholders and their successors in title and ratifies and authorises
the entry into the Shareholders' Deed of Release by the Company.
Resolution 8 - this is a resolution that is conditional upon the passing of
resolutions 1 to 6 (inclusive) that releases and waives all claims which the
Company may have in respect of the Relevant Dividends against the directors
(current and former and their personal representatives and successors in
title) at the time of declaration and payment of each respective Relevant
Dividend and ratifies and authorises the entry into the Directors' Deed of
Release by the Company.
6. United Kingdom Taxation
The following comments are intended as a general guide only and relate only to
certain UK tax consequences of the Reduction of Capital. The comments are
based on current legislation and HM Revenue & Customs published practice,
both of which are subject to change, possibly with retrospective effect. These
comments deal only with Shareholders who are resident for taxation purposes in
the UK, who are the absolute beneficial owners of the Ordinary Shares and who
hold them as an investment and not in a trading account ("UK Shareholders").
They do not deal with the position of certain classes of Shareholders, such as
dealers in securities, insurance companies, collective investment schemes or
persons regarded as having obtained their Ordinary Shares by reason of
employment.
Any Shareholder who has any doubt about their own taxation position, or who is
subject to taxation in any jurisdiction other than the UK
should consult their own professional taxation advisor immediately.
The Share Premium Reduction
The Share Premium Reduction should not have any consequences for UK
Shareholders for the purposes of UK taxation of chargeable gains
("CGT"), UK income tax or UK corporation tax.
The Capital Redemption Reserve Reduction
The Capital Redemption Reserve Reduction should not have any consequences for
UK Shareholders for the purposes of UK CGT, UK income tax or UK corporation
tax.
The Merger Reserve Reduction
On the basis that the B Ordinary Shares will be treated as being paid up for
"new consideration" received by the Company, the B Ordinary Share Issue should
not give rise to any liability for UK income tax (or corporation tax on
income) in a UK Shareholder's hands. For CGT purposes, the B Ordinary Share
Issue should be treated as a "reorganisation", so that a UK Shareholder should
not be treated as making a disposal of their Ordinary Shares for CGT purposes
upon receipt of the B Ordinary Shares. Instead, the B Ordinary Shares should
be treated as the same asset, acquired at the same time, as their Ordinary
Shares. On a disposal of B Ordinary Shares or Ordinary Shares by a UK
Shareholder for CGT purposes, a UK Shareholder's base cost in their Ordinary
Shares would be apportioned between their B Ordinary Shares and their Ordinary
Shares based on their respective market values at the date that the B Ordinary
Shares or Ordinary Shares are disposed of.
It is likely that the market value of the B Ordinary Shares will be £nil for
the duration of their existence. This is because the B Ordinary Shares will
have no voting rights or rights to income; will have no market on which they
can be traded; and it is anticipated that they will be cancelled for no
payment on the day immediately following the date of their issue.
Consequently, the issue of the B Ordinary Shares should not impact the base
cost of the Ordinary Shares. The reduction of capital effected by the
cancellation of the B Ordinary Shares should be treated for CGT purposes as a
further "reorganisation" so that a UK Shareholder should not be treated as
making a disposal of their Ordinary Shares or B Ordinary Shares for CGT
purposes. Instead, the Ordinary Shares held by the UK Shareholder after the
cancellation of the B Ordinary Shares should be treated as the same asset,
acquired at the same time, as their holding of Ordinary Shares and B Ordinary
Shares prior to the cancellation which, as described above, should in turn be
treated as the same asset, acquired at the same time, as their original
holding of Ordinary Shares.
Accordingly, following the B Share Issue and the cancellation of the B Shares,
UK Shareholders should be left in the same position for CGT purposes as they
were in originally before the B Ordinary Share Issue and cancellation of B
Ordinary Shares. Even if (contrary to the preceding paragraph) the
cancellation of the B Ordinary Shares were treated as a disposal for CGT
purposes, provided that the market value of the B Ordinary Shares is £nil for
the duration of their existence which, for the reasons described above, seems
likely to be the case, there should be no adverse CGT consequences for UK
Shareholders. There should be no chargeable gain (or allowable loss) on the
cancellation of the B Ordinary Shares, and the UK Shareholder's base cost in
their Ordinary Shares should be the same as it was originally before the B
Ordinary Share Issue and cancellation of B Ordinary Shares.
UK stamp duty and stamp duty reserve tax
No stamp duty or stamp duty reserve tax will be payable on the Reduction of
Capital, including the B Ordinary Shares Issue and the cancellation of the B
Ordinary Shares.
7. Action to be taken in respect of the General Meeting
Shareholders can appoint a proxy electronically using the link
www.sharevote.co.uk (http://www.sharevote.co.uk) - Details of how to
appoint a proxy in this way are set out on pages 21 to 22 of the Circular.
Alternatively, you may request a hard copy Form of Proxy directly from our
Registrar, Equiniti. Details of how to request, and complete, a hard copy Form
of Proxy are set out on pages 21 to 22 of the Circular. To be valid, a Form of
Proxy must be returned as soon as possible and so as to be received by the
Registrars by not later than 10 a.m. on 14 April 2023.
The completion and return of the Form of Proxy will not prevent you from
attending and voting at the General Meeting in person.
In accordance with current best practice and to ensure voting accurately
reflects the views of Shareholders, it will be proposed at the General Meeting
that voting on the Resolutions will be conducted by poll vote rather than by a
show of hands and the relevant procedures will be explained at the General
Meeting.
If the Dividend Rectification Resolutions are not passed, the Company may
continue to have claims against the Relevant Directors and
Recipient Shareholders.
8. Questions
If you wish to ask a question relating to the business of the General
Meeting in advance, please submit your questions to
company.secretary@braemar.co (mailto:secretary@braemar.com) m, please include
in your email: the shareholder's full name, number of shares held and
telephone contact details.
9. Recommendation
The Board consider all the Resolutions to be in the best interests of the
Company and its Shareholders as a whole and the Board unanimously recommend
that you vote in favour of the Capital Reduction Resolutions to be proposed at
the General Meeting, as they intend to do in respect of their aggregate
shareholdings, of 1,153,370 Ordinary Shares representing approximately 3.5% of
the Ordinary Shares in issue at the date of the Circular.
Given the interests of the Board in the Dividend Rectification Resolutions,
and as required by the Listing Rules, the Board are unable to take part in the
consideration of the matters dealt with by the Dividend Rectification
Resolutions and therefore cannot recommend that shareholders vote in favour of
the Dividend Rectification Resolutions but do recommend that shareholders vote
on them. However, the Board believes, having been advised by Investec in its
capacity as the Company's sponsor, that (i) the waiver of claims against the
Relevant Directors pursuant to the Related Party Resolutions and (ii) the
entry into the Directors' Deed of Release are fair and reasonable so far as
the Shareholders are concerned.
As none of the Board are deemed to be independent for the purposes of the
Dividend Rectification Resolutions, the Relevant Directors are precluded, and
have undertaken to abstain, from voting on the Dividend Rectification
Resolutions. The Relevant Directors have also undertaken to take all
reasonable steps to ensure that their associates abstain from voting.
Yours faithfully
Nigel Payne
Non-executive Chairman
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