REG - Schiehallion Fund Schiehallion - MNTN - Publication of Circular and Notice of EGM

Schiehallion FundAnnouncement

11/11/2025 11:00

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RNS Number : 0809H  Schiehallion Fund Limited (The)  11 November 2025

 

11 November 2025

The Schiehallion Fund Limited

Legal Entity Identifier: 213800NQOLJA1JCWXQ56

Publication of Circular and Notice of Extraordinary General Meeting

The Schiehallion Fund Limited (the "Company") has today published a circular
(the "Circular") and notice of an extraordinary general meeting (the "EGM") in
connection with the proposed amendments to the Company's articles of
incorporation ("Existing Articles"), the proposed admission of the Company's
ordinary shares of no par value in the capital of the Company ("Ordinary
Shares") to the closed-ended investment funds category of the Financial
Conduct Authority (the "CEIF Category") and to trading on the Main Market of
the London Stock Exchange (together, "Admission") and the proposed approval of
waiver of Rule 9 of the Takeover Code granted by the Takeover Panel (together
the "Proposals").

 

Details of the Proposals

 

Amendments to the Existing Articles

 

At the time of the Company's initial public offering, a substantial number of
Ordinary Shares were expected to be held by investors who are residents of the
United States and consequently, to help reduce the risk of the Company losing
its status as a "foreign private issuer" ("FPI"), Articles 82(2) to 82(4) of
the Existing Articles impose limitations on the voting rights attaching to
Ordinary Shares held by US Residents. Those limitations are designed to
prevent US Residents from exercising 50 per cent. or more of the votes on any
resolution to appoint or remove a Director (a "Director Resolution") using a
"voting cramdown" mechanism. However, in order to be eligible for Admission to
the CEIF Category, all Ordinary Shares must carry an equal number of votes on
any shareholder vote and, as a result of the voting cramdown mechanism, the
Ordinary Shares do not currently satisfy this eligibility requirement and,
consequently, are not eligible for Admission.

 

In order to make the Ordinary Shares eligible for Admission, while also
seeking to maintain the Company's status as an FPI, the Board is proposing to
adopt new articles of association (the "New Articles") in place of the
Existing Articles which will amend the voting structure under the Existing
Articles by introducing a new special voting share of the Company (the "Class
B Share") and removing the voting cramdown mechanism. Full details of the
Class B Shares and certain other proposed amendments to the Existing Articles
are set out in the Circular.

 

Investment policy

 

In order to be eligible for Admission, the Company is required to have a
published investment policy that complies with the UK Listing Rules and has
been approved by the FCA.

 

The investment policy proposed to be adopted by the Company will codify the
Company's existing investment objective and strategy, to which it is
substantially the same (while incorporating certain additional clarifications
required to meet the eligibility requirements for Admission).

 

The full text of the investment policy proposed to be adopted by the Company
is set out in the appendix.

 

Rule 9 Waiver

 

The City Code on Takeovers and Mergers (the "Code") applies to the Company.
Under Rule 9 of the Code ("Rule 9"), if any person acquires an interest in
Ordinary Shares which, when taken together with Ordinary Shares in which they
and persons acting in concert with them are already interested, carry 30 per
cent. or more of the voting rights in the Company, that person will normally
be required to make a general offer in cash to all Shareholders at the highest
price paid by them or any person acting in concert with them for an interest
in such Ordinary Shares within the preceding 12 months. Rule 9 also provides
that if any person, together with persons acting in concert with them, is
interested in Ordinary Shares which, in the aggregate, carry not less than 30
per cent. of the voting rights in the Company but does not hold Ordinary
Shares carrying more than 50 per cent. of such voting rights, and such person,
or any person acting in concert with them, acquires an interest in any other
Ordinary Shares which increases the percentage of Ordinary Shares in the
Company in which they are interested, that person will normally be required to
make a general offer in cash to all Shareholders at the highest price paid by
them or any person acting in concert with them for an interest in such
Ordinary Shares within the preceding 12 months.

 

Under Rule 37 of the Code ("Rule 37"), if the Company purchases Ordinary
Shares, a resulting increase in the percentage of voting rights carried by the
Ordinary Share holdings of any person or group of persons acting in concert
will be treated as an acquisition for the purposes of Rule 9. A Shareholder
who is neither a Director nor acting in concert with a Director will not
normally incur an obligation to make an offer under Rule 9 in these
circumstances.

 

However, where a Shareholder has acquired Ordinary Shares at a time when they
had reason to believe that a purchase by the Company of the Ordinary Shares
would take place, then an obligation to make a mandatory bid under Rule 9 may
arise. Market purchases of Ordinary Shares by the Company, if any, could have
implications under Rule 9 for Shareholders with significant shareholdings.

 

As explained above, the Company proposes, subject to Admission, to introduce
the Class B Shares. Under the New Articles, if the number of Ordinary Shares
held by US Residents crosses 35 per cent., the Class B Share would be
attributed a specified number of voting rights in relation only to Director
Resolutions. The precise number of voting rights to be so attributed shall be
calculated in accordance with a formula set out in the New Articles and shall
be such number of voting rights as would reduce the proportion of the total
voting rights on Director Resolutions which may be exercised by US Residents
to the threshold set out in the New Articles.

 

Therefore, in the event that the proportion of the Ordinary Shares held by US
Residents is equal to or exceeds 50 per cent. (which, based on the Company's
historical experience with its US shareholding percentage, is very unlikely),
the proportion of voting rights attributed to the Class B Share in relation to
Director Resolutions would equal or exceed 30 per cent.

 

The Panel has agreed that it will waive the obligation on the trustee (acting
on behalf of the non-charitable purpose trust established under Guernsey law
for the purpose of holding the Class B Share) (the "Trustee") to make a
general offer that could otherwise arise as a result of the issue to the
Trustee of the Class B Share (the "Rule 9 Waiver"), subject to the approval of
the Shareholders (other than the Directors) on a poll at the EGM.

 

Change of tax residency to UK and introduction of sterling quote

 

Although not part of the Proposals, as also announced on 23 May 2025, the
Company intends to change its tax residence from Guernsey to the UK and to
become a UK investment trust company for UK tax purposes. The Company will
apply for approval as a UK investment trust company with effect from 1
February 2026.

 

In conjunction with the Proposals the Company shall introduce an additional
market quote for the Ordinary Shares which will be denominated in Sterling.
There will be no changes to the legal form or nature of the Ordinary Shares
nor to the reporting currency of the Company's financial statements (which
will remain in US Dollars).

 

Benefits of the Proposals

 

The Proposals are expected to benefit the Company by broadening the appeal of
the Ordinary Shares to a wider range of investors. Admission is expected to
improve the Company's ability to market the Ordinary Shares to retail
investors (where appropriate) and improve the liquidity in the Ordinary Shares
as a result of having access to a potentially larger pool of capital.

 

Extraordinary General Meeting

 

The implementation of the Proposals is conditional on the Shareholders passing
the Resolutions at the EGM. A Notice convening the EGM, to be held at the
offices of Herbert Smith Freehills Kramer LLP, Exchange House, Primrose
Street, London EC2A 2EG at 10.00 a.m. (London time) on 8 December 2025, is set
out in the Circular.

 

 

Expected Timetable

 Circular sent to Shareholders                                               11 November 2025
 Record date for participating in and voting at the EGM                      4 December 2025
 Latest time and date for receipt of Forms of Proxy for the EGM              10.00 a.m. on 4 December 2025
 EGM                                                                         10.00 a.m. on 8 December 2025
 Announcement of the results of the EGM                                      8 December 2025
 Admission of the Ordinary Shares to listing on the closed-ended investment  at or immediately after 8:00 a.m. on 10 December 2025
 funds category of the Official List of the FCA and to trading on the Main
 Market of the London Stock Exchange
 All references to times in this document refer, unless otherwise stated, to
 the local time in London. Each of the times and dates in the expected
 timetable may be extended or brought forward without further notice. If any of
 the above times and/or dates change, the revised time(s) and/or date(s) will
 be notified to Shareholders by an announcement through a RIS provider.

 

Prior to Admission, the Company has complied and continues to comply on a
voluntary basis with certain provisions of the UK Listing Rules ("UKLRs").
Following Admission the Company will be required to comply in full with the
applicable provisions of the UKLRs, including in relation to transactions with
related parties, financial reporting, contents of shareholder circulars and
other continuing obligations.

Capitalised terms used but not defined in this announcement will have the same
meaning as set out in the Circular.

 

For further information, please contact:

 

 Baillie Gifford & Co Limited      +44 (0) 131 275 2000

 Alex Blake

 Winterflood Securities Limited    +44 (0) 20 3100 0000

 Neil Morgan

 

Appendix

Investment objective

 

The Company's investment objective is to generate capital growth for investors
through making long-term minority investments in later stage private
businesses that the Company considers to have transformational growth
potential and to have the potential to become publicly traded.

 

Investment Policy

 

In making its initial investment in a business, the Company will seek to
invest in private businesses which it considers have the potential to become
admitted to trading on a public stock exchange. Those investments will
typically take the form of equity or equity-related instruments (which may
include, without limitation, preference shares, convertible debt instruments,
equity-related and equity-linked notes and warrants) issued by
investee companies.

 

The Company will only invest in private businesses that are considered to have
some or all of the following features:

·      the potential to grow revenue and earnings multiple fold over the
long term;

·      scalable business models that should enable those businesses to
grow into their opportunity;

·      robust competitive advantages;

·      exceptional management teams;

·      an entry price which significantly undervalues the long-term
opportunity for the business; and

·      an ambition and ability to become stand-alone public companies.

 

Investee companies may be from any sector and any geography. While there are
no specific limits placed on exposure to any one sector, the Company will at
all times seek to invest and manage the portfolio in a manner consistent with
spreading investment risk.

 

With prior approval of the Board, the Company may permit the use of
derivatives for the purpose of currency hedging, though it currently does not
expect to do so. Save for this and for investments made using equity-related
instruments as described above, the Company may not engage in derivative
transactions for any purpose.

 

The Board does not intend to use structural gearing with a view to enhancing
equity returns on investments. The Company may employ gearing on a short-term
basis for the purpose of bridging investments and general working capital
purposes. The Company may in aggregate borrow amounts equalling up to 10% of
net asset value, calculated at the time of drawdown.

 

The Company is subject to the following investment restrictions:

·      an investee company must be a private investee company at the
time of the Company's initial investment in that investee company. The Company
may, however, make subsequent investments in the investee company, even if the
investee company has been admitted to trading on a public stock exchange in
the period since the Company's initial investment;

·      a private investee company must have a value of at least US$500
million at the time of the Company's initial investment in the private
investee company. This restriction will not apply to the Company's
subsequent investments in the investee company, if any;

·      the Company may not make an initial investment in a private
investee company which exceeds in value 10% (calculated at the time of
investment) of the Company's most recently published net asset value (save to
the extent that breach of this 10% limit is due to a change in the value of
the Company's invested assets or currency fluctuations from the time of the
Company's firm commitment to make the investment to the time of investment);

·      the Company may not make any investment or follow-on investment
in an  investee company that would cause the value of the Company's holding
in that investee company to exceed 19.9% (calculated at the time of investment
or follow-on investment) of the Company's most recently published net asset
value;

·      the Company may not make any investment in an investee company
that would cause the Company's holding in that investee company to exceed 20%
(calculated at the time of investment) of the total issued share capital of
the investee company; and

·      the Company will not invest in other listed closed-ended
investment funds.

 

A reference to the value of assets of the Company (including investee
companies) in the restrictions above shall refer to the value as determined in
accordance with the Company's valuation policy from time to time.

 

The Company does not currently expect the portfolio to be majority invested in
public investee companies at any point in time, but it has not set a limit on
the percentage of the portfolio which can be invested in public investee
companies at a given time.

 

It is intended that the Company will be substantially invested. However, the
Company may at any time hold overnight or term deposits or, pending investment
in investee companies, invest in a range of cash-equivalent instruments such
as US Treasury Bills or money market funds. There is no restriction on the
amount of cash or cash-equivalent instruments that the Company may hold and,
given the longer time period involved in identifying, analysing and agreeing
investment terms in private businesses, the Company may from time to time hold
significant amounts in cash or cash equivalents pending reinvestment.

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