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| Date | 29 Mar 2023 |
| Time | 11:40:16 |
| Category | AGMs and other meetings |
| ID | 6377U |
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) 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. 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:
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Braemar Plc |
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Nick Stone, Group Chief Financial Officer |
Tel +44 (0) 20 3142 4100 |
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Rebecca-Joy Wekwete, Company Secretary
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Investec Bank plc |
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Gary Clarence / Harry Hargreaves / Alice King |
Tel +44 (0) 20 7597 5970
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Cenkos Securities plc
Ben Jeynes / Max Gould (Corporate Finance)
Alex Pollen / Leif Powis (Sales)
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Tel +44 (0) 20 7397 8900 |
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Buchanan |
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Charles Ryland / Jamie Hooper / Jack Devoy |
Tel +44 (0) 20 7466 5000 |
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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 and follow Braemar on LinkedIn.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
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Publication of the Circular |
29 March 2023 |
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Latest time and date for receipt of Forms of Proxy for the General Meeting |
10 a.m. on 14 April 2023 |
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General Meeting |
10 a.m. on 18 April 2023 |
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Expected date of initial directions hearing of the Court |
28 April 2023 |
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Expected date of Court Hearing to confirm the Capital Reduction |
9 May 2023 |
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Expected effective date for the Capital Reduction |
10 May 2023 |
DEFINITIONS
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"Act" |
Companies Act 2006;
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"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;
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"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;
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"Board" or "Directors" |
the directors of the Company or any duly appointed committee thereof;
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"Capital Redemption Reserve" |
the capital redemption reserve of the Company;
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"Capital Redemption Reserve Reduction" |
the cancellation of the full amount outstanding to the credit of the Capital Redemption Reserve;
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"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;
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"Capital Reduction Record Time" |
6.00 p.m. on the date immediately preceding the date of the Court Hearing;
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"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;
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"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;
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"Court" |
the High Court of Justice in England and Wales;
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"Court Hearing" |
the hearing by the Court to confirm the Capital Reduction;
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"Court Order" |
the order of the Court confirming the Capital Reduction;
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"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);
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"CREST Regulations"
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the Uncertificated Securities Regulations 2001 (as amended); |
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"Directors' Deed of Release" |
as defined in paragraph 4.2.3 of Part IV of the Circular;
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"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;
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"Effective Date" |
the date of the Court Order;
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"FCA Handbook" |
the FCA's Handbook of Rules and Guidance;
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"Financial Conduct Authority" or "FCA"
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the Financial Conduct Authority of the United Kingdom;
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"Form of Proxy" |
the form of proxy accompanying the Circular relating to the General Meeting;
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"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)
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Directors: Nigel Payne (Non-executive Chairman James Gundy (Chief Executive Officer) Nicholas Stone (Chief Financial Officer) Tristram Simmonds (Chief Operating Officer Elizabeth Gooch (Non-executive Director) Joanne Lake (Non-executive Director) |
Registered office: One Strand Trafalgar Square London WC2N 5HR |
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.
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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 |
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FY 2016 - Interim dividend - 18 December 2015 |
9.0 pence |
£2,659,000 |
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FY 2017 - Final dividend - 29 July 2016 |
17.0 pence |
£5,020,000 |
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FY 2017 - Interim dividend - 16 December 2016 |
9.0 pence |
£2,838,000 |
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FY 2019 - Final dividend - 27 July 2018 |
10.0 pence |
£3,076,000 |
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FY 2019 - Interim dividend - 14 December 2018 |
5.0 pence |
£1,540,000 |
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FY 2020 - Final dividend - 26 July 2019 |
10.0 pence |
£3,064,000 |
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FY 2020 - Interim dividend - 13 December 2019 |
5.0 pence |
£1,566,000 |
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FY 2022 - Final dividend - 1 September 2021 |
5.0 pence |
£1,482,000 |
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FY 2022 - Interim dividend - 16 December 2021 |
2.0 pence |
£627,000 |
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FY 2023 - Final dividend - 14 October 2022 |
7.0 pence |
£2,017,000 |
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FY 2023 - Interim dividend - 4 January 2023 |
4.0 pence |
£1,158,000 |
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Total aggregate value |
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£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 - 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.com, 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