North Atlantic Smaller Companies Investment Trust PLC (the "Company")

In June this year,  immediately following the Company's Annual General Meeting, the Company announced that over 20% of shareholders voting on resolution 16 concerning the waiver of Rule 9 had voted against the resolution.   Resolution 16 was put to the Meeting as a resolution of the independent shareholders of the Company.   As a result, 9,878,260 of the ordinary shares in issue were eligible to vote on this resolution, these shares not being held by the Concert Party (as defined in the Notice). The waiver of Rule 9 granted by Resolution 16 permitted the Concert Party's interest in the Company's shares to increase from 29.44% to a maximum of 32.71% (in each case representing 4,121,740 ordinary shares) as a result of the share buyback authorised by Resolution 14 without requiring the Concert Party to make a mandatory offer for the other shareholders' shares.

Under the FRC's UK Corporate Governance Code, companies receiving such a vote against a resolution should publish, no later than six months after the shareholder meeting, an update on the views received from shareholders and actions taken by the Company. 

The majority of the shares in question are held in nominee accounts, many of which rely on shareholder advisory consultants to determine their voting.   This means that underlying investors are recommended to vote against share buybacks in principle as the shareholder advisory consultants are concerned about what they see as the Concert Party's potential creeping control of the Company.     Whilst this is a valid concern for a trading company, we do not believe this is so for an investment trust.

We have been working to engage with the underlying shareholders and will continue to do so.  In at least one case we found that the underlying shareholder, once they had been made aware that the nominee shareholder  had voted their shares against the resolution, had tried to change this to vote in favour but found it was too late to do so.  In the meantime, the directors believe that it is overwhelmingly in the best interest of all shareholders that the buyback programme continues.  Based on the conversations we have had so far we anticipate that a considerable number of previously dissenting shareholders will support similar resolutions in future.

Contact:

Jane Muir

For Derringtons Limited

Company Secretary

020 8819 6486