ATHELNEY TRUST PLC (the Company)
Athelney Board letter to Shareholders
Shareholders will be aware that prior to despatch of the AGM notice on 5 March 2019, the Company received a requisition from shareholder and former Chairman Dr Pohl requiring consideration at the AGM of resolutions that would return him and Mr Moore to the Board and remove David Lawman. Shareholders will also recall that Dr Pohl and Mr Moore were removed as directors at a General Meeting held on 22 January 2019. It is clear that Dr Pohl's intention is to take control of the Board and return the management to the position just after Robin Boyle's resignation. Your board considers this would not be in the best interest of all shareholders and would return the Company to a failed formula. If you are a shareholder please vote for your current board, Frank Ashton, Helen Sachdev and David Lawman and against the resolutions proposed by Dr Pohl.
Specifically your Board recommends that at the AGM to be held on 3 April 2019, you vote:
FOR - Resolutions 1 to 9
AGAINST - Resolutions 10, 11 and 12
The Board would like to draw your attention to the following information and urges you to consider it carefully when casting your votes by proxy or in person. If you have already sent in your proxy and wish to change your vote you must submit another proxy form as soon as possible in advance of the AGM. Proxy votes must be received by the company secretary or registrars no later than 2pm Monday 1 April, 2019. Further forms are available from the company secretary John Girdlestone or Debbie Warburton (who can be contacted on +44 01326 378288 or by email at [email protected]).
Following trading activity since the publication of our Annual Report on 5 March the Board would like to inform shareholders of the following points:
· A large number of Athelney Trust plc shares have been traded since 5 March 2019, the end of our closed period.
· More than 100,000 of these shares were acquired by Dr Pohl, majority shareholder of Global Masters Fund, based in Australia and were purchased from shareholders outside the top five.
· As a result, Athelney Trust plc now fails Section 1158 of the Corporation Tax Act (CTA) 2010 Chapter 3 Regulation 18, as it is deemed under the control of five or fewer participators. The trading activity of Dr Pohl (who as former Chairman and MD of the company may have been aware of these regulations), created this threat to the Company's status as an approved investment trust, exempt from Corporation Tax. Since the law changed on 1 January 2012 to be based on continuous self-assessment such a serious breach would normally result in immediate loss of approved investment trust status (and loss of exemption from Corporation Tax) for the whole of 2019.
· Since January 2019, the Board was aware that five shareholders held in excess of 49% of the shares risking an accidental Chapter 3 breach. Keen to protect the interest of the majority of shareholders, the Board has explored options to reduce risk. As soon as we were aware the "five shareholders, max 50%" breach had occurred we took tax legal advice on our chosen option and can now confirm that our approved investment trust and tax exempt status is intact.
· This relies on the s446 Companies Act 2010 exemption: Athelney Trust plc is a quoted company with more than 35% of voting shares held by the public, being traded on the London Stock Exchange over the past 12 months. We also understand from our advice that if a major shareholder becomes a director, it increases our risk of a further breach under s446 as their shares are no longer deemed public.
· We will continue to monitor this situation closely and ask that by voting for the current board, you help to improve the stability of the Company
The Board, in the interests of all shareholders, is determined to remain independent of the two major shareholders and is keen to broker a reasonable outcome that will meet most shareholder needs.
Your board has the following specific comments on Dr Pohl's resolutions and points raised by him in support of those resolutions:
· The Board believes the actions of major shareholder blocks in the past six months have led directly to substantial additional costs and this must stop if the Company is to have a viable future.
· Of the £90,000 extra costs incurred to date during this dispute between the two major shareholders, just under £70,000 was already spent and committed by Directors at the time, Mr Moore and Dr Pohl, during the three months up to the GM on 22 Jan 2019.
· Dr Pohl's trading actions have created yet more uncertainty and incurred further costs in time and resources for the Company. Given his position as a Director in the past we believe he should be well aware of these consequences.
· Dr Pohl's AGM resolutions return the Company to last year's management team, Mr Moore and Dr Pohl who failed to foresee and prevent the circumstances that led to heavy cost and uncertainty for all other shareholders.
· Contrary to Dr Pohl's comments the Board continues to work effectively alongside the Company Secretaries whose experience and knowledge is much appreciated in assisting us with the current challenges. We could not have produced the Annual Report or this tax solution without mutual support. We will review all service providers regularly as most efficient companies would do, choosing partners suited to our current size. At the moment conditions make this combined team more resolute and determined to act as one in the interest of the many.
· Dr Pohl's AGM resolutions do not solve the problems - they encourage another swing of the pendulum, exacerbated by the absence of independent voices on the Board and a return to yesterday's team.
We reiterate our support for the UK-based fund management group, Gresham House, who with the continued support of Robin Boyle, we recommend will act as future Fund Managers for the Company. Given their successful track record, we believe this represents the best option for our shareholders as a whole. As an independent board of directors, we are fully committed to acting, as is proper, in the interests of all shareholders. Contrary to suggestions in Dr Pohl's letter to shareholders, neither Frank Ashton nor Helen Sachdev have had any relationship or conversation with Gresham House prior to their appointment to the Board. However, with due diligence and given the need to return the Company to stability as soon as possible, the Board believes this is a very good partnership long term for all shareholders and might still satisfy both Dr Pohl's and Robin Boyle's needs.
Therefore we ask that you vote to keep the current independent Board members Frank Ashton and Helen Sachdev in place to represent all shareholder voices. We assert that because of David Lawman's long relationship with the Trust and as a valued member of the Board, he should be supported and remain in his position as a Non-Executive Director. In particular he brings the following:
· Extensive experience in the small quoted company arena both in understanding shareholder needs and the regulatory process.
· He is a long term shareholder in Athelney Trust through his SIPP.
· He is known to many shareholders whom he has met on numerous occasions.
· Having stepped down as Chairman, he has paved the way for the Board to now be genuinely independent.
Frank Ashton, Chairman, comments: "As your Chairman, I encourage shareholders to retain the existing Board structure and personnel. I believe that with our plan we are very well positioned to support the growth of the fund once stability is achieved. As always my door remains firmly open and I welcome further meetings and conversations with you as shareholders; your feedback and thoughts are very much valued."