OCTOPUS ECLIPSE VCT PLC

Transcription

1 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in any doubt about the action to be taken, you should immediately consult your bank manager, stockbroker, solicitor, accountant or other independent financial adviser authorised pursuant to the Financial Services and Markets Act 2000 (FSMA). If you have sold or otherwise transferred all of your Shares in Octopus Eclipse VCT plc (the Company), please send this document and accompanying documents, as soon as possible, to the purchaser or transferee or to the stockbroker, independent financial adviser or other person through whom the sale or transfer was effected for delivery to the purchaser or transferee. This document, which comprises a prospectus relating to the Company dated 28 September 2012, has been prepared in accordance with the prospectus rules made under Part VI of FSMA. The Company, the Directors and the Proposed Directors, whose names appear on pages 36 and 37 of this document, accept responsibility for the information contained herein. To the best of the knowledge and belief of the Company, the Directors and the Proposed Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information. Matrix Corporate Capital LLP, which is authorised and regulated in the United Kingdom by the FSA, is acting as sponsor for the Company and no-one else and will not be responsible to any other person for providing the protections afforded to customers of Matrix Corporate Capital LLP (subject to the responsibilities and liabilities imposed by FSMA and the regulatory regime established thereunder) in providing advice or in relation to any matters referred to in this document. SGH Martineau LLP, which is regulated in the United Kingdom by the Solicitors Regulation Authority, is acting as legal adviser to the Company, Octopus Eclipse VCT 2 plc (Eclipse 2), Octopus Eclipse VCT 3 plc (Eclipse 3) and Octopus Eclipse VCT 4 plc (Eclipse 4) (Eclipse 2, Eclipse 3 and Eclipse 4, together the Target VCTs) and no-one else and will not be responsible to any other person for providing advice in connection with any matters referred to in this document. A1: 1.1 A1: 2.1 A3: 1.1 A3: 1.2 A3: 10.1 OCTOPUS ECLIPSE VCT PLC (Registered in England and Wales with registered number ) Prospectus A1: A1: A1: Relating to the issue of up to 170 million New Shares in connection with:. the acquisition of the assets and liabilities of Eclipse 2, Eclipse 3 and Eclipse 4; and. an enhanced buyback facility A3: 6.1 A3: 6.2 The existing Shares issued by the Company are listed on the premium segment of the Official List of the UKLA and traded on the London Stock Exchange s main market for listed securities. Application has also been made to the UKLA for the New Shares to be listed on the premium segment of the Official List and will also be made to the London Stock Exchange for such New Shares to be admitted to trading on its main market for listed securities. It is expected that such admission will become effective and that trading in the New Shares will commence within three business days of the allotment of such New Shares. The New Shares will rank pari passu with the existing issued Shares from the date of issue. The attention of shareholders of the Company and the Target VCTs and new investors who are resident in, or citizens of, territories outside the United Kingdom is drawn to the information under the heading Overseas Shareholders in paragraph 5 of Part XI of this document. The distribution of this document in jurisdictions other than the UK may be restricted by law and therefore persons into whose possession this document comes should inform themselves about and observe any of these restrictions. Any failure to comply with any of those restrictions may constitute a violation of the securities laws of any such jurisdiction. In particular, the New Shares to be issued pursuant to the Schemes and the Enhanced Buyback Facility have not and will not be registered under the United States Securities Act 1933 or the United States Investment Company Act Persons receiving this document should carefully consider the risk factors on pages 11 and 12 of this document. 1

2 CONTENTS SUMMARY 3 RISK FACTORS 11 EXPECTED TIMETABLES 13 DEFINITIONS 17 PART I MERGER OF THE COMPANY AND THE TARGET VCTS 22 PART II THE SCHEMES 25 PART III THE ENHANCED BUYBACK FACILITY 31 PART IV INFORMATION ON THE COMPANY 36 PART V THE INVESTMENT MANAGER 43 PART VI FINANCIAL INFORMATION ON THE COMPANY AND THE TARGET VCTS 45 PART VII PRO FORMA FINANCIAL INFORMATION 49 PART VIII INVESTMENT PORTFOLIOS AND PRINCIPAL INVESTMENTS OF THE COMPANY AND THE TARGET VCTS 52 PART IX TAX POSITION OF SHAREHOLDERS 59 PART X TAX POSITION OF THE COMPANY 63 PART XI ADDITIONAL INFORMATION 65 PART XII ENHANCED BUYBACK FACILITY APPLICATION PROCEDURES AND TERMS AND CONDITIONS 88 ENHANCED BUYBACK FACILITY APPLICATION FORM CORPORATE INFORMATION 99 2

3 SUMMARY Summaries are made up of disclosure requirements known as Elements. These Elements are numbered in Sections A to E. This summary contains all of the Elements required to be included in a summary for the type of shares being issued pursuant to this Prospectus and the Company being a closed-ended investment fund. Some of the Elements are not required to be addressed and, as a result, there may be gaps in the numbering sequence of the Elements. Even though an Element may be required to be inserted in this summary, it is possible that no relevant information can be given regarding that Element. In these instances, a short description of the Element is included, together with an appropriate Not applicable statement. A B B1 B2 Legal and commercial name Domicile / Legal form / Legislation / Country of incorporation Introduction and Warnings This summary should be read as an introduction to this Prospectus. Any decision to invest in the securities of the Company should be based on consideration of the Prospectus as a whole by the investor. Where a claim relating to the information contained in this Prospectus is brought before a court, the plaintiff investor might, under the national legislation of Member States, have to bear the costs of translating this Prospectus before the legal proceedings are initiated. Civil liability attaches only to those persons who have tabled this summary including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus or it does not provide, when read together with other parts of the Prospectus, key information in order to aid investors when considering whether to invest in such securities. Issuer Octopus Eclipse VCT plc ( the Company ). The Company is a public limited liability company which is registered in England and Wales with registered number The principal legislation under which the Company operates is CA 2006 (and regulations made thereunder). B5 Group description Not applicable. The Company is not part of a group. B6 Material Shareholders / Differing voting rights / Control The Company does not have any material shareholders with different voting rights. All Shareholders have the same voting rights in respect of the existing share capital of the Company. As at 27 September 2012 (this being the latest practicable date prior to publication of this document), the Company is not aware of any person who, directly or indirectly, has or will have an interest in the capital of the Company or voting rights which is notifiable under UK law (under which, pursuant to CA 2006 and the Listing Rules and Disclosure and Transparency Rules of the FSA, a holding of 3% or more will be notified to the Company). A22: A1 A22 B33: B1 A22 B33: B2 A22 B33: B6 3

4 B7 Selected financial information and statement of any significant changes Certain selected historical information of the Company is set out below: Total profit/ (loss) on ordinary actitivities before taxation ( 000s) Total net asset value return per Share (p) Dividends paid per Share (p) Net assets ( 000s) NAV per Share (p) Unaudited six months to 31 January 2012 Audited year ended 31 July 2011 Audited year ended 31 July 2010 Audited 14 month period ended 31 July 2009 (1,804) (1,149) 1,801 (3,798) (5.7) (3.5) 5.7 (11.6) ,968 21,351 25,115 25, B8 Key pro forma financial information The Company s net asset value per Share has fallen from 80.7p as at 31 July 2009 to 56.8p as at 31 January 2012 and dividends of 26.0p in aggregate were paid per Share between 1 December 2008 and 31 January As at 31 July 2012, the Company s net asset value per Share (unaudited) was 49.4p. The Enlarged Company is expected to have net assets of approximately 43 million (assuming the proposed merger is completed based on the NAVs of the Companies as at 31 January 2012 (in respect of the Company, Eclipse 3 and Eclipse 4) and 31 July 2012 (in respect of Eclipse 2), adjusted for the payment of the Special Dividends, and after deducting the expenses of the Schemes and the Enhanced Buyback Facility. This pro forma financial information has been prepared for illustrative purposes only and, because of its nature, addresses a hypothetical situation and, therefore, does not represent the Company s actual financial position or results. B9 Profit forecast Not applicable. There are no profit forecasts in the Prospectus. B10 B11 B34 Qualifications in the audit report Insufficient working capital Investment objective and policy, including investment restrictions Not applicable. There were no qualifications in the audit reports for the three years ended 31 July 2009, 2010 and Not applicable. The Company is of the opinion that its working capital is sufficient for its present requirements, that is for at least the twelve month period from the date of this document The investment objective of the Company is to invest in a broad range of AIM-quoted and UK smaller companies which meet the relevant criteria for VCTs in order to generate income and capital growth over the long-term. A22: B33 B9, B10, B11 A22: B34 4

5 The Company s investment policy has been designed to enable the Company to comply with the VCT qualifying conditions. It is intended that the long-term disposition of the Company s assets will be not less than 80% in a portfolio of unquoted investments and up to 20% in cash or near-cash investments to provide a reserve of liquidity which will maximise the Company s flexibility as to the timing of investment acquisitions and disposals, dividend payments and share buybacks. Investments will be structured using various unquoted investment instruments, including ordinary and preference shares, loan stocks and convertible securities, to achieve an appropriate balance of income and capital growth, having regard to the VCT legislation. The portfolio will be diversified by investing in a broad range of industry sectors and by holding investments in companies at various stages of maturity in the corporate development cycle. The normal investment holding period will be in the range from three to seven years. Any uninvested funds will typically be held in cash and money market funds. The Company is subject to the investment restrictions relating to a venture capital trust in ITA 2007 and in the Listing Rules which specify that (i) the Company must, at all times, invest and manage its assets in a way which is consistent with its object of spreading investment risk and in accordance with its published investment policy; (ii) the Company must not conduct any trading activity which is significant in the context of its group as a whole; and (iii) the Company may not invest more than 10%, in aggregate, of the value of the total assets of the issuer at the time an investment is made in other listed closedended investment funds. B35 Borrowing limits The Articles restrict borrowings to 50% of the adjusted capital and reserves as defined therein; the current policy however is that investments will normally be made using the shareholders funds and it is not intended that the Company will take on any long-term borrowings. As at the date of this document the Company has no borrowings. B36 Regulatory status The Company is subject to the provisions of the Companies Act 2006 and UK law generally, its Shares are listed on the premium segment of the Official List and, as a qualifying VCT, it is subject to regulation by HMRC in order to retain such a status. B37 Typical investor The typical investor for whom investment in the Company is designed is an individual retail investor aged 18 or over who is resident and a tax payer in the UK. B38 Investments of 20% or more in a single company B39 Investments of 40% or more in a single company Not applicable. The Company does not have any investments which represent more than 20% of its gross assets in a single company or group. Not applicable. The Company does not have any investments which represent more than 40% of its gross assets in a single company or group. B40 Service providers Octopus receives an annual investment management fee of an amount equal to 2% of the net assets of the Company and an annual administration fee equal to 0.3% of the net assets of the Company (in each case, plus applicable VAT). These fee arrangements will continue to apply to the Enlarged Company, but will be across the enlarged net assets. A15: 2.1 5

6 B41 B42 B43 B44 Regulatory status of Octopus Calculation of net asset value Umbrella collective investment scheme Absence of financial statements Octopus is also entitled to performance related incentive fees once distributions in respect of each Share issued pursuant to the original launch prospectus issued by the Company and remaining in issue since launch have reached 45p in aggregate. Octopus will then be paid an amount (per Share in issue on a Payment Date) equal to 20% of the Increase in Value on the relevant Payment Date, subject to the Total Return exceeding the Hurdle Value on that Payment Date. For these purposes:. Payment Date means the date on which the Company publishes audited accounts in the years 2007 to 2015;. Total Return means the NAV per Share as at the Payment Date plus dividends paid or declared per Share in issue from launch;. Hurdle Value means the Total Return on the date Shares were first issued, increased by simple interest at an annual rate of 7% to the relevant Payment Date; and. Increase in Value means the amount by which the Total Return exceeds (i) the Total Return on the date Shares were first issued in respect of the Payment Date and (ii) thereafter, the Total Return on the Payment Date when the Hurdle Value was last exceeded. The Board and Octopus have agreed that, subject to one or more of the Schemes becoming effective, the performance related incentive fee arrangement will be terminated. The Board will consider implementing a new performance related incentive fee arrangement with Octopus once the overall assets of the Enlarged Company have improved Octopus is the investment manager of the Company and also provides administration, secretarial and custodian services. Octopus is registered in England and Wales as a private limited company under number Octopus is authorised and regulated by the Financial Services Authority, with registered number The Company s net asset value is calculated at every quarter and published on an appropriate regulatory information service. If for any reason valuations are suspended, shareholders will be notified in a similar manner. Not applicable. The Company is not part of an umbrella collective investment scheme. Not applicable. The Company has commenced operations and published financial statements B45 Investment portfolio The Company invests in a diversified portfolio of AIM-quoted and UK smaller companies in order to generate income and capital growth over the long-term. The investment focus will be on the provision of growth and development capital to companies which are profitable or on a clear path to profitability. A summary of the Company s portfolio is set out below: A22: B41 A22: B42 A22: B43 A22: B44 A22: B45 Date of launch Funds raised since launch ( m) Unaudited net assets* ( m) NAV per share (p)* Number of venture capital investments* Carry value of the venture capital investments ( m)* April *Taken from the unaudited management accounts to 31 July 2012 for the Company. 6

7 B46 C C1 Most recent net asset value per Share Description and class of securities As at 31 July 2012, the unaudited NAV per Share was 49.4p. Securities The securities being offered pursuant to the proposed merger and the Enhanced Buyback Facility are ordinary shares of 10p each ( New Shares ) (ISIN: GB00B00MKB60). C2 Currency The Company s share capital comprises ordinary shares of 10p each. C3 Shares in issue 32,091,513 ordinary shares of 10p each are in issue at the date of this document (all fully paid up). The maximum number of New Shares to be issued pursuant to the proposed merger and the Enhanced Buyback Facility is 170 million. C4 C5 Description of the rights attaching to the securities Restrictions on transfer The New Shares will rank equally in all respects with each other and with the existing Shares. The New Shares will be listed on the premium segment of the Official List and will be freely transferable. C6 Admission Application has been made to the UK Listing Authority for the New Shares to be listed on the Official List and will be made to the London Stock Exchange for such shares to be admitted to trading on its main market for listed securities. It is anticipated that dealings in the New Shares will commence within three business days following allotment. C7 Dividend policy The dividend policy of the Company is to maintain a regular dividend flow where possible in order to take advantage of the tax free distributions a VCT is able to provide. The Company has paid an average annual dividend of 9.7p per Share over the last three years (ignoring the Special Dividend). D D1 Key information on the risks specific to the Company or its industry The Board intends to target annual dividends of 5% of NAV, plus further special distributions when realisations permit, following the proposed merger (subject to available cash, portfolio requirements, distributable reserves and applicable law at the relevant time). Risks Company. There is no guarantee that the Enlarged Company will meet its objectives. The value of Shares can fluctuate and Shareholders may not get back the amount they invested, and there is no guarantee that dividends will be paid. The past performance of the Company, the Target VCTs and/or Octopus is no indication of future performance.. Although the existing Shares are (and the New Shares to be issued will be) admitted to the premium segment of the Official List and are traded on the London Stock Exchange s market for listed securities, the secondary market for VCT shares is generally illiquid and Shareholders may find it difficult to realise their investment. An investment in the Company should, therefore, be considered as a long-term investment.. Whilst it is the intention of the Board that the Company will continue to be managed so as to qualify as a VCT, there can be no guarantee that such status will be maintained, which may result in adverse tax consequences. A22: B46 A22: C1 A22: C2 A22: C4 A22: C5 A22: C6 A22: B33: C7 A22: D2 7

8 . The tax rules, or their interpretation, in relation to an investment in the Company and/or the rates of tax may change during the life of the Company and may apply retrospectively which could affect tax reliefs obtained by Shareholders and the VCT status of the Company.. Investment in unquoted companies, by its nature, involves a higher degree of risk than investment in companies listed on the Official List which could result in the value of such investment, and interest income and dividends therefrom reducing.. The Company s investments may be difficult, and take time, to realise. There may also be constraints imposed on the realisation of investments in order to maintain the VCT tax status of the Enlarged Company which may restrict the Enlarged Company s ability to obtain maximum value from its investments. D3 Key information on the risks specific to the securities Merger. Completion of any one Scheme is dependent upon a number of conditions precedent being fulfilled, including the approval of Shareholders. Whilst the Board has identified a number of potential benefits for the Enlarged Company, there is no certainty that these benefits will lead to improved prospects for the Enlarged Company. If one or more of the Schemes are not approved and effected, the full benefits of the Enlarged Company may not be realised. A22: D3. Shareholders may be adversely affected by the performance of the investments, whether acquired from the Target VCTs or made by the Company.. Shareholders may be adversely affected by a change in the VCT status of the Company if a number of the investments acquired from Target VCTs, or the investments of the Company, are, or become, unable to meet VCT requirements. Enhanced Buyback Facility. Implementation of the Enhanced Buyback Facility is conditional on approval of Resolutions 5 and 10. The Enhanced Buyback Facility will be withdrawn if the requisite Resolutions are not approved.. Participation in the Enhanced Buyback Facility in respect of Existing Shares which have not been held for five years will be subject to clawback by HMRC of any upfront income tax reliefs obtained on original subscription.. In addition, there could be an income tax charge for Shareholders on any excess of the Tender Price above the original issue price for the Existing Shares that are bought back. Shareholders whose Existing Shares do not qualify for VCT reliefs may also be subject to a capital gains tax charge. E Offer A22: E1 E1 Merger net proceeds and expenses If effected, the merger will result in an Enlarged Company with total net assets of approximately 40 million (after expected merger costs of approximately 387,500 and adjusting for the payment of the Special Dividends). The proposed merger will not, however, result in any proceeds actually being raised by the Company. 8

9 Enhanced Buyback Facility net proceeds and expenses The Enhanced Buyback Facility is not expected to have a material effect on the net assets of the Company as the Shares are repurchased and issued at equivalent prices (less costs amounting to 5% of the cost of Shares repurchased and any annual trail commission). The Enhanced Buyback Facility will not, however, result in any proceeds actually being raised by the Company. The Company is responsible for any annual trail commission payable as a result of the Enhanced Buyback Facility. A22: E1 E2a Reasons for the merger The Board considers that the proposed merger will bring a number of benefits to all of the groups of shareholders through: A22: E2a. a reduction in annual running costs for the Enlarged Company compared to the aggregate annual running costs of the separate companies;. the creation of a single VCT with a greater capital base over which to spread annual running costs;. a greater focus to the objective of improving the investment performance;. participation in a larger VCT with a more diversified portfolio, spreading the risk across a broader range of investments;. increasing the ability to support follow-on investments and new investments; and. the potential to enhance the ability to pay dividends and buy back shares in the future, as well as improve liquidity in the secondary market, as it is hoped that a larger vehicle will attract increased interest. Reasons for the Enhanced Buyback Facility The Enhanced Buyback Facility is an arrangement by which Shareholders can sell existing Shares in the Company and reinvest the proceeds in New Shares in the Company, on which upfront tax relief may then be available. A22: E2a E3 Terms and conditions of the merger The merger, the implementation of which is conditional on, inter alia, the passing of resolutions at the General Meeting will be effected as follows: A22: E3. each Target VCT will be placed into members voluntary liquidation pursuant to a scheme of reconstruction under Section 110 IA 1986; and. all of the assets and liabilities of each Target VCT will be transferred to the Company in consideration for the issue of New Shares (which will be issued directly from the Company to the shareholders of the relevant Target VCT). Illustrative merger example based on the net assets of the Companies as at 31 July 2012 (which includes an adjustment for the Special Dividends). Unaudited NAV (p) Roll-Over Values / Company Merger Value (p) New Shares for every share held Shares Eclipse 2 Shares Eclipse 3 Shares Eclipse 4 Shares

10 Terms and conditions of the Enhanced Buyback Facility A summary of the terms of the Enhanced Buyback Facility, the implementation of which is conditional on, inter alia, the passing of resolutions at the General Meeting, are as follows: A22: E3. The Company is making a tender offer to all UK Shareholders on the register on 1 November 2012 to purchase up to 50% of the issued share capital as at that date.. Implementation of the Enhanced Buyback Facility is conditional on the approval by Shareholders of certain resolutions to be proposed at the General Meeting. The Enhanced Buyback Facility will only be implemented to the extent the Company has sufficient distributable reserves (although the Board expects the Company to be able to implement the Enhanced Buyback Facility in full).. Shareholders eligible to participate may tender some or all of their Existing Shares (subject to the above).. The purchase will be subject to the participating Shareholder agreeing to reinvest all of the proceeds of sale in the purchase of New Shares.. The purchase will be completed at a price equal to the most recently published net asset value per Share at the time of purchase.. The reinvestment will be completed at a price equal to the most recently published net asset value per Share at the time of allotment, divided by E4 Description of any interest that is material to the issue Not applicable. There are no interests that are material to the issue. A22: E4 E5 Name of persons selling securities Not applicable. No entity is selling securities in the Company. A22: E5 E6 Amount and percentage of dilution If 170 million New Shares are issued in aggregate under the proposed merger and the Enhanced Buyback Facility, the existing 32,091,513 Shares would represent 15.9% of the enlarged issued share capital. E7 Expenses charged to the investor Not applicable. No expenses are charged to the investor by the Company. 10

11 RISK FACTORS A1: 4 A3: 2 Shareholders and prospective Shareholders should consider carefully the following risk factors in addition to the other information presented in this document. If any of the risks described below were to occur, it could have a material effect on the Company s business, financial condition or results of operations. The risks and uncertainties described below (such as changes in legal, regulatory or tax requirements) are not the only ones the Company or Shareholders will face. Additional risks not currently known to the Company or the Board, or that the Company or the Board currently believe are not material, may also adversely affect the Company s business, financial condition or results of operations. The value of the Shares could decline due to any of the risk factors described below and Shareholders could lose part or all of their investment. Shareholders and prospective Shareholders should consult an independent financial adviser authorised under FSMA. References to the Company should be taken as including the Enlarged Company. Merger Related Risk Factors Completion of the Schemes is dependent upon a number of conditions precedent being fulfilled, including the approval of Shareholders. Whilst the Board has identified a number of potential benefits for the Enlarged Company, there is no certainty that these benefits will lead to improved prospects for the Enlarged Company. If one or more of the Schemes are not approved and effected, the full benefits of the Enlarged Company may not be realised. Each Scheme is not conditional on the other Schemes being approved and the conditions precedent for the other Schemes being fulfilled. A Scheme will proceed independently and irrespective of the other Schemes. Shareholders may be adversely affected by the performance of the investments, whether acquired from a Target VCT or made by the Company. The performance of the investments acquired from a Target VCT (as well as the investments of the Company) may restrict the ability of the Company following implementation of one or more of the Schemes to distribute any capital gains and revenue received on the investments transferred from a Target VCT to the Company (as well as the investments of the Company). Any gains (or losses) made on the investments of the Company will, following implementation of one or more of the Schemes, be shared amongst all the Shareholders pro rata to the number of Shares of that class then in issue. Shareholders may be adversely affected by a change in the VCT status of the Company if a number of the investments acquired from a Target VCT or the investments of the Company are, or become, unable to meet VCT requirements. Risks applicable to the Enhanced Buyback Facility The Enhanced Buyback Facility is conditional on approval of Resolutions 5 and 11 to be proposed at the General Meeting. If the requisite Resolutions are not approved, the Enhanced Buyback Facility will be withdrawn. The Enhanced Buyback Facility will only be implemented to the extent the Company has sufficient distributable reserves (although the Board expects the Company to be able to implement the Enhanced Buyback Facility in full). The Enhanced Buyback Facility is not, however, conditional on the proposed merger. Shareholders should note that participation in the Enhanced Buyback Facility will be considered, for tax purposes, as a disposal of the Existing Shares. Participation in the Enhanced Buyback Facility in respect of Existing Shares which have not been held for five years will, therefore, be subject to clawback by HMRC of any upfront income tax reliefs obtained on original subscription. In addition, there could be an income tax charge for Shareholders on any excess of the Tender Price above the original issue price for the Existing Shares that are bought back. Shareholders whose Existing Shares do not qualify for VCT reliefs may also be a subject to a capital gains tax charge. Company Risk Factors The value of Shares, and the income from them, can fluctuate and Shareholders may not get back the amount they invested when sold. In addition, there is no certainty that the market price of Shares in the Company will fully reflect their underlying NAV nor that any dividends will be paid. Shareholders in the Company should not rely upon any share buyback policy to offer any certainty of selling their Shares at prices that reflect the underlying NAV. There is no guarantee that the Company will meet its objectives. The past performance of the Company, the Target VCTs and/or Octopus is no indication of future performance of the Company. The return 11

12 received by Shareholders will be dependent on the performance of the underlying investments. The value of such investments, and interest income and dividends therefrom, may rise or fall and Shareholders may not get back the full amount invested. The existing Shares have been (and it is anticipated that the New Shares to be issued will be) admitted to the premium segment of the Official List and are (or will be) traded on the London Stock Exchange s market for listed securities. However, the secondary market for VCT shares is generally illiquid (which may be partly attributable to the fact that initial tax reliefs are not available for VCT shares bought in the secondary market and because VCT shares usually trade at a discount to NAV) and Shareholders may find it difficult to realise their investment. An investment in the Company should, therefore, be considered as a long-term investment. Whilst it is the intention of the Board that the Company will continue to be managed so as to qualify as a VCT, there can be no guarantee that such status will be maintained. Failure to continue to meet the qualifying requirements could result in Shareholders losing the tax reliefs available for VCT shares, resulting in adverse tax consequences including, if the holding has not been held for the relevant holding period, a requirement to repay the tax reliefs obtained. Furthermore, should the Company lose its VCT status, dividends and gains arising on the disposal of Shares would become subject to tax and the Company would also lose its exemption from corporation tax on its capital gains. The tax rules, or their interpretation, in relation to an investment in the Company and/or the rates of tax may change during the life of the Company and may apply retrospectively which may affect tax reliefs obtained by Shareholders and the VCT status of the Company. Changes in legislation concerning VCTs in relation to what constitutes qualifying holdings and qualifying trades may limit the number of qualifying investment opportunities, reduce the level of returns which might otherwise be achievable or result in the Company not being able to meet its objectives. If a Shareholder disposes of his or her Shares within five years of issue, he or she will be subject to clawback by HMRC of any income tax reliefs originally claimed. For these purposes, the date of issue of the New Shares in the Enlarged Company issued pursuant to the Schemes will be the original date of issue of the relevant Target VCT s shares in respect of which such New Shares in the Enlarged Company are issued. Any realised losses on the disposal of Shares cannot be used to create an allowable loss for capital gains tax purposes. Investment in unquoted companies (including AIM-traded and PLUS market-traded companies), by its nature, involves a higher degree of risk than investment in companies listed on the Official List, which could result in the value of such investment, and interest income and dividends therefrom, reducing. In particular, small companies often have limited product lines, markets or financial resources and may be dependent for their management on a small number of key individuals and may be more susceptible to political, exchange rate, taxation and other regulatory changes and may not produce the hoped-for returns. In addition, the market for securities in smaller companies is less regulated and is usually less liquid than that for securities in larger companies, bringing with it potential difficulties in acquiring, valuing and disposing of such securities. Full information for determining their value or the risks to which they are exposed may also not be available. Investment returns will, therefore, be uncertain and involve a higher degree of risk than investment in a company listed on the Official List. Realisation of investments in unquoted companies may be difficult and may take considerable time. There may also be constraints imposed on the realisation of investments in order to maintain the VCT tax status of the Company which may restrict the Company s ability to obtain maximum value from its investments. In addition, although the Company may receive customary venture capital rights in connection with some of its unquoted investments, as a minority investor it may not be in a position to fully protect its interests. 12

13 EXPECTED TIMETABLES EXPECTED TIMETABLE FOR THE COMPANY Schemes Latest time for receipt of forms of proxy for the General Meeting 2.00 p.m. on 21 October 2012 General Meeting 2.00 p.m. on 23 October 2012 Calculation Date after 5.00 p.m. on 30 October 2012 Effective Date for the transfer of the assets and liabilities of the Target VCTs to the Company and the issue of New Shares pursuant to the Schemes* 31 October 2012 Announcement of the results of the Schemes 31 October 2012 Dealings in Shares to take place ex the Special Dividend Admission of and dealings in New Shares issued pursuant to the Schemes to commence CREST accounts credited with New Shares issued pursuant to the Schemes Certificates for New Shares issued pursuant to the Schemes dispatched 1 November November November November 2012 Payment of the Special Dividend 16 November 2012 Enhanced Buyback Facility Enhanced Buyback Facility Record Date 5.00 p.m. on 1 November 2012 Enhanced Buyback Facility opens 2 November 2012 Enhanced Buyback Facility closes noon on 28 December 2012 Purchase of existing Shares and issue of New Shares pursuant to the Enhanced Buyback Facility Announcement of the results of the Enhanced Buyback Facility Admission of and dealings in New Shares issued pursuant to the Enhanced Buyback Facility commence Certificates for New Shares issued pursuant to the Enhanced Buyback Facility dispatched 14 January January January January 2013 A3: 5.10 A3: 4.7 A3: A3: A3: A3: 4.7 A3: (The Directors reserve the right to amend or extend these dates at their discretion.) 13

14 EXPECTED TIMETABLE FOR ECLIPSE 2 Date from which it is advised that dealings in Eclipse 2 Shares should only be for cash settlement and immediate delivery of documents of title Latest time for receipt of forms of proxy for the Eclipse 2 First General Meeting 12 October p.m. on 21 October 2012 Eclipse 2 First General Meeting 2.30 p.m. on 23 October 2012 Latest time for receipt of forms of proxy for the Eclipse 2 Second General Meeting 1.00 p.m. on 29 October 2012 Eclipse 2 register of members closed 30 October 2012 Record Date for Eclipse 2 Shareholders entitlements 5.00 p.m. on 30 October 2012 Calculation Date after 5.00 p.m. on 30 October 2012 Dealings in Eclipse 2 Shares suspended 7.30 a.m. on 31 October 2012 Eclipse 2 Second General Meeting 1.00 p.m. on 31 October 2012 Effective Date for the transfer of the assets and liabilities of Eclipse 2 to the Company and the issue of New Shares pursuant to the Eclipse 2 Scheme Announcement of the results of the Eclipse 2 Scheme 31 October October 2012 Payment of the Eclipse 2 Special Dividend 16 November 2012 Cancellation of the Eclipse 2 Shares listing 8.00 a.m. on 29 November 2012 (The last trading date for the Eclipse 2 Shares will be 30 October See the timetable for the Company with regard to admission, CREST accounts being credited and certificates being dispatched.) 14

15 EXPECTED TIMETABLE FOR ECLIPSE 3 Date from which it is advised that dealings in Eclipse 3 Shares should only be for cash settlement and immediate delivery of documents of title Latest time for receipt of forms of proxy for the Eclipse 3 First General Meeting 12 October p.m. on 21 October 2012 Eclipse 3 First General Meeting 3.00 p.m. on 23 October 2012 Latest time for receipt of forms of proxy for the Eclipse 3 Second General Meeting 1.30 p.m. on 29 October 2012 Eclipse 3 Register of Members closed 30 October 2012 Record Date for Eclipse 3 Shareholders entitlements 5.00 p.m. on 30 October 2012 Calculation Date after 5.00 p.m. on 30 October 2012 Dealings in Eclipse 3 Shares suspended 7.30 a.m. on 31 October 2012 Eclipse 3 Second General Meeting 1.30 p.m. on 31 October 2012 Effective Date for the transfer of the assets and liabilities of Eclipse 3 to the Company and the issue of New Shares pursuant to the Eclipse 3 Scheme Announcement of the results of the Eclipse 3 Scheme 31 October October 2012 Payment of the Eclipse 3 Special Dividend 16 November 2012 Cancellation of the Eclipse 3 Shares listing 8.00 a.m. on 29 November 2012 (The last trading date for the Eclipse 3 Shares will be 30 October See the timetable for the Company with regard to admission, CREST accounts being credited and certificates being dispatched.) 15

16 EXPECTED TIMETABLE FOR ECLIPSE 4 Date from which it is advised that dealings in Eclipse 4 Shares should only be for cash settlement and immediate delivery of documents of title Latest time for receipt of forms of proxy for the Eclipse 4 First General Meeting 12 October p.m. on 21 October 2012 Eclipse 4 First General Meeting 3.30 p.m. on 23 October 2012 Latest time for receipt of forms of proxy for the Eclipse 4 Second General Meeting 2.00 p.m. on 29 October 2012 Eclipse 4 Register of Members closed 30 October 2012 Record Date for Eclipse 4 Shareholders entitlements 5.00 p.m. on 30 October 2012 Calculation Date after 5.00 p.m. on 30 October 2012 Dealings in Eclipse 4 Shares suspended 7.30 a.m. on 31 October 2012 Eclipse 4 Second General Meeting 2.00 p.m. on 31 October 2012 Effective Date for the transfer of the assets and liabilities of Eclipse 4 to the Company and the issue of New Shares pursuant to the Eclipse 4 Scheme Announcement of the results of the Eclipse 4 Scheme 31 October October 2012 Payment of the Eclipse 4 Special Dividend 16 November 2012 Cancellation of the Eclipse 4 Shares listing 8.00 a.m. on 29 November 2012 (The last trading date for the Eclipse 4 Shares will be 30 October See the timetable for the Company with regard to admission, CREST accounts being credited and certificates being dispatched.) 16

17 DEFINITIONS Acquisition Price Admission AIM Articles Basic Entitlement Board Broker Business Days CA 1985 CA 2006 Calculation Date Capita Registrars Circular Companies Company Company Merger Value CREST Directors Disclosure & Transparency Rules Eclipse 2 the price at which a participating Shareholder in the Enhanced Buyback Facility acquired their Existing Shares the New Shares allotted pursuant to the Schemes and the Enhanced Buyback Facility being listed on the Official List of the UK Listing Authority and admitted to trading on the London Stock Exchange s market for listed securities the Alternative Investment Market, a market operated by the London Stock Exchange the articles of association of the Company, as amended from time to time the entitlement of each existing Shareholder to tender 50% of their Existing Shares, rounded down to the nearest whole number the board of directors of the Company Matrix Corporate Capital LLP (or such other broker as the Company may appoint to act as its agent to implement the Enhanced Buyback Facility) any day (other than a Saturday) on which clearing banks are open for normal banking business in Sterling (and each a Business Day ) the Companies Act 1985, as amended from time to time the Companies Act 2006, as amended from time to time the date on which the Roll-Over Values and the Company Merger Value will be calculated, anticipated as being after the close of business on 30 October 2012 a trading name of Capita Registrars Limited the circular to the Company s Shareholders dated 28 September 2012 the Company and the Target VCTs Octopus Eclipse VCT plc the value of a Share calculated in accordance with Part II of this document the central securities depository for the UK markets the directors of the Company (and each a Director ) the disclosure and transparency rules of the FSA Octopus Eclipse VCT 2 plc Eclipse 2 Board the board of directors of Eclipse 2 Eclipse 2 First General Meeting Eclipse 2 Meetings Eclipse 2 Roll-Over Value the general meeting of Eclipse 2 to be held on 23 October 2012 the Eclipse 2 First General Meeting and the Eclipse 2 Second General Meeting the value of an Eclipse 2 Share calculated in accordance with Part II of this document 17

18 Eclipse 2 Scheme Eclipse 2 Second General Meeting Eclipse 2 Shareholders Eclipse 2 Shares the proposed merger of the Company with Eclipse 2 by means of placing Eclipse 2 into members voluntary liquidation pursuant to Section 110 of IA 1986 and the acquisition by the Company of all of Eclipse 2 s assets and liabilities in consideration for New Shares, further details of which are set out in Part II of this document the general meeting of Eclipse 2 to be held on 31 October 2012 holders of Eclipse 2 Shares (and each an Eclipse 2 Shareholder ) ordinary shares of 10p each in the capital of Eclipse 2 (and each an Eclipse 2 Share ) Eclipse 2 Special Dividend the special dividend to be paid by Eclipse 2 of 9.0p per Eclipse 2 Share, conditional on the Eclipse 2 Scheme becoming effective Eclipse 2 Transfer Agreement Eclipse 3 the agreement between the Company and Eclipse 2 (acting through the Liquidators) for the transfer of all of the assets and liabilities of Eclipse 2 by the Liquidators to the Company pursuant to the Eclipse 2 Scheme Octopus Eclipse VCT 3 plc Eclipse 3 Board the board of directors of Eclipse 3 Eclipse 3 First General Meeting Eclipse 3 Meetings Eclipse 3 Roll-Over Value Eclipse 3 Scheme Eclipse 3 Second General Meeting Eclipse 3 Shareholders Eclipse 3 Shares the general meeting of Eclipse 3 to be held on 23 October 2012 the Eclipse 3 First General Meeting and the Eclipse 3 Second General Meeting the value of an Eclipse 3 Share calculated in accordance with Part II of this document the proposed merger of the Company with Eclipse 3 by means of placing Eclipse 3 into members voluntary liquidation pursuant to Section 110 of IA 1986 and the acquisition by the Company of all of Eclipse 3 s assets and liabilities in consideration for New Shares, further details of which are set out in Part II of this document the general meeting of Eclipse 3 to be held on 31 October 2012 holders of Eclipse 3 Shares (and each an Eclipse 3 Shareholder ) ordinary shares of 10p each in the capital of Eclipse 3 (and each an Eclipse 3 Share ) Eclipse 3 Special Dividend the special dividend to be paid by Eclipse 3 of 8.0p per Eclipse 3 Share, conditional on the Eclipse 3 Scheme becoming effective Eclipse 3 Transfer Agreement Eclipse 4 the agreement between the Company and Eclipse 3 (acting through the Liquidators) for the transfer of all of the assets and liabilities of Eclipse 3 by the Liquidators to the Company pursuant to the Eclipse 3 Scheme Octopus Eclipse VCT 4 plc Eclipse 4 Board the board of directors of Eclipse 4 Eclipse 4 First General Meeting Eclipse 4 Meetings Eclipse 4 Roll-Over Value the general meeting of Eclipse 4 to be held on 23 October 2012 the Eclipse 4 First General Meeting and the Eclipse 4 Second General Meeting the value of an Eclipse 4 Share calculated in accordance with Part II of this document 18

19 Eclipse 4 Scheme Eclipse 4 Second General Meeting Eclipse 4 Shareholders Eclipse 4 Shares the proposed merger of the Company with Eclipse 4 by means of placing Eclipse 4 into members voluntary liquidation pursuant to Section 110 of IA 1986 and the acquisition by the Company of all of Eclipse 4 s assets and liabilities in consideration for New Shares, further details of which are set out in Part II of this document the general meeting of Eclipse 4 to be held on 31 October 2012 holders of Eclipse 4 Shares (and each a Eclipse 4 Shareholder) ordinary shares of 10p each in the capital of Eclipse 4 (and each a Eclipse 4 Share ) Eclipse 4 Special Dividend the special dividend to be paid by Eclipse 4 of 8.0p per Eclipse 4 Share, conditional on the Eclipse 4 Scheme becoming effective Eclipse 4 Transfer Agreement EEA States Effective Date Enhanced Buyback Facility Enhanced Buyback Facility Application Form Enhanced Buyback Facility Record Date Enlarged Company Existing Shares FSA FSMA the agreement between the Company and Eclipse 4 (acting through the Liquidators) for the transfer of all of the assets and liabilities of Eclipse 4 by the Liquidators to the Company pursuant to the Eclipse 4 Scheme the member states of the European Economic Area the date on which the Schemes will become effective, anticipated as being 31 October 2012 the enhanced buyback facility contained in this document the application form at the end of this document to be used by Shareholders in respect of the Enhanced Buyback Facility the record date to which Shareholders entitlements will be allocated pursuant to the Enhanced Buyback Facility, this being 5.00 p.m. on 1 November 2012 the Company, following implementation of one or more of the Schemes Shares on the register on 1 November 2012, (and each an Existing Share ) the Financial Services Authority the Financial Services and Markets Act 2000, as amended General Meeting the general meeting of the Company to be held on 23 October 2012 Half-Yearly Report HMRC IA 1986 Issue Price ITA 2007 the half-yearly report for the Company for the six month period ended 31 January 2012 Her Majesty s Revenue & Customs the Insolvency Act 1986, as amended the price at which New Shares will be issued by the Company pursuant to the Enhanced Buyback Facility the Income Tax Act 2007, as amended Liquidators William Duncan and Sarah Louise Burge, RSM Tenon Limited, 2 Wellington Place, Leeds LS1 4AP, being the proposed liquidators for each of the Target VCTs Listing Rules London Stock Exchange Memorandum the listing rules of the UKLA London Stock Exchange plc the memorandum of association of the Company Merger Regulations the Venture Capital Trusts (Winding-up and Mergers) (Tax) Regulations

20 NAV or net asset value New Shares Octopus Octopus Titan VCTs Official List Overseas Shareholders PLUS Proposed Directors Prospectus Qualifying Company Qualifying Investment Qualifying Investor Receiving Agent Record Date Resolutions Roll-Over Values RPI net asset value Shares to be issued by the Company pursuant to the Schemes and the Enhanced Buyback Facility (and each a New Share ) Octopus Investments Limited Octopus Titan VCT 1 plc, Octopus Titan VCT 2 plc, Octopus Titan VCT 3 plc, Octopus Titan VCT 4 plc and Octopus Titan VCT 5 plc the official list of the UKLA Shareholders other than UK Shareholders a prescribed market for the purposes of Section 118 of FSMA and a recognised investment exchange operated by PLUS Markets Group plc David Lambert and Alex Hambro (and each a Proposed Director ) this document a company satisfying the requirements of Chapter 4 of Part 6 of ITA 2007 an investment in a Qualifying company satisfying the requirements of Chapter 4 of Part 6 of ITA 2007 an individual aged 18 or over who satisfies the conditions of eligibility for VCT tax reliefs Capita Registrars Limited the record date to which entitlements will be allocated pursuant to the Schemes, anticipated as being 5.00 p.m. on 30 October 2012 the resolutions to be proposed at the General Meeting (and each a Resolution ) the Eclipse 2 Roll-Over Value, the Eclipse 3 Roll-Over Value and the Eclipse 4 Roll-Over Value Retail Prices Index Schemes the Eclipse 2 Scheme, the Eclipse 3 Scheme and the Eclipse 4 Scheme (and each a Scheme ) Shareholders Shares Special Dividend Special Dividends Target VCT First General Meeting Target VCT Meetings Target VCT Second General Meeting Target VCT Share holders of Shares (and each a Shareholder ) ordinary shares of 10p each in the capital of the Company (ISIN GB00B00MKB60) (and each a Share ) the special dividend to be paid by the Company of 11.0p per Share, conditional on one or more of the Schemes becoming effective the Special Dividend and the Target VCTs Special Dividends the Eclipse 2 First General Meeting or the Eclipse 3 First General Meeting or the Eclipse 4 First General Meeting, as the context permits in respect of a Target VCT, the relevant Target VCT First General Meeting and the relevant Target VCT Second General Meeting to be held on 23 October 2012 and 31 October 2012 respectively the Eclipse 2 Second General Meeting or the Eclipse 3 Second General Meeting or the Eclipse 4 Second General Meeting, as the context permits an Eclipse 2 Share or an Eclipse 3 Share or an Eclipse 4 Share, as the context permits (together Target VCT Shares ) A3: 4.1 A