CIRCULAR TO SHAREHOLDERS. INSIGHT LIQUIDITY FUNDS PLC (the Company)

Transcription

1 CIRCULAR TO SHAREHOLDERS OF INSIGHT LIQUIDITY FUNDS PLC (the Company) AN UMBRELLA FUND WITH SEGREGATED LIABILITY BETWEEN SUB-FUNDS AND AN OPEN-ENDED INVESTMENT COMPANY WITH VARIABLE CAPITAL UNDER THE LAWS OF IRELAND WITH REGISTERED NUMBER PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION AND COMPANY DOCUMENTS 17 December 2014 This document is important and requires your immediate attention. If you are in doubt as to the action you should take you should seek advice from your stockbroker, bank manager, solicitor, accountant or other independent financial advisor. The Directors of the Company accept responsibility for the information contained in this document as being accurate as at the date of publication. If you have sold or transferred all of your shares in the Company please pass this document to the purchaser or transferee or to the stockbroker, bank or other agent through whom the sale or transfer was effected, for transmission to the purchaser or transferee as soon as possible. This document is not required to be and has not been reviewed by the Central Bank of Ireland (the Central Bank). Unless otherwise defined or inconsistent with the context in this circular, capitalised terms used herein have the same meanings as are ascribed to them in the current Articles of Association, Prospectus of the Company and Supplements to the Prospectus for the Funds.

2 Insight Liquidity Funds plc George s Court Townsend Street Dublin 2 Ireland 17 December 2014 Dear Shareholder We write to advise you of proposed changes to the Articles of Association (the Articles) and the Prospectus, including the Supplements in respect of the Funds, of Insight Liquidity Funds plc (the Company). The Articles of the Company have not been updated since June 2006 and we are proposing that the Articles be amended to reflect regulatory and market developments. Whilst doing so, we propose including in the Articles the facility for the Company to create hedged share classes to expand the range of choice available to investors, particularly given the extended period for which interest rates for all major currencies have remained at such low levels. Low interest rates have also been a factor in the increasing regulatory scrutiny of liquidity funds, particularly funds that price on a Constant Net Asset Value (CNAV) basis, as part of the consideration of shadow banking. There is a potential for misunderstanding if CNAV funds are confused with banking products. We believe that CNAV funds are investment products not banking products, because investments in CNAV funds are not (in the absence of express provision to the contrary) guaranteed or underwritten nor are they within the scope of deposit holder protection schemes. Notwithstanding the importance of the objective of preservation of capital, in the event of a shortfall investors would bear any loss. Accordingly, in addition to the amendments to the Articles, subject to the approval of, and the incorporation of any amendments required by, the Central Bank, we will include in the next amendments to the Supplements in respect of ILF GBP Liquidity Fund and ILF USD Liquidity Fund (the CNAV Insight Liquidity Funds) disclosure in accordance with the paragraph below, which also reflects the position of the Promoter and Investment Manager, Insight Investment Funds Management Limited and the Investment Adviser, Insight Investment Management (Global) Limited (collectively Insight), to the CNAV Insight Liquidity Funds, which entities are part of The Bank of New York Mellon Corporation (BNYM): The CNAV Insight Liquidity Funds are investment funds and not banking products and whilst preservation of capital is a major component of the objective of the funds it is not guaranteed. Neither Insight nor any other BNYM group company will provide capital support for the CNAV Insight Liquidity Funds in the event of any capital loss arising within the funds. References to "Insight" in this paragraph include the Investment Manager (which is also the Promoter of the Company) and the Investment Adviser, which entities are part of the BNYM group." The proposed amendments to the Articles as further outlined below will require Shareholder approval. The Directors of the Company have therefore resolved to convene an Extraordinary General Meeting (EGM) of Shareholders in the Company on 13 January 2015 at George s Court, Townsend Street, Dublin 2, at 9.30a.m. for the purposes of considering the proposed changes to the Articles. Registered in Ireland No Registered office at the above address. Directors: John Fitzpatrick, Barry McGrath, Paul Dellar (British), Michael Boyce and Charles Farquharson (British). 2

3 Proposed amendments to Memorandum and Articles of Association: It is proposed that the Articles be amended to include the changes outlined in Appendix I, which includes changes: to update the provisions of the Articles in relation to the creation of new share classes, including hedged share classes, in accordance with the requirements of the Central Bank; and to reflect regulatory developments and general updates since the Articles were last amended in June Appendix I contains a full overview of the proposed amendments to be made to the Articles, highlighting the changes in blackline format to be incorporated into the revised Articles subject to the approval of Shareholders of the Company. It is intended, subject to the approval of the Central Bank, that the Prospectus of the Company and/or, where relevant, the Supplements in respect of the Funds of the Company shall also be updated in accordance with the amendments made to the Articles and, where applicable, revised versions will be issued shortly after the EGM. Shareholder Approval of amendments to Memorandum and Articles of Association: The changes to the Articles may not be made without the approval of the Shareholders of the Company. The resolution to amend the Articles will be tabled at the EGM. Formal notice of the EGM is set out in Appendix II. The resolution to approve the amendments to the Articles will be proposed as a special resolution, meaning that it cannot be passed unless it receives the support of a majority of at least 75% of the total number of votes cast for and against each of it. If the resolution is passed by the requisite majority, it will be binding on all Shareholders in the Company irrespective of how (or whether) they voted. The quorum for the meeting of Shareholders of the Company is two Shareholders present (in person or by duly authorised representative of a corporate Shareholder or by proxy) entitled to vote. If a quorum is not present within half an hour from the time appointed for the meeting or if during the meeting the quorum ceases to be present, it will be necessary to adjourn it. In that event, it will stand adjourned to the same day in the next week, at the same time and place or to such other time and place as the directors may determine. If at an adjourned meeting the quorum is not present within 30 minutes from the time appointed for holding the meeting, the meeting, if convened otherwise than by resolution of the directors, shall be dissolved, but if the meeting shall have been convened by resolution of the directors one person entitled to be counted in a quorum present at the meeting shall be a quorum. Available Documentation We enclose with this circular the following documents relating to the EGM: Appendix I, highlighting the proposed amendments to the Articles of the Company; Appendix II, a Notice of the EGM; Appendix III, a Proxy Form which allows you to cast your vote by proxy. Proxy Forms: A proxy form to enable you to vote at the EGM is enclosed with this circular. Please read the notes printed on the form which will assist you in completing and returning the form. To be valid, your form of proxy must be received not later than a half an hour before the time 3 Registered in Ireland No Registered office at the above address. Directors: John Fitzpatrick, Barry McGrath, Paul Dellar (British), Michael Boyce and Charles Farquharson (British).

4 appointed for the meeting. You may attend and vote at the EGM even if you have appointed a proxy, but in such circumstances the proxy is not entitled to vote. Costs: The costs of implementing the changes, if approved, as well as the costs of convening the meeting of the shareholders and of securing all necessary regulatory and other approvals will be borne by the Company. Enquiries: Copies of the existing and the proposed amended Memorandum and Articles of Association are available for inspection during normal business hours from the date of this circular up to and including the time of, and during, the EGM (and any adjourned meeting) at the registered office of the Company at George s Court, Townsend Street, Dublin 2, Ireland. Shareholders will be advised by way of an announcement on the Irish Stock Exchange as to the outcome of the EGM vote after the holding of the EGM. Conclusion: The directors of the Company recommend that you vote in favour of the resolution set out in the notice of EGM. The directors of the Company accept responsibility for the information contained in this circular. If you have any queries or if any of the above is not clear please consult your relevant client services manager. Yours faithfully, Director For and on behalf of Insight Liquidity Funds plc Registered in Ireland No Registered office at the above address. Directors: John Fitzpatrick, Barry McGrath, Paul Dellar (British), Michael Boyce and Charles Farquharson (British). 4

5 Appendix I Summary of the Amendments to the Memorandum and Articles of Association Blackline Extract Please find below the relevant extracts from the Memorandum & Articles of Association of Insight Liquidity Funds plc highlighting the amendments thereto. Numbering and crossreferences in the Memorandum and Articles of Association shall be amended accordingly. Legend Text which has been inserted Text which has been deleted All references in the Memorandum and Articles of Association of the Company to the "Companies Acts 1963 to 2012" are amended to the "Companies Acts 1963 to 2013". All references in the Memorandum and Articles of Association of the Company to "the European Communities (Undertaking For Collective Investment in Transferable Securities) Regulations, 2003 (S.I. No. 211 of 2003), as amended" are amended to "the European Communities (Undertaking For Collective Investment in Transferable Securities) Regulations, 2011, as amended" Index and numbering has been updated where appropriate throughout the document. APPENDIX I DEFINITIONS 1. Definitions In these Articles and these Appendices the following expressions shall have the following meanings: Companies Acts the Companies Acts, 1963 to including any regulations issued pursuant thereto, insofar as they apply to open-ended investment companies with variable capital as may be amended, modified, supplemented or re-enacted from time to time; Competent Authority the Irish Financial Services Regulatory AuthorityCentral Bank of Ireland or such other authority designated as such pursuant to the Regulations; Currency Share Class a class of shares denominated in a currency other than the base currency of the relevant Fund;

6 Derivative Specific Share Class a class in respect of which the Company will enter into derivative transactions the benefits and costs of which will accrue solely to holders of shares of that class; FSAFCA Hedged Currency Share Class Hedged Share Class Irish Taxable Person the Financial Services Conduct Authority of the United Kingdom or any successor authority; a Currency Share Class in respect of which the Company may conduct currency hedging transactions the benefits and costs of which will accrue solely to holders of shares of that class; a share class in respect of which the Company may conduct currency and/or interest rate hedging transactions as specified in the supplement to the Prospectus for the relevant Fund where the benefits and costs of such hedging transactions will accrue solely to holders of shares of such class, and which may be a Hedged Currency Share Class; means any person, other than:- (xiii) as may be defined in the Prospectus; Regulations the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations, (S.I. No of ) as amended, supplemented, consolidated or otherwise modified from time to time including any condition that may from time to time be imposed thereunder by the Competent Authority; Specific Investment (a) any Investment issued by, or the payment of principal and interest on which is Member State; (b) any Investment issued by, or the payment of principal and interest on which is guaranteed by, the government of a state which is included in Clause (a)(i) of Appendix IV (except for Hong Kong and Liechtenstein); and an OECD member country (provided it is investment grade),, Euratom, European Union, Council of Europe, Eurofima, European Investment Bank,, European Coal and Steel

7 Community, Inter and Development (i.e. the World Bank), African Development Bank, ("Fannie Mae"), ("Freddie Mac"), Government National Mortgage Association ("Ginnie Mae") or the; means any Investment issued or guaranteed by, the government or local authorities of an EU Member State, non-eu Member States or public international bodies of which one or more EU Member States are members; and any Investment issued anywhere in the world by any of the following: OECD Member States excluding those listed above (provided the relevant issues are investment grade) Government of Singapore European Investment Bank European Bank for Reconstruction and Development International Finance Corporation International Monetary Fund Euratom The Asian Development Bank European Central Bank Council of Europe Eurofima African Development Bank The International Bank for Reconstruction & Development The World Bank The Inter American Development Bank European Union Federal National Mortgage Association (Fannie Mae) Federal Home Loan Mortgage Corporation (Freddie Mac) Government National Mortgage Association (Ginnie Mae) Student Loan Regulated Marketing Association (Sallie Mae) Federal Home Loan Bank Federal Farm Credit Bank Tennessee Valley Authority Straight-A Funding LLC Government of India (provided the relevant issues are investment grade) Government of Brazil (provided the relevant issues are investment grade);

8 Unhedged Currency Share Class means a class of shares where typically, shares may be subscribed for and dividends calculated and paid and repurchase proceeds paid in a currency other than the base currency of the relevant Fund on the basis of a currency conversion at the prevailing spot currency exchange rate of the relevant base currency for the currency of the relevant share class; United States Person or U.S. Person unless otherwise determined by the directors, any person falling within the definition of the term "US Person" under Regulation S promulgated under the US Securities Act of 1933, as amended from time to time. Valuation Point such point in time, in such place or places as the Directors may, from time to time determine, by reference to which the Net Asset Value of the Company or of any Fund or any class or share is calculated provided that there shall be at least two Valuation Points in every Month. APPENDIX II ISSUE OF SHARES 2. Terms and conditions of issue of shares Prior to the issue of any class of shares the Directors shall determine the rights and restrictions attaching thereto including the Fund to which they relate, the designated currency of the shares and the fees and expenses (which shall be disclosed in the Prospectus) to be borne by the class of shares. The Directors may in relation to a Fund create more than one class of shares to participate in the Fund. to which different charges, fees and expenses and such other factors as may be determined by the Directors at the date of their creation, may be applicable, and which may be denominated by the Directors in the same or different currencies. The Directors shall notify the Competent Authority of the creation of any new share class In creating classes of shares, the Directors may determine if such class of shares shall be constituted as a Derivative Specific Share Class, Hedged Share Class and/or an Unhedged Currency Share Class. Notwithstanding anything contained in these Articles, the costs and gains/losses of any derivative and/ or hedging transactions relating to a Derivative Specific Share Class and/or Hedged Share Class shall accrue solely to the Holders of shares in such Class and shall not form part of the assets of the relevant Fund or constitute a liability of the relevant Fund to which the share relates. Any derivative and/or hedging transaction relating to a Derivative Specific Share Class and/or Hedged Share Class shall be valued in accordance with the provisions of Appendix III and shall be clearly attributable to the

9 specific Derivative Specific Share Class and/or Hedged Share Class. 3. Subscription Price 3.1. During the Initial Offer Period in relation to a Fund the Subscription Price per share of the relevant class shall be the price as determined by the Directors.After the Initial Offer Period, the Subscription Price shall be the Net Asset Value per share of the relevant class Where shares are issued at the Net Asset Value per share, the Subscription Price per share of the relevant class shall be ascertained by: determining that proportion of the Net Asset Value of the relevant Fund which is attributable to the relevant class of shares as at the Valuation Point for the relevant Dealing Day; where the class of shares is a Derivative Specific Share Class or Hedged Share Class, adding to or deducting from (as the case may be) the sum calculated in accordance with above the costs and gains\losses of any derivative and/or hedging transactions effected in respect of that class; dividing the sum calculated in accordance with paragraph (i)the paragraphs above by the number of shares of the relevant class in issue or deemed to be in issue in the relevant Fund at the Valuation Point for the relevant Dealing Day; and adding to the resulting sum a provision of such amount (if any) as the Directors may consider appropriate in respect of Duties and Charges and stamp duties and taxation; and rounding the resulting amount so determined to a maximum of three decimal places of the unit of the currency in which such share is designated ("unit" for such purposes being the smallest fraction of the relevant currency which is legal tender in the country of issue of that currency) For the purposes of this Clause 3, shares which have been allotted shall be deemed to be in issue from the close of business on the Dealing Day on which they are allotted and shares which have been repurchased shall be deemed to cease to be in issue at the close of business on the Dealing Day of such repurchase The Directors may where there are net subscriptions adjust the issue price per share by applying an anti-dilution levy to cover dealing costs and to preserve the value of the underlying assets of a Fund. 13. Repurchase mechanism The Company may retain a sufficient portion of the amount payable to the Applicant in respect of the repurchase to pay any taxation payable to the Revenue Commissioners in Ireland or other tax authorities in respect of the repurchase of the shares. 14. Repurchase price of shares

10 14.1 The Repurchase Price per share of the relevant class shall be an amount as determined by the Directors on the relevant Dealing Day referred to in Clause 13(a)(i) above by: determining that proportion of the Net Asset Value of the relevant Fund which is attributable to the relevant class of shares as at the Valuation Point for the relevant Dealing Day; where the class of share is a Derivative Specific Share Class or Hedged Share Class, adding to or deducting from (as the case may be) the sum calculated in accordance with above the costs and gains\losses of any derivative and/or hedging transactions effected in respect of that class; dividing the sum calculated in accordance with paragraph (i)the paragraphs above by the number of shares of the relevant class in issue or deemed to be in issue in the relevant Fund at the Valuation Point for the relevant Dealing Day; deducting from the resulting sum a provision of such amount (if any) as the Directors may consider appropriate in respect of Duties and Charges; and rounding the amount so determined to a maximum of three decimal places of the unit of the currency of the shares ("unit" for such purposes being the smallest fraction of the relevant currency which is legal tender in the country of issue of that currency) The Directors may on any Dealing Day where there are net redemptions adjust the Repurchase Price by deducting an anti-dilution levy therefrom or may deduct an anti-dilution levy from the redemption proceeds, in either case to cover dealing costs and to preserve the value of the underlying assets of a Fund. DETERMINATION OF NET ASSET VALUE 17. Determination of Net Asset Value The Net Asset Value of a Fund or class of shares or per share shall be determined in accordance with Appendix III. APPENDIX III 28. Determination of Net Asset Value 28.1 The Net Asset Value (i.e. the value of the assets of a Fund having deducted the liabilities of that Fund therefrom) of any Fund or any class of shares or per share shall be expressed in the currency in which the Fund or class or the shares are designated or in such other currency as the Directors may determine, from time to time, and shall be determined, in accordance with the valuation rules set out hereafter. In the event the shares of any Fund are further divided into classes, the Net Asset Value per share of the relevant

11 class shall be determined by attributing the Net Asset Value of the Fund between the relevant classes of that Fund making such adjustments for subscriptions, redemptions, fees, dividends accumulation or distribution of income and the expenses, liabilities or assets attributable to each such relevant class (including the gains/losses on and costs of financial instruments employed for derivative and/or hedging transactions undertaken for any class which is a Derivative Specific Share Class and/or Hedged Share Class, which gains/losses and costs shall accrue solely to that relevant class) and any other factor differentiating the relevant classes as appropriate.

12 Appendix II NOTICE OF EXTRAORDINARY GENERAL MEETING of INSIGHT LIQUIDITY FUNDS PLC NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of Insight Liquidity Funds plc will be held at George s Court, Townsend Street, Dublin 2, on 13 January 2015 at 9.30am for the following purposes: Special Business To adopt the revised Articles of Association of the Company amended to reflect the changes contained in Appendix I to the Circular to Shareholders of the Company dated 17 December 2014, subject to the incorporation of any amendments pursuant to requirements of the Central Bank as may be approved by any one Director for and on behalf of the Company, in place of the existing Articles of Association of the Company. And to transact any other business which may be properly brought before the meeting. BY ORDER OF THE BOARD For and on behalf of Northern Trust International Fund Administration (Ireland) Limited Registered Office: George s Court, Townsend Street, Dublin 2 Ireland Date: 17 December 2014 Notes: A registered Shareholder in Insight Liquidity Funds plc is entitled to attend, speak and vote at the above meeting or is entitled to appoint a proxy to attend and, on a poll, vote on his behalf. A body corporate may appoint an authorised person to attend, speak and vote on its behalf. A proxy need not be a Shareholder.

13 Appendix III FORM OF PROXY FOR EXTRAORDINARY GENERAL MEETING INSIGHT LIQUIDITY FUNDS PLC (the Company) I/We being a shareholder of the above named Company, hereby appoint, or failing him/her the Chairman of the meeting, or failing him/her, Mr Ryan Walker of Northern Trust International Fund Administration Services (Ireland) Limited, or failing him, Ms Laura Gleeson of Northern Trust International Fund Administration Services (Ireland) Limited, or failing her, Ms Aideen Colgan of Northern Trust International Fund Administration Services (Ireland) Limited as my/our* proxy to vote for me/us* on my/our* behalf at an Extraordinary General Meeting of the shareholders of the Company to be held at George s Court, Townsend Street, Dublin 2, on Tuesday, 13 January 2015 at 9.30am and at any adjournment thereof. * DELETE AS APPROPRIATE Signature: Date: PLEASE INDICATE WITH AN X IN THE SPACE BELOW HOW YOU WISH YOUR VOTE TO BE CAST. UNLESS OTHERWISE INSTRUCTED, THE PROXY WILL VOTE OR ABSTAIN FROM VOTING AS HE THINKS FIT. Special Business FOR AGAINST To adopt the revised Articles of Association of the Company amended to reflect the changes contained in Appendix I to the Circular to Shareholders of the Company dated 17 December 2014, subject to the incorporation of any amendments pursuant to requirements of the Central Bank as may be approved by any one Director for and on behalf of the Company, in place of the existing Articles of Association of the Company. Please return to: Northern Trust International Fund Administration Services (Ireland) Limited Georges Court Townsend Street Dublin 2 Ireland Attention: Ryan Walker

14 Notes: 1. This instrument of proxy, to be valid, must be sent by post so as to arrive, or be lodged, at the address printed below not later than a half an hour before the time fixed for the meeting. 2. A Shareholder may appoint a proxy of his own choice. If you wish to appoint as your proxy some person other than the Chairman of the meeting, insert in block capitals the full name of and address of the person of your choice and delete Chairman. A proxy need not be a Shareholder to attend and on a poll to vote in his stead. 3. At any general meeting, resolutions put to the meeting shall be decided on a show of hands unless before or upon the declaration of the result of the show hands, a poll is demanded. Every Shareholder entitled to vote who is present in person or by proxy will have one vote. On a poll every Shareholder entitled to vote who is present in person or by proxy will have one vote in respect of every participating share in the Company registered in his name. 4. In the case of joint Shareholders, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint Shareholders and for this purpose seniority shall be determined by the order in which the names appear in the register of Shareholders. 5. If the appointer is a corporation, this form must be executed under common seal or under the hand of some officer or attorney duly authorised to act on its behalf. 6. If this instrument is signed and returned without any indication of how the person appointed proxy shall vote, the proxy will exercise his discretion as to how he votes and whether or not he abstains from voting. 7. To be valid this Proxy Form and the power of attorney or other authority (if any) under which it is signed (or a notarially certified copy thereof) must be deposited at Northern Trust International Fund Administration Services (Ireland) Limited, Georges Court, Townsend Street, Dublin 2, Ireland, for the attention of [Ryan Walker.] You are recommended to allow at least five days for posting. 8. Proxy forms may be returned in the first instance by fax to or Dublin_Corp_Sec_Minute_Taking_Team@ntrs.com but the original should be forwarded by mail to the address shown at 7 above. 9. The completion and return of the form will not preclude Shareholders from attending and voting at the said Meeting should they decide to do so.