Amati VCT 2
Terms and Conditions
Information for users
Before finding out more about Amati VCT 2 plc, it is important that you first read and understand the information set out below.
Amati VCT 2 plc is an investment company within the meaning of section 266 of the Companies Act 2006. Registered in Scotland, company number 278722. The Manager of the Trust is Amati Global Investors Limited, authorised and regulated by the Financial Conduct Authority.
Important information for Investors
The information contained on the following pages has been prepared for the use of those people who are United Kingdom residents for tax and investment purposes. Amati believes that the information provided is accurate as at the date of its publication, but no representation or warranty of accuracy is given by Amati and therefore no liability in respect of any error or omission by a third party is accepted by Amati or its affiliates or any of their directors, employees, consultants or agents.
The information contained in this web site is subject to change without prior notice and is not to be reproduced, copied or otherwise made available to persons other than those for whom it is intended, especially anyone outside the UK for tax or investment purposes, without the prior written consent of Amati.
This web site and its contents have been issued and approved by Amati, in its capacity as Amati VCT 2 plc's investment manager. Amati Global Investors is authorised and regulated in the United Kingdom by the Financial Conduct Authority. Any comments expressed reflect the views of Amati Global Investors and should not be taken as any kind of recommendation or advice.
We recommend that potential investors seek independent financial advice prior to investing in a VCT. Investment in a VCT carries a higher risk than many other forms of investment.
For more information relating to risks, please see the important information section, headed "important risk warnings". Please note that this is not a prospectus and does not constitute an offer, invitation or solicitation to subscribe for shares. Subscription for shares in Amati VCT 2 plc may only be made on the basis of the prospectus relating to the company and offers for subscription.
Important risk warnings
The Directors draw the attention of potential investors to the following risk factors which may affect the Company's performance and/or the availability of tax reliefs.
Offer related risks
The market price of the ordinary shares may not fully reflect their underlying net asset value. The value of an investment in the company, and the income derived from it, may go down as well as up and an investor may not get back the amount invested. Although the ordinary shares will be listed on the official list and admitted to trading on the London Stock Exchange, it is possible that there may not be a liquid market in the ordinary shares and shareholders may have difficulty in selling them. Details of the buy-back policy are included in the Prospectus.
VCT investment should be viewed as a long-term investment with shares being held for a minimum of five years from the date of issue in order for the shareholder to retain the initial income tax relief received following subscription. The past performance of funds managed or advised by the Manager or previous Manager is not necessarily a guide to the future performance of the company. Any realised losses on a disposal of ordinary shares will not be allowable losses for the purposes of capital gains tax, and will therefore not be available for set off against any capital gains. Proper information for determining their value or the risks to which they are exposed may also not be available. Smaller companies are less likely to have multinational markets for their products or services than large companies and, as a result, may be more exposed to national economic cycles rather than global economic cycles. Investment in the company should be regarded as long-term in nature and is not suitable for all individuals. Potential investors should consult their independent professional advisers in deciding how much they should invest in the company or if at all. There can be no guarantee that the company's investment objectives will be achieved.
Amati VCT 2 plc shares have not been and will not be registered under the United States Securities Act 1933. The information on this website is not intended for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States of America to or for the benefit of any United States persons.
Gearing, where borrowing is used to fund further investment, can increase the returns in rising markets and decrease the returns in market downturns.
Realisations of investments in AIM-traded companies and unquoted investments can sometimes be more difficult than realisation in companies listed on the official list of the UK Listing Authority and can take more time. The company's ability therefore to obtain maximum value from its investments (for example, through a sale or takeover) may be restricted because of the requirement to satisfy certain conditions necessary for it to maintain its VCT status (such as the condition that not less than 70% by value of its investments must be in qualifying holdings). Investments in AIM-traded companies and unquoted investments can involve a higher degree of risk than investment in companies listed on the official list. In particular, smaller companies often have limited product lines, markets or financial resources and may be dependent for their management on a smaller number of key individuals. In addition, the market for stock in smaller companies is often less liquid than that for stock in larger companies, bringing with it potential difficulties in acquiring, valuing and disposing of such stock.
AIM is designed primarily for emerging or smaller companies. Such companies may in comparison to companies quoted in the official list, have less mature businesses, a more restricted depth of management and a higher risk profile. The rules of this market are less demanding than those of the official list. The London Stock Exchange does not itself examine prospectuses or admission documents relating to AIM companies. The spread between the buying price and the selling price of AIM-traded companies' shares may be wide and thus the mid-market price used for valuation may not be achievable. Unquoted shares are inherently more difficult to value and, as a result, valuations are subject to uncertainty. The market for new shares on AIM is subject to market forces and there can be no certainty that there will be sufficient new share issues to enable to the company to achieve the intended level of investment in qualifying investments. The Manager may use market traded derivatives on a suitable stock index rather than investing the fund in cash or other less volatile instruments, in order to achieve a limited degree of portfolio insurance. Investors however should be aware that there is no guarantee that portfolio insurance will be in place during a falling market. The use of these instruments will reflect the manager's view of the market risks which may be taken.
Tax related risks
The tax rules or their interpretation in relation to an investment in the company and/or rates of tax may change during the life of the company. There can be no guarantee that the company will achieve or maintain full VCT status. If the company fails to obtain full approval as a VCT, or ceases to retain approval as a VCT before qualifying subscribers have held their ordinary shares for three years, the 40% income tax relief obtained will have to be repaid. Following a loss of VCT status a qualifying subscriber will be taxed on dividends paid by the company and, in addition, a liability to capital gains tax may arise on any subsequent disposal of ordinary shares. Where full approval as a VCT is not achieved within the three year limit, any dividends previously paid to shareholders will be liable to be assessed to income tax in the year in which they were paid. Interest may also be due. The company will also lose its exemption from corporation tax on capital gains. If at any time VCT status is lost, dealings in the ordinary shares will normally be suspended until such time as the company has published proposals either to continue as an investment company or to be wound up. Further information concerning the loss of VCT status is set out in the prospectus. The information in this document is based on existing legislation, including taxation legislation. The existing levels and bases of, and reliefs from, taxation may change. The value of tax reliefs depends on the personal circumstances of investors, who should consult their own tax advisers before making any investment. In addition the VCT legislation in relation to what constitutes a qualifying holding has changed regularly, as described in the introductory section to Amati VCT 2 on this website. There is a risk that future changes could increase the risk profile of the investments which Amati VCT 2 needs to make in order to maintain its qualifying status.
The Manager may use market-traded derivatives on a suitable stock index rather than investing the fund in cash or other less volatile instruments, in order to achieve a limited degree of market risk mitigation. However, investors should be aware that there is no guarantee that this risk mitigation will be available at any time, whether through the use of derivatives or otherwise. The use of derivatives and other instruments will reflect the Manager's view of the market risks which may be taken at the time.
Derivative positions will always be covered by the assets of the portfolio and will not be used speculatively, however investors should be aware of the following risks relating to derivatives:
- The type of derivatives which the Manager intends using are referred to as contracts for differences. These can be options and futures on the FTSE 100 Index or any other index, as well as currency and interest rate swaps. However, unlike other futures and options, these contracts can only be settled in cash. Investing in a contract for differences carries the same risks as investing in a future or an option. Transactions in contracts for differences may also have a contingent liability.
- Transactions in futures involve the obligation to make, or to take, delivery of the underlying asset of the contract at a future date, or in some cases to settle the position with cash. They carry a high degree of risk. The "gearing" or "leverage" often obtainable in futures trading means that a small deposit or down payment can lead to large losses as well as gains. Futures transactions also have a contingent liability.
- If the Manager writes an option, the risk involved is considerably greater than buying options. The Company may be liable for margin to maintain its position and a loss may be sustained well in excess of the premium received. By writing an option, the Company accepts a legal obligation to purchase or sell the underlying asset if the option is exercised against it, however far the market price has moved away from the exercise price.
Contingent liability investment transactions, which are margined, require the Company to make a series of payments against the purchase price, instead of paying the whole purchase price immediately. If the Manager trades in futures contracts for differences or sell options, the Company may sustain a total loss of the margin deposited to establish or maintain a position. If the market moves against it, the Company may be called upon to pay substantial additional margin at short notice to maintain the position. If the Manager fails to do so within the time required, the Company's position may be liquidated at a loss and will be responsible for the resulting deficit.
Issued by: Amati Global Investors Limited, authorised and regulated by the Financial Conduct Authority. Registered in Scotland no. SC199908 Registered office 18 Charlotte Square, Edinburgh, EH2 4DF