shareholders to get a straight vote on winding up decision by 20 may
The board of the Aberdeen Emerging Countries trust is again proposing to wind it up, after a previous attempt failed due to warrant holder concerns. This time Aberdeen will not offer a specific rollover vehicle for investors.
At an EGM held in April, warrant holders in Aberdeen Emerging Economies voted against winding up the investment trust as they were not being offered market price for their paper.
Under board proposals warrant holders were offered 8p for each warrant at a time when the market price stood at 15.75p. The monies raised from the wind up of the portfolio, managed by Hugh Young, were then going to be rolled into Aberdeen's Emerging Markets unit trust.
The EGM marked the first time warrant holders have ever stopped a reconstruction of an investment trust. In situations where a rollover vehicle is being offered to shareholders, warrant holder approval is needed.
The latest proposals, to be put forward to shareholders by no later than May 20, just require the vote of shareholders as the vote is for a straight wind-up of the trust, which does not require warrant holder approval. Warrant holders will receive 8p per warrant.
Andrew McHattie, publisher of the Warrants Alert, the newsletter from the McHattie Group, said: 'In other words the directors are saying that now warrant holders have voted down their scheme, they will carry on with a similar scheme anyway.
'At a time when investment trusts are trying to woo private investors and to gain their faith and confidence in these vehicles as well-governed responsible methods of investment, this seems an odd message to send.'
Ian Sayers, technical director at the AITC, said warrant holders are not afforded the same rights and protection as shareholders receive under company law.
He added: 'Their rights are pretty much set out in the warrant deed and, while the board must clearly ensure that the terms of the deed are complied with, they do not owe warrant holders the same general duties as they do shareholders.'
The board of £43m trust was forced to put forward proposals to wind it up after its largest institutional shareholder, City of London called for an immediate winding up of the trust in August last year.
City of London withdrew this requisition later in the same month when the board said it would put forward its own proposals for the winding up of the company.
Piers Currie, head of investment trusts at Aberdeen, said that while warrant holders do not want the trust to wind up, the problem is that the City of London forced the board to have to wind up the company.
He said that the board never wanted to wind up the trust, indeed since the ordinary resolution in August to 1 May, the trust has returned 46.7% in share price terms.
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