Puma Vct 13 : Circular to shareholders with notice of general meeting - related party transaction

Puma VCT 13 plc

General Meeting in connection with recommended proposals to amend the performance incentive fee arrangements for Puma Investments

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 a person authorised under the Financial Services and Markets Act 2000 (FSMA) who specialises in advising on the acquisition of shares and other securities.

If you have sold or otherwise transferred all of your Ordinary Shares in Puma VCT 13 plc (the "Company"), please send this document and accompanying documents, as soon as possible, to the purchaser or transferee or to the stockbroker, authorised financial adviser or other person through whom the sale or transfer was effected for delivery to the purchaser or transferee.

This document comprises a circular prepared in accordance with the Listing Rules made under section 73A of the FSMA for the purposes of the General Meeting of the Company convened pursuant to the Notice of General Meeting set out at the end of this document.

This Circular has been approved by the FCA in accordance with section 87A of the FSMA and will be made available to the public.

Howard Kennedy Corporate Services LLP ("Howard Kennedy"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting for the Company in respect of the subject matter of this Circular and no-one else and will not, subject to the responsibilities and liabilities imposed by FSMA or the regulatory regime established thereunder, be responsible to any other person for providing the protections afforded to clients of Howard Kennedy or for providing advice to any other person in relation to the contents of this document or on any other matter referred to in this Circular.

P U M A V C T 1 3 P L C

(Incorporated in England and Wales with registered number 10376236)

General Meeting in connection with

recommended proposals to amend the performance incentive

fee arrangements for Puma Investments

Your attention is drawn to the letter from the Chairman of the Company set out in Part I of this document which contains a recommendation from the Board to vote in favour of the Resolution to be proposed at the General Meeting to be held at 5.30 p.m. on 27 July 2023 (or, if earlier, immediately after the conclusion of the Company's annual general meeting to be held on 27 July 2023) at Cassini House, 57 St James's Street, London, SW1A 1LD.

Notice of the General Meeting is set out at the end of this Circular.

To be valid, the form of proxy enclosed with this document for the General Meeting should be completed and returned not later than 5.30 p.m. on 25 July 2023, either by post or by hand (during normal business hours only) to the Company's Registrar, Neville Registrars, Neville House, Steelpark Road, Halesowen B62 8HD or by email to [e-mail].

The right to vote at the General Meeting is determined by reference to the register of members at close of business two days prior to the General Meeting. Accordingly, to be entitled to vote, Shareholders must be entered in the register of members by close of business on 25 July 2023.

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Contents4

Part I

Letter from the

Chairman

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Part II Additional information

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Part III

Definitions

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Part IV Details of the proposed amendments to the performance incentive fee arrangements

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Notice of the

General

Meeting

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Form of Proxy

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PA R T I

Letter from the Chairman

Puma VCT 13 plc

(Incorporated in England and Wales with registered number 10376236)

D I R E C T O R S	R E G I S T E R E D O F F I C E
David Buchler (Chairman)	Cassini House
Stephen Hazell-Smith	57 St James's Street
Graham Shore	London SW1A 1LD

15 June 2023

Dear Shareholder,

Recommended proposals to amend the performance incentive fee arrangements between the Company and its investment manager, Puma Investment Management Limited ("Puma Investments")

Following discussions between the Board and Puma Investments, I am writing to you to propose changes to the current Investment Management Agreement to better align the way that the performance incentive fee ("PIF") is calculated to ensure it properly rewards Puma Investments for the performance of the Company's portfolio.

Background

Following the decision of the Board in October 2020 to change the Company from a limited life VCT to an evergreen VCT, the Board has kept under review the operation of the PIF (in particular, whether some of the incentive fee arises for technical reasons rather than due to genuine performance of the Company's investment portfolio). As a result of this, recently

it has become apparent to the Board and Puma Investments that some adjustments need to be made to the existing arrangements.

More generally, and after ongoing discussions with Puma Investments, the Board believes that the overriding principle of the PIF should be to incentivise Puma Investments based purely on the investment gains within the portfolio in a relevant accounting period (net of costs), so that Puma Investments is rewarded on portfolio improvement unaffected by

any changes to the share capital of the Company (including the issue of new shares and/or the buyback of shares by the Company). In addition to proposing changes to the methodology for calculating the PIF to correct the two anomalies described below, the Board and Puma Investments have agreed that

the Auditors should have the ability to make any necessary adjustments to the calculation of the PIF for the relevant accounting period to ensure that the PIF complies with the "overriding" principle stated above. The two anomalies that have been identified with regards to the methodology for calculating the PIF under the current Investment Management Agreement are:

1. Given that there is the potential for share buybacks to feature more prominently in the operation of the Company going forward, it has been noted that the current PIF arrangements reward Puma Investments for gains in NAV per Share that simply result from the Company making share buybacks (which is unrelated to the performance of the Company's investment portfolio). The stated buyback policy of the Company anticipates Ordinary Shares being bought back at a 5% discount to the latest published NAV per Share, which has the effect of increasing the NAV per Share of the remaining Ordinary Shares in issue, which currently forms the basis for the calculation of the Performance Value per Share, which then feeds into the PIF calculation. Consequently, this could contribute to the payment of a higher level of PIF.

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2. The Company publishes its financial results twice a year - in its annual report and accounts (usually released in May or June) and its interim reports (usually released in November each year). As well as publishing its NAV per Share in its financial results, the Company also occasionally announces an unaudited NAV per Share at other times at the Board's discretion (for example, after the realisation of a significant investment).

When the Company raises new funds the number of Ordinary Shares to be issued to investors is largely determined by reference to the last published NAV per Share, so new Ordinary Shares are issued at varying share prices during the course of the relevant offer. On occasions this does not reflect the "actual" underlying NAV per Share of the Company at the time of allotment, as the last published NAV per Share before a share issue may have been determined by the Board some time ago, and the relevant annual report and accounts or interim reports may not be published for some time thereafter.

Furthermore, the calculation of the PIF is based on the Performance Value per Share (which takes into account all dividends paid up to the date of the end of the accounting period, and all PIFs previously paid). The Performance Value per Share is, therefore, always higher than NAV per Share. The fact that the price per Share on a share buyback, or an allotment of new Ordinary Shares is based on NAV per Share (even if it were an up to date NAV per Share) means that those share transactions are not on a level playing field with the Performance Value per Share and thereby artificially impact the calculation of the PIF.

All of the above anomalies artificially affect the NAV per Share on which the PIF is based.

To address these issues, it is proposed (subject to shareholder approval) that the calculation of the PIF for a relevant accounting period is amended to adjust for the impact of any share transactions (including, as applicable, the issue of new shares and/ or the buyback of shares by the Company) which have been carried out during that period at varying share prices, so that Puma Investments is rewarded on portfolio improvements (net of costs) unaffected by any changes to the share capital of the Company. The adjustment will operate so that the relevant share price for any such share transaction will be deemed to have been at the prevailing Performance Value per Share as at the start of the relevant accounting period. The purpose of the proposed amendments is to ensure that Puma Investments is properly rewarded in line with the performance of the investment portfolio,

after costs, so as to result in Puma Investments receiving a PIF that equates to 20 per cent. of the investment gain within the portfolio (net of costs) for the relevant accounting period. The payment of the PIF will continue to be subject to the hurdle of the adjusted Performance Value per Share exceeding the High Watermark (being the higher of 110p and the highest Performance Value per Share at the end of any previous accounting period).

A detailed explanation of the proposed amendments to the PIF arrangements is set out in Part IV of

this document. It is proposed that if Shareholders approve the proposals set out in this document, the amendments will take retrospective effect from 1 March 2022 (being the start of the Company's previous accounting period) and a PIF of £637,000 (inclusive of VAT where applicable) will become payable to Puma Investments.

The proposed amendments described in this document together constitute a related party transaction under the Listing Rules, as it is a transaction between the Company and Puma Investments (as the Company's investment manager, Puma Investments, is a "related party" under the Listing Rules). Since the potential financial benefit of the proposals to Puma Investments cannot be quantified, the Listing Rules require the Company to seek Shareholder approval of the proposals. This is the subject matter of the Resolution to be proposed at the General Meeting.

The Directors believe that the amended PIF structure will provide a strong incentive for the Investment Manager to generate as much value as possible

for Shareholders, and is more appropriate for an "evergreen" VCT.

As Graham Shore, a director of the Company, is also an employee of the Puma Group, which is a related party of the Company under the Listing Rules, he has not taken part in the Board's consideration of the proposals relating to the amendment of the PIF.

Shareholder Approval

Notice of the General Meeting is set out at the end of this document. The General Meeting will be held at 5.30 p.m. on 27 July 2023 ( or if earlier, immediately after the conclusion of the Company's annual general meeting to be held on 27 July 2023).

An explanation of the Resolution is set out below:

The Resolution is an ordinary resolution to approve the proposed variation to the Investment Management Agreement between the Company

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