Ruffer Regulatory News (RICA)

1 April 2022

RUFFER INVESTMENT COMPANY LIMITED

(a closed-ended investment company incorporated in Guernsey with registration number 41996)

(the "Company")

Publication of Circular and Notice of EGM

The Company announces that it has today published a circular to shareholders and notice of extraordinary general meeting of the Company to be held at 10.00 a.m. on Thursday, 21 April 2022 at the Company's registered office, Sarnia House, Le Truchot, St Peter Port, Guernsey, GY1 1GR (the 'Circular'). The text of the Chairman's letter and the expected timetable, extracted from the Circular, are set out below.

The Circular will be posted to Shareholders today and a copy of the Circular can be found on the Company's website at www.ruffer.co.uk/2022-04-ric-circular 

A copy of the Circular has been submitted to the National Storage Mechanism and will shortly be available for viewing online at https://data.fca.org.uk/#/nsm/nationalstoragemechanism  

Terms used and not defined in this announcement shall have the meanings given to them in the Circular.

Expected timetable

Letter from the Chairman

1 INTRODUCTION

At the Company's annual general meeting held on 3 December 2021 (the '2021 AGM'), Shareholders granted the Directors authority to issue up to 22,678,841 Shares, being 10% of the Company's issued share capital as at that date, and to dis-apply pre-emption which would have required share issuance pro rata to all Shareholders.

Due to ongoing demand for the Shares in the market, the authority granted at the 2021 AGM was substantially utilised by February 2022. Additional Shareholder authority to issue a further 26,312,563 Shares for cash on a non-pre-emptive basis was granted at an extraordinary general meeting held on 25 February 2022 (the '2022 EGM'). This was 10% of the number of Shares in issue at that date.

As at 31 March 2022, which was the latest practicable date prior to the publication of this document, the Company has issued 40,550,000 Shares pursuant to the authorities granted at the 2021 AGM and the 2022 EGM. These authorities have been substantially utilised with a balance of 8,441,404 Shares remaining to be issued so the Directors are now seeking approval from Shareholders for an additional authority to be granted.

Share issuances, utilising the authorities granted at the 2021 AGM and the 2022 EGM to date, have been made at a price per Share of no lower than the last published Net Asset Value per Share at the time of the relevant issue plus costs, thereby protecting existing Shareholders from any economic dilution. Future Share issuances will be made on the same basis.

The Directors are also taking the opportunity to propose that the existing cap on Directors' fees of £200,000, which has remained unchanged since 2013, is increased to £300,000 for the reasons set out at paragraph 6 below.

2 RENEWAL OF AUTHORITY TO ISSUE SHARES ON A NON-PRE-EMPTIVE BASIS

The Shares have continued to trade at a premium to the Net Asset Value per Share since February 2021, evidencing strong ongoing demand for them in the market. As part of the Board's efforts to satisfy this demand and instil a degree of premium control, the Company has issued 40,550,000 Shares during the period from the 2021 AGM to 31 March 2022 by way of regular tap issuances. This is in addition to the 13,787,221 Shares issued by the Company on 6 December 2021 pursuant to an open offer, offer for subscription and intermediaries offer undertaken by the Company.

The tap issuances have utilised the 2021 AGM authority and the existing 2022 EGM authority at an average price of 301.2 pence per Share and at an average 2.06% premium to the Net Asset Value per Share at the time of issue. Accordingly, the authority granted at the 2021 AGM has been fully utilised and the authority granted at the 2022 EGM has been substantially utilised, with a balance of 8,441,404 Shares remaining to be issued under the existing 2022 EGM authority as at 31 March 2022.

In order to seek to satisfy continuing demand for Shares, and given the benefits to existing Shareholders described below, the Directors have resolved to convene the EGM on 21 April 2022 to seek additional Shareholder authority to issue further Shares for cash on a non-pre-emptive basis.

The Resolution to be considered at the EGM will, if passed, give the Directors immediate authority to dis-apply pre-emption for up to 10% of the number of Shares in issue at that date. As with the Share issuances to date, the Shares will be issued at a price which is at a premium to the last published Net Asset Value per Share at the time the relevant allotment is agreed plus the costs of the issue. Any issuance will therefore be accretive to the Net Asset Value per Share.

The authority conferred by the Disapplication of Pre-Emption Resolution will lapse on the date which is 18 months from the date of the passing of the Disapplication of Pre-Emption Resolution or, if earlier, at the conclusion of the next annual general meeting of the Company (the '2022 AGM'), to be held in December 2022, when the Directors will seek to renew the authority. If the authority conferred by the Disapplication of Pre-Emption Resolution is exhausted before the 2022 AGM, or if the authority renewed at the 2022 AGM is subsequently exhausted, then the Directors intend to seek Shareholder authority to issue further Shares on a non-pre-emptive basis at one or more subsequent extraordinary general meetings.

Aside from the matter of Shareholder authority to dis-apply pre-emption, the Company must also comply with the requisite provisions of the Prospectus Regulation when issuing new Shares, and in particular the rolling requirement that the Company should not issue more than 20% of its share capital during any preceding 12 month period without having published a prospectus.

In the event that Shareholders approve the Disapplication of Pre-Emption Resolution, and assuming that demand for the Shares continues at recent levels, there is a high likelihood that future issuance will be such as to trigger the requirement for a prospectus if the Company wishes to make full use of the authority granted by the Disapplication of Pre-Emption Resolution, and that which will be sought at the 2022 AGM. Accordingly, it is currently the intention of the Directors to publish a prospectus shortly in order to 'reset' the 20% capacity afforded under the Prospectus Regulation.

3 BENEFITS OF THE RENEWAL OF THE AUTHORITY TO ISSUE SHARES ON A NON-PRE-EMPTIVE BASIS

The Directors believe that any Share issuance pursuant to the authority conferred by the Disapplication of Pre-Emption Resolution should continue to yield the following principal benefits

- maintenance of the Company's ability to issue Shares to meet ongoing demand in the market in order to provide effective management of the premium to Net Asset Value per Share at which the Shares may trade so as to help to ensure that long-term investors who regularly acquire Shares are not disadvantaged

- an increase in the size of the Company, thereby spreading operating costs, other than management fees which are charged by reference to the Net Asset Value, over a larger capital base which should reduce the ongoing charges ratio

- enhancement of the Net Asset Value per Share of existing Shares through share issuance at a premium to the last published Net Asset Value per Share plus the costs of the issue and

- improvement of liquidity in the market for the Shares enabling easy purchase and sale providing Shareholders with flexibility in the management of their own wealth without impacting the investment decisions of the Company.

4 USE OF PROCEEDS

The net proceeds of any Shares issued pursuant to the authority conferred by the Disapplication of Pre-Emption Resolution will be invested in accordance with the Company's published investment policy.

5 DILUTION AND TREASURY SHARES

The issue of Shares pursuant to the authority conferred by the Disapplication of Pre-Emption Resolution will dilute the voting control of existing Shareholders. Assuming that the balance of 8,441,404 Shares remaining under the existing 2022 EGM authority are issued prior to the EGM, the authority conferred by the Disapplication of Pre-Emption Resolution is used in full, and the new Shares are not issued to existing Shareholders, this will result in an aggregate dilution of approximately 11.74% in existing Shareholders' voting control of the Company (based on the Company's issued share capital as at 31 March 2022).

As at the date of this document the Company does not hold any shares in treasury.

6 PROPOSED INCREASE OF DIRECTORS' FEE CAP

The Articles of Incorporation currently limit the total remuneration which can be paid to non-executive directors of the Company in any one year to £200,000 (the 'Fee Cap'), a limit which has remained unchanged since 2013. In the financial year to 30 June 2022, the total fees paid to the Directors are anticipated to be £194,350, which is very close to the Fee Cap. The Directors are now seeking Shareholder approval by ordinary resolution pursuant to article 29.1 of the Articles of Incorporation, of a Fee Cap increase to £300,000 for the reasons set out below.

The Company's annual report for the financial year ended 30 June 2021 drew attention to an analysis which showed that the fees paid to the Directors were below the average for all investment companies with market capitalisations over £500 million and well below those paid to directors of Channel Island companies. The interim report for the period ended 31 December 2021 further explained that a third party, Trust Associates, had been engaged for an in-depth review of directors' time, responsibility, complexity and experience involved as well as competitive fees.

Trust Associates noted that the Company is the only London-listed investment company managed by Ruffer and some of the work which is typically supported by groups with larger stables of investment companies falls to the Audit and Risk Committee and Board. The Company has also been active in terms of portfolio investment and premium control through Share issuance. Net Asset Value calculation and transaction reporting to the Board are weekly, as has recently been Share issuance, and the increase in company size to FTSE 250 status now implies a higher level of scrutiny and risk. The total uplift in current Directors' fees recommended by Trust Associates was to £230,150.

Annual Directors' fees for the ten years to the financial year ending 30 June 2022 are anticipated to have risen in total by 35.4%, to £194,350. This compares to a 33.5% increase in the Retail Price Index in the ten year period from January 2012 to January 2022. This represents an increase in Directors' fees of only 1.9% in real terms over these comparable ten year periods despite a significant real increase in the workload and time commitment of the Directors, all of whom are non-executive.

When the Board was seeking to hire new directors in 2019, a number of desirable candidates declined to be considered because of the level of fees at the time. The Company is once again in the process of seeking new directors and is keen that remuneration should be competitive with peer companies in order to attract high quality candidates.

Later this calendar year, the Board expects to increase the number of non-executive directors temporarily, albeit only for a few months, before the intended retirement of two current directors at the 2022 AGM. In particular, it is important that the new chair of the Audit and Risk Committee joins the Board in good time to ensure a seamless handover of that role. This will include gaining familiarity with the preparation of the annual report for the financial year ended 30 June 2022 and the associated audit process before the current Chair of the Audit and Risk Committee retires. The temporary increase in Board numbers will still need accommodation within an increased Fee Cap.

Remuneration policy is set by the Board. There is no separate remuneration committee; there are no incentive fees; there are no additional one-off payments made for any extra time involved except for the posts of Company Chair, Senior Independent Director and Audit and Risk Committee Chair, which all involve regular added time and responsibility.

The principal objectives of the remuneration policy are: simplicity, transparency, competitiveness and fairness. To achieve these objectives, the Board has agreed that an external remuneration review will in future be held triennially in line with the triennial external Board review. This external review will consider the Fee Cap and will recommend and explain to Shareholders any changes deemed necessary, which will be subject to Shareholder approval by ordinary resolution in accordance with article 29.1 of the Articles of Incorporation. Between the external reviews, an annual in-house review will take into account any sustained changes in workload, in inflation or in comparators with the peer group. Any changes to Directors' fees as a result will be subject to the then current Fee Cap, as approved by Shareholders by ordinary resolution.

7 EXTRAORDINARY GENERAL MEETING

The EGM will be held at the Company's registered office, Sarnia House, Le Truchot, St Peter Port, Guernsey, GY1 1GR on 1 April 2022 at 10.00 am. The formal notice convening the EGM is set out at the end of this document.

The Disapplication of Pre-Emption Resolution is a special resolution and, in order to be passed, will require the approval of Shareholders representing at least 75% of the votes cast at the EGM. The Increase of Directors' Fee Cap Resolution is an ordinary resolution and, in order to be passed, will require the approval of Shareholders representing over 50% of the votes cast at the EGM.

In accordance with the Articles of Incorporation, all Shareholders present in person or by proxy shall upon a show of hands have one vote and upon a poll have one vote in respect of each Share held. In order to ensure that a quorum is present at the EGM, it is necessary for two Shareholders entitled to vote to be present, whether in person or by proxy (or, if a corporation, by a representative) holding 5% or more of the voting rights available in respect of the EGM. In the event that the EGM is adjourned and the above-mentioned quorum is not present, at such adjourned EGM the quorum shall be one Shareholder.

As soon as practicable following the EGM, the results of the voting will be announced via a Regulatory Information Service and also placed on the Company's website, ruffer.co.uk/ric.

8 ACTION TO BE TAKEN

Shareholders will find enclosed with this document a personalised Form of Proxy for use in connection with the EGM. Submission of the Form of Proxy will enable your vote to be counted at the EGM in the event of your absence (please see the section titled ' Covid-19' on page 2 of this document for further information on potential restrictions on attendance at the EGM).

Shareholders are asked to complete and return the Form of Proxy in accordance with the instructions printed thereon as soon as possible and, in any event, so as to reach the Company's registrar, Computershare Investor Services (Guernsey) Limited, by no later than 10.00 am on 19 April 2022. The Form of Proxy can be returned by delivery to the offices of Computershare Investor Services (Guernsey) Limited, c/o The Pavilions, Bridgwater Road, Bristol, United Kingdom, BS99 6ZY, online at investorcentre.co.uk/eproxy, or by email to #UKCSBRS.ExternalProxyQueries@computershare.co.uk or, in the case of CREST members, by utilising the CREST electronic proxy appointment service in accordance with the procedures set out in the Notice of Extraordinary General Meeting and the CREST Manual on the Euroclear website, euroclear.com.

In light of the ongoing uncertainty as a result of the covid-19 pandemic, including as to how any restrictions imposed by the States of Guernsey in response thereto (as described under the heading 'Covid-19' on page 2 of this document) may change between the date of this document and the date of the EGM, the Company encourages Shareholders to vote by proxy at the EGM and to appoint the chairman of the meeting as their proxy for that purpose. If a Shareholder appoints someone other than the chairman of the meeting as their proxy or corporate representative or intends to attend and vote in person, and covid-19 restrictions are re-introduced which affect attendance at the EGM, they or their proxy or corporate representative may be unable to attend in person and therefore unable to vote at the EGM.

The appointment of a proxy will not prevent a Shareholder from attending and voting in person at the EGM if it is legally permitted at the time of the EGM and should they wish to do so.

9 RECOMMENDATION

The Directors consider the proposals set out in this document to be in the best interests of the Company and its Shareholders as a whole. Accordingly, the Directors unanimously recommend that Shareholders vote in favour of the Resolutions to be proposed at the EGM.

The Directors intend to vote in favour of the Resolutions in respect of their holdings of Shares amounting to 693,475 Shares in aggregate (representing approximately 0.25% of the issued Share capital of the Company as at 31 March 2022, the latest practicable date prior to the publication of this document).

Enquiries:

Sanne Fund Services (Guernsey) Limited

Company Secretary

Katrina Rowe

DDI: +44(0)1481 737673

Email: ric@praxisifm.com 

Investec Bank plc

Broker

David Yovichic

DDI: +44(0)20 7597 4952

Email: David.yovichic@investec.co.uk 

LEI 21380068AHZKY7MKNO47