Milkwood requisitions general meeting at Downing Strategic Micro-Cap IT

Milkwood Fund is requisitioning a general meeting at Downing Strategic Micro-Cap Investment Trust (LON: DSM), which has been selling investments as part of a managed winding down. The general meeting should be convened within seven days. Milkwood Fund believes this is the wrong time to be selling the smaller company shares in the portfolio.

Milkwood Fund has acquired a stake of more than 26% in Downing Strategic Micro-Cap. The other large shareholder is Foresight with 22.3%.

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The requisition includes the removal of Hugh Aldous and William Dawkins and the appointment of Rhys Summerton, Andre Tonkin and Paul Shackleton. Milkwood Fund also wants the 12p/share special dividend payable on 21 June – the ex-dividend date was 6 June – to be cancelled and to stop any other dividend being declared.

Milkwood Fund argues that the special dividends are tax inefficient. It says that the strategy was based on the wishes of four shareholders, and it has acquired the shares of two of those. The winding up proposal was passed by a narrow margin. The largest investor is advised by the investment manager of the investment trust, Downing.

Downing Strategic Micro-Cap launched at 100p/share It has paid a special dividend of 30p/share last year. That is part of the reason why the share price has fallen to 23.5p. NAV was 27.3p/share on 14 June. There is an intention to pay a third special dividend of up to 7p/share by the end of July. More than £1m in cash should come in from the takeover of FireAngel.

Milkwood Capital, the manager of Milkwood Fund, wants its own investment managers to join the board and they could manage the investment trust portfolio for no fee.

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