RFM is pleased to advise the outcome of a Rural Funds Group (RFF) General Meeting held today.
The resolutions, which were decided by poll, were passed. The Board of Rural Funds Management Limited (RFM) had recommended Unitholders vote in favour of Resolution 1, but as Resolution 2 involved amending RFM’s fees, the Board was unable to provide a recommendation with respect to Resolution 2.
Resolution 1 considered the adoption of a new RFF Constitution and the stapling proposal. The new constitution provides an appropriate framework for an entity operating on the ASX. This is in contrast to RFF’s previous constitution which was adopted over 10 years ago for an unlisted trust.
The new constitution also contains provision for RFF to be stapled to another trust, RF Active. This trust has been established to house the small amount of “active” assets. The isolation of active assets from RFF’s passive assets is sensible as it allows passive risk and operating risk to be separated into two separate trusts. Further RFF’s passive rental income, which represents the vast majority of RFF’s revenue stream, is expected to continue to receive flow through taxation treatment and thus be taxed in the hands of the investor. Distributions from RF Active are expected to be taxed at the corporate rate, currently 30%, and any franking credits distributed to Unitholders.
Resolution 2 simplifies the fees proposed by RFM and sought Unitholders consideration to remove the acquisition fee and insert a termination fee.
Additional information about each of the resolutions is contained in the Explanatory Memorandum and additional information about RF Active is contained in the Product Disclosure Statement.
As a result of the passing of Resolution 1, a new Fund Constitution has been adopted. The administrative steps to give effect to the Stapling have commenced. Deferred settlement trading will commence from 10 October 2014. As set out in the Explanatory Memorandum dated 29 August 2014, RFF Unitholders will be issued units in RF Active, which will then be stapled to their RFF units. It is expected that the stapled securities will commence trading on a T+3 basis from 22 October 2014.
As a result of Resolution 2 being passed, the Termination Fee proposed will be included in the new Constitution, and the existing Acquisition Fee will be removed.
Please direct any enquiries to RFM Investor Services by telephone on 1800 026 665 or at firstname.lastname@example.org.