Investment trust Chrysalis Investments has questioned the need for its existing advisory arrangement as it looks to wind down the company.
On Friday (February 20) Chrysalis Investments Limited set out a new investment policy.
It said this would include the sale of all or some of the company’s assets, after which it would be wound down.
It announced an extraordinary general meeting will be held on March 24 to vote on the proposals.
The notice said in light of the changes to the investment policy, the board has also looked at options for its future management and advisory arrangements, this included whether to continue to be advised by Chrysalis Investment Partners.
It said: “The annual investment advisory fee, currently approximately £4.5mn under the existing investment advisory arrangement with CIP, was put in place three years ago to support the development of CIP as an independent entity with the required resources, structure and processes to manage a multi-asset growth portfolio which was continuing to assess and make new investments.
“Given the new investment policy does not envisage new investments and is focused on realising assets in an orderly manner, the board has sought to secure changes to the investment management and advisory agreement which more appropriately reflect the new investment policy.”
However, it said the proposals for a new advisory agreement had not yet been agreed to by CIP.
It added the board believes the best option for shareholders is to end the existing arrangement with CIP, through a protective notice which has a six month notice period.
Related to the changes, Sam Dobbyn has been appointed to the board as a independent non-executive director.
In response to the notice, CIP has hit back saying it is “deeply concerned” as if the proposals are adopted the board will go forward with a self-managed approach.
It said there would be negative outcomes, if the decision was made, including increasing shareholder costs.
The CIP statement added: “This is a moment for stability, common sense and the protection of shareholder value — not disruption that places shareholder returns at unnecessary risk.”
tara.o’connor@ft.com
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