British Smaller VCT 2 : Prospectus relating to Offers for subscription

British Smaller Companies VCT plc British Smaller Companies VCT2 plc

Offers for subscription for the tax year 2023/2024 to raise up to £65 million, in aggregate, with an over-allotment facility of a further £25 million, in aggregate

bscfunds.com

Transforming small businesses

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 your bank manager, stockbroker, solicitor, accountant or other independent financial adviser authorised pursuant to the Financial Services and Markets Act 2000 (FSMA).

This document, which comprises a prospectus relating to British Smaller Companies VCT plc ("BSC") and British Smaller Companies VCT2 plc ("BSC2") (BSC and BSC2 together the "Companies") dated 20 September 2023, has been prepared in accordance with the Prospectus Regulations Rules Instrument 2019 made under Part VI of FSMA, and has been approved for publication by the Financial Conduct Authority as a prospectus under article 20 of the Prospectus Regulation.

The Companies and the Directors, whose names appear on pages 33 and 34 of this document, accept responsibility for the information contained herein. To the best of the knowledge of the Companies and the Directors, the information contained in the Prospectus is in accordance with the facts and the Prospectus makes no omission likely to affect its import. To the extent that information has been sourced from a third party, this information has been accurately reproduced and, as far as the Directors and the Companies are aware, no facts have been omitted which may render the reproduced information inaccurate or misleading. In connection with this document, no person is authorised to give any information or make any representation other than as contained in this document.

Subject to FSMA, the Prospectus Regulation Rules and applicable laws, the delivery of this document shall not, under any circumstances, create any implication that there has been no change in the affairs of the Companies since the date of this document or that the information in this document is correct as at any time after this date.

The Prospectus has been approved by the Financial Conduct Authority, as competent authority under the UK version of Regulation (EU) 2017/1129. The FCA only approves the Prospectus as meeting the standards of completeness, comprehensibility and consistency imposed by the UK version of Regulation (EU) 2017/1129. Such approval shall not be considered as an endorsement of the Companies or the quality of the New Shares that are the subject of this Prospectus. Investors should make their own assessment as to the suitability of investing in the New Shares. The Prospectus has been drawn up as part of a simplified prospectus in accordance with Article 14 of the UK version of Regulation (EU) 2017/1129.

Persons receiving this document should note that Howard Kennedy Corporate Services LLP, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as sponsor for the Companies 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 customers of Howard Kennedy Corporate Services LLP or providing advice in connection with any matters referred to herein.

Offers for Subscription

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British Smaller Companies VCT plc

(Incorporated and registered in England and Wales under the Companies Act 1985

with Registered Number 03134749)

British Smaller Companies VCT2 plc

(Incorporated and registered in England and Wales under the Companies Act 1985

with Registered Number 04084003)

Prospectus relating to: Offers for subscription by British

Smaller Companies VCT plc and British Smaller Companies VCT2 plc of New Shares to raise up to a maximum of £65 million, in aggregate, with an over- allotment facility of a further £25 million, in aggregate, payable in full in cash on application

Sponsor:

Howard Kennedy Corporate Services LLP

The Shares of the Companies in issue at the date of this document are listed on the premium segment of the Official List and traded on the London Stock Exchange's main market for listed securities. Applications have been made to the FCA for all of the New Shares to be listed on the premium segment of the Official List and applications will be made to the London Stock Exchange for the New Shares to be admitted to trading on its main market for listed securities. It is expected that such admission will become effective, and that trading will commence, in respect of the New Shares within 10 Business Days of their allotment. The New Shares will be issued in registered form and will be freely transferable in both certificated and uncertificated form and will rank pari passu in all respects with the existing Shares.

This Prospectus does not constitute an offer of, or the solicitation of an offer to subscribe for or buy, any New Shares to any person in any jurisdiction to whom it is unlawful to make such an offer or solicitation in such jurisdiction. The Offers are not being made, directly or indirectly, in or into the United States, Canada, Australia, New Zealand, Japan or the Republic of South Africa or their respective territories or possessions, and documents should not be distributed, forwarded or transmitted in or into such territories. The New Shares have not been and will not be registered under the United States Securities Act of 1933 (as amended) and may not be offered, sold or delivered, directly or indirectly, in or into the United States, Canada, Australia, New Zealand, Japan or the Republic of South Africa or in any other jurisdiction where to do so would be unlawful.

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Your attention is drawn to the risk factors set out on pages 13 and 14 of this document. Prospective Investors should read the whole text of this document and should be aware that an investment in the Companies involves a high degree of risk and should make the decision to invest only after careful consideration and, if appropriate, consultation with an independent financial adviser. All statements regarding the Companies' business, financial position and prospects should be viewed in light of such risk factors.

This document is not a KID (key information document) for the purposes of the EU Packaged Retail Investment Insurance Products Regulations or the UK PRIIPs Laws.

The contents of this document and the information incorporated herein by reference should not be construed as legal, business or tax advice. Neither the Companies nor any of the Directors or representatives or advisers are making any representation to any offeree or purchaser or acquirer of the New Shares regarding the legality of an investment in the New Shares by such offeree or purchaser or acquirer under the laws applicable to such offeree or purchaser or acquirer.

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Contents

Summary		6	Part 4:	The Offers	30
Part 1:	Risk Factors	13		4.1	Introduction to the Offers	30
	General	15		4.2	Investment strategy	30
	Timetable, Key Offers Information,			4.3	Investment policy	30
	Application Procedures and			4.4	VCT Regulations	31
	Costs of the Offers	16
		4.5	Co-investment policy	31
Part 2:	Letter from the Chairs	18
	4.6	The Investment Team	31
Part 3:	Key Investment Highlights	20
	4.7	The investment process	33
	3.1	Attraction of Venture Capital Trusts	20
		4.8	Directors	33
	3.2	The British Smaller Companies
			4.9	Terms of the Offers
		VCTs - Investment Highlights	20		35
	3.3	YFM Private Equity	22		4.10	Pricing of the Offers	36
	3.4	Consistent successful track record			4.11	Costs of the Offers	39
		of realisations	22		4.12 Annual charges	41
	3.5	Strong demand for investment in
			4.13	Conflicts of interest	43
		the UK regions	23
		Part 5:	Taxation Considerations	45
	3.6	Strong historical performance	24
	Part 6:	Financial Information on the
	3.7	Broad and maturing portfolio	25
		Companies	49
	3.8	Tax benefits to Investors	27
	Part 7:	Additional Information on the
	3.9	Providing improved liquidity
			Companies	58
		and buy-back policy	27	Part 8:	Definitions	76
	3.10	Dividends and Dividend
		Part 9:	Terms and Conditions of the
		Re-investment Schemes	27
			Dividend Re-investment Schemes	80
	3.11	Practices and operations	28
	Part 10: Terms and Conditions of Application	84
	3.12	Committees	28
	Manager and Service Providers	88
	3.13	Custody arrangements	29

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