Downing Strategic Micro Cap Investment Trust : Shareholder Circular

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

If you are in any doubt as to the action you should take, you should immediately consult your stockbroker, bank manager, solicitor, accountant or other appropriately qualified independent financial adviser authorised under the Financial Services and Markets Act 2000 (as amended) ("FSMA") if you are in the United Kingdom or another appropriately authorised independent financial adviser if you are in a territory outside of the United Kingdom.

If you have sold, transferred or otherwise disposed of all of your ordinary shares ("Shares") in Downing Strategic Micro-Cap Investment Trust PLC (the "Company") you should pass this circular (the "Circular") and the accompanying form of proxy (the "Form of Proxy") to the stockbroker, bank or other agent through whom the sale, transfer or disposal was effected for transmission to the purchaser or transferee except that such documents should not be sent to any jurisdiction under any circumstances where to do so might constitute a violation of local securities laws and regulations. Persons into whose possession this Circular comes should inform themselves about and observe those restrictions. Any failure to comply with any of those restrictions may constitute a violation of the securities laws of any such jurisdiction. If you have sold, transferred or otherwise disposed of only part of your holding of Shares in the Company, you should retain this Circular and the accompanying Form of Proxy and consult the stockbroker, bank or other agent through whom you effected the sale, transfer or disposal.

DOWNING STRATEGIC MICRO-CAP INVESTMENT TRUST PLC

(Incorporated in England and Wales with company number 10626295 and registered as an investment

company under section 833 of the Companies Act 2006)

Amendment of Articles of Association and allotment and issue

of a non-redeemable preference management share

and

Notice of General Meeting

This Circular should be read in its entirety. Nevertheless, your attention is drawn, in particular, to the letter from the Chairman which contains a recommendation that you vote in favour of the resolution to be proposed at the general meeting referred to below (the "Resolution").

Notice of a general meeting of the Company to be held at St Magnus House, 3 Lower Thames Street, London EC3R 6HD on 20 February 2023 at 11.30 a.m. (the "General Meeting") is set out at the end of this Circular (the "Notice"). Shareholders who wish to vote on the Resolution to be considered at the General Meeting are encouraged to submit proxy appointments in advance of the General Meeting. To be valid, the Form of Proxy must be completed and returned, in accordance with the instructions printed thereon, so as to be received by the Company's registrar, Computershare Investor Services PLC (the "Registrar"), at The Pavilions, Bridgwater Road, Bristol BS99 6ZY as soon as possible, but in any event not later than 11.30 a.m. on 16 February 2023.

Alternatively, you may submit your proxy electronically by using the following link and the details provided on the Form of Proxy: www.eproxyappointment.com. Proxies submitted electronically must be transmitted so as to be received by the Registrar by no later than 11.30 a.m. on 16 February 2023. If you hold your Shares in uncertificated form (that is, in CREST) you may vote using the CREST electronic voting service in accordance with the procedures set out in the CREST Manual (please also refer to the accompanying notes to the Notice set out at the end of this Circular). Proxies submitted via CREST for the General Meeting must be transmitted so as to be received by the Registrar as soon as possible and, in any event, by no later than 11.30 a.m. on 16 February 2023.

LETTER FROM THE CHAIRMAN

DOWNING STRATEGIC MICRO-CAP INVESTMENT TRUST PLC

(Incorporated in England and Wales with company number 10626295 and registered as an investment

company under section 833 of the Companies Act 2006)

Directors	Registered Office
Hugh Aldous (Chairman)	St Magnus House
Linda Bell	3 Lower Thames Street
William Dawkins	London
Robert Legget	EC3R 6HD
	24 January 2023

Dear Shareholder,

Amendment of Articles of Association and allotment and issue of a non-redeemable preference

management share

Background

The Board of the Company announced on 20 January 2023 that the Company has identified a technical legal issue with its share capital structure.

Under the Companies Act 2006 (the "Act"), the Company must have at least one non-redeemable share in issue. However, all of the current issued shares in the Company are redeemable. In order to rectify this, the Board is convening a general meeting of the Company (the "General Meeting") to obtain approval for amendments to the Company's articles of association (the "Articles") in order to create a new class of share with minimal rights known as non-redeemable preference management shares, and to confer authority on the Board to allot one such share (the "Preference Management Share") which shall be allotted and issued to the Company's investment manager, Downing LLP (the "Investment Manager").

The General Meeting will be held at St Magnus House, 3 Lower Thames Street, London EC3R 6HD on 20 February 2023 at 11.30 a.m and the Resolution that you will be asked to consider and vote on at the General Meeting is set out in full in the Notice on pages 4 to 7 (inclusive) of this Circular.

The Preference Management Share

As noted above, in order to rectify the technical legal issue identified with the Company's share capital structure, the Board is proposing to issue a single Preference Management Share to the Investment Manager. The Preference Management Share will have a nominal value of £0.01. The Preference Management Share will have no significant rights attached to it and will carry no right to vote or participate in the distribution of surplus assets beyond the amount paid up and will not be admitted to trading on the main market of London Stock Exchange plc. For the avoidance of doubt, there is no intention to issue further Preference Management Shares.

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For completeness, the principal rights attached to the new class of Preference Management Share will be as follows:

Dividend: Entitled (in priority to any payment of dividend on any other class of share) to a fixed cumulative preferential dividend of 0.01 per cent. per annum on the nominal amount of the Preference Management Shares held by the holder, such dividend to accrue annually and to be payable in respect of each accounting reference period of the Company within 21 days of the end of such period.

Capital: On a return of assets on a winding up of the Company or otherwise, have a right to be paid out of the assets of the Company available for distribution amongst shareholders the capital paid up on such Preference Management Share in priority to any amounts of capital paid to the holders of the Ordinary Shares issued by the Company from time to time but no rights to participate in any surplus remaining following payment of such amounts.

Voting: No right to receive notice of or to attend or vote at any general meeting of the Company.

Redemption: Not redeemable or liable to be redeemed at the option of the Company or its holder.

Amendments to the Articles

If the Resolution is passed, the Articles will be amended to:

1. create the Preference Management Share class;
2. specify the rights attached to the Preference Management Share class (as set out above); and
3. specify that the Company will be authorised at any time to effect a transfer of the Preference Management Share without the consent of the holder thereof and for no consideration.

A copy of the proposed new Articles which contain the rights and restrictions attached to the Preference Management Share, as well as the current Articles, will be available for inspection during normal business hours (Saturdays, Sundays and public holidays excepted) and for at least 15 minutes before and during the General Meeting at St Magnus House, 3 Lower Thames Street, London EC3R 6HD, being the place of the General Meeting. The proposed new Articles will also be available for inspection on the Company's website and on the National Storage Mechanism at https://data.fca.org.uk/#/nsm/nationalstoragemechanism, from the date of this Circular.

The Resolution

In order to implement the Board's proposals to rectify the identified technical legal issue, it is necessary to amend the Articles in order to create the new Preference Management Share class and to confer authority on the Board to allot one Preference Management Share.

The Resolution set out in the Notice seeks shareholder approval for both of these matters. If the Resolution is passed at the General Meeting, the Company will allot and issue the Preference Management Share to the Investment Manager as soon as possible thereafter.

The Resolution will be proposed as a special resolution and, accordingly, will only be passed if at least 75 per cent. of the votes are cast in favour.

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Share buybacks and cash exit facility

As announced previously, in accordance with the provisions of the Act, the Company will not be able to buyback any Shares until the Resolution has been passed and the Preference Management Share issued to the Investment Manager. Assuming the Resolution is passed, the Company will recommence Share buybacks immediately following the General Meeting and the issue of the Preference Management Share.

For the avoidance of doubt, none of the proposals described herein will have an impact on the Company's 2024 cash exit proposal as previously announced.

Action to be taken

All Shareholders are encouraged to vote in favour of the Resolution and if your Shares are not held directly, you are encouraged to arrange for your nominee to vote on your behalf.

Shareholders are requested to complete and return proxy appointments to the Registrar by one of the following means:

1. by logging on towww.eproxyappointment.comand following the instructions; or
2. by completing and signing the Form of Proxy in accordance with the instructions printed thereon and returning it by post, by courier or by hand; or
3. in the case of CREST members, by utilising the CREST electronic proxy appointment service in accordance with the procedures set out in the notes to the Notice.

In each case, the proxy appointment must be returned so as to be received by the Registrar by no later than

11.30 a.m. on 16 February 2023. Completion and return of a proxy appointment will not prevent shareholders from attending and voting in person at the General Meeting, should they so wish.

Recommendation

The Board considers that the Resolution to be proposed at the General Meeting is in the best interests of the Company and its shareholders as a whole. Accordingly, the Board unanimously recommends that shareholders vote in favour of the Resolution, as the Directors intend to do in respect of their own beneficial shareholdings.

Yours faithfully,

Hugh Aldous

Chairman

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DOWNING STRATEGIC MICRO-CAP INVESTMENT TRUST PLC

(Incorporated in England and Wales with company number 10626295 and registered as an investment

company under section 833 of the Companies Act 2006)

NOTICE OF GENERAL MEETING

Notice is hereby given that a general meeting of Downing Strategic Micro-Cap Investment Trust PLC (the "Company") will be held at St Magnus House, 3 Lower Thames Street, London EC3R 6HD on 20 February 2023 at 11.30 a.m. for the purpose of considering the following business.

To consider and, if thought fit, pass the following resolution as a special resolution.

SPECIAL RESOLUTION

THAT:

1. with effect from the conclusion of the general meeting of the Company at which this resolution is proposed the draft regulations produced at the general meeting and initialled by the chair of the meeting for the purposes of identification be adopted as the articles of association of the Company in substitution for, and to the entire exclusion of, all the existing articles of association of the Company; and
2. the directors of the Company (the "Directors") be and are hereby generally and unconditionally authorised in accordance with section 551 of the Companies Act 2006 (the "Act") to exercise all the powers of the Company to allot one non-redeemable preference management share having a nominal value of £0.01 in the share capital of the Company (the "Preference Management Share"), such authority to expire at 11.59 p.m. on 30 June 2023, save that the Company may make an offer or agreement before such authority expires which would or might require such Preference Management Share to be allotted after such authority expires and so that the Directors may allot such Preference Management Share in pursuance of any such offer or agreement notwithstanding that such authority has expired.

By Order of the Board	Registered Office
Grant Whitehouse	St Magnus House,
Company Secretary	3 Lower Thames Street,
	London
Dated: 24 January 2023	EC3R 6HD

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