TIDMFPP
RNS Number : 8327V
Fragrant Prosperity Holdings Ltd
16 December 2021
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, WITHIN, INTO OR IN THE UNITED STATES, AUSTRALIA,
CANADA, THE REPUBLIC OF SOUTH AFRICA, THE REPUBLIC OF IRELAND OR
JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE
OR DISTRIBUTION WOULD BE UNLAWFUL.
Fragrant Prosperity Holdings Limited
("FPP" or the "Company")
Notice of AGM
7.00am 16 December 2021
The Company announces that it has posted a Notice of Annual
General Meeting ("AGM") to Shareholders, a copy of which is
available on the Company's website
https://www.fragrantprosperityholdings.com/ the AGM will be held at
the offices of Hill Dickinson LLP, The Broadgate Tower, 20 Primrose
St, London EC2A 2EW at 10 a.m. GMT on 13 January 2022. Extracts of
the Notice of AGM are set out in Appendix A below.
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014 which is part of UK law by
virtue of the European Union (Withdrawal) Act 2018. Upon the
publication of this announcement this information is considered to
be in the public domain.
- Ends -
Enquiries
Fragrant Prosperity Holdings Limited
Simon Retter +44 (0)20 3137 1902
Optiva Securities - Broker to FPP
Vishal Balasingham +44 (0)20 3137 1903
Appendix A
Note: All terms referenced below are as defined in the Notice of
AGM
Dear Shareholder,
This letter gives details of the business to be transacted at
the 2021 Annual General Meeting of Fragrant Prosperity Holdings
Limited ("FPP" or the "Company") to be held at Hill Dickinson LLP,
The Broadgate Tower, 20 Primrose St, London EC2A 2EW at 10 a.m. GMT
on 13 January 2022 (the "AGM").
Introduction to the Proposals
On 24 May 2021 the Company announced ("Announcement") that it
had signed a letter of intent ("LOI") with CiiTECH Ltd ("CiiTECH"
or the "Target"), a leading cannabis wellness company based in the
UK and Israel, in relation to the potential acquisition of the
entire issued share capital of the Target by FPP ("Intended
Acquisition"). Although the exclusivity period under the LOI has
expired the Company is still working with CiiTECH towards signing
definitive agreements in respect of the Intended Acquisition. A
summary of CiiTECH's business is contained in Appendix 1.
The Intended Acquisition constitutes a reverse takeover for the
purposes of Listing Rule 5.6 and so the Company is obliged to apply
for readmission of its Ordinary Shares to the Official List of the
Financial Conduct Authority ("FCA") ("Admission"). Under the
requirements of the Prospectus Regulation, the Company is therefore
required to publish a FCA approved prospectus ("Prospectus") in
order for its Ordinary Shares to be re-admitted to the Official
List of the FCA. The Company is the process of having a prospectus
approved by the FCA but there is currently no certainty that the
FCA will approve the Prospectus. If the FCA does not approve the
Prospectus then the Intended Acquisition will not proceed.
The Company plans to raise additional equity capital to fund the
development of the business of CiiTECH through a placing of new
shares in the Company by Optiva Securities Limited who are
collaborating with Chrystal Capital LLP ("Placing") to raise
approximately GBP3 million ("Target Amount"). The Company is aiming
for the Placing to occur at the same time as Admission which will
be immediately following the completion of the Intended Acquisition
if it proceeds.
The price of the Intended Acquisition is subject to final
agreement with CiiTECH and shall comprise of 333,333,333 ordinary
shares in the capital of the Company ("Ordinary Shares") for
CiiTECH's current equity and further Ordinary Shares to be issued
in exchange for shares in CiiTECH that will be issued pursuant to
conversion GBP2,2721,000 of convertible loan notes issued by
CiiTECH ("Convertible Loan Notes"). The price of the Intended
Acquisition is predominantly dependent upon the results of the
Placing because it is proposed that this price shall be payable in
Ordinary Shares. The Ordinary Shares will be issued to the owners
of CiiTECH as consideration for the Intended Acquisition at the
same price as the Ordinary Shares issued pursuant to the
Placing.
It is currently anticipated that the Placing will be conducted
at a price of between 2 and 3.85p per Ordinary Share ("Proposed
Issue Price"). This gives CiiTECH a valuation (including the
Convertible Loan Notes) of between GBP9,667,944 and GBP15,834,610
("Proposed Purchase Price") assuming a Placing of GBP3 million of
new Ordinary Shares. These figures are lower than those announced
on 24 May 2021 as the current feedback from market participants
indicates that this a more realistic price range in current market
conditions, which have been challenging for the cannabis sector and
reflects, to a large extent, the decline in share prices of a
number of listed peers in the time from announcing the Intended
Acquisition in May 2021 to today.
The Company is currently registered in the British Virgin
Islands. The laws of the British Virgin Islands currently prohibit
the Company from receiving funds from CiiTECH or using the
Company's cash to fund CiiTECH's cannabis related activities.
Therefore, the board of the Company (Board) are proposing that the
Company be redomiciled from the British Virgin Islands to Guernsey
("Re-domiciliation") where the laws in respect of the proceeds of
CiiTECH's business are clearer. A summary of the key elements of
Guernsey corporate law are contained in Appendix 2.
If the Re-domiciliation is approved there are a few resulting
consequences for the Company. These include (i) the Company needing
to change its registered office to Guernsey, (ii) the Company
adopting new articles of incorporation ("New Articles"), (iii) the
Company's depositary interest facility being no longer required, as
the Ordinary Shares will be eligible for electronic settlement in
CREST. Accordingly, the agreement by which Computershare Investor
Services PLC was appointed to act as depositary services provider
will be terminated and the depositary interests cancelled and (iv)
the Company becoming subject to the Takeover Code ("Takeover
Code"). In respect of the adoption of New Articles a summary of
material differences between and the Company's existing articles
("Current Articles") and the New Articles are contained in Appendix
3 to this notice and a copy of the New Articles are contained in
Appendix 4.
Approval of Intended Acquisition
Although there is no certainty that the Intended Acquisition
will proceed and there is no express requirement under the
Company's Current Articles or the FCA's Listing Rules to obtain
shareholder approval of the Intended Acquisition, the Board have
decided to seek shareholder approval of the Intended Acquisition at
the AGM. The marketing of the Placing has not yet completed and so
there is no certainty what the Proposed Purchase Price for the
Intended Acquisition will be or what the Proposed Issue Price for
Intended Acquisition will be. Therefore, the approval the Company
is seeking is based on the maximum value for the Intended
Acquisition and an anticipated fundraise of GBP3 million (i.e. an
issue price of 3.85p per Ordinary Share) in connection with the
Intended Acquisition.
Board Recommendation
The Company has invested a significant amount of management time
and Company resources in the Intended Acquisition. The release of
the FCA Technical Note 104.1 in July 2021 during the reverse
takeover process raised the bar that cannabis companies were
required to meet to admit their shares to the Official List. This
has, in part, caused the delay of the proposed Intended
Acquisition. The Board has considered the terms of the Intended
Acquisition and believes it to be in the best interests of
shareholders and therefore unanimously recommends that Shareholders
vote in favour of the Resolutions at the Annual General
Meeting.
Shareholders should be aware that if Resolutions 7 , 8 , 10 , 11
, 12 or 13 are not passed at the Annual General Meeting, it is
highly likely the Intended Acquisition would not proceed. The
Company would then need to locate another potential reverse
takeover transaction. However, due to the Company's relatively
modest cash reserves and costs already incurred in relation to the
Intended Acquisition, the Director's believe that the Company would
need more capital in order to cover the costs of another
transaction. The Company would therefore either need to raise new
capital or, if new capital cannot be located, the Board would need
to consider whether the Company would need to cease trading. In
these circumstances it is highly likely that any new capital raised
would be at a level below the current range of the Proposed Issue
Price as the Company would have a low net asset value and no
potential transaction. In this scenario it is highly likely that
shareholders would experience significant dilution. Therefore,
shareholders are recommended to vote in favour of the
Resolutions.
Concert Party and Takeover Code
Although the Company is not currently subject to the Takeover
Code, after the Re-domiciliation it will be subject to the Takeover
Code. Section 3(a) of the Introduction to the Takeover Code
provides that a company with its registered office in the Channel
Islands and whose securities are admitted to trading on a UK
regulated market (such as the Main Market) is subject to the
Takeover Code. Accordingly, following the Re-domiciliation, the
Company will be subject to the Takeover Code as its registered
office will be in Guernsey and the Company's Ordinary Shares will
be admitted to the Main Market. The Takeover Code governs, inter
alia, transactions which may result in a change of control of a
public company to which the Takeover Code applies.
Under Rule 9 of the Takeover Code, when (i) any person acquires,
whether by a series of transactions over a period of time or not,
an interest in shares which, taken together with shares in which
persons acting in concert with him are interested, carry 30 per
cent. or more of the voting rights of a company subject to the
Takeover Code or (ii) any person, together with persons acting in
concert with him, is interested in shares which in aggregate carry
not less than 30 per cent. of the voting rights of such a company
but does not hold shares carrying more than 50 per cent. of such
voting rights, and such person, or any person acting in concert
with him, acquires an interest in any other shares which increases
the percentage of shares carrying voting rights in which he is
interested, then such person is normally required to make a general
offer to all the holders of any class of equity share capital or
other class of transferable securities carrying voting rights of
that company to acquire the balance of their interests in the
company. An offer under Rule 9 of the Takeover Code must be in cash
(or with a cash alternative) and must be at not less than the
highest price paid within the preceding 12 months for any shares in
the company by the person required to make the offer or any person
acting in concert with him.
The Takeover Code includes a definition of "acting in concert".
Paragraph 9 of that definition makes clear that shareholders in a
private company (such as CiiTECH) who sell their shares in that
company in consideration for the issue of new shares in a company
to which the Code applies will be presumed to be persons acting in
concert with other persons in the same category unless the contrary
is established. The Company has agreed with the Takeover Panel that
the current shareholders of CiiTECH ("Concert Party") will be
regarded as acting in concert. The holders of convertible loan
notes issued by CiiTECH ("CLN Holders") will, if the Intended
Acquisition proceeds, convert their convertible loan notes into
shares in CiiTECH and these shares will be sold to the Company at
completion of the Intended Acquisition. The Company has agreed with
the Takeover Panel that the CLN Holders should not be considered to
be members of the Concert Party as they are not connected to the
current shareholders of the CiiTECH.
For the purposes of the Takeover Code, the Concert Party will,
immediately following Admission based on the anticipated raise of
GBP3 million raised at 2p, hold in aggregate, 333,333,333 Shares,
representing approximately 47.01 per cent. of the share capital as
enlarged by the shares issued pursuant to the Intended Acquisition,
the Placing and shares issued in connection with Admission
("Enlarged Share Capital").
At the point of Re-domiciliation, the Company will move its
registered office from the British Virgin Islands to Guernsey. The
Intended Acquisition will take place following the Re-domiciliation
and so the Company will be subject to the Code at the time the
Company completes the Intended Acquisition and issues Ordinary
Shares to the Concert Party ("Consideration Shares") in
consideration for the Intended Acquisition. Under Rule 9.1 of
Takeover Code, as the Concert Party is acquiring through the issue
of the Consideration Shares an interest in Ordinary Shares which
carry 30% or more of the voting rights of the Company. This would
trigger a general offer obligation unless consent of the Panel is
obtained. The Takeover Code contains a procedure pursuant to which
the Panel may waive the obligation to make a general offer under
Rule 9 of the Takeover Code where this obligation would arise as a
result of an issue of new shares. This waiver is subject to, inter
alia, approval of the waiver by an independent vote of
shareholders.
The Panel has agreed in this instance to grant a dispensation
from the requirement for a mandatory offer to made under Rule 9.1
of the Takeover Code as a result of the issue of the Consideration
Shares to the Concert Party without the approval of independent
shareholders being obtained on the basis of the disclosure of the
Concert Party's position in this document and in the Prospectus, as
set out below.
Based on a Proposed Purchase Price of GBP9,667,944, a Proposed
Issue Price of 2p and anticipated fundraise of GBP3 million at 2p,
the Concert Party's expected holdings in the Company following
completion of the Intended Acquisition are detailed below:
Name of Number of Ordinary Percentage Number of Maximum number Percentage
Concert Shares held on of Enlarged Options of Ordinary Shares of Enlarged
Party member completion of Issued held on held on completion Fully diluted
the Intended Share Capital* completion of the Intended Issued Share
Acquisition* of the Intended Acquisition Capital
Acquisition* as at Admission**
Clifton
Flack 122,117,249 17.2% Nil 122,117,249 15.2%
Yoad Development
and Technology
2014 Ltd 70,272,426 9.9% Nil 70,272,426 8.7%
Samuel Jeremy
Kattan 33,939,794 4.8% Nil 33,939,794 4.2%
Daniel Nicholas
Kattan 33,912,290 4.8% Nil 33,912,290 4.2%
James Adam
Kattan 33,939,794 4.8% Nil 33,939,794 4.2%
Benjamin
Stern 18,152,564 2.6% Nil 18,152,564 2.3%
Steve Graubart 18,152,564 2.6% Nil 18,152,564 2.3%
Nava Swersky
Sofer 1,897,768 0.3% Nil 1,897,768 0.2%
Jonathan
Adelman 948,884 0.1% Nil 948,884 0.1%
Total 333,333,333 47.01% Nil 333,333,333 41.3%
*This is based on a Proposed Purchase Price of GBP9,667,944, a
Proposed Issue Price of 2p and anticipated fundraise of GBP3
million and may change dependent upon the finalised terms for the
Placing and Intended Acquisition. Although the members of the
Concert Party do not currently hold any Ordinary Shares they will
on the assumptions as aforesaid on Admission hold 333,333,333
Ordinary Shares.
** Assumes exercise in full of all options and warrants expected
to be granted at Admission assuming no other changes to the
Company's Enlarged Share Capital.
Rule 9 of the Takeover Code provides that when any person,
together with persons acting in concert with him, is interested in
shares which, in aggregate, carry 30 per cent. or more of the
voting rights of such company but does not hold share carrying more
than 50 per cent. of such voting rights, a general offer will
normally be required if any further interest in shares is acquired
which increases the percentage of shares carrying voting rights in
which he together with persons acting in concert with him, are
interested. Based on the scenario in the above table the Concert
Party will be unable to acquire an interest in shares which would
increase the percentage of shares in the Company carrying voting
rights that it is interested without triggering an obligation to
make a general offer under Rule 9.1 of the Takeover Code.
In the event that the marketing of the Placing is more
successful, and the Proposed Issue Price is 3.85p and GBP3m of new
money is raised at that price, CiiTECH will have a valuation of
GBP15,834,610. In this scenario the Concert Party's expected
holdings in the Company following completion of the Intended
Acquisition are detailed below:
Name of Concert Number of Ordinary Percentage Number of Maximum number Percentage
Party member Shares held of Enlarged Options held of Ordinary of Enlarged
on completion Issued Share on completion Shares held Fully diluted
of the Intended Capital* of the Intended on completion Issued Share
Acquisition* Acquisition* of the Intended Capital as
Acquisition at Admission**
Clifton Flack 122,117,249 21.8% Nil 122,117,249 19.1%
Yoad Development
and Technology
2014 Ltd 70,272,426 12.6% Nil 70,272,426 11%
Samuel Jeremy
Kattan 33,939,794 6.1% Nil 33,939,794 5.3%
Daniel Nicholas
Kattan 33,912,290 6.1% Nil 33,912,290 5.3%
James Adam
Kattan 33,939,794 6.1% Nil 33,939,794 5.3%
Benjamin
Stern 18,152,564 3.2% Nil 18,152,564 2.8%
Steve Graubart 18,152,564 3.2% Nil 18,152,564 2.8%
Nava Swersky
Sofer 1,897,768 0.3% Nil 1,897,768 0.3%
Jonathan
Adelman 948,884 0.2% Nil 948,884 0.1%
Total 333,333,333 59.57% Nil 333,333,333 52%
*This is based on a Proposed Purchase Price of GBP15,834,610, a
Proposed Issue Price of 3.85p and anticipated fundraise of GBP3
million and may change dependent upon the finalised terms for the
Placing and Intended Acquisition. Although the members of the
Concert Party do not currently hold any Ordinary Shares they will
on the assumptions as aforesaid on Admission hold 333,333,333
Ordinary Shares.
** Assumes exercise in full of all options and warrants expected
to be granted at Admission assuming no other changes to the
Company's Enlarged Share Capital.
In the scenario set out in the table above, the members of the
Concert Party would, in aggregate hold Ordinary Shares carrying
more than 50 per cent. of the voting rights of the enlarged issued
share capital of the Company on Admission. Therefore, in this
scenario for so long as they continue to be treated as acting in
concert and they continue to hold shares carrying over 50 per cent
of the voting rights, the members of the Concert Party will be
entitled to increase their aggregate interest in the voting rights
of the Company without incurring an obligation under Rule 9 of the
Takeover Code to make a general offer. However, individual members
of the Concert Party will not be able to increase their percentage
interests in Ordinary Shares through or between a Rule 9 threshold
without Takeover Panel consent.
Further information on the members of the Concert Party is set
out below:
1. Clifton Flack is the CEO of CiiTECH. Clifton founded CiiTECH
in 2017 after a 25 year marketing career, with roles including Head
of Global at McCann Universal Search, a digital division of McCann
Erickson Israel, responsible for strategic planning and management
of International clients (2013-2014). In 2015 Clifton co-founded
and was Chief Marketing Officer at iCAN Israel Cannabis, an Israeli
innovation ecosystem including a global industry event 'CannaTech'.
Clifton studied marketing and business at Leeds and Brighton
Universities.
2. Yoad Development and Technology 2014 Ltd ("Yoad") is a
private company organised under the laws of the State of Israel
with company number 515093896 and whose registered offices is at 8
Ha'lrus St, Binyamina, Israel. Yoad formerly provided marketing
services to CiiTECH.
3. James Adam Kattan, Samuel Jeremy Kattan and Daniel Nicholas
Kattan are all brothers . James and Daniel are based in the UK and
Samuel is based in Israel. They were initial investors in CiiTECH.
Daniel Nicholas Kattan is a property investor. James Adam Kattan
and Samuel Jeremy Kattan are self-employed .
4. Steve Graubart is the CFO of CiiTECH. Steven Graubart, CFA,
has diversified experience as a CFO and cofounder and as a
consultant and investor across a range of sectors, specifically in
regulated sectors, including in the cannabis, infrastructure,
education, fintech and health sectors. Mr. Graubart started his
career as a management consultant with IPAC, Inc. and Ernst &
Young, specializing in working with clients on their international
expansion. He graduated from the Fletcher School of Law and
Diplomacy and SUNY, Stony Brook;
5. Benjamin Stern was a co-founder of CiiTECH and until October
2021 was COO of CiiTECH. Benjamin has experience in high risk
regulated sectors including fintech industries. We understand
Benjamin no longer has any executive, managerial or operational
involvement in CiiTECH;
6. Nava Swersky Sofer leads the board of CiiTECH. She is a
seasoned senior executive and non-executive board member with a
diverse, increasingly progressive, cross sector background,
acquired over 30 years of international business experience in
Europe, the US, Canada, Israel, and Asia; and
7. Jonathan Adelman is the brother-in-law of Clifton Flack and
has been engaged by CiiTECH as a consultant advising CiiTECH in
respect of its corporate governance requirements. He has agreed to
be appointed as a non-executive director of the Company with effect
from Admission. He has more than 25 years of experience as a lawyer
in the City of London and as General Counsel & Company
Secretary of various FTSE listed businesses. He is therefore well
placed to assist the board in ensuring the Enlarged Group complies
with its regulatory requirements.
Directors Interests in the Intended Acquisition
None of the Directors of the Company have an interest in
CiiTECH. However, if the Intended Acquisition proceeds, Stonedale
Management and Investments Limited (being a company under the
control of a Director, Simon Retter) will receive 5,500,000
Ordinary Shares in the Company as well as warrants over 5,000,000
Ordinary Shares [1] which shall be exercisable at the Proposed
Issue Price in consideration for consultancy services provided in
respect of the Intended Acquisition to the Company.
Daniel Reshef joined the board prior to the LOI being signed the
Company. Under the terms of his engagement he is entitled to a cash
payment of GBP35,000 upon completion of the Intended Acquisition to
reflect the additional work required to close the Intended
Acquisition.
Furthermore, the Company on 10 November 2021 agreed that a cash
payment of GBP35,000 would be made on the same terms to Richard
Samuel. The board have considered the deal related payments for
Daniel Reshef and Richard Samuel and do not regard them as
sufficient given their levels of personal wealth to create a
conflict of interest.
Responsibility Statement
All of the directors of the Company being Simon Retter, Mahesh
s/o Pulandaran, Richard Samuel and Daniel Reshef, accept
responsibility for the information contained in this document in
respect of the Company and for statements of opinion made in
respect of CiiTECH and the Intended Acquisition and the
recommendations made in this document. However, the statements made
in Appendix 1 are based upon information that has been supplied by
CiiTECH as part of the Admission process which the directors have
sought to independently verify. A number of these statements relate
to the current and future conduct of the CiiTECH business and so
relate to matters outside of the Directors' knowledge and/or
control. This information has been included in this document to
provide shareholders with a board overview of the CiiTECH business
rather than provide specific information on which an investment
decision can be made. This document is not intended to act as
invitation to invest in the Company or CiiTECH. Shareholders who
wish to learn more about the Intended Acquisition should contact
the Company's broker Optiva Securities Limited.
To the best of the knowledge and belief of the directors (who
have taken all reasonable care to ensure that such is the case),
subject to the qualification above, the information contained in
this document for which they are responsible is in accordance with
the facts and does not omit anything likely to affect the import of
that information.
Approval of Accounts
The Company due to COVID 19 did not hold an Annual General
meeting last year and so has tabled the accounts for the year to 31
March 2020 and the year to 31 March 2021 for approval by
shareholders.
Retirement by Rotation
Article 8.5 of the Current Articles Retirement by Rotation.
Simon Retter and Mahesh s/o Pulandaran were both re-elected at the
Company's last AGM on 19 December 2019. As the Company held no AGM
last year Richard Samuel and Daniel Reshef decided to both retire
by rotation at the AGM and offer themselves up for re-election.
Business of the AGM
Resolution 1 - Receiving and adopting the Annual Report and
Accounts 31March 2020
The Board of Directors of the Company (the "Board") recommends
the receiving and adopting of the annual report and accounts of the
Company for the financial period ended 31 March 2020, together with
the directors' report and the auditor's report be received and
adopted.
Resolution 2 - Receiving and adopting the Annual Report and
Accounts 31March 2021
The Board of Directors of the Company (the "Board") recommends
the receiving and adopting of the annual report and accounts of the
Company for the financial period ended 31 March 2021, together with
the directors' report and the auditor's report be received and
adopted.
Resolutions 3 - Auditor's Appointment and Remuneration
This Resolution proposes the retrospective approval of the
appointment of Crowe U.K. LLP as the Auditors of the Company for
the accounts for the year to 31 March 2021 ("2021 Accounts") and
authorise the Directors to fix the Auditors' remuneration. It is
usual business for the AGM.
Resolution 4 - Re-election of Richard Samuel as a Director of
the Company
To re-elect Richard Samuel as a Director of the Company who has
retired by rotation.
Resolution 5 - Re-election of Daniel Reshef as a Director of the
Company
To re-elect Daniel Reshef as a Director of the Company who has
retired by rotation.
Resolutions 6 - Remuneration of Directors of the Company
This Resolution relates to the retrospective approval for the
Directors remuneration as set out in the 2021 Accounts and to
approve authority of the Board to determine the remuneration of the
Directors for the year to 31 March 2022. It is usual business for
the AGM.
Resolution 7 - Approval of the Intended Acquisition
Resolution 7 proposes that the Intended Acquisition be approved
provided that the Proposed Purchase Price of GBP15,834,610 is not
exceeded.
Resolution 8 - Approval of the change of the Name of the
Company
Resolution 8 proposes that the if the Intended Acquisition
completes that the Company name be changed to CiiTECH Group
Limited.
Resolution 9 - Authority to Buy-Back Shares
For the purposes of the New Articles, Resolution 9 proposes that
the Board be authorised to make market acquisitions of shares in
the capital of the Company on the terms as more particularly set
out in Resolution 9 in the Notice.
Resolution 10 - Directors' Authority to Allot Shares
This is a 75% resolution of shareholders to grant the Board with
authority to allot and issue shares and grant rights to subscribe
for shares in the Company up to a maximum of 1,559,808,922 shares,
calculated as follows:
1. up to 483,400,000 of shares in the Company to be issued in
connection with the consideration for the Intended Acquisition;
2. up to 150,000,000 shares, in respect of the Placing;
3. up to 18,931,541 of shares in respect of costs of and matters
related to the Intended Acquisition more detailed particulars of
which will be set out in the Prospectus;
4. up to 23,523,964 shares, in respect of the grant of options
over shares in the Company to directors, employees and consultants
to the Company and its group under a share option plan adopted on
or about Admission provided that authority to allot shares pursuant
to this authority shall be limited to such amount as to ensure that
the Company does not allot shares that represent more than 10% of
the issued ordinary share capital of the Company in any rolling 10
year period;
5. up to 72,945,077 of shares in respect of the conversion of
the loan notes, exercise of options and warrants other than those
granted under an employee share scheme; and
6. otherwise than pursuant to paragraphs (i) to (v) above,
811,011,154 shares (being 100% of the fully diluted, issued shares
of the Company as at Admission) for such other purposes as the
directors consider necessary or appropriate.
PROVIDED that this power shall expire on the conclusion of the
next annual general meeting of the Company (unless renewed, varied
or revoked by the Company prior to or on that date) save that the
Company may, before such expiry, make offer(s) or agreement(s)
which would or might require Ordinary Shares to be allotted after
such expiry and the Directors may allot Ordinary Shares in
pursuance of any such offers or agreements notwithstanding that the
power conferred by this resolution has expired.
Resolution 11 - Waiver of Pre-emption Rights
This is a 75% resolution of shareholders, and a special
resolution for the purposes of the New Articles, to authorize the
directors to allot and issue the shares which are the subject of
Resolution 10 free of the rights of pre-emption set out in the New
Articles, on the terms as more particularly set out in Resolution
13 in the Notice.
Resolution 12 - Re-domiciliation of the Company to Guernsey
The Company be re-domiciled from British Virgin Islands ("BVI")
to Guernsey including in accordance with BVI law, the transfer of
registered office of the Company from the BVI to Guernsey and for
this re-domiciliation to take effect before the Intended
Acquisition. This resolution is proposed as a special
resolution.
Resolution 13 - the New Articles
In addition, to effect the Re-domiciliation, the Company will
also require a 75% resolution to be passed approving the adoption
of a New Articles in accordance with Guernsey law upon completion
of the Re-domiciliation.
Resolution 13 proposes to approve the adoption of the New
Articles which will be effective upon the Re-Domiciliation.
For the avoidance of doubt, Resolutions 12 and 13 (together the
"Re-domiciliation Resolutions") will be contingent on the passing
of the other Re-domiciliation Resolution, such that both
Re-domiciliation Resolutions will be passed or none will be
passed.
A copy of the proposed New Articles is attached in Appendix 4
and available from the Company's website at
www.fragrantprosperityholdings.com.
In producing the New Articles, the Directors have ensured that
as far as possible as a matter of Guernsey law, all of the
substantive provisions of the Current Articles relating to the
rights of shareholders and their ability to transfer shares have
been retained in the New Articles.
A summary of the material differences between the Current
Articles and the New Articles is enclosed in Appendix 3. However,
shareholders are advised to review the New Articles in their
entirety, and not to rely on the summary.
Recommendation
The Board believes that the resolutions to be put to the AGM are
in the best interests of shareholders as a whole and, accordingly,
recommends that shareholders vote in favour of the resolutions.
Forms of Proxy and Forms of Instruction
A Form of Proxy and a Form of Instruction for use at the AGM are
enclosed with this letter.
If you are a holder of Ordinary Shares in FPP in certificated
form, you are asked to complete and sign the enclosed Form of Proxy
and return it to the Computershare Investor Services (BVI) Limited
c/o The Pavilions Bridgwater Road Bristol BS99 6ZY United Kingdom
either by post or courier, and by email
#ukcsbrs.externalproxyqueries@computershare.co.uk
mailto:info@valeig.com so as to arrive no later than 48 hours
before the time fixed for the AGM which is Hill Dickinson LLP, The
Broadgate Tower, 20 Primrose St, London EC2A 2EW at 10 a.m. GMT on
13 January 2022. The return of a Form of Proxy will not, however,
prevent you from attending the AGM and voting, in person, should
you wish to do so.
If you are a holder of depositary interests representing
Ordinary Shares in the Company ("Depositary Interests"), you are
asked to complete and sign the enclosed Form of Instruction and
return it to Computershare Investor Services PLC, The Pavilions,
Bridgwater Road, Bristol BS99 6ZY, United Kingdom, either by post
or courier, and by email
#ukcsbrs.externalproxyqueries@computershare.co.uk so as to arrive
no later than 72 hours before the time fixed for the AGM which is
Hill Dickinson LLP, The Broadgate Tower, 20 Primrose St, London
EC2A 2EW at 10 a.m. GMT on 13 January 2022.
Depositary Interest holders wishing to attend the AGM should
request a Letter of Representation by contacting the depositary at
Computershare Investor Services PLC, The Pavilions, Bridgwater
Road, Bristol BS99 6ZY, United Kingdom or by email
!ukallditeam2@computershare.co.uk by no later than at 10 a.m. GMT
on 10 January 2022.
Yours faithfully,
Simon Retter
Chairman
for and on behalf of the Board of Directors of Fragrant
Prosperity Holdings Limited
Fragrant Prosperity Holdings Limited
(Incorporated in British Virgin Islands under the BVI Business
Companies Act, 2004 (as amended) with registered number
1905051)
NOTICE OF 2021 ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT the 2021 Annual General Meeting of
Fragrant Prosperity Holdings Limited ("FPP" or the "Company") will
be held at Hill Dickinson LLP, The Broadgate Tower, 20 Primrose St,
London EC2A 2EW at 10 a.m. GMT on 13 January 2022 (the "AGM") for
the purposes of considering and, if thought fit, approving the
following resolutions:
RESOLUTIONS
1. Annual Report and Accounts, Directors' Report and Auditor's Report of the Company
THAT the Annual Report and Accounts of the Company for the
financial period ended 31 March 2020, together with the Directors'
Report and the Auditor's Report be received and adopted.
2. Annual Report and Accounts, Directors' Report and Auditor's Report of the Company
THAT the Annual Report and Accounts of the Company for the
financial period ended 31 March 2021, together with the Directors'
Report and the Auditor's Report be received and adopted.
3. Re-appointment and Remuneration of Auditors of the Company
THAT Crowe U.K. LLP be retrospectively appointed as the Auditors
of the Company for the accounts for the year to 2021 Accounts and
authorise the Directors to fix the Auditors' remuneration.
4. Resolution 4 - Re-election of Richard Samuel as a Director of the Company
THAT Richard Samuel be re-elected as a Director of the
Company.
5. Resolution 5 - Re-election of Daniel Reshef as a Director of the Company
THAT Daniel Reshef be re-elected as a Director of the
Company.
6. Remuneration of Directors of the Company
THAT the Directors remuneration as set out in the 2021 Accounts
be retrospectively approved and the Board be granted authority to
determine the Directors' remuneration and other emoluments and
benefits until the conclusion of the next annual general
meeting.
7. Approval of the Intended Acquisition
THAT the Intended Acquisition be approved provided that the
Proposed Purchase Price of GBP15,834,610 is not exceeded.
8. Change of the Name of the Company
THAT , if the Intended Acquisition completes, the Company name
be changed to CiiTECH Group Limited.
9. Directors Authority to Make Market Purchases
THAT , the Company is generally and unconditionally authorized
to make market purchases of ordinary shares in the capital of the
Company on such terms and in such manner (and with respect to those
shares cancel them or hold them as treasury shares) as the
directors shall determine provided that:
1. the maximum number of ordinary shares hereby authorised to be
purchased is limited to such number of ordinary shares as
represents 10% of the issued share capital of the Company on a
fully diluted basis as of the date this resolution is passed;
2. here shall be no minimum price;
3. purchase on any trading day more than 25 % of the average
daily volume of the shares on the trading venue on which the
purchase is carried out. and
4. the maximum price, exclusive of associated expenses, which
may be paid for an ordinary shares shall not be more than an amount
equal to 5 per cent. of the average of the middle market quotations
for an ordinary share derived from the London Stock Exchange Daily
Official List for the five business days immediately preceding the
date on which such ordinary share is contracted to be
purchased,
such authorities to apply in substitution for all previous
authorities and to expire on the date occurring 15 months from the
date of the passing of this resolution or, if earlier, on the
conclusion of the Company's next annual general meeting but, in
each case, so that the Company may make any offer or agreement
before such expiry to purchase ordinary shares under this authority
which will or may be completed wholly or partly after the expiry of
such authority and may make a purchase of ordinary shares in
pursuance of any such offer or agreement notwithstanding that the
authorities conferred by this resolution have expired.
5. Directors' Authority to Allot Shares
THAT the Directors be and are hereby generally and
unconditionally authorised to exercise all powers of the Company to
allot Ordinary Shares up to a maximum of 1,559,808,922 Ordinary
Shares, calculated as follows:
1. up to 483,400,000 of shares in the Company to be issued in
connection with the consideration for the Intended Acquisition;
2. up to 150,000,000 shares, in respect of the Placing;
3. up to 18,931,541 of shares in respect of costs of and matters
related to the Intended Acquisition more detailed particulars of
which will be set out in the Prospectus;
4. up to 23,523,964 shares, in respect of the grant of options
over shares in the Company to directors, employees and consultants
to the Company and its group under a share option plan adopted on
or about Admission provided that authority to allot shares pursuant
to this authority shall be limited to such amount as to ensure that
the Company does not allot shares that represent more than 10% of
the issued ordinary share capital of the Company in any rolling 10
year period;
5. up to 72,945,077 of shares in respect of the conversion of
the loan notes, exercise of options and warrants other than those
granted under an employee share scheme; and
6. otherwise than pursuant to paragraphs (i) to (v) above,
811,011,154 shares (being 100% of the fully diluted, issued shares
of the Company as at Admission) for such other purposes as the
directors consider necessary or appropriate.
PROVIDED that this power shall expire on the conclusion of the
next Annual General Meeting of the Company (unless renewed, varied
or revoked by the Company prior to or on that date) save that the
Company may, before such expiry, make offer(s) or agreement(s)
which would or might require Ordinary Shares to be allotted after
such expiry and the Directors may allot Ordinary Shares in
pursuance of any such offers or agreements notwithstanding that the
power conferred by this resolution has expired. This resolution is
proposed as a special resolution.
7. Waiver of Pre-Emption Rights
This resolution is proposed as a special resolution for the
purposes of the new articles of incorporation of the Company
proposed to be adopted by way of Resolution 13 , below (" New
Articles ").
That the directors are generally and unconditionally authorised
(including for the purposes of article 5.7 of the New Articles) to
issue Equity Securities (as defined in the New Articles) for cash
pursuant to the authority conferred on them by resolution 10 ,
above, as if any shareholder rights of pre-emption (including,
without limitation, under Article 5.2 of the New Articles) did not
apply, and such authority shall expire when the authority conferred
on the directors by resolution 10 , above, expires save that,
before the expiry of this power, the Company may make any offer or
agreement which would or might require Equity Securities to be
issued as if any such rights of pre-emption did not apply after
such expiry and the directors may issue Equity Securities in
pursuance of such offer or agreement as if such rights of
pre-emption did not apply notwithstanding that the authorities
conferred by this resolution have expired.
8. Re-domiciliation of the Company to Guernsey
THAT conditional upon passing resolution 7 and the Company
entering into definitive agreements in respect of the Intended
Acquisition (as defined in the Letter from the Chairman) the
directors be authorised to apply for the Company to be re-domiciled
from the British Virgin Islands ("BVI") to Guernsey
("Re-domiciliation") and that, in accordance with BVI law, the
registered office of the Company be transferred from the BVI to
Guernsey. This resolution is proposed as a special resolution.
9. New Articles
THAT , subject to and with effect from the date of the issue of
the Guernsey certificate of registration in respect of the Company,
the new Guernsey law governed memorandum and articles of
incorporation of the Company, a copy of which is contained in
Appendix 4 to this Notice being the New Articles be and are adopted
in substitution for, and in replacement of, the existing memorandum
and articles of association of the Company and subject to the
authorities granted to by the shareholders pursuant to Resolutions
7 , 8 , 10 , 11 and 12 above.
Simon Retter, Chairman
by order of the Board, 15 December
2021
Registered Office
Vistra Corporate Services Centre
Wickhams Cay II, Road Town,
Tortola, VG1110
British Virgin Islands
Appendix 1 - Summary of CiiTECH
CiiTECH is a UK incorporated company which acts as the holding
company for the CiiTECH Group, a group focused on the development
of a portfolio of cannabidiol (CBD) wellness and
tetrahydrocannabidiol (THC) Medicinal Cannabis branded products.
CiiTECH initially focused its efforts on the UK CBD wellness market
with UK sales representing approximately 95% of its turnover in FY
2020, but has now established distribution relationships in Brazil,
Israel and South Africa.
CiiTECH has created a compelling house of brands:
1. Provacan: CiiTECH's flagship brand in the UK, this is
available in many forms including as ingestibles (tinctures,
capsules and gummies), dermatologicals (cosmetics, topicals) and
vapors (e-liquids and extracts). It was developed and designed to
give the consumer confidence that Provacan is "safe and effective",
not "fun and funky."
2. IMPACT: IMPACT providing CBD support for fitness and impact
sports. Launched in partnership with two rugby players, IMPACT is
intended to become CiiTECH's flagship brand in South Africa as a
part of its go-to-market strategy around rugby academies and sports
institutes.
3. HüGG: HüGG is a CBD self-care and beauty brand for women of
all ages. It was built around a range of well-proven cosmetic
ingredients to create a trustworthy, high-quality CBD cosmetics
brand.
4. ProPaws (in development): CiiTECH is working with one of its
key manufacturing partners to create a pet care range of
cannabis-based healthcare products.
5. Labotanix (in development): Labotanix is being developed as a
value brand to supply marketplace partners as a complement to
CiiTECH's premium brands.
The key territories that CiiTECH operates in are as follows:
6. UK: The UK is CiiTECH's key market and one in which all
CiiTECH's live CBD branded products are currently sold. Using the
credibility of the UK's pharmaceutical market globally, CiiTECH
uses the UK as its market testing, launch and proof of concept base
from which brands are then launched into other jurisdictions. The
core revenue stream in the UK is through its flagship brand
Provacan. Moving forward, CiiTECH's marketing budget will be
focused on building its CBD wellness market share and rolling out
its THC Medicinal Cannabis products.
7. Brazil: CiiTECH currently distributes Provacan CBD products
under the Compassionate Use programme in Brazil. Moving forward the
Enlarged Group plans to apply for Sanitary Authorisation from
ANVISA for a range of Provacan-branded CBD products and is aiming
to introduce THC Medicinal Cannabis products under the ANVISA
Compassionate Use programme if registration with ANVISA can be
obtained.
8. Israel: CBD wellness products cannot currently be sold in
Israel without a licence from the local regulator. Nonetheless
CiiTECH has signed an agreement with Ecolife, a licenced importer,
to distribute its CBD wellness brands in Israel when the law
changes in Israel to permit such products to be sold over the
counter. CiiTECH is also currently developing a range of
Provacan-branded Medicinal Cannabis products which it intends to
market locally with Cannassure Ltd.
Through its joint venture with the Yissum Research Development
Company of the Hebrew University of Jerusalem Ltd (Yissum), CiiTECH
has been engaged in R&D projects for the treatment of
non-alcohol related fatty liver disease (NAFLD), diabetes and
obesity. Two pre-clinical studies have been funded by CiiTECH, the
first in 2017 and the second in 2020. The research resulted in the
patent application for CBD/CBG to treat NAFLD, diabetes and
obesity. Separately in 2017 CiiTECH funded a study to investigate
the potential for CBD to treat asthma.
9. South Africa: CiiTECH's operations in this territory are
carried out through its wholly owned subsidiary, CiiTECH SA (pty)
Ltd. CiiTECH will market its CBD wellness products in South Africa.
CiiTECH plans to use its strong rugby partnerships and networks to
market its IMPACT CBD brand as its flagship brand in South
Africa.
CiiTECH has also established a distribution agreement with a
third party to exclusively distribute its H ü GG branded products
in South Africa. CiiTECH is currently exploring opportunities to
appoint local manufacturing, warehousing and order fulfilment
partners.
As indicated above, the Enlarged Group's strategy is as
follows:
1. To increase brand awareness and sales of its full range of
CBD wellness products in the UK and launch its unlicensed THC
Medicinal Cannabis products in the UK;
2. To grow sales in Brazil of CBD wellness products and launch
Provacan-branded Medicinal Cannabis products;
3. To launch a range of CBD wellness over the counter products
in Israel as soon as a change in law permits and to launch
Provacan-branded THC Medicinal Cannabis products under licence in
Israel;
4. To launch its IMPACT sports and HuGG cosmetics CBD wellness brands in South Africa;
and
5. To advance its R&D activities in Israel in partnership with Yissum.
[1] These share numbers assume a 2p Proposed Issue Price
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