Proposed settlement scheme for Investors in the LF Equity Income Fund
We explain the proposed settlement scheme and what it means for you. No action needs to be taken unless you want to vote against establishing the Scheme. If you do wish to place a vote then this article provides you with the information you need.
Duration: 5 mins
Date: 17 Nov 2023
What has happened?
The Fund, previously known as LF Woodford Equity Income Fund, was suspended on 3 June 2019. Link Fund Solutions Limited, the authorised corporate director of the Fund (“Link”) is offering to settle potential claims which ‘Scheme Creditors’ may have in connection with the suspension and wishes to establish the Scheme.
To be established, the Scheme has to be approved through a vote by Scheme Creditors (the “Vote”). Specifically, more Scheme Creditors must vote for it than against it, and they must represent 75% or more by value of the voting Scheme Creditors.
What does this mean for you?
You may be a Scheme Creditor depending on the product(s) through which your investment in the Fund is held. If you are a Scheme Creditor you are entitled to participate in the Vote. If you are not a Scheme Creditor, you are not entitled to participate in the Vote.
Please view this table below to identify if you are a Scheme Creditor and therefore entitled to participate in the Vote.
| Product (Wrap) | Am I a Scheme Creditor and entitled to participate in the Vote? |
|---|---|
| ISA (Individual Savings Account) | Yes |
| Personal Portfolio | Yes |
| SIPP (Self Invested Personal Pension) | No - the Scheme Creditor is the product provider. This is due to the legal structure of the product – the product provider is the legal owner of the holdings in the Fund. |
| International Portfolio Bond | No - the Scheme Creditor is the product provider. This is due to the legal structure of the product – the product provider is the legal owner of the holdings in the Fund. |
| Product (Elevate) | Am I a Scheme Creditor and entitled to participate in the Vote? |
|---|---|
| ISA (Individual Savings Account) | Yes |
| GIA (General Investment Account) | Yes |
| PIA (Pension Investment Account) | No The Scheme Creditor is the product provider. This is due to the legal structure of the product – the product provider is the legal owner of the holdings in the Fund. |
Please note:
If you hold multiple products, you’ll be entitled to participate in the Vote in proportion with the value in the Fund which is held through the product(s) for which you are a Scheme Creditor. You are only entitled to one vote even if you hold multiple products.
Where the product provider is entitled to participate in the Vote, they are voting in favour of establishing the Scheme.
This is because the product provider will not pursue other methods of seeking compensation (such as litigation) on an investor’s behalf. The product provider also acknowledges that establishing the Scheme may mean that:
(a) investors are likely to be paid earlier; and
(b) investors are likely to be paid more.
This is because Link stated that they intend to defend any claims raised against them if the Scheme is not established. This may take several years and the cost of this may mean that Link will not have as much money to compensate investors.
Even though the product provider may participate in the Vote, any compensation paid to them if the Scheme is established will be paid out to investors in proportion to the value of investments held in the Fund.
What happens if the Vote is passed?
If the Vote is passed and the Scheme is approved, it will be established. The Vote itself is not a vote for or against a specific amount of compensation.
What happens if the Scheme is approved?
If the Scheme is approved and established, it will create an agreement between Link and the Scheme Creditors. All Scheme Creditors (including those who voted against establishing the Scheme and those who did not vote) will be bound by the agreement. Investors in the Fund will share a settlement fund.
Claims which you may have against Link or its company group will be settled, and you will not be able to claim against Link or with the Financial Services Compensation Scheme (FSCS).
What happens next?
Please take the appropriate action detailed in the table below depending on your circumstances.
| Your options | Action you should take before 12:00 noon on 29 November 2023 (the “Deadline”) |
|---|---|
| I am a Scheme Creditor, eligible to vote, and I would like to vote in favour of establishing the Scheme. | You do not need to take any action. We will vote in favour of establishing the scheme as your authorised representative. |
| I am a Scheme Creditor, eligible to vote, and I would like to vote against establishing the Scheme. | You need to place your vote before the Deadline by emailing us at LFWEIF.VOTEAGAINST@abrdn.com with your Wrap account number, beginning ‘WP, or your Fundzone account number, beginning ‘SP’ or your Elevate account number, beginning ‘EL’. We will place this vote with Link as your authorised representative. |
| I am not eligible to vote because the product provider is the Scheme Creditor in respect of my product(s). | You do not need to take any action. The product provider will vote in favour of establishing the Scheme. |
What is the timetable?
For more information on the timetable please visit here.
Any questions?
If you require any further information, please:
- Explore Link’s dedicated website. However, please do not vote through Link’s website. This is because we are placing the vote on your behalf.
- Contact Link at 020 3991 0224 if you have any questions about the Scheme or the Fund’s suspension.
- Contact abrdn at LFWEIF.VOTEAGAINST@abrdn.com
- Contact us at 0345 606 0034 if you have any questions about the Vote. We cannot give advice as to how you should cast your vote if eligible, on the details of the Scheme, or the Fund’s suspension.
