BROCHURE

STELLAR SUCCESSION

bRochuRE

IhT pLAnnIng foR ThE nExT gEnERATIon

1. Introduction This document (“Document”) has been issued By Stellar Asset Management Limited (“Stellar”) which is authorised and regulated by the Financial Conduct Authority (“FCA”) and whose registered office is at Kendal House, 1 Conduit Street, London, W1S 2XA. This Document is dated 10 April 2015. This Document is only being communicated by Stellar to FCA or Prudential Regulation Authority (“PRA”) authorised persons (“Authorised Persons”). The communication of this Document by such an Authorised Person is only permitted where the Authorised Person has entered into an agreement with Stellar (“Distributor”) and is satisfied that this is a suitable and appropriate opportunity for their clients. This Document is not for general distribution. This Document is issued solely for the purpose of seeking investment in the discretionary portfolio investment management service described in this Document which is to be managed by Stellar and known as Stellar Succession. Each investor will set up their own Stellar Succession private limited company to facilitate the investments described in this Document. This Document is provided to you on a confidential basis. You may not copy, reproduce or further distribute this Document or any of its content to any other person at any time nor discuss with any other person the proposal in this Document without the prior written consent of Stellar. An investment in Stellar Succession may expose an investor to a significant risk of losing all of the money invested. There are significant other risks associated with an investment which are set out on page 24. This Document should not be communicated outside of the United Kingdom without Stellar’s prior consent. Significantly, the tax treatment for investors who are based outside of the United Kingdom will differ from that set out in this Document and they may not receive the reliefs available to United Kingdom investors. Any individual who is in any doubt about investing in Stellar Succession should consult an authorised person or an appropriately qualified tax adviser. The information contained in this Document makes reference to the current laws concerning Inheritance Tax Relief (“Relief”). These levels and bases of relief may be subject to charge. The tax reliefs referred to in this Document are those currently available to certain persons and their value depends on individual circumstances. Past performance is not necessarily a guide to future performance and may not necessarily be repeated. You should be aware that the value of investments and income from them may go down as well as up and you may not get back the amount you originally invested. Stellar has taken all reasonable care to ensure that all the facts stated in this Document are true and accurate in all material respects and that there are no other material facts or opinions which have been omitted, which would make any part of this promotion misleading. However, where information has been obtained from third party sources Stellar cannot accept responsibility for the completeness or accuracy of that information and potential Investors must form their own opinion as to the reliance they place on that information. You will need and be expected to make your own independent assessment of an investment in Stellar Succession and to rely on your own judgement (or that of your independent financial adviser) in respect of any investments you may make through Stellar Succession and the legal regulatory, tax and investment consequences and risks of so doing. 2. Investing in property Prospective Investors should note that a substantial portion of their investment may be committed to investments in real property and such investment is of a long term and illiquid nature. Therefore any investment may be difficult to value and the value of property is generally a matter of a valuer’s opinion rather than fact. An investment is likely to involve an above average level of risk. 3. Confidentiality This Document is being provided in confidence solely for a Distributor to consider an investment for their clients in Stellar Succession. The information contained in this Document is only to be used for this purpose and must not be reproduced, disclosed or made available to any other party except for the purpose of obtaining professional advice in connection with an investment in Stellar Succession. An investment in Stellar Succession is only being made available by way of this Document to potential Investors via the Distributors as intended above and any other persons should place no reliance on this Document whatsoever. 4. Risk factors The attention of potential investors is drawn to the “Risk Factors” section of this Document on this page 24. 5. Fees and charges The attention of potential investors is drawn to the “Summary of Fees and Expenses” section of this Document on page 20. 6. Conflicts of interest The attention of potential investors is drawn to the “Conflicts of Interest” section of this Document on page 23. 7. General Information contained in this Document is current only up to the date of publication of this Document. Neither delivery of this Document nor anything stated in this Document should be taken to imply that any information in this Document is correct as of any date after the date of this Document. Neither Stellar nor any of its directors, officers, employees, advisers, representatives, affiliates or associates guarantees a rate of return to be achieved by an investment in Stellar Succession, the repayment or performance of an investment in Stellar Succession meeting of its investment objectives or any increase in value. An investment in a Stellar Succession is subject to investment risks including the possibility of delays in the repayment of, or the loss of, capital invested. All taxation treatment is subject to the individual circumstances of the investor and may be subject to change in the future. If an Investor wishes to complain about any aspect of the service it has received, the Investor should contact Stellar’s Compliance Officer at Kendal House, 1 Conduit Street, London W1S 2XA in the first instance. In limited circumstances for certain types of investors, an Investor can then complain to: The Financial Ombudsman Service (FOS), Exchange Tower, London E14 9SR, if the Investor’s complaint to Stellar’s Compliance Officer is not dealt with to its satisfaction. If Stellar is unable to meet its liabilities in full for any valid claims in respect of its role as manager of Stellar Succession then an Investor may, depending on their status, be entitled to compensation from the Financial Services Compensation Scheme. The level of compensation currently available under the Financial Services Compensation Scheme depends upon the type of business and the circumstances of the claim as well as whether the Investor is, depending on the Investor’s circumstances, an eligible claimant under the rules of the Financial Services Compensation Scheme. Most types of investment business are covered for up to £50,000 per person per firm. If necessary Stellar will, on request, provide full details of this cover and how to obtain any compensation that may be payable. Further information is also available from the Financial Services. Compensation Scheme which may be contacted on telephone number 020 7892 7300, or at their address which is 10th floor, Beaufort House, 15 St Botolph Street, London EC3A 7QU or at their website: www.fscs.org.uk

IMpoRTAnT noTIcE

02 ✶

conTEnTS

Introduction 5

StellarAssetManagementandInheritanceTax 6

HowSuccessionWorks 8

OurTrades 12

InvestorInsurance 19

SummaryOfFeesAndExpenses 20

OtherInformation 22

ConflictsOfInterest 23

RiskFactors 24

Appendix1-Taxation 27

Appendix2-Definitions 28

Appendix3-GeneralInformation 29

✶ 03

DIREcToRy

Officers Directors of a Succession company

Jonathan Mark gainMatthew Robert Steiner

Company Secretary Stellar company Secretary Limited

Kendal house, 1 conduit Street, London W1S 2xA

ManagerStellar Asset Management Limited

Kendal house, 1 conduit Street, London W1S 2xA

Legal advisers to the Managernabarro LLp

125 London Wall, London, Ec2y 5AL

Taxation AdvisersEy LLp

1 More London place, London SE1 2Af

Insurance Broker pendulum financial Management

po box 320, Ilkley LS29 1fR

04 ✶

TheobjectivesofStellarSuccessionaretoprotectinvestors’capitalbyinvesting

inassetbackedbusinessestogenerateareturnof5%perannum

afterallfeesandchargestoobtainIHTreliefaftertwoyears

Dear Investor

Since our inception in 2008 we have launched a number of products that mitigate Inheritance Tax (IHT). all of which utilise the relief available through relevant business property (Business Relief).

Our products are designed to be easy to understand with all fees and charges clearly set out. Our IHT products offer clients complete control over the capital and we are the only provider to offer investors the option of taking out a comprehensive, but optional, insurance policy to cover any loss in value should the initial investment have fallen in value at the date of death. See page 19 for further details.

Stellar Succession is a unique and compelling proposition for discerning clients seeking to mitigate IHT without losing control of the capital whilst pursing an asset backed investment strategy in their own private limited company.

The company structure provides a simple yet robust planning opportunity for families who find themselves caught in the IHT net as a result of increasing asset prices and frozen nil rate bands.

Succession is also ideal for business owners who may have recently sold, or who are thinking of realising capital.

We believe you will like the bespoke nature of our product and the returns available from our asset backed portfolios.

To discover more about us and our range of products please visit www.stellar-am.com or telephone us on 020 3195 3500.

Yours sincerely

Jonathan GainChief Executive of Stellar Asset Management

✶ 05

Jonathan Gain

WHOWEARE

The directors of Stellar Asset Management Limited made their names at Close Brothers Investment Limited where its chairman and CEO grew a very successful business over fifteen years. At its peak, over 150 staff were employed and assets under management were in excess of £1.5 billion. The directors were considered by many as pioneers in the use of tax mitigation products that work within the framework of existing legislation. Stellar was founded in 2007 and, in addition to its range of evergreen IHT products, it has successfully closed nine other funds which are fully invested in forestry, farming, land and hotels. The product structures that we use are transparent and are developed with advice from a leading international law firm and an international accountancy firm.

WHYWEAREDIFFERENT

Our team has a wealth of experience and expertise in creating product structures that take advantage of current tax legislation to benefit private individuals and business owners. We provide training and compliance assistance and offer a high level of transparency within our product structures. Our fees and charges are lower than other companies in this market, and unlike some, we do not place a cap on investment returns. Uniquely we also offer our investors in our IHT products insurance against future loss of value between the date of investment and the investor’s death, to provide your clients with peace of mind and investment security.

WHATISINHERITANCETAx

IHT is payable on the value of an individual’s estate on their death. Any value in excess of the nil rate band (currently £325,000) is chargeable at 40% The number of estates becoming liable to IHT is growing because the nil rate band is frozen until 2018/19 and asset values, particularly house prices, are increasing.

Even the Government’s own forecasts expect their revenues from IHT to almost double from current levels to £6.16 billion in 2018/19. With sensible planning IHT can however be mitigated using simple, flexible products.

WHATISBUSINESSRELIEF

At Stellar we use products that benefit from Business Relief (BR) formerly Business Property Relief (BPR), which is part of legislation introduced by the Government in 1976. Unlike trust based planning or by making gifts, which take seven years before they mitigate a liability to IHT, BR achieves this in two years.

Therefore, using BR offers a number of advantages over other forms of IHT planning.

Stellar Asset Management and Inheritance Tax

WHATWEDO

Stellar Asset Management is a specialist in developing, marketing and managing innovative investment products. Most of our products are designed to reduce or mitigate tax within approved and established structures. The investment strategies adopted aim to protect individual’s wealth and typically are backed by tangible assets. While the majority of our products focus on inheritance tax planning (IHT), we also offer tax planning and investment products to help financial planners deliver real added value to their clients.

06 ✶

2 YEARS

CONTROL

DIVERSE

Diversification – Capital will be committed to a range of partnerships to diversify and mitigate investment risk.

Control - Investments are made in the client’s name and they have access to the assets at all times.

Timely- An investment will be outside of the client’s estate for IHT after only two years.

✶ 07

Why Stellar?

Why Stellar Succession?

Capital will be committed to a range of Partnerships

to diversify and mitigate risk

2 YEARS

CONTROL

Investments are made in the client’s name

An investment will be outside of the estate for IHT in two years

DIVERSE

Full access to your capital and income

100% relief from IHT and no exposure to personal tax rates

CAPITAL

TAX

Competitive - lower fees than other companies

LOW FEES

Legislation - our products use statute law not opinion

LEGISLATION

INSURANCE

CRYSTAL CLEAR

EXPERIENCED DIRECTORS

Experienced - the directors have been developing tax efficient

products since 1991

Transparency - no hidden fees and charges

Insurance - only company to offer comprehensive loss of value insurance

WHYFINANCIALADvISERSCHOOSEUS

THEBENEFITSTOCLIENTS

how Succession Works

Once established, Stellar will appoint the directors of that Company and it is intended that it will commence trading immediately. This starts the clock on the two year qualifying period for Business Relief. The directors of the investor’s Company will then seek appropriate qualifying trades and it is the intention to have 80% of the Company’s capital committed within twelve months of the initial investment. The Company will continue trading and after only two years the shares will enable relief from IHT to be claimed.

In order to maintain this exemption the Company must continue to undertake trading activities until the death of the Shareholder. Money can be removed from a Succession Company either by way of profit distribution or a return of capital, if required.

A personal private limited company structure for

each investor

The investor retains 100% control of their capital

Capital exempt from IHT liability after just two years

Uncorrelated asset classes

Lower risk trading opportunities

Opportunity to create a regular income stream

5% target return after all costs

No borrowings

Optional insurance policy is available to

protect any potential loss of value

Key benefits of Stellar Succession

When an Investor applies for Stellar Succession, Stellar will establish a Company on behalf of the Investor who become the sole shareholder of that company, owning 100% of the shares.

08 ✶

Key benefits of Stellar Succession

✶ 09

A Stellar Succession company will allow Shareholders to benefit from a variety of different trading activities. These include offerings where the returns are delivered through capital growth such as forestry and farming or through income such as bridging and renewable energy.

Currently there are five trades on offer with new trades introduced regularly and capital will be committed to a range of trading Partnerships alongside the capital of other Shareholders.

Stellar aims to commit capital to at least four trading Partnerships to provide a spread of investment risk. The trades shown in the diagram below are specifically chosen because of their lower risk characteristics. Many will have a physical asset underpinning their value such as forestry, farming, hotels and renewable energy installations. The trades that provide short term lending will typically be secured on assets.

FARMING

FORESTRY HOTELS

BRIDGINGFINANCE

RENEWABLEENERGY

Available Trades

Diversification

Stellar will be the operator of each Partnership and will be appointed pursuant to an operator agreement. The operator agreement for Stellar’s appointment as operator of a Partnership will be capable of being terminated by either Stellar or the Partnership by at least 12 months’ notice in writing although in certain circumstances (e.g. the insolvency of either party or an unremedied breach after notice) the appointment will be capable of termination at any time.

A bespoke ServiceA private limited company incorporated in England and Wales will be incorporated for each Investor as their Succession Company. Stellar will appoint two directors to serve as the directors who will be responsible for the day to day running of the Company. Stellar will also provide, or procure the provision of administration, accounting and taxation services to each Company. Stellar Company Secretary Limited will be appointed as the company secretary.

The Shareholder and their independent financial adviser will decide on the level of investment to be made for estate planning purposes. The number of Succession Companies into which an Investor’s investment is made will usually depend upon the estate planning advice received by the Investor from their adviser. The Investor may decide to set up more than one Company if, for example, there is more than one intended ultimate beneficiary. Potential Investors interested in forming more than one Company should see the associated company’s tax rules on page 27. Each Investor will subscribe for all the issued share capital ordinary Shares of 50p each will be issued to the Investor at a price of £1 per Share. Issuing Shares at a premium will create a share premium reserve which the issue costs can be charged. See page 22 for further details.

A copy of the memorandum and articles of association for an Investor’s Company is available from Stellar on request.

how Succession Works

BRIDGINGFINANCE

FORESTRY FARMING HOTELS RENEWABLEENERGY

EXAMPLE TRADING LTD

Example Trading Limited

CASH

partnerships

THESTRUCTURE

Each Succession Company will have its own segregated bank account and will commit capital to Partnerships to carry out a particular trade. Each Partnership will typically be structured as a general or limited Partnership and will be established and operated by Stellar. A Shareholder in a Succession Company will own a proportion of a Partnership pro-rata to the capital each introduced.

10 ✶

✶ 11

portfolio Selection It is Stellar’s intention to commit an Investor’s capital in Partnerships in a number of trades within twelve months of the Investor’s initial subscription. Stellar will select and manage the Partnerships on a discretionary basis for each Shareholder with the intention to give each Succession Company a spread of trading activities typically across at least four Partnerships to mitigate risks associated with any particular trade.

portfolio AllocationA Shareholder will usually be allocated to at least four Partnerships, equivalent to 80% of their capital, within twelve months of their initial investment. No more than 50% of an Shareholder’s capital will be allocated to any one trade unless requested specifically by the Shareholder.

ouR TRADES

12 ✶

FORESTRY

FARMING

HOTELS

BRIDGINGFINANCE

RENEWABLEENERGY

STRATEGY

Stellar typically acquires UK woodlands which, on average, will be approximately half way through their 35-40 year life cycle. The predominant crop species is likely to be sitka spruce; this is the most commonly planted conifer in the UK. The popularity of sitka spruce arises because it can yield high volumes of timber in a comparatively short time and the timber has a wide diversity of end uses.

Stellar will target woodlands which are capable of outperforming the IPD UK Forestry Index (the “Index”) over a period of around ten years. The latest Index to 31 December 2013 showed an annualised return from forestry of 8.5% since the launch of the Index in 1992.

RETURNSFROMFORESTRY

The investment return from forestry comes first from the physical tree growth and, secondly, from any gain generated from increasing timber and property prices.

Typically the return from physical tree growth for an upland conifer site is around 3% per annum. This return is comparable to the income yield from an index linked gilt. With index linked gilts the other half of the return is capital appreciation in line with inflation. With forestry, the other return comes from changes in timber prices and property values.

The returns from forestry are largely tax free. The timber harvesting income is not assessable in the hands of the investors; the growth in value of standing timber is also tax free and after two years an investment is free from IHT. The only gain which may be subject to tax is that attributed to any increase in the land values upon which the trees stand.

FORESTRYMANAGER

Forestry Investment Consultancy was founded in 1995 to provide advisory and administrative services to forestry owners. Its managing director, Anthony Wyld, is a chartered surveyor who began his career in rural

land management in 1973 and was marketing director of Economic Forestry Group during the 1980s.

At present the forestry manager manages 28 properties comprising a total of approximately 10,000 acres.

The forestry manager will recommend and advise on potential acquisitions and disposals which will include an independent assessment of the value of each forest. It will also arrange for the forests to be maintained, which will include the following:,

ensuring that the forests are appropriately insured; advising on timber harvesting; arranging for any repairs and forestry replanting to be carried out; submitting annual financial budgets for each forest; and ensuring compliance with all health and safety obligations.

SECURITY

A Stellar Succession forestry Partnership will acquire the freehold (or long leasehold) interest in each plantation with full title at the Land Registry.

A Partnership will enter into a contract for services with our forestry manager, Forestry Investment Consultancy, and the manager will be directly employed by the Partnerships.

BENEFITSTOINvESTORS

UK commercial forestry offers investors access to an asset class that is underpinned by freehold land assets that offer stable and predictable returns. Forestry is uncorrelated to other asset classes and has low volatility but offers a good opportunity to generate capital growth.

An investment is extremely tax efficient and through your Succession Company you will get access to a sector which typically requires more significant capital outlay and therefore benefit from economies of scale.

forestry

✶ 13

FORESTRY

14 ✶

STRATEGY

The strategy is to acquire a portfolio of farm assets in the UK. These assets will comprise freehold agricultural land and associated buildings that may either be used for dairy or arable farming. Each farm asset will be run by a farmer with responsibility for the day to day activities of the farm.

We take advantage of investment opportunities that may arise in the agricultural sector. These opportunities may arise, for instance, as a result of death, divorce and debt. This presents an opportunity for those with capital.

RETURNSFROMFARMING

Stellar will target farm acquisitions in the UK that will collectively outperform the Rural Property Held Only Properties Index forming part of the Investment Property Databank (“IPD”) UK Rural Property Investment Index, (the “Index”) over its life. The Index has generated a return of 8.6% per annum since 1981.

It is envisaged that the majority of the return to investors will come by way of capital growth of farm assets. Operational income is likely to be offset by both the direct running costs of the farm assets and the Partnership costs.

FARMMANAGER

The directors and employees of Manor House Farm have been involved in farm, agricultural, environmental and land management for a combined period of over 25 years.

Under the agreements with Stellar, the farm manager will:

act in the negotiation, appraisal and management of the acquisition and disposal of the assets;

act on any development proposals in respect of any of the assets and this may involve specific planning and development schemes or land enhancement;

monitor the performance of the assets; and carry out, or where necessary facilitate the engagement of experienced

individuals to carry out, the day to day management and maintenance of all farms acquired.

Independent chartered surveyors will provide farm management services and advise on acquisitions, provide valuations and land value forecasting.

The Farm Manager will seek the provision of property services for certain aspects of the management, maintenance and development of the property and land.

The firm of chartered surveyors appointed will only assist with the identification opportunities and reviewing the investment performance of the farmland market and will not provide investment advice.

SECURITY

A Stellar Succession farming Partnership will acquire the freehold (or long leasehold) interest in each farm with full title at the Land Registry.

A Partnership will enter into a contract for services with our farm manager, Manor House Farm, and the farmer will be directly employed by the Partnership. Any specialist work such as harvesting and replanting obligations will be put out to tender as and when required.

BENEFITSTOINvESTORS

UK commercial farming offers investors access to an asset class that is underpinned by freehold and assets that offer stable and predictable returns.

Farming is uncorrelated to other asset classes and has low volatility but offers an opportunity to benefit from capital growth. Investors will get access to a sector which typically requires more significant capital outlay and therefore benefit from economies of scale.

farmingFARMING

✶ 15

hotelsHOTELS

STRATEGY

Stellar intends to acquire either freehold or long leasehold interests in under-valued and under-performing hotels primarily in key strategic locations outside of London where opportunities exist to rebrand and/or reposition hotels to generate strong annual cash yields and significant uplift in capital value.

Our partners have a proven track record in originating and completing hotel acquisitions in the UK and will provide a comprehensive service to include deal origination, the provision of debt finance and, post acquisition, asset managing the hotels. The hotels will typically benefit from a franchise agreement with a branded hotel chain and will be run day-to-day by local staff overseen by an experienced hotel management company.

RETURNSFROMHOTELS

Well managed hotels will generate good levels of income which, over time, should increase through both efficient management and price inflation. We reasonally expect capital values to increase as hotels normally change hands on a multiple of profits.

SECURITY

A hotel Partnership will acquire the freehold (or long leasehold) interest in each hotel with full title at the Land Registry. A Partnership will enter into a contract for services with our hotel manager, a franchise agreement with a major hotel brand and a hotel management agreement with an experienced management company.

HOTELASSETMANAGER

Stellar will appoint Hetherley Capital Partners Limited (‘Hetherley’) to perform the asset management and performance monitoring of the Hotels on its behalf.

Hetherley will act as the Stellar’s representative in all aspects of the management of the hotel, liaising with the hotel management company on the day-to-day management of the hotel and brand standards. Hetherley will attend monthly owners’ meetings and provide regular updates on the current performance of the Hotels and future business strategy.

Hetherley has extensive experience in the UK hotel sector having advised developers, owners and investors in the sector for more than twelve years. Hetherley is currently appointed to a similar role at the Holiday Inn Express, Leeds Armouries, the Holiday Inn Express, Folkestone and the Staybridge Suites, Birmingham on behalf of other Stellar funds.

BENEFITSTOINvESTORS

This trade affords investors a good level of annual income which should rise as the asset management efficiencies are generated. This should then lead to the potential for capital growth following the increase in profitability. Freehold or long leasehold assets underpin the security of this trade.

STRATEGY

Bridging finance seeks to take advantage of the continued difficult conditions in the lending market. Specifically, capital will be provided for the property market on a short term basis that will always be secured against a charge on property assets.

Typical transactions will involve investors seeking to acquire buy to let properties who need to acquire the property, refurbish and find a tenant before a buy to let mortgage is approved. The short term loan will enable the buyer to secure the property and find a tenant. The capital advanced will be replaced by the mortgage obtained.

Alternatively vendors of property may require short term capital ahead of the completion of any property sale. We also seek business owners who need access to short term capital and pledge their property as security for the transaction.

RETURNSFROMBRIDGINGFINANCE

Bridging finance produces a regular income stream and the principal sum borrowed is repaid at the end of the finance period. The finance period is typically between six to twelve months duration, and the interest rate in the finance agreement is fixed at the start. The interest is also typically charged and received upfront and provides certainty of income over the finance period and ensures loan to value covenants are not exceeded.

SECURITY

A Stellar Succession bridging Partnership will only lend where we can take a charge over the asset and we insist that the borrower takes their own independent legal advice. We never extend lending terms and are always repaid at end of term. All fees including the interest are typically deducted up front from the amount of the loan which reduces credit risk.

BRIDGINGFINANCEMANAGER

Working with Bridgefast Finance, Investors will take comfort from the steps taken on each transaction including:

confirmation that the borrower has taken independent legal advice; the borrower has been subjected to a thorough credit vetting process; the properties provided as security have been independently valued; and the legal charges against the properties are registered and enforceable.

A Stellar Succession bridging Partnership will ensure in all cases that the property asset has been valued recently both on an open market basis and a forced sale basis and a Partnership will:

ascertain that a mortgage advance is available subject to normal conditions; ascertain that the property is on the market and help manage the sales

process (if applicable); never lend more than 60% of the property’s forced sale value; ensure that no loan is greater than 35% of the Partnership’s capital; and ensure that no individual Succession Company has more than 25% of its

capital in the Partnership (unless requested).

BENEFITSTOINvESTORS

This trade affords investors a predictable income with strong levels of asset security. Whilst there is no expectation of any capital growth, the lower risk profile of each transaction offers capital protection and complements our other trading activities.

bridging financeBRIDGINGFINANCE

16 ✶

STRATEGY

The Feed-in Tariffs (FITs) and Renewables Obligation Certificates (ROCs) were subsidies established to help the UK Government meet its goal of 15% renewable energy by 2020 by providing renewable energy companies with a pre-defined and index-linked price for electricity generation.

FEED-INTARIFFS

Under the FITs programme, any person or company installing FITs qualifying renewable energies will receive:

a fixed tariff for each kilowatt hour (kWh) of energy generated (the “Generation Tariff”); and

a further minimum tariff for each kWh of generated energy that is not consumed and which is sold into the national grid (the “Export Tariff”).

The Generation Tariff and the Export Tariff are index linked to the Retail Prices Index (“RPI”) and are typically contracted for 20 to 25 years.

RENEWABLESOBLIGATIONCERTIFICATES

The Renewables Obligation is currently the main support mechanism for renewable electricity projects in the UK.

Eligible renewable generators receive ROCs for each megawatt hour (MWh) of electricity generated from renewable sources. The certificates are tradable and can be sold to other suppliers to help them fulfil their obligation. Where suppliers do not have sufficient ROCs to cover their obligation, a payment must be made into the buy-out fund. The proceeds of the buy-out fund are paid back to suppliers in proportion to how many ROCs they have presented. ROCs can thus increase the profitability of renewable energy production, as ROCs have additional value over and above the price of electricity generated.

The buyout price for the 2014-15 obligation is £43.30 per ROC and will increase in line with the Retail Prices Index.

Given the anticipated low operating costs of the Partnership which will operate the generating assets, Stellar believes that this indexation means that the investments should be attractive in the event that there is significant inflation in the UK during the investment time frame.

RETURNSFROMRENEWABLEENERGY

The level of the subsidies was set by the Government to give projects an annualised return of 5% to 8% and the subsidies have reduced over the years as has the cost of the equipment. The Partnerships will receive a predictable and secure income stream from major utility companies such as npower and E.On.

SECURITY

The assets will be owned by Succession Partnerships and there will be no borrowings. In the case of residential rooftops, the space used by the panels are under a long lease with full rights to access. This arrangement is agreed with all owners’ mortgage companies, where relevant, and all panels are fully insured and under maintenance contracts.

The wind turbines are owned by Succession Partnerships and lease the land from local landowners. The turbines will be fully maintained and insured.

BENEFITSTOINvESTORS

This opportunity provides investors with a stable and predictable income underpinned by the subsidies available from the Government for up to 25 years. The income is index linked and protection is afforded by the ownership of the equipment such as solar panels or wind turbines.

Renewable EnergyRENEWABLE

ENERGY

✶ 17

18 ✶

INvESTORINSURANCE

There are two forms of insurance available to an Investor ; both are arranged by Pendulum Financial Management Limited, which is regulated by the Financial Conduct Authority under reference 527714. Pendulum is an independent insurance broker and Stellar is an appointed introducer to Pendulum in respect of the insurance available to Investors.

cover for first two yearsThe first form of insurance is a two year life policy which covers a sum up to 40% of an Investor’s capital in Stellar Succession should the Investor die within two years of their Investment in Stellar Succession. Such an event would cause an Investor’s estate to remain liable for inheritance tax on their Investment in Stellar Succession. An annual fee of 5.75% of an Investor’s capital in Stellar Succession applies for this policy.

The maximum amount that can be paid out to an Investor’s estate by this policy is £150,000 unless additional cover has been specifically arranged. Loss of value on deathThe second form of insurance is a life assurance policy which is available to cover any loss should your initial investment have fallen in value as at the time of death. Any increase in the value of the portfolio is to your benefit and any decrease in the initial investment may be covered by the life assurance policy subject to the terms and conditions of the policy. An annual fee of 2.5% applies for this standard policy. This fee will be reviewed every two year.s

The maximum amount that can be paid out by the life assurance policy is £250,000 unless additional cover has been specifically arranged.

The optional downside life assurance policy is available on standard terms if the following conditions are met:

You are under 80 years old. You are not currently receiving treatment for any symptoms, illnesses

or injuries. You have not previously been advised to undergo any medical

treatment or are awaiting any medical treatment. You have never had a proposal for Life, Critical Illness, Disability or

Private Medical Insurance declined, postponed, withdrawn or accepted on special terms.

You have not resided outside the European Union (EU) for longer than three months in a calendar year or travel frequently outside the EU.

On standard terms the policy will cease when the Investor reaches their 85th birthday (or on the second life in respect of joint policies). Cover can be extended beyond an Investors’ 85th birthday but it will be based on an updated health disclosure and may result in changes to the annual fee. Investors may, at their discretion cancel the insurance policy at any time.

If an Investor does not meet these criteria, insurance may still be available and a questionnaire will need to be completed. This is available upon request from Stellar.

Please be careful when answering these questions as a detailed current and historical medical report will be requested by the underwriters after any claim against the policy. Any incorrect information may invalidate the policy.

The life assurance policy is provided by a UK registered insurance company with 75% of the risk underwritten by GenRe, a subsidiary of Berkshire Hathaway.

The majority shareholder of the UK insurance company is the Mediterranean and Gulf Co-operative Insurance and Re-Insurance Company which provides a range of insurance and reinsurance products. It had net assets in excess of £206 million as at 31 December 2013.

The above is a brief summary only of the standard terms and conditions of the policy that can be arranged by Pendulum. An Investor should read the policy terms and conditions in full before determining whether or not to take out any insurance in respect of their investment. The policy document is available upon request.

All Investors who wish to obtain a policy should carefully consider the terms of the policy and obtain independent advice.

LIFEASSURANCEpAYOUT

Any pay out of the life assurance policy may crystallise a further IHT liability. To avoid this any pay out can be written into trust in order to maximise tax efficiency.

Stellar has produced a draft trust document to enable you to put in place a trust structure which you can choose to use if you so wish. Based on current legislation, by using the trust, any pay out under the terms of the life assurance policy will be channelled directly to your beneficiaries, rather than being paid into your estate, where it may be subject to IHT.

This product is designed primarily to be an IHT tax planning product. In respect of any other taxation which may apply to any portion of any pay out or for advice on the trust structure, you are encouraged to seek professional advice as individual circumstances may vary.

If you wish to take advantage of the trust structure, please tick the box in Section 6 of the Application Form and we will send you the required documentation.

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SUMMARYOFFEESANDExpENSES

The fees and expenses payable will depend on the category of each investor. These are set out in the table opposite. (See figure 2)

Initial feesStellar will charge an initial fee to each Investor to cover all the initial costs and charges associated with establishing a Succession Company for investment into Partnerships. Management feesStellar will charge an annual management fee to each Investor for providing full administration and accounting services to a Succession Company and each Partnership. Management fees will only be charged for the budgeted duration of any Partnership. Should this time frame be exceeded for whatever reason then no further management fees will be charged. Management fees will not be charged on cash that has not yet been applied to Partnerships.

The ongoing adviser charge will be paid by a Succession Company after the returns generated by each Partnership.

Adviser chargingAdviser charging are costs that each investor has agreed with a financial adviser in payment for the advice they have provided. Stellar can facilitate adviser charging from your investment. Stellar will deduct these charges from the amount on the application form and pay them to your adviser. The initial adviser charge will be deducted once your funds have cleared and any ongoing adviser charge will be paid twice yearly. partnership manager feesThe fees and charges of the specialist manager who will be responsible for the day to day management of each trade will also be paid by each Partnership and

are taken into account when determining the target return of 5% per annum.

The level of fees and charges will vary from trade to trade and will be typically no more than 1.0% per annum of funds invested in each Partnership. profit sharingAll costs, including the fees payable to Stellar and the manager of each trade, will be paid by each Partnership and no additional charges will typically be paid. The target return of 5% per annum for each Partnership is net of all fees and charges and is therefore the target for both Succession and each Partnership, once fully invested. Each Partnership may incentivise the manager for performance, which results in a Partnership achieving a greater return on the monies committed but only fall due once the target return has been met. The performance fee for a manager will be negotiated on a case by case basis, but will provide that Investors will typically receive at least 50% of the excess return above the target. Once profits have been realised by an Investor’s Succession Company, they may determine the policy for paying dividends or retaining profits.

No adviser charging will be taken into account when calculating the target return. ExpensesThe costs and expenses, such as filing fees, incurred in running a Succession Company will be payable by Stellar from the management fees it receives. no hidden or unspecified chargesAll charges are disclosed above and the amount of each charge is specified. Stellar does not charge any other administrative, service, dealing or exit fees to a Succession Company or to the Partnerships.

20 ✶

Advised Investment An Investor who applies

and is provided with advice

Non-advised InvestmentAn Investor who applies

through an intermediary who does not provide any advice

Direct InvestmentAn Investor who applies without an intermediary

INVESTOR

NON-ADVISEDINVESTMENT

INITIALCHARGE

5%

ANNUALCHARGE

2%

INVESTOR

ADVISEDINVESTMENT

INITIALCHARGE

2%

ANNUALCHARGE

1.5%

ADVISER

INVESTOR

NON-ADVISEDINVESTMENT

INITIALCHARGE

5%

ANNUALCHARGE

2%

ADVISER

Chargingagreedwithadviserandaddedto

chargesabove

2.5%Initialcommission0.5%perannumpaidfromchargesabove

✶ 21

fees and charges by category of Investor

Figure 2

OTHERINFORMATION ReportingInvestors shall receive the annual report and accounts for a Succession Company which includes each Partnership that holds a trade in which the Investor has invested. This will be sent within three months of the year end of 30 June. Periodic statements, which will contain full information on the value and composition of an Investor’s portfolio of Partnerships will be provided to all Investors on a six monthly basis by Stellar. borrowingsIt is not the intention to use external debt to fund any of our trading activities. However, from we may occasionally recommend that debt funding be provided to increase our ability to complete an acquisition either on a more timely basis or to enhance returns for Investors.

If utilised it is our intention that any debt required will be as no more than 40% of an asset’s cost of acquisition.

Should an investor not wish to participate in any trading activities which utilise debt finance they should complete section 9 on the Application Form.

Timing of ReturnsThe Partnerships that Stellar Succession Companies commit capital to generate a blend of both income and capital returns. Investors should note that approximately eighteen months should be allowed before the first income distribution can be made from a Succession Company.

Share premiumThe initial fees will be no more than 2% (unless adviser charging is agreed with the Investor) of the capital subscribed and will be charged to a share premium account. This avoids charging these costs to the profit and loss account where they are not deductible for corporation tax purposes. The number of Shares that are issued to an Investor will depend on the amount to be invested by the Investor. How ever each £1 invested, 50p will be credited to the Company’s share capital account and 50p to its share premium account. Together with retained profits these accounts constitute “Shareholder Funds”.

AuditA Succession Company will not be subject to an audit unless required by the Companies Act 2006. It is likely that each Company will be able to rely on the exemption from the requirement for a company to undertake an annual statutory audit. To rely on the exemption the annual turnover must not exceed £6.5 million and the balance sheet should not be more than £3.26 million. Certain conditions must be satisfied by the directors to allow the Company to rely on this exemption. If an audit is required the cost will be borne by the Company.

LiquidityAt some point in the future, an Investor (or their beneficiaries) may wish to realise their investments in one or more Partnerships. The ability for an Investor (or their beneficiaries) to do this and the timing of the realisation will depend on the Partnerships the Investor has invested in. However, Stellar will seek to match any Investor seeking to dispose of their investment in a Partnership before the realisation of the Partnership with another Investor that may be willing to purchase the Investor’s investment at the prevailing Partnership net asset value Stellar makes no assurance that it will be able to match both vendors’ and purchasers’ expectations. If Stellar is unable to arrange a matched bargain, then the Investors will not be able to realise their investment in a Partnership until the trade is realised. If Stellar arranges for a transfer of an Investor’s investment in a Partnership, Stellar may charge the vendor a fee of up to 2% of the relevant transfer price. This fee is to cover third party costs incurred. Following the death of an Investor the following situation may arise:

The Shares in the Succession Company will be transferred to the control of the executors of the deceased’s estate;

The executors will then transfer the Shares to those persons specified in the deceased’s will;

The new owner(s) of the Shares (the beneficiaries) will be able to choose to wind up or to strike-off or continue running the Company;

If the beneficiaries decide to continue to hold the Shares and the investments in the trades, then the terms for the operation of the Succession set out in this Document will continue to apply;

If the beneficiaries decide to wind-up or strike-off (under Section 1003 of the Companies act 2006) the Company, trading activities may cease and there will be a period of time whilst all existing Partnerships in which the Company has invested in trades are wound up following the realisation of the particular Partnership; and

Stellar will assist the beneficiaries in the winding-up or the striking-off of a Company following an Investor’s death.

ValuationsEach Succession Company will be valued annually by Stellar. It is not intended that each Partnership will be independently valued. InsuranceStellar will ensure that an FCA authorised firm with appropriate permissions will arrange an adequate level of insurance cover for each Partnership. cashAny amount of an Investor’s capital that has not been invested in Partnerships at any time will be held as cash in a bank account set out in the name of the Investor’s Company with the UK clearing bank, the Royal Bank of Scotland plc. The Royal Bank of Scotland plc currently pays interest on its business reserve account of between 0.05% and 0.25% per annum. Stellar accepts no liability for the loss of any cash held in any bank account in the event of the bank defaulting.

22 ✶

Share capital ReductionUnder Section 642 of the Companies Act 2006 it is possible to access the majority of unused cash where an Investor (or their beneficiary) wishes to do so. Investors should allow four to six weeks from the time of their written consent to the completion of the Share Capital Reduction procedure. However in some circumstances this procedure may take longer. Stellar will usually charge a fee for performing the work involved to facilitate a share capital reduction of up to £350 (plus VAT) for the work performed. Dissolution of a Succession company An Investor (or their beneficiary) may realise their investment by dissolving their Company pursuant to section 1003 of the Companies Act 2006. In order to dissolve a Company in this way, the Company will need to dispose of all of its holdings in Partnerships. Once it has disposed of all of its holdings in Partnerships and the Company has ceased trading, the Investor should allow a minimum of six months, from the time of their written consent, for the dissolution to be fully completed. However, Stellar will endeavour, where possible, to return the assets to the Investor within three months. If certain assurances are given to HMRC in advance of the dissolution, any distributions made to an Investor may be regarded as having been made under a formal wind-up so the value of the distribution is treated as a capital distribution for the purposes of assessing any chargeable gains arising on the disposal of the Shares in the Company. The cost of this process is payable by the Investor’s company.

CONFLICTSOFINTEREST There may be occasions when conflicts of interest arise between the interests of Stellar and Investors. Conflicts of interest may arise as a result of various factors. The following summarises some of the transactions that could result in conflicts of interest, but is not intended to be an exhaustive list of all such transactions. The following should be carefully evaluated before making an investment. other Services of StellarStellar and its associated entities may provide investment management services to Investors and to other clients, including other funds and accounts, whose principal investment policies are either similar or differ from those followed by Stellar for the trades contemplated in this Document. Directors of Stellar may also serve on the board of other entities or other investment committees and may also manage their own proprietary accounts. Neither Stellar, its associated entities nor any of their representatives are required to refrain from any other activity nor disgorge any profits from any such activity, including acting as investment manager or investment adviser for investment vehicles or managed accounts with objectives similar to or different from those of the Partnerships. Stellar may utilise the same or different information or investment strategies for such other funds as it utilises for the Partnerships. Stellar Succession may compete for investment opportunities with other funds or investment vehicles managed by Stellar. Stellar Succession may also invest in a Partnership that Stellar or one of the funds managed by Stellar has invested in.

other feesStellar may receive certain fees in connection with the purchase, monitoring or disposition of a Partnership or in connection with unconsummated transactions or in connection with other services provided to a Partnership. These fees will be disclosed to investors, if possible, prior to Stellar under taking a Partnership or alternatively in the next periodic statement to investors following Stellar’s receipt of such fees. Other activities of management personnel of Stellar will devote such time as shall be reasonably necessary to conduct the affairs of each Succession Company in an appropriate manner. However, such personnel will be involved in managing or advising other funds and therefore, conflicts may arise in the allocation of management resources. Material, non-public informationBy reason of its other activities, Stellar may acquire confidential or material non-public information or be restricted from initiating certain transactions. Stellar may not be able to act upon such information on behalf of the Investors. Given these restrictions, Stellar may not be able to initiate a transaction that they might otherwise have initiated on behalf of Investors and may not be able to dispose of a Partnership that it might otherwise have disposed of. Further, Stellar may be constrained from disclosing any information received in respect of other funds to Investors and which might be relevant to an investment recommendation; as a result the Investors may enter or, as the case may be, not enter into a transaction which it would not have done or, as the case may be, would have done had such information be known to it.

conflicting Interests of InvestorsThe Investors may have conflicting tax and other interests with respect to their investments. The conflicting interests of individual Investors may relate to or arise from, among other things, the nature of a Partnership or the structuring of a Partnership. As a consequence, potential conflicts of interest may arise in connection with decisions made by Stellar, including with respect to the timing of disposing of a Partnership that may be more beneficial for one Investor than for another Investor, especially with respect to Investors’ individual tax situations. In making investment decisions for Investors, Stellar will consider the investment and tax objectives of the Investors as a whole consistent with applicable law, not the investment, tax or other objectives of any Investor individually.

no independent adviceThe terms of the arrangements under which each Partnership is established and the articles of each Investor’s Company to be operated by Stellar are not the result of arm’s length negotiations or representations of the Investors by separate legal counsel. Applicants should therefore seek their own taxation and financial advice before investing in Succession.

compensationThe management fee is payable to Stellar without regard to the overall success of an Investor’s investment.

Stellar will discuss the above conflicts of interest with any Applicant or Investor upon request. These activities and any conflicts of interest are acknowledged and consented to by each Applicant by signing the Application Form as a necessary condition for the Applicant becoming an Investor.

✶ 23

Risk factors

Applicants should consider the following key risk factors which on their own or together could have a material adverse effect on an investment in Stellar Succession.• An investment in Stellar Succession requires a long-term commitment, with no certainty of any investment return and the risk of loss of capital. The return of capital and the realisation of gains, if any, generally will occur only upon the partial or complete disposition of all trades held by an Investor’s Company as to which there can be no certainty. Trading investments are illiquid and may take months or years to realise. • Shares in a Succession Company will be unquoted, there will be no market for Shares and it is unlikely that any public market will emerge in the future. Investors should, therefore, note that the value of the Shares may go down, perhaps substantially, as well as up and there is no certainty that they will get back in full the amount which they invest. • There is no market for an Investor’s portfolio of investments in Succession and it is unlikely that any public market will emerge in the future. Applicants should consider carefully whether an investment in Succession is suitable for them in light of their personal circumstances and the financial resources available to them. There can be no guarantee that any appreciation in the value of a trade will occur or that the investment strategies will be achieved. • An investment in Succession should not be considered a short-term investment. Any realisation of an Investor’s investment in Succession may result in the loss of the Business Relief. • Any downturn in the market of the relevant trade could adversely affect the value of the Investor’s investment in Succession. • An Investor’s portfolio of trades in Succession may be comprised of a limited number of trades and/or one trade may constitute a significant percentage of an Investor’s Succession portfolio. A decline in value of a trade that an Investor’s investment has been invested in could substantially affect the value of the Investor’s Succession portfolio. • The business of identifying suitable trades for investment is competitive and involves a high degree of uncertainty. High levels of competition may result in Stellar being unable to source suitable trades. Furthermore, the availability of investment opportunities generally will be subject to market conditions. Accordingly, there is no guarantee that Stellar will be able to identify trades. • To maximise returns and to qualify for Business Relief, Investors will need to hold their investment for the medium term. As a consequence, an investment in Succession will not be suitable for short term investment and an Applicant should not invest if it is likely that they may need to realise their investment over the short term. • An Investor will be liable to pay various fees, costs and expenses (including a fee to Stellar) in respect of their investment irrespective of whether any profits are realised. • No guarantees as to investment performance, capital gains or income distribution are given, either expressly or by implication, in this document. • There can be no assurance that the strategy of Succession or the investment strategy of Succession will be successful. • It is likely to be difficult for Investors to obtain information relating to the value of their investment or to sell their investment.

• There is a risk that trading returns may be adversely impacted if a counterparty fails to deliver on its contractual obligations, or experiences financial difficulties.

• An investment in Succession that is an illiquid asset may impact on the Investor’s investment returns if the asset cannot be sold at a beneficial price. • Determinations of the value of a Succession Company involves the exercise of discretion if fair value or similar determinations are made. There can be no assurance that the values assigned in good faith by Stellar to a trade will equal or approximate to the price at which it may be sold or otherwise disposed of from time to time. • The performance and operation of Succession is largely dependent upon the expertise of the directors and certain employees of Stellar and the key personnel of the managers that Stellar may appoint to a trade who may change from time to time. If such persons were to become unavailable, it could have a detrimental effect on the ability of Succession to achieve its investment objectives. • There is a risk that an extraordinary event, such as a hurricane, flood, tornado, earthquake, terrorist attack or political uprising could adversely affect any Succession Company at any given time. • The value of any trading investment in Succession may be affected by uncertainties, such as political developments, changes in government policies and taxation. • Changes to legislation that either a Succession, trade or a Partnership that carries on a trade, is subject to, or the introduction of new legislation or regulations regulating any of these, or a change in the interpretation of the taxation position or a change in the taxation treatment of any of these may affect the investment performance and the investment returns of an Investor’s investment. • Dependent upon the specific outcome of the trades undertaken, Investors may incur a taxation liability in advance of profits being distributed to them through Succession. • The statements in this document relating to taxation are intended to be a brief description of some of the tax consequences for UK resident Investors of an investment in Succession. The statements are based on Stellar’s understanding of applicable law and practice as at the date of this Document.They do not apply to certain classes of Investors such as financial traders which hold property as trading stock or to non-UK investors. Potential Investors should seek their own advice on the taxation consequences of an investment in Succession because Stellar and its advisers can take no responsibility in this regard. • Each Partnership that carries on a trade will typically be formed as a general Partnership and accordingly, if a Partnership makes a loss, the Succession Company of those Investors that invested in that Partnership may be liable to contribute to that loss pro-rata to their investment in the Partnership. An Investor may therefore need to make a further investment in to their Succession Company so that it has enough capital to contribute to the loss. The foregoing list of risk factors is not comprehensive and there may be other risks that relate to an investment in the trades. Prospective Investors should note that an investment in Succession should be of a medium to long term nature and they should consult with their professional advisers before deciding whether to invest.

24 ✶

ThE AppEnDIcES

✶ 25

26 ✶

The description of inheritance tax, Business Relief, formerly Business Property Relief, and corporation tax is only a summary of the relevant legislation. All Investors should therefore seek advice from a qualified taxation adviser if they require further information. The rules described are those currently in force. There is, however, always the possibility that taxation legislation could change in the future. Investors should note that neither Stellar nor EY LLP, its tax adviser, can guarantee the availability of such reliefs since this may depend on the particular tax circumstances of each Investor. uK TAxATIon A summary of the UK tax treatment of Succession is set out below. The tax analysis, so far as it applies to Investors, is in respect of Investors who are resident in the UK for tax purposes. The analysis is based upon the current legislation, current case law, guidance published by HMRC and practice existing as of the date of this Document. The foregoing authorities are subject to change and such changes may be retroactively effective. If so, the tax analysis set out below may be affected and may not be relied upon. Investors are recommended to seek independent professional advice regarding the tax implications of their investment in light of their circumstances. a prospective investor who is in any doubt as to their tax position or who is subject to tax in any other jurisdiction outside the UK should consult an appropriate professional adviser. InhERITAncE TAx: buSInESS RELIEfBusiness relief is granted under Sections 103 -114 IHTA 1984. Under these provisions, the inheritance tax liability which would otherwise arise on the estate of a deceased person, or on a transfer of assets by way of a lifetime gift, may be reduced or eliminated to the extent that the assets comprise Relevant Business Property. For this purpose, relevant Business Property includes shares where the company concerned is unlisted and is either a trading company or the holding company of a trading group. Currently, 100% Business Relief from inheritance tax is available in respect of shares in an unlisted trading company, regardless of the percentage held by the individual shareholder. conDITIonS To bE SATISfIED foR buSInESS RELIEfThe main conditions which must be satisfied are as follows: • the shares must have been owned continuously during the previous two years or must have been inherited from a spouse and, when the spouse’s period of ownership is taken into account, the combined period of ownership must be at least two years; and • the qualifying business activity must be carried on at the date of death or transfer.

buSInESSES WhIch Do noT QuALIfy foR buSInESS RELIEfBusiness Relief is not normally available where the business carried on consists wholly or mainly of dealing in securities, stocks or shares, land or buildings (in the absence of a property development trade), or in making or holding of investments. foRESTRy QuALIfyIng TRADIng pARTnERShIpSThere is currently no income tax, capital gains tax or corporation tax arising on either the sale of trees or timber produced from them for forestry Partnerships.

coRpoRATIon TAxThe Partnerships will be treated as “tax transparent”. Accordingly, the Partnerships themselves will not be subject to tax but each Succession Company will be subject to corporation tax at the prevailing rate of 20% on its share of the trading profits and other income, if any, of the Partnerships to which it belongs. coRpoRATIon TAx: ASSocIATED coMpAny RuLES Investors should be aware that the corporation tax liability of their Company may be increased if they have controlling interests in other companies which could then be regarded as “associated” with their Company. For example, another company will be regarded as associated if the majority of the share capital in the other company is owned by the Investor alone, or by the Investor together with the Investor’s immediate family. This section is not intended to be exhaustive and there are other instances where companies may be associated including if an Investor has a beneficial interest in the share capital of other companies or Partnerships. Potential investors should seek independent taxation advice on this matter.

Appendix 1 Taxation

✶ 27

28 ✶

”AppLIcAnT”A person who applies to become an Investor “AppLIcATIon foRM”A Stellar Succession application form “buSInESS pRopERTy RELIEf”, “buSInESS RELIEf” oR “bpR” Relief granted from inheritance tax under sections 103-114 IHTA 1984 on the estate of a deceased person or on a transfer of assets by way of a lifetime gift, to the extent that the assets comprise Relevant Business Property (as defined below)

“DISTRIbuToR”Any FCA authorised firm which has been appointed by Stellar to distribute this document “DIREcToRS”The persons who may be appointed as a director of a Succession Company whose names appear on page 3

“DocuMEnT”This document, and any supplement to it “fcA”The Financial Conduct Authority or any successor or replacement body “fSMA”The Financial Services and Markets Act of 2000, as amended from time to time and the rules and glossary contained in the FCA Handbook of Rules and Guidance, as amended or replaced from time to time “hMRc”Her Majesty’s Revenue and Customs “IhTA 1984”Inheritance Tax Act 1984

“InVESToR” oR “ShAREhoLDER”Any individual, company or trust which becomes the sole owner of Shares in a Succession Company

“pARTnERShIp”A general or limited Partnership that is formed by a number of Succession Companies to carry on a trade as described in this Document “RELEVAnT buSInESS pRopERTy” Property, including shares in unquoted trading companies, which qualifies for relief from inheritance tax under the business relief provisions contained in IHTA 1984 “ShARES”Ordinary shares of 50p nominal value each in a Company “SuccESSIon” oR “SuccESSIon coMpAny” oR “coMpAny”A company incorporated by Stellar on behalf of each Investor which carries on trading activities through Partnerships by acquiring a portfolio of Partnerships as described in this Document “STELLAR”Stellar Asset Management Limited, a company incorporated in England and Wales with registered number 06381679 which is authorised and regulated by the Financial Conduct Authority “TcgA 1992”Taxation of Chargeable gains act 1992 “TRADE”A trading venture which is commercial forestry, commercial farming, renewable energy, bridging finance or hotels described in this Document which qualify for Business relief

“uK” the United Kingdom of Great Britain and Northern Ireland.

Appendix 2 Definitions

Inthisdocumenttheseexpressionsandabbreviationshavethefollowingmeaningsunlessthecontextotherwiserequires.

RESponSIbILITyStellar has taken all reasonable care to ensure that the facts stated in this document are true and accurate in all material respects and that there are no other material facts the omission of which would make misleading any statement in this document, whether of fact or opinion. All statements of opinion and/or belief contained in this document and all views expressed and all projections or forecasts, or statements relating to expectations regarding future events or the possible future performance of Succession, represent Stellar’s own assessment and interpretation of information available to them as at the date of this document. No representation is made or assurance given that such statements, views, projections or forecasts are correct or that the objectives of a Succession Company will be achieved. Prospective investors must determine for themselves if such statements, views, projections or forecasts are reasonable and no responsibility is accepted by Stellar or any other person in respect thereof. Prospective investors are strongly advised to conduct their own due diligence including, without limitation, on the legal and tax consequences to them of investing in Succession.

AuThoRITyCompletion of the agent’s box on the Application Form confirms that the agent is duly authorised to transact such business under the FSMA and that the agent has complied with the requirements of the Money Laundering Regulations 2007 regarding the identification and verification of the applicant. Stellar is not acting for any of the Investors and will not be responsible for ensuring that any Investor’s investment is suitable or appropriate for them.

Appendix 3 general Information

✶ 29

30 ✶

TheobjectivesofStellarSuccessionaretoprotectinvestors’capitalbyinvesting

inassetbackedbusinessestogenerateareturnof5%perannum

afterallfeesandchargestoobtainIHTreliefaftertwoyears

STELLAR ASSET MAnAgEMEnT LIMITED Kendal House 1 Conduit Street, London W1S 2XAt 020 3195 3500 e info@stellar-am.com www.stellar-am.com

Authorised and Regulated by the Financial Conduct Authority