JPMorgan US Smaller Companies Investment Trust plc (JUSC) has published a shareholder circular setting out full details of its proposed combination with Brown Advisory US Smaller Companies PLC (BASC), to be effected via a scheme of reconstruction and members' voluntary liquidation of BASC under section 110 of the Insolvency Act 1986. The board of JUSC first announced heads of terms with BASC on 7 October 2026 and now seeks shareholder approval at a general meeting scheduled for 2 December 2026. The enlarged trust would be the only dedicated UK-listed vehicle focused on US smaller companies, with management fees set to reduce and secondary market liquidity expected to improve for shareholders.

Key Points

  • JPMorgan US Smaller Companies Investment Trust plc (JUSC)
  • JUSC has published a circular to shareholders proposing a combination with Brown Advisory US Smaller Companies PLC via a scheme of reconstruction and members' voluntary liquidation of BASC
  • JUSC's management fee will reduce to 0.65% on the first £200 million of net assets and 0.60% thereafter, down from 0.70% on net assets up to £300 million; a general meeting is convened for 2 December 2026, with the scheme effective date expected on 15 December 2026
  • Investors should watch the outcome of the 2 December general meeting and monitor BASC shareholder elections between the rollover and cash exit options ahead of the 15 December effective date

JUSC and BASC Scheme Structure: Rollover Option, Cash Exit and FAV Calculation

Under the scheme, BASC will be placed into liquidation and its assets divided into three pools: a rollover pool for shareholders electing to receive new JUSC shares, a cash pool for those electing the cash exit option, and a liquidation pool to meet BASC's liabilities. BASC shareholders who do not actively elect the cash option will be deemed to have chosen the rollover option. New JUSC shares will be issued on a formula asset value to formula asset value basis, with the ratio, cash entitlement per BASC share, and total new shares to be issued expected to be announced on 15 December 2026. Dealings in new JUSC shares on the London Stock Exchange Main Market are expected to commence on 16 December 2026.

Revised JUSC Management Fee and JPMorgan Funds Limited Financial Contribution

Conditional upon the scheme completing, JPMorgan Funds Limited has agreed to reduce JUSC's management fee to 0.65% on the first £200 million of net assets and 0.60% on net assets above that threshold, compared with the current rate of 0.70% on net assets up to £300 million. JUSC's current ongoing charges ratio stands at 0.95%, which the company states is expected to fall as a result of the transaction. JPMorgan Funds Limited has also agreed to contribute a minimum equivalent of 12 months' management fee on the net assets transferred from BASC, with the aim of insulating existing JUSC shareholders from transaction costs, estimated at approximately £750,000. BASC's transaction costs are estimated at approximately £880,000, inclusive of VAT.

New 5-Yearly Conditional Tender Offer and Discount Management Policy from January 2027

As part of the proposals, JUSC will introduce a 5-yearly conditional tender offer from 1 January 2027, covering 30% of its own shares at a 2% discount to NAV. The tender offer will only be triggered if two conditions are simultaneously met: JUSC underperforms the Russell 2000 Index total return with net dividends reinvested, expressed in sterling, over the preceding five-year period; and the average share price discount to NAV over the preceding twelve months exceeds 5%. JUSC will also retain its existing discount management policy of share buybacks and regular 5-yearly continuation votes, supplementing these with the new conditional mechanism.

Saba Capital Standstill Agreement and Board Recommendation Ahead of 2 December Vote

Saba Capital Management LP, which holds approximately 16% of BASC's issued share capital, provided an irrevocable undertaking to vote in favour of the scheme and elect the cash option for its entire beneficial holding ahead of heads of terms being agreed. Separately, Saba, BASC and JUSC have entered a standstill agreement under which Saba has agreed not to put forward proposals to JUSC shareholders or requisition a general meeting of JUSC, with those undertakings expiring on 7 October 2027. The JUSC board unanimously recommends shareholders vote in favour of all five resolutions at the 2 December general meeting, with directors intending to vote their own combined holding of 22,940 shares accordingly.