FSSA Investment Managers, the Asia-based fund manager of the trust, introduced the performance-related conditional tender offer in 2021 linked to the company’s investment performance  from September 1, 2021 to August 31, 2026.

Under the terms announced, a tender offer for up to 25% of the company’s outstanding share capital will be put to shareholders if, over the five-year period, the company’s net asset value (NAV) total return in sterling on a cum-income basis does not exceed the total return of the MSCI AC Asia ex Japan Small Cap Index (in sterling) over the same period.

The five-year measurement period ended on 31 August 2026. Over this period, the company’s NAV total return was 28.04%, compared with a total return of 48.45% for the comparator index.

The board at Scottish Oriental Smaller Companies Trust said: “The performance condition has not been met, and the conditional tender offer has been triggered.

“The tender offer will be made at a 2% discount to formula asset value, being the net asset value attributable to the tendered shares less the costs and expenses of the tender offer, and will be conditional upon the approval of shareholders at a general meeting of the company.

“A circular to shareholders containing further details regarding the tender offer, including the expected timetable, arrangements for shareholders wishing to participate and notice of the general meeting, will be published in due course with the expectation that, subject to the timely realisation of the assets comprising any tender pool, the tender proceeds will be paid to shareholders before the end of 2026.”

It confirmed that, in accordance with the arrangements announced in November 2021, the next five-year performance measurement period commenced on 1 September 2026 and will end on 31 August 2031. The same performance condition will apply.

The board revealed in a statement that it recognised the fund’s “disappointing returns over the performance measurement period” and is looking into whether additional action is required to ensure the company meets the investors’ needs. The board and its advisers will be engaging with a number of the company’s shareholders.

It comes after the company announced that Sreevardhan Agarwal would take over as lead manager, following the departure of former lead manager Vinay Agarwal.