RS2 plc - Extraordinary General Meeting

On 19 November 2020, RS2 Software plc issued an announcement providing information about the upcoming Extraordinary General Meeting (“EGM”) scheduled to be held virtually on 15 December 2020. During the EGM, shareholders will be asked to consider and approve a number of changes to the company’s ‘Memorandum & Articles of Association’ (“MAA”). These changes are required to enable and empower the company to implement its objectives and expansion plans in terms of its business strategy. In this respect, RS2 explained that due to its current position across the industry value chain, it plays a pivotal role in the payments ecosystem. Accordingly, RS2’s strategy is geared towards the continued transformation of the company with a view of achieving accelerated growth and improved profitability whilst maintaining a sustainable position within the entire value chain.

In addition to the company’s current business lines (namely licensing and managed services), RS2 also penetrated the direct merchant acquiring and issuing services (“Merchant Solutions”). This new business will be conducted through RS2’s fully-owned subsidiary RS2 Financial Services GmbH and will allow the company to offer acquiring and issuing services itself directly to merchants rather than through third-party service providers. In this respect, RS2 Financial Services will operate via an ‘E-Money Institution’ (“EMI”) license with the German Regulator, thus enabling the company to manage merchant funding, provide acquiring services, and issue payment instruments including prepaid cards for consumers and micro/small-sized merchants.

The changes to the MAA will also lead to the strengthening of RS2’s capital base. In fact, the company is recommending:

  • That its current authorised share capital of 200 million ordinary shares of a nominal value of €0.06 per share is increased to 240 million ordinary shares of a nominal value of €0.06 per share. Accordingly, for the avoidance of misinterpretation, no authorisation is being sought for the allotment of any authorised ordinary shares at the forthcoming EGM.
  • The introduction of 60 million new non-cumulative, non-redeemable preference shares of a nominal value of €0.06 per share. In this respect, when RS2 declares a dividend in respect of any financial period, holders of the preference shares will be entitled to a premium (“Premium Dividend”) over the dividend distributed and payable to the holders of ordinary shares. Such Premium Dividend will be determined by the Board of Directors at the time of issue of the preference shares, but this will not be less than 10%. Moreover, preference shareholders will qualify in the same manner as the ordinary shareholders when it comes to any bonus shares issued.
  • That the ordinary shares would have a weighting of two votes per share, whilst the preference shares would have a weighting of one vote per share. Furthermore, preference shareholders would only have the right to vote at any general meeting convened for the purpose of (i) reducing the capital of the company; (ii) winding up of the company; (iii) where the proposition to be submitted directly affects their rights and privileges; and (iv) when the dividend on their shares is in arrears by more than six months.

In the context of the introduction of the new non-cumulative, non-redeemable preference shares, RS2 explained that the ordinary shareholders and the preference shareholders will be irrevocably waiving all their rights of pre-emption deriving from their shareholding in the context of the Directors issuing and allotting any of the Preference Shares to employees and Officers of the Company or of its subsidiaries and in the context of a public offering of any Preference Shares. The company also added that it has so far financed its investments through internally generated cash flows and bank financing. However, to continue forging ahead with its plans for accelerated growth, RS2 is looking at outside financing via the introduction of the preference shares. The additional financing will thus take RS2 to the next level in re-positioning itself to a fully integrated payment service provider reflecting the robust foundations from the market-side as well as the demand from the current client base to serve as an impetus for future growth.

With regards to the increase in the authorised number of ordinary shares, RS2 explained that these new shares would provide the company with the capacity and flexibility needed in the event that it would require raising of further capital to act in a timely manner to opportunities and be able to bring on board strategic investors which will enhance shareholder value, if and as needed. Taken as a whole, the increase in the authorised ordinary share capital and the creation of the new preference shares is being proposed in order to restructure the share capital of the company to enable the planned growth.

RS2 concluded by stating that it intends to issue the new preference shares (up to 10% of which will be earmarked as a ‘Share Option Scheme’ towards officers of the company) and for this reason, an application will be made with the Listing Authority and the Malta Stock Exchange for the new preference shares to be admitted to Listing and Trading on the Official List of the Malta Stock Exchange. A public announcement will be issued when an application to the MFSA is submitted and the timelines would be communicated in due course via a prospectus.

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RS2 Software plc – EGM Notice to Shareholders.

RS2 Software plc – EGM Circular to Shareholders.