It's now 10:00 A.M., so that's the appointed time. We'll kick off. Good morning, everyone. My name is Michael Cole. I'm the independent chairman of Regal Partners Limited. Thank you for joining us today for the company's 2023 annual general meeting. Before I go further, could I ask all people in the room to turn your mobile phones to silent? Thank you. The company secretary has advised me that we have a quorum, so I declare the meeting open. The notice of the meeting has been sent to shareholders on the 21st of April and will be taken as read. I begin today by acknowledging the traditional custodians of the land on which we meet, the Gadigal people of the Eora nation, and pay my respects to elders past, present, and emerging.
I'm chairing today's meeting from Customs House in Sydney, and the company's directors are all in attendance. On stage with me today are members of the board, Brendan O'Connor, who's the CEO and Managing Director, Sarah Dulhunty, Jaye Gardner, both Independent Non-Executive Directors. Ian Gibson, an Executive Director. On the far side of the stage, we have Ian Cameron, our Chief Financial Officer and Company Secretary. Also in attendance are representatives of our shareholding registry, Boardroom, and our auditor, Deloitte, is represented by John Corbett. We are pleased to be conducting today's meeting in a hybrid format, meaning that people can participate in person, online or over the phone. This will provide plenty of opportunities for shareholders to ask questions during the meeting. Please refer to the meeting materials distributed to shareholders for detailed instructions on how to participate, and I'll run through the key points shortly.
Turning to our agenda today. As reflected in the agenda, I will begin with a short introductory address. Brendan O'Connor will then provide a brief update on the group. We will then move to the formal resolutions, where I will take questions on each resolution. Following this, there will be an opportunity for you to ask general questions. We will then collect all the votes. Once we formally conclude the AGM, we will then host light refreshments at the back of the room for shareholders attending in person. Please note today's meeting is about Regal Partners. We will focus primarily on key items in the notice of the meeting. Questions about equity markets, individual portfolios and funds are best kept for other forums such as webinars and client events that we host throughout the year.
Questions about your personal holdings may be directed to our investor relations teams or the share registry after this meeting, both of whom will be happy to help. In addition, the ASX-listed investment vehicles to which we provide investment management services have their own independent governance structures. In the case of RF1, that is the responsible entity, Equity Trustees. In the case of the ASX-listed investment companies being Regal Asian Investments, or RGA, and VGI Partners Global Investments Limited, VGI, those companies have their own boards. They are not subsidiaries of Regal Partners Limited, and so I and other directors are not responsible for their decision-making in the way that we are ultimately responsible for the decisions of Regal Partners Limited and its subsidiaries.
Decisions of those companies beyond the responsibility for day-to-day investment of their portfolios are specifically delegated to us under the investment management agreements and are matters for the boards of those companies. Now, turning to the logistics of the meeting, I would like to hand over to Rebecca Fesq, who will run through the process of asking questions and voting. Rebecca is head of client business and strategic partnerships at Regal. Thank you, Rebecca.
For today's meeting, all resolutions are being voted on by poll. For those in the room, when you have registered today, you would have received one of three colored cards. Green cards were given to shareholders who have not submitted proxy forms prior to this meeting and proxy holders. Green card holders can therefore vote on the resolutions being put forward. Holders of a green card are also entitled to ask questions when prompted throughout the course of the meeting. Yellow cards were given to shareholders who have submitted proxy forms prior to this meeting and who therefore cannot cast votes again during the meeting. However, you are welcome to ask questions when we reach the relevant parts of the meeting. White cards were given to non-shareholder guests who cannot vote or ask questions during the meeting. You can complete your voting at any time during the meeting.
Just make sure that you give your card to one of our Boardroom representatives before we close voting at the end of the meeting. Asking questions in the room, when we reach the relevant item in the meeting, we will ask people with questions who have a green or yellow card to make their way to a microphone and show their card before asking their question. Depending on time and the number of questions, we may need to limit each shareholder to 2 questions or comments per item of business. For those of you who have logged into the webcast with your username and password, you will have the opportunity to submit questions online as well as vote on the resolutions.
If you have already prepared a question, please submit it now through the website, and we will aim to answer it at the appropriate stage of the meeting. If your question relates to a specific item of business, please state the resolution number or reference the financial report at the start of the question. All other questions will be considered during the section for general questions. If we receive multiple questions on the same topic, we may group those together. Again, depending on time and the number of questions, we may also need to limit each shareholder to 2 questions or comments per item of business. With regard to online voting, to give you ample time to vote, we are going to open the polls now.
This means you can submit your online votes at any time between now and when we close the polls at the end of the meeting. If you change your mind about your about any vote, you can also override your original online vote between now and when the polls close. For those of you who have logged into the website as a guest, you will be able to view our webcast but not submit questions or vote. For shareholders who have joined over the phone, if you have provided your passcode to the call center and been verified, you will be able to ask questions. Please note that the process for registering your questions is very different to the webcast.
For those on the phones, please do not try to register for any questions or comments yet, as we will only open the phone lines when we reach each item of business. When we arrive at the first item, we will ask if you want to register for a question on that topic. You can register at that point by pressing star one. Once we have finished that item of business, we will move to the next item of business and repeat this process. Please do not register to ask a question for an item of business before we reach that item. That we can give all shareholders a reasonable opportunity to ask their questions, once we have answered a shareholder's question, we will move to the next person in the phone queue.
If you have an additional question or comment on that same item of business, please press star one to register for the queue again. For other people on the phone, that is guests and shareholders who have not provided their passcode to the call center, please note the phones will be listen only. I should also point out that if you are listening on the phone but viewing the webcast as well, the webcast may lag the phone by 10 seconds or more. It may be simpler just to use the webcast for the sound as well. Note that you will not be able to vote over the phone. With these procedural matters handled, I would now like to hand back to Michael Cole to make his chairman's address.
Thanks, Rebecca. On behalf of the Board of Regal Partners or RPL, I would like to warmly welcome all shareholders today and very much thank them for your support. Today's meeting is a notable milestone for us, given it is the inaugural AGM of the company following the merger of Regal Funds Management and VGI Partners last June. The union of these two companies to form Regal Partners has created a market-leading provider of alternative investment strategies with a strong track record across a broad range of alternative asset classes and an ambition to be a leading provider of these products across Australia and Asia. Before we speak about the business, I would like to take a moment to provide additional background on our board members, given this is our first AGM post-merger.
As many of you would know, at the time of the merger, it was agreed to have a board of 6 directors, 2 nominated by Regal Funds Management, 2 nominated by VGI Partners, and 2 independents. David Jones, a VGI nominee, recently announced his intention not to seek re-election today and has subsequently stepped down from the board formally as of this morning. A result, our board consists of 5 directors, 3 of whom are independent. This means we're now a majority independent in addition to having an independent chairman. We believe this is a key part of meeting our governance goals and expect it to resonate soundly with our shareholder base. To our current membership from the original Regal business, we have Brendan O'Connor and Ian Gibson.
Brendan has been the Regal Funds CEO since 2016 and managing director of Regal Partners from June 2022. Ian is a co-founder of Attunga Capital, which is majority-owned by Regal Funds Management prior to the merger and now by Regal Partners. On the VGI side, we have Jaye Gardner, who previously sat on the VGI board as an independent director. Jaye remains an independent director of Regal Partners and is also a managing director at Grant Samuel, where she specializes in corporate valuations and mergers and acquisitions advice. Finally, Sarah Dulhunty and I were the two new independents appointed to the group. Sarah is a former partner of the law firm Ashurst, specializing in equity capital markets, mergers and acquisitions, and corporate governance, and was also a member of the Australian Takeovers Panel for nine years.
I think I can speak on behalf of the whole board when I say I have found Sarah's insights and contributions of significant value, particularly as the business continues to explore new growth opportunities both organically and inorganically. In terms of my background, although I was new to the Regal Partners group last year, I have worked in Australian financial services for over 40 years and have keenly observed the development of both Regal Funds and VGI since their respective inceptions. I was honored to be approached for the role of RPL Chair and look forward to serving shareholders well. My past roles include a number of board positions, including a former Chair of the ASX-listed investment management company, Platinum Asset Management. I would now like to address a few formalities.
With David leaving the board earlier today, I'd firstly like to thank David for his many years of contribution to both VGI and Regal Partners. We obviously wish David well for the future and look forward to continuing to speak with him in his role as a director of VG1 and RG8, the two independent ASX-listed investment companies to which at this time, however, we will continue to evaluate this as the company evolves and grows. I should also add that David was not a member of Regal's Audit or Remuneration Committees, and as such, there is no need to replace him there. Earlier this month, I joined Regal's Audit and Risk Committee, taking the number of members to four. At today's meeting, Ian Gibson is seeking re-election and other members of the board firmly support this, and we shall discuss this further when we reach the relevant resolutions.
Turning now to the business. Nearly a year has passed since the merger completed. The group has achieved a tremendous amount over that period. Regal CEO and Managing Director Brendan O'Connor will elaborate on this further in the CEO speech, but I will touch on a few highlights here. I should just remind everyone that Regal Partners has a December year-end, but given that the merger was completed last June, most of our historical commentary will be then focused on the 6 months to December 2022 and developments since then. Funds under management or FUM has risen 17% - over AUD 5.5 billion over the 10 months to the 30th of April 2023.
This was primarily driven by over $900 million of net inflows, an impressive effort in an industry where many traditional asset managers are currently experiencing consistent fund outflows. Importantly, Regal's fund inflows have been well-established across a mix of existing strategies and new funds, such as Regal's Private Credit Opportunities Fund, which successfully launched in October last year. Secondly, the company's entitlement offer in September 2022 raised approximately $110 million of gross proceeds to assist with the ongoing growth initiatives and co-investment opportunities. This raising further boosted Regal's balance sheet and provides the company with additional flexibility to consider both organic and inorganic growth opportunities. A recent agreement for Regal to acquire alternative asset manager East Point Asset Management in Hong Kong provides an example of this.
We've also been pleased to welcome a number of new shareholders onto the register, both through our capital raising in September as well as our general on-market buying. This has included some significant high-net-worth individuals and families, as well as a number of quality institutional investors. Another benefit of the raising was that it increased our free float, which supports on-market liquidity and is hopefully a stepping stone to index inclusion at some point in the future. Lastly, in terms of financials, pro forma normalized net profit after tax for the six months to December 2022 was AUD 18.2 million and an AUD 0.04 fully franked final dividend was declared in February this year.
For those VGI shareholders who were invested prior to the merger, there was also a AUD 0.397 fully franked special dividend paid last June, taking total dividends for Regal's 2022 financial year to AUD 0.437. The company also launched a dividend reinvestment plan in February this year, and I would encourage shareholders to contact RPL's investor relations team or the share registry if you require more information. In terms of the outlook from here, I'll leave it to Brendan to provide more detail. However, I would like to reiterate that I feel Regal is very well-placed for the future, given its strong track record, current fundraising momentum, and broadening range of alternate asset strategies available. To put this in context, earlier in my career, the biggest local success stories were in the traditional long-only domestic equities.
We saw the rise of some specialist players offering global-only equities. However, with the evolution of both markets and technology, as well as the more challenging economic conditions related to rising interest rates and persistent inflation, we're now seeing growing demand for alternative asset classes. This is where Regal, we see being exceptionally well-positioned to offer a broad suite of investment strategies to clients across long/short equities, private markets, real and natural assets, and our capital solutions platform. Over time, Regal may seek to further expand those capabilities. However, this will only be done carefully and when we feel the opportunities make sense for our shareholders. This concludes my remarks, and I'd now like to hand over to Brendan with the CEO's report.
Thank you, Michael. As you've just heard, Regal Partners Group has had a transformative year since the merger completed, and I'd like to thank you, our shareholders, and our clients who have shown their support during this time. In my presentation today, I'll provide a brief overview of the last 12 months, in addition to a progress update on our strategic ambition of being the leading provider of alternative investment strategies in Australia and Asia. Firstly, however, I think it's really important to set the scene with how we manage the business and the behaviors that we expect from our employees across the group, and to which we hold each other accountable. When we demonstrate these behaviors, it fosters a positive culture that lays a strong platform for our strategic success and longer-term ambitions to be realized.
Starting from the top of this slide, clients first is core to our business. Delighted clients are our best advocates, and it's a bedrock of the asset management industry. We are custodians of client capital, and we can never lose sight that managing money for our clients is a great privilege and one that should be never taken for granted. Three, accountability and reputation are everything. We like to say the standard you walk past is the standard that you accept. Four, be entrepreneurial, be passionate, and embrace the opportunities that change presents. We are fortunate to deal with many clients and family groups who have successfully built businesses from scratch because they have embraced these same qualities, and they rightfully expect the same from us. Five, collaborate. We win as a team and embrace collaboration and diversity of thought.
We have a saying, "Whoever's closest to the ball kicks it." Finally, be the benchmark in alignment. By investing alongside our clients, we ensure that our interests always remain highly aligned, and this properly establishes the core pillar of trust between investor and manager. This is the truest sense of partnership and the foundation of both the Regal and VGI businesses since their respective inceptions. Before I move on, I'd say it's been a great delight to sit, stand here and be CEO of a wonderful business. It's a wonderful team, and it's a great privilege to be able to lead this team. A lot of the achievements that we highlight in today's presentation are very much as a result of the great team that we have at Regal Partners. The past 12 months have certainly been an exciting period for the group.
In June 2022, we were very pleased to complete the merger between Regal Funds and VGI Partners. As many of you would be aware, Regal Funds Management was previously a privately owned asset management business that had enjoyed strong growth across a number of its alternative investment strategies and was seeking opportunities to expand its scalable investment, operating, and distribution platforms. A number of initiatives were well progressed in this regard prior to the VGI merger, given Regal had been expanding its investment team and capabilities to launch a number of new alternative strategies in recent years, in addition to acquiring majority stakes in Kilter Rural and Attunga Capital.
The merger of VGI Partners and Regal Funds provided an attractive opportunity for Regal to further accelerate its growth and to add further capabilities, including dedicated global and Asian strategies, as well as simultaneously enabling Regal to become a public company via VGI's ASX listing. For VGI, there were benefits in becoming part of a more diversified asset management group, and in particular, the opportunity to leverage the scale and expertise of Regal's institutional-grade operating platform and highly regarded client services and marketing team. The slide here shows a brief snapshot of our business today, highlighting AUD 5.5 billion of funds, a market capitalization of just under AUD 800 million.
We have four offices globally, in Sydney, Victoria, Singapore, and New York, approximately 100 employees, with nearly half of that, 45, being investment professionals. Our FUM of AUD 5.5 is split across four key asset classes: long-short equities, private markets, real and natural assets, and capital solutions. Today, long-short equities make up about two-thirds of the business. We see great potential for other areas to continue to grow their share, particularly in real and natural assets covering water, farmlands, power, and carbon strategies, and capital solutions, including resource royalties and Regal's recently launched private credit strategy. Our client base remains heavily skewed to higher value wholesale net worth and ultra-high net worth families and their advisors and family officers, complemented by 3 ASX-listed funds that provide a convenient entry point for both retail investors to access a selection of Regal strategies.
The group has been well supported by institutional investors of late, both domestically and offshore. We will continue to build this channel where available capacity allows. This slide provides some additional detail on our achievements following the merger. We've touched upon some of these already. Just to further highlight, we noted that Regal won the Global Equities and Market Neutral categories at the Hedge Fund HFM Asia Performance Awards, as well as the Market Neutral category at the AIMA Australia Awards. The support received from new and existing shareholders in RF1, Regal's listed investment trust, which raised AUD 92 million in June 2022 via a wholesale placement and unit purchase plan. I'd also highlight the receipt of a number of new institutional investments across long-short equities, Kilter Rural's water strategy, and Attunga Capital's power and environ strategy.
The successful launch of Regal's Private Credit Opportunities Fund last year, following the hire of two highly regarded and experienced private credit specialists. Pleasingly, the fund has had a great traction, securing us a $200 million commitment from a prominent external Australian family office, with the option to invest a further $100 million. Finally, the operational and investment integration of Regal and VGI teams has continued to progress well, with VGI migrating across to Regal's proprietary IT and trading systems, enabling management to access firm-wide view of portfolio attribution and risk management metrics. Additionally, portfolio management of VGI's Asian strategies, RG8, was transitioned to Regal Funds Management and its Chief Investment Officer, Phil King, leveraging Regal's track record in managing long-short equity strategies across the Asian region and large fundamental research team located in offices in Sydney and Singapore.
In fact, the benefits of the merger are already becoming apparent with the shareholder returns of the ASX-listed vehicles, VG1 and RG8, outperforming the Australian market over the past 12 months, with VG1 and RG8 both delivering returns to shareholders of 18% despite the tumultuous equity market. This is a result of a combination of both good investment returns, I should highlight and pay tribute to the global team led by Rob Luciano, Marco Anselmi, and Simon Birrell, and the Asian team led by Phil King, Shannon McConaghy, and Glen Barnes, as well as our marketing and distribution team, helping to reduce the discount to NTA. On fund flows, as Michael stated, we have continued to see strong support from new and existing investors, which has translated to strong net flows across the group this year.
You may recall that prior to Regal's merger with VGI, Regal generated over AUD 700 million in net inflows for the year to June 2022. Our merged group has over AUD 900 million of net inflows for the 10 months to April 2023. Pleasingly, this means that we are fast approaching or closing in on our current target of AUD 1 billion of net inflows for the year to June 2023. A very strong outcome when compared to the broader industry trends. While our domestic investor base continues to represent the substantial majority of our current inflows across the group, we have been pleased with the strong level of traction and inbound client inquiry from our offshore investor relationships, including large international funder fund investors, global family offices, and offshore institutional allocators.
The recruitment last year of a full-time offshore distribution executive, Ingrid Groer, based in our Singapore office, has continued to accelerate these introductions, resulting in eight new institutional investors across the group sourced from offshore and an increasingly attractive pipeline of additional client opportunities for the year ahead. Additionally, the extensive investment in operational due diligence requirements required or needed to successfully secure these institutional investments continue to provide strong endorsement of Regal's operational risk and governance platforms, both for our existing institutional investors and for those groups potentially interested in Regal's investment solutions. While strong growth is pleasing, however, it is important to stress that we will always seek to maintain the right balance between capacity and margin.
It is not growth for growth's sake, and we will continue, where necessary, to ration the availability of certain investment strategies to ensure our performance, investment processes, and available capacity can be best rewarded. As previously mentioned, while long-short equity strategies currently represent approximately two-thirds of Regal's fund, the group has continued to evolve in recent years to provide investors with a broad selection of truly alternative non-equity strategies that generate positive return profiles that are uncorrelated to movements in more traditional asset classes such as equities and bonds. The benefits of investing in alternatives continue to be more broadly appreciated, both as a source of positive absolute investor return, in addition to the portfolio benefits of assisting in lowering overall volatility of returns and broad diversification.
In this vein, I'd like to highlight a number of strategies across the group that we have recently launched that I think demonstrate the group's innovative and differentiated product offering, and which I believe will continue to be a major beneficiary of the move towards more investors seeking alternative sources of return. You've previously heard us speak a lot about private credit. Private credit, as I've highlighted, has already seen strong support from family office investors seeking access to the regular income streams and the lower expected volatility that private credit investments can provide. Private credit entails lending capital to companies in private transactions secured over all or part of the company's assets. The borrower pays the lender an agreed interest rate payment, usually a floating rate above the current cash rate for a fixed period, which is typically three to five years.
In Australia, this activity has primarily remained the domain of the banks. However, in recent years, the withdrawal of more traditional lenders from the markets has provided the opportunity for private pools of capital, such as Regal, to step into the space to provide funding. For investors, this can provide very attractive proposition for portfolios, including steady, regular series of income payments with traditionally low levels of volatility given that loans are not publicly traded. Two, the ability to hedge or provide some protection against inflation and rising interest rates, as most loans are struck at a floating margin above the cash rate. To take advantage of this dynamic, we have been delighted to launch the Regal Private Credit Opportunities Fund in October 2022, providing investors with access to a diversified portfolio of private loans, leveraging Regal's deep corporate contacts across the region.
The fund was originally seeded from capital from Regal's balance sheet, alongside external capital from a number of family offices and private investors. Seven months in, is comfortably delivering on its target return of 8%-12% per annum through the cycle. Staying within the pillar that we call capital solutions, Regal's Resources Royalty strategy provides a financing solution for resource companies. However, in this case, investors gain access to an agreed share of revenues generating from production rather than an interest payment. Resource royalties hold a long history in Australia of generating significant wealth for a number of families and institutional investors, and many investors would be familiar with some of the more famous royalty streams held by investors over long-term oil and gas assets in the Bass Strait or iron ore tenements in Western Australia.
The Regal Resources Royalty Fund provides investors with exposure to an asset class that, while highly attractive, is typically incredibly difficult to source and access. In building a diversified portfolio of royalty assets, the Regal Resources Royalty Fund seeks to provide investors with an attractive, uncorrelated income stream with exposure to a number of different royalty streams covering various underlying commodities without any of the OpEx or CapEx risks with that commodity. Pleasingly, the performance of the strategy has been strong, with the fund delivering returns of 28% per annum since inception.
Moving to our real and natural assets pillar, the Kilter Rural Water strategy, and Kilter is a farmland manager as well, provides one of the best examples of a true alternative, given the return drivers for a portfolio of water assets that are significantly different to those that typically move global equity and fixed income markets every day. Established in 2014, the Kilter Water Fund provides investors with exposure to a diversified portfolio of permanent and temporary water licenses in the southern Murray-Darling Basin. Investment returns are generated via capital growth, where the value of the water licenses increase as scarcity of water or demand increases, and income via leasing a portion of these entitlements to the end users of water, the irrigated farmers.
As we can see at the image on the right-hand side of this slide, water has proven to be a highly attractive asset class, with the Kilter Water Fund generating returns of approximately 14% per annum since inception, with lower volatility than many traditional asset classes. Most importantly for investors, these returns have been delivered with a correlation to the Australian equities market of -0.02%, effectively zero. Highlighting the valuable diversification benefits that water can bring to a broader investment portfolio. Finally, we've been delighted to see the launch of the Attunga Capital's dedicated Carbon and Enviro Fund, which leverages Attunga's strong position as the most experienced power and carbon asset manager in Australia.
Limited opportunities currently exist for institutional or private investors to gain exposure to the carbon market, despite significant anticipated growth and demand for carbon and renewable products over the years ahead. As an emerging asset class, price dispersion across carbon markets remains highly evident, providing opportunities for skilled managers such as Attunga to deliver strong risk-adjusted returns for investors. In a similar fashion to water, carbon pricing has exhibited low overall correlation to traditional asset classes, again, providing substantial portfolio diversification benefits for investors seeking to reduce overall volatility. In addition to our wholesale products, we are proud to provide investment services to three independent and ASX-listed investment vehicles. As mentioned earlier, these are available to retail investors and are currently the main way for retail investors to access Regal strategies, given our direct investors are either wholesale or institutional clients.
The charts for each show the portfolio and share price returns since 30 June 2022, and it's most pleasing to see positive growth in both net asset value and share price across all three, and it's most pleasing to see RG8 rise in NTA and share price over this period following the transition of its portfolio to the team led by Phil King. Moving now to RPL's 2022 results. Due to the merger occurring mid-year, it is best to focus on pro forma normalized earnings. Our net profit after tax on this basis was AUD 24.8 million for calendar 2022, with AUD 18.2 million in the second half. Management fees were AUD 63 million, with management fee margin of 115 basis points or 1.15% in second half.
This margin was lower than first half, primarily due to product mix, such as the award of the AUD 500 million institutional long-short equities mandate, which began in September 2022. Product mixing of new sales will continue to be a key driver of the resulting margin. It's also worth noting that Regal currently manages approximately AUD 600 million of capital on behalf of staff, where fees were fully rebated and places a further downward pressure on total management fee margin. In this regard, we recently announced that effective from one January 2024, the staff rebate will be adjusted to a 50% rebate. We estimate, based on the level of fund, that this would change, would generate a further AUD 5 million in management fees per annum, as well as providing Regal with the opportunity to earn performance fees on this fund.
Turning back to 2022, performance fees over the year were AUD 37 million and came from a range of strategies, including the resources long-short strategies and the resources royalty strategy, which I've previously mentioned. Against a very macro-dominated equity market, the performance of many of our long-short equity strategies has been challenging so far in calendar 23. However, in current markets, we're acutely aware that performance outcomes can change quickly, and we will provide an update on our first half 23 performance fee expectations in mid-July when we announce our June quarter fund and net flows.
Perhaps for some additional context around the variability of performance fees, this slide shows that pro forma performance fees in 2021 were $164 million, which was a stellar result showing the operating leverage that is available when all major strategies are performing well and above high-water mark. With regards to costs, they're also somewhat a little bit dependent upon performance fees, as a portion of staff bonuses are also driven by performance fee outcomes, but are also deferred by performance rights which vest into RPL shares over 2 years, better aligning staff incentives with our shareholders. As you'll hear later in resolutions, due to Regal's merger with VGI, we also chose to offer some long-term grants which vests over 3 years to key executives.
A portion of these are financial hurdles. The grants are intended to incentivize and retain key staff following the merger. The board is very mindful that this is a one-off grant and is currently developing an ongoing long-term incentive plan for future years. We will share the details with the board, with the market when appropriate. I expect this plan to be appropriately hurdled so the employees are highly aligned with our shareholders. Moving to our next slide, the balance sheet is strong. To better illustrate that point, I can highlight that with AUD 214 million of investment assets in cash as at December 31, bolstered by the capital raising in late 2022, allowing us to explore growth initiatives where they make sense. These include organic initiatives such as seeding new funds as well as inorganic opportunities.
As Michael said earlier, the raising has also increased our free float and brought new shareholders onto the register. We have seen four broker analysts initiate stock coverage on RPL, and we thank them for their interest. Our final dividend for the year was AUD 0.04 fully franked, and it represented a normalized payout ratio of 56% in the second half. Our policy is to maintain a minimum 50% payout ratio, but this may be flexed depending upon the opportunities that we see at hand. We currently have strong franking balances which equates to four times the second half 2022 dividend. Turning to my final slides. From here, we see multiple opportunities for growth. We currently have AUD 5.5 billion of fund. However, we have the capacity of the existing strategies is about AUD 15 billion, three times higher than today.
With current rate of growth in net flows and investment returns, we can quickly focus on the achievement of that outcome. We have significant client relationships and high net worth and family offices, which represent over 50% of our fund. If we continue to invest in our distribution capability, particularly offshore, then we will continue to grow those net flows, including the conversion of a growing pipeline of offshore institutional investors. From a technology standpoint, our proprietary operating platform remains highly capable and scalable. We also intend to take full advantage of the fact that alternative asset strategies have attractive tailwinds. We are open to inorganic growth opportunities. My final slide here highlights how we're thinking about inorganic growth. To start with, we expect there to be further consolidation in the industry, both domestically and offshore. We see three key reasons for that.
Firstly, if economic conditions in equity markets are more challenging in the future, we expect traditional asset managers to seek new avenues of growth. Secondly, the maturity of the first generation of boutiques, particularly in Australia, means they may be looking for generational change. Finally, smaller and independent asset managers are increasingly looking for a platform to enable them to scale and reach a broader cohort of investors. We continue to monitor a range of opportunities to add scale and expertise to the business. This may include smaller bolt-ons, for example, like our agreement to buy East Point Asset Management in Hong Kong, announced earlier this year. Whatever we explore must not hamper our existing runway for growth, which is substantial. We will thus be very disciplined when looking at inorganic opportunities, and we'll only proceed if we see financial and strategic benefits for our shareholders.
Given our staff are significant investors in RPL stock, we are very aligned with you. Thank you for your support. I look forward to updating you further in August when we release our first half 2023 results. I would now like to hand back to Michael for the next stage of the meeting.
Thanks, Brendan. We'll now turn to the formal business of the meeting. I will take each item and resolution in the order they are set out in the notice of the meeting. Today, our meeting involves tabling and reviewing the accounts and six resolutions to be decided. In terms of logistics, when we reach the point for questions, we will start with online questions from the webcast first, then questions over the phone, and then questions from the room. For those online, please remember, you can submit questions at any time during the meeting. Just type clearly at the top, whether it relates to our financial reports or write the number of the resolution, or if it is a general question, which we will cover general questions after the formal business.
As a reminder to those on the phone, please wait until we reach each item of business before registering for a question on that item. Please press 1 to register, press 2 to cancel. As we mentioned earlier, we will conduct a poll on all resolutions today, combining votes submitted before the meeting with votes to cast during the meeting, both in the room and online. Since the online poll is already open, if you would like to vote now, please do so. Alternatively, it is also fine if you prefer to only vote after we've discussed each resolution. I'll also allow some time at the end of the meeting for you to finalize your votes. For those voting online, if you make a mistake or change your mind, please just select your preferred voting option and that will override the original vote.
I note that Boardroom are our returning officers in today's meeting will conduct our poll. Certain votes will be excluded in accordance with the Corporations Act and the ASX Listing Rules. The proxy votes will be shown before the discussion of each individual resolution. I advise that the meeting, I will be voting all undirected proxies in favor of all resolutions as indicated in the notice of the meeting. As a result of the poll will not be available before the meeting closes, they'll be released to the ASX and made available on our website later. Turning now to the first item of formal business, which is the tabling of the financial report, the directors' report, and the auditors' report for the financial year ended 31st of December 2022.
The company is required to lay before the meeting the last audited financial statements and reports, which were released to the ASX on the 24th of February 2023 as part of the company's annual report. No resolution is required on this matter. However, I invite shareholders and proxies to ask their questions on the reports. Questions may also be asked of the auditor in relation to the conduct of the audit, the content of the audit report, accounting policies adopted by the company, and the independence of the auditor in carrying out the audit.
Let's start with the online questions. I'll ask Rebecca to read out the questions as they come through on the webcast. Beck, are there any online questions?
Thank you, Michael. There's a number of general questions that have come through. There is one that relates to a number of resolutions that I may read out. Did any of the 5 main proxy advisors, ACSI, Ownership Matters, Glass Lewis, ISS, and ASA, recommend a vote against any of today's resolutions? Which of the proxy advisors are covering us, and have there been any material proxy protest votes? Will you disclose the proxy votes before the debate on each resolution so shareholders can ask questions about the reasons if there have been any protest votes? Why not disclose the proxies to the ASX with the formal addresses like others now do?
Well, I think we can answer yes to the fact we will be disclosing the proxies. The second question on the advisors, or the first question on the advisors, and I answered the second one. Maybe Brendan, you might comment on where we are in the world of proxy advisors.
I'm aware that we had one proxy advisor provide a report. I need to speak to our head of investor relations to get the details. Just the second part of that question.
Ingrid.
Thanks, Brendan. We did have Glass Lewis just note that they recommended against Ian Gibson as the executive director on the audit and remuneration committee. The reasoning was just that there is a governance principle that in general, they prefer to have full independence on the committee. As Michael mentioned earlier, we now have 4 people on the audit committee, it's majority independent at this stage.
I'll deal with that question on Ian's position when we get to Ian's election. We covered all those issues, Rebecca.
I will ask one-
Your satisfaction.
One more question?
Yep.
Michael. A question with regard to the four separate resolutions, approving the issuance of shares to various directors and third parties at the AGM. The question relates to whether or not this could have been handled under the 15% annual placement cap.
The short answer to that is, it has been. What we are now doing is seeking approval from the shareholders to enable that to be voted by them, which will then exclude it from the 15% shareholder cap. We have already issued the shares. This is a protocol as to how it is going to be satisfied, the 15% vote would then give us clear air going forward. It's a capital efficiency issue from our point of view rather than the actual issue of the shares. That's already been done.
Further questions on the web at the moment, so I might open the phone lines to see if there's any questions over the phone.
There are no phone questions at this time.
Okay. We now throw it open to questions from the floor.
McComas Capital. I was surprised at the presentation because I think it omits a number of the challenges facing Regal Partners. Potentially there are some concerns I have with the director's report and the auditor's report. Just like to make a few comments. I do have serious concerns about potential brand damage to Regal Partners. The gloss seems to be coming off. I hope the wheels stay on. In the past year, the share price is down from well over AUD 4 to the current AUD 3. I'm confused, Chairman and Brendan O'Connor, about the assertions you made about the FUM. When reading the merger documents a year ago, the claimed FUM was AUD 5.6 billion.
Clearly, the FUM at 31 December was mere AUD 5.2 billion, and now we read today it's now AUD 5.5 billion. Based on your own reports, the FUM has actually declined over the past year. We note also that part of that is 0 fee paying or from 1 January next year, 50% fee paying, and part of it is also not wholly owned. Big concern about the ongoing AUD 180 million NTA discount to the sponsored VG1 and RG8. Concern also that even Regal Investment Fund, which often had been at a premium, is now at a discount. Also very concerned about the bad results in a range of unlisted funds. The Regal Tasman Fund has lost in the last 12 months 22.2%. The Regal Atlantic Fund has lost 46% in the last 12 months.
The Regal Emerging Companies Fund II has lost 24.7% in the last 12 months. The Regal Emerging Companies Fund III has lost 25%. The Regal Emerging Companies Opportunities Fund has lost 23.1% in the last 12 months. Maybe the company is just becoming too fragmented. There are so many different funds, maybe it's just too distracted, I'm not sure. Currently, a lot of the investors in the Regal Funds are losing money. The manager's winning. We are gonna come to resolutions today about big incentive allocations to Brendan and Phil King and other employees. If the manager keeps winning and a range of investors keep losing, that is unsustainable. I note also that Regal is trading at a very high percentage of FUM, around about 15% of FUM when you adjust to the cash.
A lot of quality funds managers are trading at 2% of FUM. With such a premium rating on Regal, excellent results for all of the investors are required, as well as excellent governance. Otherwise, that premium rating will disappear. It's also trading at a huge PE multiple, and again, that may not be sustainable unless the performance improves. I'd also like to make some comments on the 2 of the listed funds, VG1 and RG8, sponsored by Regal and VGI. The original IPOs were initiated by VGI, which is now Regal. They charge management fees of 1.5% per annum and 15% for performance fee with no threshold. They're trading at excessive double-digit NTA discounts, VGI, VG1 18%, RG8 11%, which amount to around about AUD 180 million of discount to NTA.
The performance since inception of both those funds is extremely poor. In the nearly six years since the IPO at AUD 2, VG1 is currently trading below the issue price. For the end of April 2023, VG1 has a total shareholder return of 2% per annum based on portfolio values, which represents a capital loss which is offset by dividends. However, based on the more important share price, which is the relevant thing for investors, VG1 has delivered investors an absolute total shareholder return or loss since inception, which is alarming. Turning to RG8, in its three and a half years since the IPO at AUD 2.50 per share, RG8 has delivered a total shareholder loss of 0.1% based on portfolio and a much larger TSR loss based on share price. Alarming results.
These terrible results for the two funds compare with the often-cited targeted returns, including in the prospectuses of 10%-15% per annum. These investors are locked in a cage. They're unable to get out unless they cop a nasty discount. In contrast, the ungated investors in the VGI private fund have been able to get out at NTA. I'd also like to point out that over 2 years ago, Regal, stroke, VGI, made detailed written representations in a letter dated 16 March 2021, addressed to me and copied to Malcolm McComas. The letter was signed by David Jones as Executive Director of VGI, which is now legally Regal. Same entity. VGI and Regal are the same. Briefly, I'd just like to highlight a couple of extracts.
The letter says, "We are in vigorous agreement with you that it's unacceptable for LICs to trade at a substantial discount for a sustained period. VGI Partners is working with the independent directors of VG1 and VG8 to explore options to address the discount to NTA. This includes converting to an unlisted trust or a listed ETF, a large-scale buyback, a winding-up, or a merger of VG1 and VG8." The letter acknowledges these options would close the discount to NTA, in some cases fully, and other cases partially, or otherwise allow shareholders to exit at or near NTA. The letter cites tax issues as an obstacle, but given the poor performance of VG1, any tax issue for VG1 or its investors would be minor. The letter notes the manager's consent will be required for some of the above options.
However, there would be no consent or termination fee in the case of, say, a 50% buyback at NTA. Many highly credible funds managers have adopted structural options to provide their investors, shareholders to whom the directors owe a fiduciary duty, the right to exit at or near NTA, including Ellerston, Antipodes, Monash, ALF, et cetera. In addition, other LICs have agreed to corporate transactions that remove the discount to NTA. The closing observations of the Regal letter make the following representation. Quote, "We agree with you that it is unacceptable for the VGI Partners LICs to trade at a large discount to NTA.
It's something VGI Partners and the boards of VG1 and VG8 are determined to rectify." It continues, "We can assure you we are working diligently to achieve this in a timely and considered manner with the best interests of shareholders in mind." Sadly, since the March 2021 written representations, Regal has failed to rectify the substantial discounts every day that is causing major loss to shareholders who are selling at a punitive discount. My question to you, Mr. Chairman, I assume you would agree Regal has failed to fulfill its written representation to rectify the discount that is causing huge loss to investors, AUD 180 million of discount. Why has Regal failed, and what are you personally doing to honor the representation? Thank you.
Thank you, David. I think there's about six questions there. And I'm not sure that many of them actually relate to the accounts or the conduct of the audit, but I'll attempt to deal with them in turn. Brendan, maybe you might just comment on this funds management reconciliation, which is, I think, possibly relevant to the accounts.
Certainly, we update the market on our fund each quarter. Our April fund announcement for the March quarter, 2023, showed AUD 5.5 billion to the fund. That included, if you see on the financial year or the 10 months to 30 April or 31 March 2023, significant flows, and we've updated that now at today's AGM to include total flows for the 10 months to 30 April of just over AUD 900 million of flows. I think the difference in what you're referring to is obviously investment performance, which you've separately highlighted, has obviously dragged down our fund, but notwithstanding that investment performance, our flows have been strong.
Brendan, if listening to your presentation, which is a nice presentation, it gave the clear impression that Regal Partners was growing. However, the documentation you issued at the time of the merger, or VGI issued, referred specifically to AUD 5.6 billion of merged fund from a year ago. We now have AUD 5.5 billion. Clearly that is a decline, which is quite contrary to the manner in which you presented it today.
I'll just reiterate the disconnect that you're referring to there is growth from net flows. We've got more clients invested with us today than we did 12 months ago. However, the mark to market of investment returns has impacted the absolute level of fund.
Okay. The second issue I think you touched on, David, related to investment performance by Regal and a comment on the performance of the number of funds. I think on that matter, I don't really see that relating to the end report or the accounts. It's probably an item best dealt with in the general business section of the papers. I'll take that one as an issue which we can revisit at that particular point in time. All the other issues I would lump together under the issue of the LICs. I've tried to make it very clear, both in the chairman's address and in our personal conversations, that the LICs are separate entities which have independent governance structures, which have independent boards, and will initiate their own actions in relation to capital management. Those actions do not require the consent Regal Partners.
Regal Partners is a very small shareholder in both those organizations. I think 2% in the case of VG1 and 8% in the case of RG8. Any initiatives that those independent boards take would be something which is decided by the shareholders, and our influence on that outcome would be absolutely minimal, given our very, very small shareholdings. I have, as I indicated in our previous meeting, written to both chairmen of VG1 and RG8 and stated our position asserting their independence and ability to make capital decisions in their own account. They will respond to you directly, I'm sure, in relation to those matters.
The David Jones letter of two years ago is 12 months before Regal had any involvement in this organization on a combined basis. Accordingly, I cannot see how the reconstituted Regal Partners Limited can be held accountable for statements that were made in the past. Now, we can go and get legal opinions on this, but our commercial judgment is that it's not relevant to it. If there's any issues in there you want to take up, I suggest you take them up with David Jones directly in his capacity as chairman of VG One.
Thank you, Michael. Look, the difference is that the letter was written on Regal letterhead, which at that time was called VG-.
It wasn't Regal letterhead, David. It was VGI Partners Limited letterhead. Regal had no involvement, no contact, to the best of my knowledge, with that organization at the time it was written.
Clearly, Regal was acquired by VGI. Regal is currently the same legal entity that wrote that letter. The letter was written by an executive director of VGI, which is now called Regal. I think Sarah, as the lawyer on the rostrum, would agree, VGI and Regal are the same legal entity. They've just changed their name.
I appreciate the extension of the legal entity, but the question it goes to is whether, with a complete change of management, the current board can be held accountable for representations that may have been made by a previous board. We can get a legal opinion on it. There's no problem. We can go and spend money. As we sit here today, our commercial judgment is David Jones made statements, and those statements are best taken up with David Jones in his capacity as chairman of VGI.
In his capacity that he made them as a director of VGI, are you disowning David Jones's comments?
I'm saying they are not relevant to the commercial decisions of the RPL board today.
All I'd ask, Chairman, is if you could get some legal advice. I'm sure Sarah would have a view. I think when Regal backed Regal into VGI, it was fully aware of these issues. I'd be very, very disappointed if Regal would disown written representations that were relied upon by investors that have led to damage. I'd be very disappointed if Regal didn't honor those representations.
We certainly take that on notice, David. As I said, as we sit here today, our commercial judgment is that those representations that were made were made 12 months prior to Regal having any involvement with VGI.
Okay. Well, there's some legal issues as well, Michael. If you could get some legal advice, that would be good.
Absolutely.
Thank you.
We'll take that on notice. All right. Is there any other questions? Malcolm, welcome.
Thank you, Michael. Good morning. Malcolm McComas Capital. I'm concerned that there's commentary from you in the annual report that is, in my opinion, misleading at worst and glossy at best. The material in the annual report perpetuates the myth that everything is good inside the house of Regal. It's clear that some people of influence in Regal are not prepared to acknowledge the VG1 and RG8 LICs have failed to meet their target returns of 10%-15% over the cycle. Michael, that was also a representation made by the predecessors in management roles of your company today, I'm sure you're not walking away from those. Those roles are now structurally flawed. That's not good for Regal or for shareholders.
As you know, David and I have been, you know, having ongoing discussions with David Jones over the last 2 years regarding the shocking financial performance of these two LICs. There are obvious capital management and portfolio management initiatives that you could be taking to fix the problem of them both trading at worst in class discounts. To date, you've done nothing structural to solve this problem, apart from your recent disclosure that you've written letters to the chairs of these organizations. Michael, as you know, this is a AUD 180 million issue for the shareholders of VG1 and RG8. It's material in the context of the combined capital of the two LICs of approximately AUD 1.1 billion. That's a problem that Regal has with approximately 25% of its fee paying FUM.
That's material to Regal, therefore it's very relevant to this meeting today. The problem also has the potential to cause significant and ongoing brand damage to Regal and needs to be addressed. Regal, under its old name of VGI, created these funds. They were more than half of VGI's total FUM. They were also very material to VGI, now Regal Partners then, and remain material to the enlarged Regal now. In relation to a couple of other comments you made, I think it's disingenuous to suggest that there's a do not cross line between Regal and the boards of VG1 and VG8. I was truly rocked to learn that this communication you've had with Lawrence Myers at VG8 is, in fact, the first communication you've had with him since taking over the role.
As you mentioned, I think Brendan mentioned in his presentation, they are customers. Rule number one, look after your customers first and keep them close. I think you're ignoring that rule in your separation of duties in a technical legal way rather than a commercial way that you addressed before in those two organizations. Turning first to your letter, I've got some specific comments and then a question. The AUD 5.2 billion claim in the first paragraph of your letter is. It just fails the pub test, Michael. With AUD 800 million or 15% of your FUM being managed for the King family staff and charities at no fee, that's a very material AUD 12 million income concession that benefits everyone but Regal shareholders.
Regal, in fact, manages AUD 4.4 billion of FUM under the old numbers, and a further AUD 800 million at concessional rates would have been perhaps a more technical expression. It was only when we probed the former management of Regal at the last year's AGM that they revealed the details surrounding the rebate that you were handing out to your associates. Since then, we acknowledged that Regal has agreed to rebate 50% of the fees going forward from 1st of January, which is a commendable initiative. Thank you. The second point is that you talk about the driving force of the merger as being complementary product offerings and client relationships. I characterize the merger as a white flag takeover event that happened in circumstances where the VGI team had lost its way as a listed fund manager.
It came after many departures of key staff and a co-founder. VGI had terrible bottom of class performance across both its LICs, VG1 and VG8, now RG8. At the same time, both LICs were trading underwater at an 18%-20% heroic discount to NTA at the time. I acknowledge also that that has been improved in both cases under new management, and that's pleasing to see. Regal clearly saw it as an opportunity to capture several AUD billion of additional listed fund, wholesale and listed, a chance to enhance performance from a low base, a liquidity event obviously for its founding shareholder and key staff. Disappointingly, the share price is down 25% from this time last year, which says that the market doesn't fully support the same optimism that you've articulated here today.
I happen to think that the former VGI shareholders and the VGI customers are better off under Regal management, under the guidance and wisdom of Philip King, who, let's face it, is the very public face of the Regal brand and a very influential human inside the organization, I am sure. We'll come to that point later. The next issue you mentioned is very important. You talk about Philip King stepping away from board responsibilities to focus on portfolio management. In my opinion, this initiative has been manipulated by executives of the new company to avoid having to disclose Phil's compensation as a key management person in the remuneration report. This is wrong for just so many reasons. I think it's a sham to avoid disclosure of compensation for the most important person within Regal. Apologies, Brendan, I rank you as number two in that in that lineup.
Phil and his very happy face of Phil is the king of Regal. He's been airbrushed out of the family photo to cover up disclosure of his compensation. Phil, I think you're being far too modest here. Michael, it would appear that you've rolled over on this key issue with no meaningful explanation in the annual report or in the remuneration report, that's something we can come to in more detail in Resolution 1. You talked about strong funds inflow, David has addressed that issue in some detail and helpful reconciliation from Brendan is also helpful. Again, you know, you failed to mention the $180 million discount to NTA that VG1 and VG8 are currently trading at.
You talk about fees on gross fund, delivering unacceptable performance and then ignore the structural issues that you could adopt to give shareholders access to their NTA. The manager gets richer, the shareholders in VG1 and VG8 get poorer. We've talked about the financial parameters of Regal, trading at the price that it does, but I won't dwell on that. You mentioned that Regal will always seek to nurture and protect relationships with shareholders and clients as a priority. Michael, I don't see how you can make these statements, since I don't think you've done much at all to nurture and protect the interests of our entities in regard to the losses that have been incurred by us and many others in VG1 and RG8.
Refusal by your company to engage with us as shareholders in the boards of these two satellite entities for a material buyback of shares at NTA or a reorganization of these two LICs to provide for redemptions at NTA is a fundamental breach of fiduciary duties by Regal. If you truly believe this statement, you would have insisted on sitting down with the board of VG1 and RG8 and recommend a restructure to give shareholders access to their NTA. I would have called that a first 100 days event in your chairmanship. I'm calling on you personally to intervene here and to initiate the discussions with David Jones and Lawrence Myers, and I'm pleased that you've actually put pen to paper on that issue.
I don't think there's any more time to waste, and I would urge you to be the fixer of this issue and not become the problem. Yes, it will likely marginally reduce some to Regal, but not by much. It'll generate considerable goodwill to the thousands of shareholders in the two LICs and resolve the toxic effect these two failed LICs are bringing on Regal. My question is this: Will you give a commitment to this meeting today that you'll take steps to recommend to the board of both VG1 and RG8 to restructure to facilitate redemptions at NTA? I don't think this issue needs any further deliberation. You've had a year to look at it, and your predecessors have had four years since inception to look at it, and it hasn't gone away. If you won't do that, could you please explain why not?
Alternatively, will you consult with the boards of VG1 and RG8 to renegotiate a substantial buyback of up to 50% of capital to allow shareholders to realize their NTA? It's 2 pretty clear options. I know you're very familiar on the pathway to achieving those objectives because we had a common interest in resolving the exact same issue at Australian Leaders Fund 2 years ago, which was a happy outcome for shareholders. Thank you, Michael.
Thanks, Malcolm.
Well, to summarize your questions, I think you basically replowed the ground that David raised in his. I didn't see anything that we hadn't already dealt with, and I would simply reiterate, and I can only keep saying this because we just seem to have a fundamental difference of opinion as to our relationship with the LICs and the role of the independent boards of those two organizations. I'll say it again, and I don't intend revisiting anything to do with the LICs after I answer this. That is, we are an investment management service provider to the two LICs. Yes, as our client, Brendan can articulate, we are very attentive to their needs in relation to matters that have regard to day-to-day issues on their portfolio.
As Brendan highlighted, the performance over the last six months for the two LICS, in terms of what we can control, has been more than acceptable. On the issues of capital management, the LICS are independent entities, and they will make their own decisions in relation to that and what initiatives they wish to institute. It is not appropriate for us to become a party dictating to somebody who is completely independent as to how they should run their Sorry, their corporate affairs to those organizations. It is just ultra vires. I can only restate, and as I said, I'm not revisiting this issue again because it is very clear, our position, you fundamentally have a different view, and on that point, we agree to disagree.
You've written kindly to David Jones, and we see David Jones in the street, and we've organized a meeting with him in the next short while. Lawrence Myers has blocked us on his email. You've written to Lawrence Myers, you say, but have you actually spoken to Lawrence to discuss this issue?
I have not. I have never met Lawrence. I would not know what he looks like if I passed him in the street.
We get the.
My interaction with Lawrence Myers is based on a very similar letter that I wrote to David Jones in his capacity as chairman of VGI. I understand he is meeting with you. Lawrence Myers, as with all things, will make his own decision as to what he wants to do. If you think you are being inappropriately treated by Lawrence Myers, I urge you, as a shareholder in those organizations, to pursue your perceived legal rights directly with him.
I re-
There is nothing more that can be done at the Regal Partners Limited level. They are our client. We provide investment services management to them, and we are a small shareholder in both those organizations. We do not have any power of veto over any capital management initiatives they may wish to institute. There is a termination fee which is payable in the event that our services are terminated, which is roughly the equivalent of one year's payments for contracts which have of the order of five years to go. The financial penalty is disproportionate to the length of our contract, but they are all matters for VG1 and RF1.
We look forward to our annual conversations with Lawrence at the.
Absolutely, I welcome.
At the RG8 annual general meetings. I look forward to. I've known Lawrence Myers for a long time.
Okay.
Accounting and finance circles, it's just an incredible lack of respect displayed by Lawrence Myers and contempt actually for his shareholders. It's a serious governance issue that you should take note of. I'm sure you can assist and facilitate that interaction with Lawrence Myers.
I do not believe there is anything more I can do in relation to Lawrence Myers beyond the letter that I wrote to him, which is very similar to the letter I wrote to David Jones. David Jones has initiated contact, as I understand it, and Lawrence will make his own decision as the independent chair of RF1.
I just might take the opportunity while I'm on my feet to ask my second question.
Second or 22nd?
I've only asked one so far.
Oh, sorry. Okay.
I wrote to Brendan recently to point out the recent example of Equity Trustees and the Partners Group, who announced on the 2nd of May a proposal to delist the Partners Group Global Income Fund. The PGG announcement said this: "Partners Group is firmly of the view that PGG is a highly attractive fund, but it continues to trade at a significant discount to its net asset value. Both Equity Trustees and Partners Group," Equity Trustees being the responsible entity, "and Partners Group consider the fund would be more appropriately operated as an unlisted fund with monthly redemptions and subscriptions based on NAV." I said to Brendan, "It's time for action." He's had time to reread David Jones's letter.
There's another worked example together with the six other precedents that have occurred in the last 2 years to wind up and reorganize and hand shareholders back their NAV in listed investment companies.
Even Geoff Wilson has actually taken the initiative to step back under the ALF model that we participated in. You nominated me and Rob Ferguson to be directors at a special general meeting of the board of the company with a single mandate to seek a redemption of a reorganization of that company to get cash back. You had a very substantial cash investment in that business, and you signed a requisition along with 20 other institutional investors and high-net-worth individuals to appoint us to the board. We didn't get to a board meeting, but we negotiated an outcome which saw a reorganization of that LIC and a conversion to it as an unlisted fund with redemptions at NTA.
You banked your 20% premium over that, yet you won't take any action here to do exactly the same with VG1 or RG8.
Malcolm, just to make it clear, I know I said I wasn't gonna repeat myself, but I will for the sake of saying it again. If you wish to initiate that action with VG1 or RF1, then you should directly engage with the shareholders of those organizations in order to bring about those actions you wish to take. It is nothing to do with RPL. To initiate the corporate action appropriately.
Twice or three times to those shareholder groups. We've had an email line. We've had direct communication with very substantial shareholders within that group. They're all unhappy. You, as the new manager, are not actually taking any steps to actually turn the books around on this one.
We are taking the steps of managing the money to the best of our ability to produce the best returns for the shareholders in order to minimize and narrow the gap between NTA and the share price. As Brendan indicated, we believe we have done quite a good job over the last year in terms of the performance we've delivered on those funds, consistent with our management agreement to provide invested management services.
Michael, I have to say, Michael, in conclusion, that I'm disappointed, and I think it's that you're denying VG1 and RG8 shareholders a liquidity event when you sought to force a liquidity event for yourself at the Australian Leaders Fund, when you had considerable personal investments in that fund. You did it for ALF. Why won't you come out today and support a similar incentive initiative for RG8 and VG1? That's a rhetorical question, Michael. You don't need to answer it.
Thank you.
You've already covered the issue very well.
All right. Yes, David?
My second question. It won't be too long, Michael.
Thank you.
Hear what you say, it may be we agree to disagree. It may be that Sarah Dulhunty, a very good lawyer, expresses a view as well, being on the takeovers panel also. Clearly, Michael, you are taking a diametrically opposed approach to the approach of your fellow director, David Jones, who was a director of this company until this morning. He's the independent chairman of VG1, who in March 2021, took it upon himself as an executive director of VGI, which is legally Regal Partners, same legal entity. He took it upon himself to make those representations. Michael, now, you are running 1 million miles from that now and raising, you know, a legal issue, which I think is semantics, to be frank, because Regal and VGI were the sponsors of these entities. You're not really an arm's length, just a little contractor.
VGI and RPL were the sponsors of these two LICs. David Jones, your fellow director until this morning, he wrote a five or six-page letter taking ownership of this issue on behalf of Regal. Yet now, the new chairman is disowning David Jones, throwing him under a bus. Anyway, that's that. Let me ask you one specific question, Michael. In the event that David Jones, at our meeting next week and after some deliberation, I'd also say Lawrence Myers' corporate governance is nothing short of disgraceful. It's an embarrassment to the whole group to block emails from intelligent investors, to not respond to the recent emails that were passed to him by Ian Cameron. His performance is a disgrace. We may need to write to ASIC or the ASX.
For a funds manager's chairman to behave like that is just a blight on the whole of Regal, Brendan O'Connor, that will not hold you in good stead. Let me ask you a question, Michael Cole. In the event that David Jones, who at least is prepared to meet with us. Thank you, David Jones. In the event that he says, "Yes, we have AUD 1.96 of NTA, and yes, shareholders who want to sell have to sell at AUD 1.62. Oh my God, I'm a genius," says David Jones. "Yes, if we offer them AUD 1.96, wow, of course, they're gonna love that." You know, you'd be knocked over in a rush. It's not a particularly big challenge to form that view.
In the event that David Jones, no longer compromised by being on both boards with a massive conflict, in the event that he decides, "Yes, it is in the interest of shareholders of VG1 to try and secure them access to NTA." In the event that he pursues that, if he puts that to you, Michael, as chairman of Regal, I appreciate you can't carry the whole board. You are one vote on the whole board. In the event that David Jones decides to fulfill his fiduciary duty to the long-suffering shareholders of VG1 and puts a proposal to Regal that we should allow them access to NTA as many other reputable fund managers have done.
Question to you, Michael, with your personal hat on as a director of Regal, and given the ALF example that Malcolm has elucidated on, would you personally support that proposal if David Jones puts it to you? Thank you.
David, it's a hypothetical question, and I'll deal with it at the time that David puts the proposal to the board. I note Regal has a shareholding of 2%, I think, in relation to that, and we'll have to make a decision about how we vote those shares, and 8% in the case of RF1. We cannot deal with hypothetical situations at this point in time, and I encourage you to have your discussions with David to put the points you believe are in the best interest of the shareholders of those two organizations.
I've always admired you, Michael, as a very intelligent person, a man of integrity, with a couple of question marks today. Michael, I never thought of you as a politician. You have run away and hidden behind the politician's classic answer. He didn't like the question, the politician says, "It's a hypothetical.
David, I can't answer because I don't know what the nature of the proposal would be. It could range across a whole broad spectrum of different solutions. It's a hypothetical question, we'll deal with it at the time it's put to us, we will deal with it in relation to the legal rights we have under the management contract, that will be our response to it.
If it was the identical proposal that went to ALF, where you had an uplift from AUD 0.80 on the dollar.
David, we don't know that's what the proposal is going to be. Okay? The proposal will be dealt with when it's put to us, you should raise your concerns directly with David. If he's able to take the rest of the board with him in terms of wanting to initiate that, we'll deal with it at the time.
Work in progress, but it's gonna be a festering sore. A year ago, everyone said that Regal was gonna fix the problem. They have failed to fix the problem. I would finally say again, in my opinion, and I do have legal experience, there were written representations which are incredibly clear-cut. Regal, as it was then called, VGI, have failed to honor those written representations to deal and remove the discount. Thank you.
I think the letter has to be reviewed by an appropriate legal person. Whether they're representations or theoretical alternatives, somebody with a legal skill set can determine that much more accurately. I'm saying as we sit here today, our commercial judgment is we're not gonna be held to account for decisions that were made 12 months before we became involved with VGI Partners.
Excuse me, Michael, just a short follow-up question on that. Has Sarah Dulhunty seen the letter?
Sarah, could you just answer yes or no to that?
No, I haven't seen the letter.
Okay. No.
There are a number of general questions that have come through, I'm conscious of making sure we have enough time at the end to answer those questions. I can confirm there's no more questions or comments on the financial report, directors report or auditors report online or on the phone.
That's encouraging. Okay. Well, I think we just deal with the general business when we get to the general business, if that's okay.
Thanks.
All right. I believe we are now in a position where the annual report, audit report, et cetera, has been presented. As I said, no vote required in relation to that. We simply note that and the questions we've had from the audience. That takes us on to the first resolution, which is the remuneration report. That is required to be voted on. The Corporations Act requires... Listed companies are required to include as part of the directors' report a remuneration report. The remuneration report for the financial year ended December 31, 2022, is included in the company's 2022 annual report. Corporations Act requires companies to put to shareholders a non-binding vote to enable shareholders to voice their opinion on matters included in the remuneration report.
Given the vote is advisory only, it does not bind the board or the company. However, the board will take the outcome of the vote into account when considering future remuneration decision. Board recommends shareholders vote in favor of adopting the 2022 remuneration report. I will now move this resolution and show the proxy votes on the screen above. First time I've ever had a 100% vote in favor. You can see the proxy votes on the slide. Open votes in favor of the chair of the meeting, at the time of the meeting, will be voted in favor of the resolution. Adjusting for these, the numbers are up there 139,595,570 in favor. 9,908 at my discretion, and 4,354 against.
This equates to 100% for, 0% against. Are there any questions in relation to the remuneration report?
I'll start with an online question.
Yes, that's where we start. Thank you, Rebecca.
I have a question on the remuneration report as it relates to Philip King last year. A question with regard to whether you will commit to disclosing Mr. King's payment going forward and the decision-making process around whether it was disclosed or not. Sorry, whether Phil requested that his pay not be disclosed or whether it was a decision of the remuneration committee.
Yeah. I think this matter was touched on earlier, but I'll just restate it. Phil is not a KMP. He's not involved in the management of the company. His role is to manage the money. In those circumstances, there is no disclosure required in relation to Phil's remuneration. That is the legal advice that we have, and the same applies to Robert Luciano, who is also deemed to be not a KMP of the organization. There's no disclosure required, and there will not be a disclosure required as long as they are not KMPs.
Thank you, Michael. There are no more questions online, and I'll now move to the phone lines and open the phone lines. Operator?
There are no phone questions at this time.
Malcolm?
Michael?
Yes. This is the elephant in the room. Philip King not being regarded as a KMP. This is misleading and deceptive to not acknowledge King as a KMP. He is the founder of this organization. He owns 60 million shares or whatever. He benefits from low fees on AUD 600 billion of his personal fund. Every broker in Australia and overseas calls it Philip King's Regal. Every journalist story refers to Philip King's Regal. The suggestion that key decisions are not discussed with Phil and that Brendan doesn't take instructions from Phil is just ludicrous and does not pass the pub test.
In particular, his remuneration, base comp, short-term incentive, long-term incentive, dividends, cost savings on farm as a collateral benefit suggests that his compensation is both material and should obviously be disclosed in the context and size, who knows what it is, of the total compensation for the business. My questions are, what task does Sarah Dulhunty perform to qualify her as a KMP? What tasks does Philip King do that exclude him from being considered as a KMP? This is a very technical issue, Michael. I'm not sure whether you're across the detail of what constitutes it and what inquiries one has to make. I have a follow-up question for the auditor, who I think is here. Is John Corbett here?
He is indeed.
Oh, John, well, you'll have something to share on this issue, but I'll reserve John's questions, Michael, for my second question.
Okay. I think the way I might deal with this is state the legal advice is very clear that Brendan is the CEO of the organization, and Phil is not a KMP. Phil takes his orders from Brendan in relation to all matters other than managing the money. There are other KMPs within the organization, but Phil and Rob are not one of them. They are focused totally on managing the money. That is the legal definition that applies in this case, and that's the legal definition we go to. Maybe, Brendan, you might just comment on the management from your perspective as the CEO because you are the KMP as far as that goes.
Thank you, Michael. I think you've given a great answer. That is exactly the case. We entertained this question when the board first came together. It was very clear, backed up by the legal advice that Phil was not a KMP. The KMPs, besides the directors, Ian Cameron as Group CFO and myself, the board has been charged with the strategic direction and the governance of this business. There is no doubt that Phil, and you referenced this, is a shareholder. He is consulted from time to time in the context of being a shareholder as it relates to business. Any other interaction with Phil is in respect of him being the Chief Investment Officer of our long-short equities division.
In that regard, he's the employee that reports through to me in the same way that Jason Pöke, who's the Portfolio Manager that leads our private credit strategy, reports through to me.
I'm sure that's a very happy conversation at the remuneration committee about comp and what's been achieved and what hasn't been achieved. Have I misread the accounts? Isn't Sarah Dulhunty also listed as a KMP?
I said the directors are KMPs.
All the directors?
Correct.
Jay is not listed as a KMP. Is it just because Jay is a protected species and a representative of the former, three-year deal from last year?
No. Your question goes to the definition of key management personnel and so directors and the key executives being Ian Cameron and myself.
Other than being a director, what special actions does Sarah Dulhunty perform to qualify her as a KMP? Are you saying that it's purely the fact that she's a director?
As a director of the business, her disclosure in a remuneration report is required. I'm missing the subtlety of your question, Malcolm.
Yeah. Okay. Thank you.
David?
Thank you, Michael. Look, we all know that answers from lawyers at times depend upon how the question is asked. It's a little bit like a survey in the street. Depending on the question, you can get whatever conclusion you like. At the end of the day, Michael, ongoing long-term success in funds management is a function of probably first and foremost performance. I've mentioned earlier today that the performance is extremely poor in relation to a number of Regal's funds in the past year. Secondly, it comes down to integrity, transparency, and trust. I respect, Michael, that clearly you have had legal advice that Phil is not a KMP, but it just doesn't pass the pub test. Why not disclose it?
It's gonna come up again when there's a resolution about whether Phil gets yet another benefit, another AUD 15 million of incentive. Why not disclose the totality of what Phil is getting out of this company in the interests of trust, transparency, not being cute? I respect you've got legal advice, but it just doesn't pass the test. Clearly, there was another question online about that issue as well. I would certainly suggest to you it's in Regal's interest to be more transparent. Thank you.
Thanks for your comments, David.
To address, a question to the order, if I may, Michael.
Yes, Malcolm.
John, could you explain to the meeting, whether this issue was reviewed by another audit, independent audit partner, apart from you? Secondly, what issues did you consider in relation to how the day-to-day management of Regal is conducted to determine, in your own mind, if Philip King was in fact acting as a shadow director or not and should have been disclosed as KMP?
John Corbett from Deloitte here. Thank you for your question. You talked about the issue, I assume it's the issue of the KMP and whether Philip King should be disclosed as a KMP. After the merger of Regal and VGI into Regal Partners Limited, I was invited to a REM committee meeting by Chair Sarah. We discussed the matter whether who would constitute being a KMP in the newly organized group. We talked through the roles of directors and executives. I posed as the auditor questions to each of the directors as to the roles going forward of both Rob and Phil as previous founders of their respective organizations and how that would look going forward.
We talked through the accounting and legal definitions of what a KMP was in relation to their roles and the conclusions that both management and the board had made around that. Internally, I consulted with my QA partner as well as some other technical partners on the matter and also looked to market where you see other portfolio managers with high compensation packages. You know, in funds management, portfolio managers are obviously key to an organization, but not necessarily KMPs, as disclosed in financial statements. With all that in mind, I think the decision that the directors and management made sense, and we accordingly.
Thanks, John, for that. I've tried to be very accommodative of the questions, David and Malcolm, but we are under a deadline here, and I really wanna keep moving on with them. I'd like to think we can be more focused in the questions going forward. I now propose, as I said, we've dealt with the proxy votes, and we're now putting this matter to the meeting for a decision. On the basis of the proxy votes, the matter will be dealt with, and then we'll release the result in due course. Okay, that takes us on to the second item. This is a resolution in relation to Ian's reappointment as a director.
With regard to the resolution, clause 60.2 of the company's constitution states, "Directors to retire in accordance with clause 60.1 must be those who have been longest in office since their last election. The director has been longest in office since the last election is David Jones. However, David, term as director concluded this morning, has indicated that he's not standing for re-election at the AGM, so has been excluded. All the other directors were either appointed or re-elected on the same date, which was the 3rd of June, 2022, at the time of the merger between Regal Funds and VGI Partners becoming effective. In these circumstances, clause 60.3 of the company's constitution provides that directors elected or re-elected on the same date may agree amongst themselves or determine by lot which of them must retire.
With this in mind, the board has determined that Ian Gibson will be required to retire from office and, being eligible, will stand for re-election as a director of the company at the AGM. Mr. Gibson's details are set out in the explanatory memorandum of the notice of the meeting, and they are shown in detail on this slide. As stated, Ian has over 25 years' experience in financial markets, spending the last 15 years as a director, investment advisor and consultant for a range of financial groups and organizations. Currently, he's a director of Regal, director of Kilter Rural, director of Attunga Capital, director of ReNew Power Group, and an advisor to RPG Management, a director and investment committee member for the Riverside Financial Group, and an independent member of the investment committee for Atrium Investment Management.
He's a member of the Audit and Risk Committee and the Nomination and Remuneration Committee. Ian might just say a couple of words in support of his re-election, so I'll hand over to him.
Great. Thank you, Michael. Good morning, ladies and gentlemen. I think it's still morning. My name is Ian Gibson. I'd like to thank shareholders for the opportunity to have sat on the Regal Partners Limited board since the formation on the 3rd of June last year. Also on the Regal Funds Management board for several years prior to that. I initially joined the Regal Funds Management board as an independent director many years ago. Subsequent to being involved more actively in some of the subsidiaries and compliance and risk activities, I was deemed an executive director. Sorry, a non-executive director. Then subsequently, post the acquisition of a partial stake in Attunga Capital, I was deemed to be an executive director.
I'd like to take a moment to introduce myself and provide an overview of my experience and skills. As already mentioned, I sit on a number of the RPL subsidiary boards, as well as being actively involved in those subsidiary compliance and risk committees, and as also alluded to on the ARC and REM and NOM committee as well. More broadly, I bring 25 years of experience in financial markets, and over that time, I've been involved in most aspects of funds management, including investments, operations, marketing, compliance, risk, and governance. My experience spans mainstream asset classes as well as, importantly, many alternative asset classes as well. I bring both a buy side perspective as well as an investor or allocator perspective to the business, and I have a real-world understanding of the complexities and dynamics of our industry.
As a director, I believe my core values revolve around integrity, honesty, and teamwork, and I'm committed to upholding Regal's high standards and pursuing sustainable growth for the business. If re-elected, I will be dedicated to working with my fellow directors and the very talented management team to drive the strategic vision of the business and to capitalize on opportunities for growth. I'll bring my expertise, passion, and commitment to represent all shareholders and stakeholders, and I would welcome the opportunity to be re-elected. Thank you, Michael.
Thanks, Ian. The votes, please. 99.6% in favor of the resolution. Turning to the proxies. Open proxies in favor of the chair of the meeting at the time will be entered and voted in favor of the resolution. Adjusting for these, resolution two has 188,904,209 in favor, 10,691 discretionary proxies, and 803,166 voting against. As I said, 99% in favor. We'll now go to questions.
No questions online at the moment, and I'll now turn to the operator for any questions on the phones. There are no phone questions at this time.
Okay. David.
Hi, hi, Ian. look, having regard to a range of very serious concerns tabled today, some of them might be new to you. I note that Sarah Dulhunty was not given a copy of the detailed complaints about the failure to rectify the discounts. I would hope that you will, and Sarah and every other member of the board will obtain a copy of that letter so that you fulfill your fiduciary duty and check that as to whether Regal is honoring its legal commitments. I'd just be interested in your views, Ian, having regard today to, you've heard about, number 1, a lot of the funds are performing poorly, incurring major losses in the last year to The investors who are trusting Regal.
Number two, there's big doubts about transparency, over Philip King and disclosure. You know, there's doubts about the 2021 letter. Could you just give us your views, Ian? Do you think that?
The business is being run, in an appropriate manner. Are you hands-on enough? Are you fulfilling your fiduciary duty to be right on top of all these issues? Thank you.
I think the answers are yes, and yes.
You, did nothing today. There was nothing today news to you. Were you expecting all these issues to be tabled? Is it just water off a duck's back?
I think all of us have read your correspondence that was sent prior to this meeting, so we're aware of your issues and grievances.
I think Sarah said she hadn't read the.
She was referring to the letter from, I think, two years ago, as opposed to the more recent correspondence.
That 2021 letter was attached to the recent correspondence. Can't have it both ways. I would hope that you will read it and react. Thank you.
Michael, if I may ask a question?
Sure.
I think Ian Cameron specifically circulated that information and came back to us and said that both those letters, the email and the attachment, David Jones' letter from two years ago, was provided to all directors. Is that correct, Ian? Ian Cameron. Sarah has got a copy of the David Jones letter as well as the email complaint.
No. We're dealing with the reelection of Ian.
It's a simple question.
No, it's not relevant...
Yes or no.
to the reelection of Ian. Ian has stated what's relevant. Unless there's anything relevant to Ian's reelection, we're not dealing with it.
Ian Gibson, Welcome to the board and good luck on your congratulations on your reelection. I think you'll make a terrific contribution to the team. There's a footnote about your compensation. It was a little confusing. Mr. Gibson receives a fixed director's fee for his role as Executive Director of the company, Regal Partners, I presume, and separate fixed compensation for his employment as a Director of Attunga Capital, a subsidiary of the company. Could you give us some color on how that works and what elements make up your total consideration remuneration?
Sure. My employment agreement sits with Attunga Capital Proprietary Limited, as it has for 17 years. I'm employed under a base remuneration, and I'm entitled to certain short-term bonuses that might result from generally the underlying performance of Attunga Capital. Then quite separate to that, I have the board fees that relate to RPL, and those are as very clearly stated in the annual report.
Okay. Thank you very much. We'll now go to voting on that. Anybody that hasn't voted is now entitled to do that, and we'll move on to the third resolution. Let me state at the start of the third resolution as it relates to Resolutions three, four, and five. This. Sorry. Third resolution is the pre-remuneration one. We're now dealing with the issue that goes to the approval to issue shares to East Point Asset Management. By way of background to this resolution, under the existing Rule 7.1, a company during any 12-month period has the ability to issue shares or agree to issue shares with a, without shareholder approval, which represent up to 15% of the shares at the start of the period. This is generally known as the 15% placement capacity.
If shareholder approval is subsequently obtained, the shares no longer impact on the 15% placement capacity, thus maximizing the company's ability to, for other purposes, such as future business opportunities. In relation to this Resolution three, in relation to Resolution four, in relation to Resolution five and six, all those shares have already been issued. All those deals have been done. This is an approval we're seeking in relation to all those subsequent resolutions for the 15% rule to be waived so that we then have the flexibility going forward. With regard to Resolution three, which is what we're dealing with now, Regal announced that it entered into a binding agreement to acquire 100% Hong Kong-based alternative asset manager, East Point Asset Management, conditional upon customary regulatory approvals from the Hong Kong Securities and Futures Commission.
Regal’s announcement on the 10th of February provides more background. In summary, Regal regards East Point as a business that provides expertise in Asian markets and its proximity to mainland China gives its investment team insight into one of the key drivers of the regional and global economy. Regal also believes that East Point’s strategy may appeal to a variety of clients in Regal’s wholesale network, and thus Regal believes it can assist with distributing this offering in addition to collaborating on various ideas. One component of the transaction involved the issue of 788, 195,000 shares to Sun Hung Kai Strategic Capital Limited. This was consideration for Regal’s entitlement to revenue share arrangements for the East Point Asset Management Master Fund, which is managed by East Point.
These shares were issued on the 28th of February and are now subject to escrow arrangements. For the purpose of Resolution 3 is therefore to seek shareholder approval and ratification for the issuance of these shares to Sun Hung Kai Strategic Capital. If shareholders approve the resolution, the shares will no longer be treated as having been issued within the 15% placement capacity, which will increase Regal's flexibility to issue shares in the future. If shareholders do not approve the resolution, the 788,195 shares will remain issued under Regal's 15% placement capacity. The board recommends shareholders vote in favor of Resolution 3, and I now move this resolution. On the screen, we have the proxies. Which is a 100% vote in favor. Open proxies in favor of the meeting. At the time of the meeting will be voted.
The Resolution 191,526,533 in favor. 10,691 other proxy discretion. 52,531 against. As I said, 100% in favor. Rebecca, any questions?
No questions online for Resolution three. I will open the phone lines. Thanks, operator.
There are no phone questions at this time.
No questions from the floor? Thank you. People will now cast their vote that have not voted, and we will move on to resolution number 4. Okay. As I stated, as with the previous resolution, with these resolutions, these shares in the subsequent resolutions have all been issued. What we're seeking to do is to confirm that they can be issued within, sorry. We're confirming that with the shareholder approval, they are then excluded from the 15% placement capacity, which gives us flexibility going forward. This is the approval and ratification of prior issuance of securities under the employee incentive plan. As described in the previous resolution, the company is able to issue securities or agree to the issue of securities within a 12-month period without shareholder approval if the issuance meets the criteria of the company's 15% placement capacity.
If the shareholder approval is subsequently obtained, the issuance is no longer impacts the capacity, thus making it available for other business opportunities. With regards to Resolution four, in August 2022, the board approved the grant of awards to promote the alignment of employees with shareholders following the merger of Regal Funds Management and VGI Partners. Consequently, on 31st of August 2022, approximately 27.2 million incentive grants or rights were issued. These included three types of grants: deferred bonus grants, integration grants, and long-term incentive grants. Deferred bonus grants represent a partial deferral of last year's annual bonuses. Approximately half of these rights will vest into ordinary shares after 1 year, that is after the 31st of August 2023.
The other half will vest into ordinary shares after two years, that is 31st of August 2024. The integration grants are expected to be one-off and are intended to act as an incentive and retention tool following the merger of Regal and VGI. These rights are due to vest into ordinary shares in approximately three years after the issue, that is around August 2025. Long-term incentive grants are also expected to be one-off and similarly act as an incentive and retention tool. They are also due to vest around August 2025, but subject to a performance hurdle that requires net profit before tax to increase approximately 15.7% over the 3-year period from the original normalized pro forma base.
The purpose of the resolutions today is to seek shareholder approval and ratification for the issuance of 20,949,445 of these incentive grants. Please do not include 6,336,502 rights, which were issued to Brendan O'Connor and Philip King, which are the subject of Resolutions five and six. If shareholders approve the resolution, the rights will no longer be treated as having been issued within the 15% capacity, which will increase Regal's flexibility to issue shares in the future. If shareholders do not approve the resolution, these rights will remain issued, but under Regal's 15% placement capacity. The board recommends shareholders vote in favor of Resolution four, and I move this resolution now. The proxy votes are on the screen.
Open proxies in favor of the chair of the meeting will be voted in favor of the resolution. Adjusting for these 127,615,687 in favor. 9,908 other proxies at my discretion, 9,013 against. This equates to 99% in favor. I'll now go to questions. Anything from you, Rebecca?
Nothing online for resolution four. Operator? There are no phone questions at this time.
David, question.
Thank you. 27 million rights under this resolution. Another six odd million under the resolutions to approve Brendan and Philip King. Round numbers. The board is recommending, I understand the structure if this is to ratify it. The board is supporting another AUD 100 million of value going to the management team. We've raised issues before, in reality, in my opinion, it's been a bad year. If I listen to Brendan, it's been a phenomenal year. For the reasons I've said, it's been a bad year. Yet, there's an AUD 100 million of a handout to the management team. I just put it to you, Mr. Chairman, that potentially, you're gonna kill the golden goose here. At the end of the day, funds managers only sustain if it's win-win.
If it's win-lose, it's a disaster. We've all seen the example of Magellan go up like a rocket and come down like a rocket as well. These things go up and down. When the investors are losing or a significant number of the investors lose, it really damages the brand. Surprised Ian didn't learn anything today. Maybe I don't speak well enough, Ian, or maybe I'm too short in my dissertations. I'll have to go and get to public speaking lessons or train to be more incisive about my analysis. I'm sorry, Ian, I've bored you. At the end of the day, Mr. Chairman, you know, I think you're killing the golden goose. The transparency also is poor. Is Robert Luciano participating in these AUD 27 million?
At least we know what Brendan's getting and Phil's getting. In the case of Brendan, he's a director. In the case of Phil, he's a substantial shareholder. Well, I suppose Luciano is as well. Is Luciano getting any shares? Rights?
David, we've disclosed what we have to disclose. I have no further comment.
Gee, you should be as well as a politician, a lawyer. We disclose the minimum. We don't believe in transparency. If there are relevant questions that we have technical advice, we do not have to technically disclose. We are going to disclose the minimum. I would just put it to the board that I believe you are killing the golden goose, that there is brand damage happening and, there are real risks to Regal. Thank you.
Thanks, David. The only comments I'd make there is that this is a unique grant. It related to the integration of the two organizations. The board considered the matter in great detail. This was the way we thought we'd get the most effective integration between the two organizations and provide the appropriate incentives for those people to work to the best of their ability and enable Brendan to operate as effectively as he possibly could. The board made the call on this particular grant, and as I think we've alluded to earlier, we're now looking in detail at a long-term remuneration package for the staff. That's a work in progress and will be dealt with by the board over the next 12 months. Okay. If there's nothing further on that particular item, people can now vote.
I will move on to resolution number five, which is the ratification of prior issuance of securities for Brendan O'Connor. The purpose of this resolution is that on August last year, various Regal employees received incentive grants as described in the previous resolution. As part of this, Brendan O'Connor, CEO and Managing Director of Regal, received 1,334,000 incentive grants on the 31st of August, 2022. Under Listing Rule 10.14, a company must not permit a director of that company to acquire equities under the incentive equity plan without shareholder approval.
However, Listing Rule 10.16 provides an exception to this, and that is to the effect that incentive grants should be awarded to Brendan O'Connor, provided that the shares given to him at the time of vesting are acquired on market unless shareholder approval is obtained to permit the issuance of the shares to him. The company now wishes to obtain shareholder approval and ratification of the prior issuance of those incentive grants under the employee incentive plan pursuant to Listing Rule 10.14. If the shareholders approve this resolution and the incentive grants issued to Brendan O'Connor vest, the board will have the ability to satisfy the grant via the issuance of new fully paid ordinary shares to the company in addition to on-market acquisitions. This provides greater flexibility with respect to the use of the company's cash reserve to satisfy the incentive grants.
If shareholder approval is not obtained under Listing Rule 10.14, the vesting of the incentive grants issued to Brendan O'Connor will be satisfied by on-market acquisition of shares. More detail on Brendan O'Connor's remuneration and summary of the material terms of the employee incentive plan can be found in the company's 2022 annual report. Other than Brendan O'Connor, the board recommends shareholders vote in favor of Resolution five. The proxies are there for you to view. Open proxies in favor of the chair of the meeting at the time of the meeting will be voted in favor of the resolution. Adjusting for these, the votes are 180,633,852 in favor.
9,908 other proxy discretions, which I'll vote in favor, and 112,774 against. This equates to 99.4% in favor of the resolution. Sorry, 99.9% in favor of the resolution, 0% proxy and 0.1% against. Okay. Any questions in relation to this, Rebecca?
No questions online, Michael.
Okay.
I'll just open to the operator on the phones.
Yeah, no phone questions at this time.
David.
Brendan, look, you're an incredibly smooth marketer, a brilliant communicator, albeit, as I've said earlier on, I think there's a fair bit of spin in that stuff for the reasons I've said that you ignored, in my opinion, a whole lot of highly relevant issues, and you presented the positive without being balanced. Can I, before voting on this resolution, Brendan, to give you another AUD 4 million or AUD 5 million of RAM, could you please clarify what is your role? Are you involved in investment at all, or are you basically a marketing, distribution, and administration guy?
Thank you. I think my role is pretty clear as CEO and Managing Director. That puts me front and center of the board, also for the management team in the allocation of the company's capital, principally as it relates to the divisions that we have. I'm not involved in the stock picking on the long-short equities, nor in the allocation of capital within the private credit strategy or the resource royalty strategy or the water or the farmland or the carbon or the power strategy.
Picking up, Brendan, what the chairman eloquently said that, you know, Philip King is purely an investor. What would happen if Phil continued? He's had some of his funds have been performing very poorly this year. What would happen if Phil continued to perform poorly? Would you terminate him?
I'm not gonna comment on a individual employee, nor a theoretical question.
Politician again. Can you just clarify, though, how long do you give your funds managers before you terminate them? Do you give them five years or three years or one year of underperformance?
We like to support all our staff. There's no defined period. Thank you for your question.
David, I'll just add the comment that funds management is a business where you don't add alpha every day of the week, every week of the year, every year. There are ups and downs. You're right, some of the performance of the funds has been below benchmarks, and they are below high water marks. For those, Brendan has responsibility for ensuring that the fund managers do deliver their performance over time, not instantaneously.
Just my second one. Brendan didn't seem to like my question, I'll address this to you, the Chairman. Warren Buffett, who we all know, has often warned of the danger of high fee hedge fund managers. He had a celebrated bet where he bet various hedge funds as to whether they would actually, after fees, beat the index over a number of years. You know who won? Warren Buffett, the hedge funds managers, with all their marketing spin, all the gloss, all the lipstick, failed to deliver. I appreciate some do, some don't. Buffett continued, Mr. Chairman, "Under the lopsided fee arrangements, a hedge fund operator's ability to simply pile up assets under management has made many of these managers extraordinarily rich, even as their investments have performed poorly." Mr. Chairman, are you cognizant of this issue?
Do you think the management team here are receiving too big a kicker, when overall, in my opinion, in the last year, the performance has been poor?
The remuneration of the management team is reviewed by the remuneration committee. The approvals that we've put in place support the recommendations that we put into the meeting. We believe it is appropriate. Okay, no further questions. I will now go to a vote on that. Anybody who hasn't cast their votes can do so. That takes us to the last resolution, which is the ratification and prohibition of securities that relate to Philip King. As discussed in the prior two resolutions, August last year, various Regal employees received incentive grants. As part of this, Philip King received 5,002,502 incentive grants on the 31st of August, 2022. As many of you would know, Philip King is the chief investment officer and cofounder of Regal Funds Management and the largest business within Regal Partners.
Under Listing Rule 10.11, a person who is an associate of a person who is a substantial shareholder has not been moved to be issued securities in the company without shareholder approval. In the context of this rule, substantial requires 30% or greater. Philip King is an associate of New Highland Pty Limited, which is a substantial shareholder that is greater than 30%. In the company, his capacity is as trustee of the Philip King Family Trust and the King Family Trust. The effect of Exemption 9 under Listing Rule 10.12 was to allow incentive grants to be awarded to Philip King, provided that the incentive grants be settled in cash or in shares of the company at the board's sole discretion, and if they are settled by the grant of shares, such shares to be acquired on market.
Unless shareholder approval is obtained to permit the issuance of shares in the company to him. As such, the company now wishes to obtain shareholder approval under the Listing Rule 10.11 to permit the proposed amendments outlined in Resolution five to the incentive grants to be issued to Philip King. If approved by shareholders, the board will have the ability to satisfy the vesting of the incentive grants via the issuance of new shares in the company, in addition to on-market acquisitions or cash settlement. This provides greater flexibility in respect to the use of the company's cash reserves to satisfy the incentive grants. If shareholder approval is not obtained under Listing Rule 10.11, the vesting of the incentive grants to issue to Philip King will only be satisfied by the on-market acquisition of shares or cash settlement.
The board recommends that the shareholders vote in favor of Resolution six. We've now got the proxies put up on the screen. Opening proxies in favor of the chair at the time of the meeting will be voted in favor of the resolution. Adjusting for these, 101,535,013 are in favor. 9,908, at my discretion, which I vote in favor, and 111,444 voted against. This equates to 99.9% in favor and 0.1% against. Rebecca, do we have any questions?
No questions online. Moving to the operator. Thank you.
There are no phone questions at this time.
David.
It's very hard for anyone to properly consider this when the board and its advisors are hiding Phil's remuneration. Hiding may not be the right word, but certainly not disclosing Phil's basic remuneration.
Nothing to do with Phil's remuneration.
I'm about to talk about, Brendan, the total package, which is obviously highly relevant to whether he should also receive additional rights and incentives.
That's not the question at hand.
David, the question we're voting on here is not whether Phil gets these shares. He's got them. The question is how we pay him. Do we buy the shares back from the market, or do we pay him in cash?
I totally understand that.
That's the issue we're dealing with. Your opinion on Phil's remuneration is not the issue under discussion at this point in time.
I totally understand that, Michael. As you would expect, I'm very good on the detail. At the end of the day, the board and its advisors are seeking shareholder approval for this resolution. Clearly, it is highly relevant in considering whether shareholders support that or not. Look at the total remuneration of Phil King from the company. Number one, he's getting undisclosed remuneration. Number two, it was acknowledged at the meeting last year that the majority of the AUD 600 million at concessionary discounted management fee rates is Phil King's family. Number three, it's the... it was acknowledged at this meeting last year that the majority of the AUD 200 million for charities is, in fact, Phil King's foundation. Lo and behold, we then have another, you know, huge amount of rights. I again just make the comment, Mr.
Chairman, because I know you're not gonna acknowledge it, if this board and the senior management decide to milk the golden goose, the goose might end up in the same way that Magellan ended up. Thank you.
Thanks, David. Okay. We are now going to vote on the resolution. There's no further questions. Anybody who hasn't voted should do so. I guess we're saying that people have now got time to vote before we close the meeting on all the resolutions, 1-6. I'm going to open the meeting as per the script to general questions. I can't believe there isn't anything that hasn't already been covered in relation to that. There's no general questions, Rebecca, online?
A couple of general questions that have come through online.
Sure.
One relates to the bid for Perpetual last year. If I may ask, we have been aggressive since listing, lodging a AUD 1.9 billion bid for Perpetual last year. We've also conducted a share market raid on rival Platinum Asset Management. What did the CEO think about Kerr's recent criticisms of Platinum? Have we had any engagement with Mr. Neilson about a potential control transaction?
Let me answer the first question. In relation to Perpetual, they were asking us for what? An opinion? Was there anything they wanted on Perpetual?
Uh, just-
They were just noting that we'd made a bid?
Noting that we've made a bid.
Okay. All right. In relation to Platinum?
Relating to Kerr Neilson's article and.
We've got no comment on that whatsoever.
Thank you. One more if I may, I'll read this out. Thank you for offering shareholders the hybrid AGM. The investor would like to question whether we'd commit to doing hybrid AGMs in future years, and what your experiences... Some comments around the experience of the hybrid AGM. Some comments with regard to how many shareholders showed up to the physical meeting.
Well, maybe you can answer that question, Rebecca. My overall observation is it's been a much smoother process than I anticipated. Unless there's some technical issues that emerge in a postmortem of this event, it would seem to me that it's a very effective communication mechanism. You would know how many shareholders are here from what's been filled in. I'm guessing maybe 20 or something like that.
Yes.
That would kindly be recorded by Boardroom.
I might move to the phone lines. Thanks, operator. There are no phone questions at this time.
Okay. All right. I believe we... Yes, sir. Question.
My name's Barney Romo, Mr. Chairman. I was just looking at the annual report on page 81, the shareholder information. I see the substantial shareholders appear to have 119.5% of the total shareholding. I can't quite understand it. Can you explain to me why that exceeds the total amount of share issues?
Ian, over to you.
What page were you looking at?
Page 81.
The top on page 82, it shows the top 20 holders represent 83.66%.
If you look at page 81, there's a notice that there are four substantial shareholders. When I add them up, that comes to 302,437,444 shares or 111. If you add up the percentages, it seems to come to 119.5%. That doesn't seem to. That seems to exceed, down the bottom of the page, the total issued number of shares is 253,000. It seems to exceed that number.
Yeah. The, the response to that question is it's a technical one. Because Philip King's shareholding and RPL, they're mixed together due to New Highland having gained legal control of RPL. Let me ensure.
Let's say Phil's is 100%. The only question is, what is Phil's adjusted shareholding by himself and the entities, I guess, which is deemed to control?
The other technicality was just, with regard to how the escrow was treated. I think that the 58% there was actually reflecting Regal Partners', escrowed shares. Some of those shareholdings of New Highland and Robert Luciano and the foundation are actually escrowed as well. They're a subset of that 58%.
Accounting technicalities is the short answer. There's only 100% of shares on issue. Okay. Nothing more? Okay. Anybody who hasn't voted, we urge you to vote. Ingrid, that's your... As mentioned earlier, Boardroom, Regal Partners share registry will conduct the poll using the voting cards that you will submit today in this room. The online votes that you submit and the votes that were cast online before the meeting. As a reminder for those in the room, the persons entitled to vote in this poll are all shareholders, proxy holders who hold green voting cards. On the reverse of the green admission card is your voting paper and instructions. Please ensure you print your name where indicated and sign the voting paper.
When you're finished filling in your voting card, please provide it to the Boardroom staff to ensure the votes are counted. Boardroom staff will also be able to help you if you need additional time or assistance, or if you require any help, raise your hand. Seems to imply there's somebody from Boardroom in the room. Okay. There we go. The person at the back's got a box, you put the votes in the box. Have all the votes been cast? I now declare the poll closed and formally charge Boardroom to count the votes. The results of the AGM will be released to the market and made available on Regal Partners' website later today. I would also like to thank everybody for attending and encouraging people to contact the investor relations team if you have any further questions.
As there are no other formal business to the meeting, I declare the AGM of Regal Partners Limited closed. For those in the room, please feel free to join us for refreshments at the back. Well done, Beck. Okay, meeting closed. Thank you very much. See you again next year.