StoneCastle Financial Corp. asked shareholders to approve a plan to reorganize the company into a Delaware statutory trust at their annual meeting on June 4.
The reorganization will transfer all of StoneCastle Financial's assets to the trust in exchange for the trust's shares, with each shareholder receiving a proportional amount of shares from the trust. The trust will assume all of the company's liabilities and all of the company's current directors will serve as trustees. A Delaware trust can issue an unlimited number of shares, unlike a corporation, which has a fixed number of authorized shares.
The proposed trust will also enter into a management agreement with StoneCastle Asset Management LLC, which will be substantially the same as StoneCastle Financial's existing agreement.
The board said the reorganization plan will provide more flexibility in terms of administration that could lead to lower expenses for shareholders, limit the obligations of the trust and its trustees, create greater operating efficiencies and lead to lower taxes. It also added the plan will not have any dilutive effect on the company's shareholders.
If the plan is approved, the reorganization will take place by Oct. 1. StoneCastle Financial will be terminated upon the plan's approval.