Two shareholders have called for the Strategic Equity Capital trust to be shut down over its poor performance and its large discount.
Ian Armitage and Jonathan Morgan, who collectively own 7.66 per cent of the trust, have called for a general meeting, which will be held on Tuesday, March 30.
Shareholders will be asked to vote on whether the £166m trust, which is managed by Gresham House's Ken Wotton, should continue to exist.
If they vote for it to continue, they will be asked to vote on whether shareholders should be able to realise their investment in the trust for cash at close to net asset value or exchange their shares for those in another investment vehicle.
The board has urged shareholders to vote for the trust to continue and against the second resolution.
In an open letter, Armitage and Morgan said Strategic Equity Capital had consistently traded at a discount to net assets of greater than 10 per cent for over five years and that this was unlikely to narrow.
They criticised the board for sanctioning multiple changes to the investment management team, resulting in the abandonment of the long-standing and proven investment strategy and for dropping the discount target and discount control mechanism.
Armitage and Morgan added: "Since our initial engagement with you, we have spoken to a large number of shareholders, who all share at least some of our concerns.
"As a result, we believe this meeting will help to dispel the idea that your shareholders are happy with the status quo, and thereby create the momentum required for future value creation."
Strategic Equity Capital currently trades at a discount of 15 per cent.
Over the past five years it has returned 33.6 per cent while its sector, the AIC UK Smaller Companies, has returned 75 per cent.
In response, the board said: "In [the most recent half-year report], the board set out the positive returns of the company in that period and noted the promising developments at portfolio companies.
"The board has confidence in the management team's strategy for the portfolio and a vote against continuation of the company at this early stage would, in the board's opinion, not give the management team sufficient time to implement and demonstrate the benefits of their strategy and would, accordingly, be likely to prejudice the performance of the portfolio and therefore the interests of shareholders."
A spokesman for Gresham House said: "Gresham House was only appointed in May 2020 and is focused on fulfilling this long term investment mandate utilising its extensive investment resources and track record in this area of specialist investing whilst working with the board to act in the interest of all shareholders.
"A resolution for the continuation of the company was passed comfortably very recently on November 11, 2020. There has been no change in the stated investment strategy since Gresham House’s appointment and this is set out clearly in the recent SEC interim report."