abrdn Asia-Pacific Income Fund VCC: Unveiling 2025 Redemption Details and Proposed Changes

abrdn Asia-Pacific Income Fund VCC (TSX:FAP) has recently announced details regarding its 2025 voluntary cash redemption and a special shareholder meeting proposal to eliminate the 10% cap on annual redemptions. These changes could significantly impact shareholder value and fund dynamics, as well as introduce new risks and benefits.

2025 Voluntary Cash Redemption Details

The redemption date for the Company's annual voluntary cash redemption is set for March 31, 2025. Shareholders are entitled to redeem shares at a price equal to 100% of the Average Net Asset Value (NAV) of the three trading days preceding the redemption date, less direct costs (expected to be less than 1%). If all redemption requests exceed 10% of the aggregate outstanding units of the Company on March 10, 2025, the final day to submit shares for redemption, the Company will process redemptions on a pro-rata basis based on the total number of shares tendered. Payment for shares that have been tendered and accepted for redemption will be made on or before April 17, 2025.



Proposed Changes: Eliminating the 10% Cap on Annual Redemptions

The Company is proposing to amend its VCC Constitution to eliminate the current 10% cap on the annual redemption, allowing shareholders to tender for redemption up to 100% of the outstanding shares commencing in 2026. Additionally, the amendments would grant the board of directors discretion to terminate and wind up the Company if it is no longer economically practical to continue or if it would be in the best interest of the Company and the shareholders to terminate the Company.



The proposed constitutional amendments contain several key legal and governance implications. The discretionary termination power being granted to the Board represents a significant expansion of authority that warrants careful scrutiny. The 15-90 day notice requirement for termination, aligned with National Instrument 81-102, provides reasonable shareholder protection while maintaining operational flexibility. The override mechanism allowing termination announcements to supersede pending redemptions is particularly notable, creating a clear hierarchical structure for corporate actions but could potentially be used to circumvent shareholder redemption rights if not exercised judiciously. The preservation of pro-rata distribution rights in a termination scenario maintains fundamental fairness principles.



The March 7, 2025 special meeting timing provides sufficient notice for shareholder consideration, though the early morning Singapore time may impact North American participation. The ordinary resolution requirement sets an appropriate approval threshold for changes of this magnitude.

In conclusion, abrdn Asia-Pacific Income Fund VCC's proposed changes to its redemption policy represent a significant shift in its fund dynamics and shareholder value. While these changes could provide increased liquidity and flexibility for shareholders, they also introduce new risks and potential challenges. Shareholders should carefully consider the implications of these changes and engage in the upcoming special meeting to voice their opinions and make informed decisions about their investments.