Circular and Notice of General Meeting

14 October 2014

Daniel Stewart Securities plc ("Daniel Stewart" or "the Company")

Posting of Circular and Notice of General Meeting

Daniel Stewart announces that it is today publishing a Circular and Notice of General Meeting in connection with propose authorities to issue and allot new Ordinary Shares and the disapplication of pre-emption rights. The General Meeting will be held at 10:30am on 6 November 2014 at the offices of the Company, Becket House, 36 Old Jewry, London EC2R 8DD.

The Circular and Notice of General Meeting will shortly be available to view on the Company's website at www.danielstewart.co.uk.

Defined terms used in this announcement shall, unless otherwise denoted, have the same meanings set out in the Circular.

Enquiries:

DANIEL STEWART SECURITIES PLC Tel: 020 7776 6550

Peter Shea

WESTHOUSE SECURITIES Tel: 020 7601 6100

Richard Johnson / Martin Davison

The following, including the letter from the Chairman of Daniel Stewart, is extracted from the Circular:

"Proposed authority to allot Ordinary Shares and disapplication of pre-emption rights

1. Introduction

On 7 October 2014 Daniel Stewart announced that the Company is required to raise additional capital in respect of a shortfall in its regulatory capital, under the European Capital Requirements Regulations and Directive CRR/CRD IV, and is in discussions with certain parties in order to strengthen the Company's balance sheet for regulatory capital purposes. The Company has had a number of offers of assistance presented to it and is reviewing all available options. The Directors are confident that this regulatory issue can be resolved shortly and a further announcement will be made in due course. The approval of Shareholders is required for the Disapplication, to enable Daniel Stewart to allot and issue new Ordinary Shares to the potential investors. Any Issue of new ordinary shares to potential investors is therefore conditional on the passing of the Resolutions by Shareholders.

The purpose of this document is to provide you with details of, and the background to, the proposed disapplication of pre-emption rights and authority to allot Ordinary Shares ("Proposals") and to explain why the Directors believe that the Proposals are in the best interests of Shareholders as a whole.

This document also contains the Directors' recommendation that you vote in favour of the Resolutions to be proposed at the GM convened for 10.30 a.m. on Friday 6 November 2014, notice of which is set out at the end of this document.

Notice of the General Meeting and a form of proxy for use at the General Meeting are enclosed with this document.

2. Information on Daniel Stewart

Daniel Stewart was incorporated in 1989 and, following a reverse takeover, was admitted to trading on AIM in October 2004. The Group, through its wholly-owned subsidiary Daniel Stewart & Co plc, offers a comprehensive range of services focusing on equity capital markets including corporate finance, equity research, corporate broking and sales. The main focus of the Group is on small and mid cap stocks, principally on AIM.

3. Background to and reasons for the Proposals

On 1 October 2014 the Company announced that it was not able to publish its Annual Report for the year ended 31 March 2014 ("Accounts"). As a consequence, and pursuant to the AIM Rules for Companies, the Company's shares were temporarily suspended on that date.

During the final stages of preparation of the Accounts, the Company identified a shortfall in its regulatory capital, under the European Capital Requirements Regulations and Directive CRR/CRD IV ("ECRRD"), and is in discussions with certain parties in order to strengthen the Company's balance sheet for regulatory capital purposes. Regulatory capital relates to the capital required to be maintained by Daniel Stewart as a financial services firm, to ensure that sufficient financial resources are available to cover the risk associated with the Company's business, as distinct from working capital, which is the capital required to operate the firm. As a result, the Company has not yet been able to publish the Accounts and the Ordinary Shares continue to be suspended.

The Company has a number of potential financing proposals and is reviewing all available options.

Terms have not been agreed with any of the parties to the potential financing proposals, however in order to enable the Directors to progress these potential financing proposals, to provide sufficient regulatory capital to enable the Company to satisfy its obligations under ECRRD, the Directors believe they are likely to require an increase in their authority to issue and allot new Ordinary Shares beyond the existing authorities granted by Shareholders at the Company's Annual General meeting on 5 December 2013. The Directors are of the opinion that additional capital of up to approximately £1,500,000 will more than be sufficient to resolve the regulatory capital shortfall. 

The Resolutions are explained in more detail below:

First Resolution (authority to issue shares)

The first Resolution will permit the Director to issue and allot up to a further 380,000,000 new Ordinary Shares. If the Resolution is passed and the authority is exercised in full by the Directors, the new Ordinary Shares would represent approximately 42.2 per cent. of the Company enlarged issued Ordinary Shares.

It should further be noted that a company may not, under UK company law, issue new shares for a price below the par value of shares. The Ordinary Shares have a par value of 0.25p, and therefore any new Ordinary Shares must be issued, or subscribed for, at a value per Ordinary Shares of 0.25p or higher.

Second Resolution (disapplication of pre-emption rights)

If the Directors wish to allot new Ordinary Shares (or other equity securities) for cash, the Companies Act requires that such shares (or other equity securities) are offered first to existing Shareholders in proportion to their existing shareholding. The allotment of new Ordinary Shares as referred to in the second Resolution includes the sale of any shares which the Company holds in treasury following a purchase of its own shares.

The second Resolution, which is conditional upon the passing of the first Resolution and which will be proposed as a special resolution, asks the Shareholders to authorise the Directors to allot equity securities for cash without offering them first to existing Shareholders in proportion to their existing holding.

4. General Meeting

You will find at the end of this document a notice convening a General Meeting of the Company, to be held at 10.30 a.m. on Thursday 6 November 2014 at the Company's offices at Becket House, 36 Old Jewry, London EC2R 8DD, at which the Resolutions will be proposed.

5. Action to be taken

Whether or not you propose to attend the GM in person, you are asked to complete the Proxy Form appended to this Circular and to return it in the enclosed pre-paid envelope to Capita Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU so as to arrive as soon as possible but in any event no later than 10.30 a.m. on 4 November 2014. Completion and return of the Proxy Form will not preclude you from attending the GM and voting in person should you so wish.

6. Recommendation

The Directors consider that the Proposals are in the best interests of the Company and its Shareholders as a whole and recommend that you vote in favour of the Resolutions, as they intend to do in respect of their own beneficial holdings, amounting in aggregate to 83,313,874 Ordinary Shares, which represents approximately 15.83 per cent. of the Company's issued ordinary share capital.

Yours faithfully

Peter Shea

Chairman

DEFINITIONS

In this document, the following expressions shall have the following meanings, unless the context otherwise requires:

"Act" or "Companies Act" the Companies Act 2006 (as amended from time to time);

"AIM" AIM, a market operated by the London Stock Exchange;

"AIM Rules for Companies" the rules for AIM companies as published by the London Stock Exchange, from time to time;

"certificated" or "in certificated form" recorded on the relevant register as being held in certificated form and title to which may be transferred by means of a stock transfer form;

"Company" or "Daniel Stewart" or "Group" Daniel Stewart Securities Plc;

"CREST" the relevant system (as defined in the CREST Regulations) in respect of which Euroclear UK & Ireland Limited is the operator (as defined in the CREST Regulations);

"CREST Regulations" the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755) as amended from time to time;

"Directors" or "Board" the directors of the Company;

"Disapplication" the proposed disapplication of section 95 of the Companies Act in relation to the allotment of certain Ordinary Shares, to be proposed at the General Meeting and detailed in the Resolutions (set out in the attached notice of the General Meeting);

"Existing Shares" the 519,902,579 Ordinary Shares in issue as at the date of this document;

"Financial Conduct Authority" or "FCA" the Financial Conduct Authority of the UK;

"Form of Proxy" the form of proxy for use by holders of issued Ordinary Shares accompanying this document for use in connection with the GM;

"FSMA" the Financial Services and Markets Act 2000 (as amended);

''General Meeting'' or "GM" the general meeting of the Company to be held at 10.30 a.m. on 6 November 2014, or any adjournment thereof, notice of which is contained at the end of this document;

"London Stock Exchange" London Stock Exchange plc or any recognised investment exchange for the purposes of FSMA which may take over the functions of London Stock Exchange plc;

"Ordinary Shares" ordinary shares of 0.25p each in the capital of the Company;

"Resolution" or "Resolutions" the ordinary resolution and the special resolution (individually or together, as applicable) to be proposed at the General Meeting as set out in the notice of General Meeting accompanying this document;

"Shareholders" the persons who are registered as holders of Ordinary Shares at the Record Date;

"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland; and

"UKLA" or "UK Listing Authority" United Kingdom Listing Authority, being the FCA acting in its capacity as the competent authority of the purposes of Part VI of the FSMA.