THE SCOTTISH ORIENTAL SMALLER COMPANIES TRUST PLC

LEI: 213800DBSW6WJXKNXL87

Investment Management Agreement

Following the change to the benchmark index used as the basis for calculating the performance fee of the Company's Alternative Investment Fund Manager, First Sentier Investors (UK) Funds Limited (the "AIFM"), on 31 July 2023, the Board has agreed the following further key changes with the AIFM in respect of the calculation of the performance fee:

·    The hurdle rate (i.e. the level of outperformance of the benchmark index at which a performance fee may be payable) will be reduced from ten per cent. to two per cent.

·    Periods of underperformance will now be accumulated and applied against potential future performance fees.

·    If the total fee payable to the AIFM (base fee plus any performance fee) in a year would be in excess of the cap of  one and a half per cent, such excess will be carried forward and may be paid in future periods of positive performance where a performance fee is otherwise payable.

·    In addition, a high watermark provision has been introduced, whereby a performance fee will only be paid when the Company's share price exceeds the  level where a performance fee was previously paid (with the initial high water mark being the Company's share price as at 1 September 2023).

The Board believes that this structure is an appropriate way to incentivise and reward the AIFM to deliver consistent positive returns above those available using a passive index model, whilst also allowing for a competitive base management fee.

The AIFM is a related party and this change constitutes a smaller related party transaction under Listing Rule 11.1.10R. No other changes are being made to the management arrangements at this time.