Stellus Capital Investors Grant Dilutive Issuance Flexibility, Confirm Board Seats

Rhea-AI Filing Summary

Stellus Capital Investment Corporation (NYSE: SCM) disclosed the results of its 17 June 2025 Annual Meeting in an 8-K filed on 20 June 2025 (Item 5.07).

Voting participation: 15,187,040 of 28,416,148 eligible shares (≈53.4%) were represented in person or by proxy.

Proposal 1 – Election of Directors:

• Dean D’Angelo: 14,468,514 FOR / 718,526 WITHHELD (≈95.3% support)
• William C. Repko: 13,693,643 FOR / 1,493,396 WITHHELD (≈90.2% support)

Both nominees were elected for three-year terms expiring at the 2028 Annual Meeting.

Proposal 2 – Authorization to Issue Shares Below NAV: Shareholders approved permitting the Board to sell or issue up to 25 % of outstanding common stock at prices below the then-current net asset value (NAV) per share.

• All shareholders: 11,161,327 FOR (≈70.2%), 3,306,930 AGAINST, 718,771 ABSTAIN
• Non-affiliate shareholders: 10,028,907 FOR, 3,306,930 AGAINST, 718,771 ABSTAIN

The authorization provides the company with added financing flexibility typical for Business Development Companies (BDCs) but could be dilutive if executed.

No other matters were brought before the meeting, and no financial performance data were presented in this filing.

Positive

• Board continuity secured: Both incumbent directors were re-elected with strong majorities, ensuring strategic consistency.
• Financing optionality: Shareholders approved the flexibility to raise capital quickly, which could support future portfolio expansion.

Negative

• Dilution overhang: Authorization to sell up to 25 % of shares below NAV could reduce per-share NAV and earnings if executed.
• Moderate voter turnout: Only ~53 % of eligible shares participated, which may indicate limited retail engagement.

Insights

Corporate Governance Expert

TL;DR: Routine director elections passed; shareholders also granted below-NAV issuance authority, giving board flexibility but raising dilution watchpoints.

Governance processes appear orderly: quorum achieved, two directors re-elected with >90% support, signalling broad shareholder confidence. The below-NAV issuance authority is common among BDCs, requiring annual renewal, and passed with 70% overall and 75% non-affiliate support, comfortably above the majority threshold. While not immediately actionable, the approval equips the board to react quickly to market conditions. Because it is a renewal of a typical BDC provision and no other governance changes were proposed, I view the overall impact as neutral for current equity holders.

Portfolio Manager

TL;DR: Potential 25% share issuance below NAV poses dilution risk; monitor execution timing and pricing.

The newly approved authority lets SCM issue up to roughly 7.1 million shares (25 % of current float) beneath NAV. If exercised, existing shareholders could face book-value dilution and earnings drag until capital is deployed. Conversely, access to incremental equity improves balance-sheet flexibility, possibly lowering leverage and supporting portfolio growth. With no immediate issuance announced, the risk is contingent, but my bias is slightly negative because downside dilution precedes potential upside returns.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): June 20, 2025 (June 17, 2025)

Stellus Capital Investment Corporation

(Exact Name of Registrant as Specified in Charter)

Maryland		814-00971		46-0937320
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)
4400 Post Oak Parkway, Suite 2200 Houston, Texas				77027
(Address of Principal Executive Offices)				(Zip Code)

Registrant’s Telephone Number, Including Area Code: (713) 292-5400

Not applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	SCM	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Item 5.07 Submission of Matters to a Vote of Security Holders.

Stellus Capital Investment Corporation (the “Company”) held its Annual Meeting of Shareholders on June 17, 2025 (the “Annual Meeting”). At the Annual Meeting, the Company submitted two proposals to the vote of the shareholders, which are described in detail in the Company’s proxy statement dated April 21, 2025. As of April 17, 2025, the record date for the Annual Meeting, 28,416,148 shares of common stock were eligible to be voted.

On June 17, 2025, the proposals were submitted to the vote of the shareholders. Of the shares eligible to be voted, 15,187,040 were voted in person or by proxy in connection with the proposals. 

Each of the proposals submitted to a vote of the shareholders of the Company at the Annual Meeting was approved as follows:

Proposal 1: Election of Directors

The Company’s shareholders elected Dean D’Angelo and William C. Repko as directors to each serve for a three year term, or until their successors are duly elected and qualified. The following votes were taken in connection with this proposal: 

Nominee		Total Votes For				Total Votes Withheld
Dean D’Angelo			14,468,514				718,526
William C. Repko			13,693,643				1,493,396

Proposal 2: Issuance of Shares Below Net Asset Value

The proposal to authorize the Company, with the approval of the Board, to sell or otherwise issue up to 25% of the Company’s outstanding common stock at an offering price that is below the Company’s then current NAV per share was approved. The following votes were taken in connection with this proposal:

		Votes For				Votes Against				Abstentions
All Shareholders			11,161,327				3,306,930				718,771

		Votes For				Votes Against				Abstentions
Shareholders Without Affiliates			10,028,907				3,306,930				718,771

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: June 20, 2025	Stellus Capital Investment Corporation
	By:	/s/ W. Todd Huskinson
		Name:	W. Todd Huskinson
		Title:	Chief Financial Officer

FAQ

What did SCM shareholders approve at the 2025 Annual Meeting?

They re-elected two directors and authorized the Board to issue up to 25 % of shares at prices below NAV.

How many votes supported the below-NAV share issuance for SCM?

11,161,327 votes (≈70 %) were cast in favor by all shareholders.

Will Stellus Capital immediately issue shares below NAV?

The 8-K grants authority but does not announce any immediate issuance.

What percentage of eligible SCM shares were represented at the meeting?

Approximately 53.4 % (15.19 million of 28.42 million) were voted.

Why is issuing shares below NAV considered risky for investors?

It can dilute existing shareholders’ NAV per share and earnings until new capital is profitably deployed.