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Supporters' Trust Handbook
Introduction
Setting up a Supporters' Trust – The three-stage model
Stage One – Open meeting to introduce the Trust
Stage Two – Develop Working Group and Launch
Stage Three – The First AGM
Running a Trust
Organisation
Constitutional Issues
Fundraising
Marketing
Using the Media Effectively
Action in the Community
Shareholding, AGM, and Board Strategies
Contexts
Corporate Governance
Company Law
Codes of Corporate Governance
Regulation by the Football Authorities
Appendices
Appendix 1: Model agenda for the stage one open meeting
Appendix 2: Template application form
Appendix 3: Model board membership policy
Appendix 4: Model agenda for Trust AGM
Appendix 5: Model rules for Trust elections
Appendix 6: Sample election nomination form
Appendix 7: Supporters Direct funding policy
Appendix 8: Potential sources of funding from within the co-operative movement
Appendix 9: Some of the objects used by existing Trusts
Appendix 10: Media directory
Appendix 11: Taxation treatment of football community mutuals
Appendix 12: Code of conduct for elected supporter directors
Appendix 13: Identifying and tracing shareholders at your club
edit · changes

You can get hold of most documents relating to companies by going to Companies House Direct, but you do have to pay for downloading the document.

If you have a problem finding this information, go to the main Companies House website and contact them through the details there. If you have further problems, contact SD.

Most football clubs are incorporated as public or private companies. Company law regulates how companies are incorporated, how they are run and what rights are afforded to shareholders. All registered companies must submit a document called the Memorandum and Articles of Association (M&A) to Companies House.

The M&A of a club provide basic information on how the club is incorporated. Attaining a copy of this document is essential in order to understand how a club is run. If you are a shareholder in the club, the club is obliged to send you a copy of the M&A for a nominal fee of not more than 5 pence (set by law). Most companies do not charge shareholders for copies of their memorandum and articles of association. If you experience any further difficulty obtaining the M&A you should contact Supporters Direct.

Contents

3.2.1 Memorandum and Articles of Association & Company Objects

In order for a company to be set up, two or more people must put their names to a memorandum of association, comply with the Companies Act and register the company at Companies House. The M&A specifies the type of company, (for example, limited liability, public or private), the objects of the company (its objectives), information about share capital, and its governance structure. The box below lists the information that is contained in the M&A.

What’s in the M&A?

The following may be included in the M&A (depending on company type):

  • Company type
  • Objects
  • Members
  • Authorised share capital
  • Allotment of shares
  • Transfer and transmission of shares
  • Appointment and removal of directors
  • Directors’ powers
  • Meetings of directors
  • Directors’ remuneration, expenses and other interests
  • Meetings of members, including:
    • business to be transacted
    • quorum requirements
    • the exercise of voting rights
    • appointment of proxies
  • General administrative requirements
    • Notices
    • Minutes
    • Winding-up
  • Financial Administration requirements
    • Accounts
    • Dividends

Company objects (Objectives)

Companies are required to specify their objectives in their M&A. Most football clubs whose shares are not traded on share markets have a number of non-commercial objectives including sporting objectives, charitable objectives and community objectives. Finding out about the full range of club objectives as specified in the memorandum can help supporters put their case to the board. If supporters’ objectives fall under any of the objects listed in the memorandum, supporters cannot be fobbed off by owners or directors with the excuse that their objectives are not in line with those of the club.

A number of football clubs that floated on the stock market have become wholly owned subsidiaries of holding companies that have purely commercial objectives so it is important to check the memorandum of the club. If the club is a subsidiary of another company it is also important to check the memorandum of its holding company. See the next section (3.2.2) for more on holding companies.

3.2.2 Shares & ownership of football clubs

The M&A shows whether the company is guaranteed by shares, how much share capital the company is authorised to issue (the amount of share capital actually issued is shown in the company’s Annual Return), the rights pertaining to different types of shares, restrictions on transmitting shares (transferring ownership in the case of death or bankruptcy, rather than buying or selling shares), entitlements to new issues and rights of veto on share issues. If your club is a public limited company and its shares are listed on the London Stock Exchange (LSE) it is also bound by LSE rules including the Combined Code of Corporate Governance (see section 3.3).

Finding out who owns the company: The share register

As detailed in section 2.7 of Shareholding, AGM & Board Strategies, all companies that issue shares are required to keep an up-to-date share register that lists the names and addresses of all shareholders and the number and type of shares owned. Companies are obliged to allow any shareholder to inspect the register without charge. They are also obliged by law to send a copy to any shareholder who requests it within 10 working days. However, companies may charge up to the statutory rate for sending out a copy (currently £2.50 for the first 100 entries, £20 for the next 1000 entries and £15 for every subsequent 1000).

Companies are required to submit an up-to-date copy of their share register in the Annual Return, and copies are available from Companies House for a small fee. However, depending when the company last submitted its annual return, the register held at Companies House could be up to a year out of date. It is best to obtain the most up-to-date register from the club whenever possible. If you have difficulty obtaining a copy of the share register from the club, Supporters Direct can help you get a copy from Companies House.

Share ownership rights

Owning a share in a company gives the holder of that share certain rights, including the right to vote on resolutions at shareholder meetings, such as the Annual General Meeting (AGM) or an Extraordinary General Meeting (EGM). A list of share ownership rights is shown in the box below. Using these rights can help supporters gain an effective voice in their club.

Share ownership rights

A shareholding, however small, gives the shareholder a stake in the company and various entitlements resulting from this. These include the right to:

Requisition general meetings (subject to having the relevant shareholding qualification);
Requisition resolutions (subject to having the appropriate shareholding qualification);
Inspect various company registers (including those relating to share ownership, mortgages, directors and directors’ interests);
Inspect directors’ service contracts or a summary of their terms;
Inspect the register of substantial interests in shares (public companies only);
Inspect minutes of general meetings;
Inspect contracts (or written memorandum of terms) relating to the purchase by the company of its own shares and any variations thereof;
Not be unfairly prejudiced as a shareholder;
Attend and vote at shareholder meetings;
Receipt of the annual accounts;
Apply to the DTI to investigate the affairs of the company and/or its membership, (although generally the Secretary of State has the discretion whether or not to undertake an investigation).

Pooling voting rights: creating a voice

Generally speaking, voting rights are directly proportional to the number of ordinary shares a person holds. There are exceptions to this for different classes of shares, which should be detailed in the M&A. An individual football supporter usually only holds a small number of shares. Individual supporters therefore have little influence. However, collectively the share ownership of football supporters at a club typically places the supporters amongst the top ten largest shareholders. Supporters who wish to gain an effective voice in their club may wish to consolidate (or pool) their voting rights by transferring votes to their Supporters’ Trust by proxy. (See section 2.7.1.4 for details on how the Watford Supporters’ Trust have done this). To ensure democracy, such a measure should be accompanied by the establishment of a mechanism via which a Supporters’ Trust can ballot its members so that it can cast the proxy votes according to the views of the majority of its members. The Model Rules for a Football Community Mutual available from Supporters Direct allow for the use of proxy. Supporters Direct can also advise on the use of ballots and provide names of organisations that Trusts can use to ballot memberships in an efficient and transparent way (see section 1.27).

Holding companies

Many clubs now have holding companies – companies which either own 100% or a majority of the shares in the company. These have been created for several reasons:

Flotation - FA Rules used to prevent the payment of a dividend on football club shares, so when clubs began to float on public quoted markets in the mid 1980s, instead of the club itself being floated, the club would become a wholly owned subsidiary of another company which would then be floated. So, shares wouldn’t be sold in the club itself, but in the company that owned the club.
Protection - If a club goes into administration or liquidation, then the insolvency practitioner could sell the assets of the club – including the ground – to pay off the creditors who are owed money. As a result, the club could lose long-standing assets and the ground could end up as housing, often seen as the best way to realise the value of the land.
However, if the ground is owned by a holding company and the club goes into liquidation, then the ground is protected, as it is owned by a company that isn’t in liquidation. As football clubs are often technically insolvent, it can be seen as a wise strategy.
Furthermore, the club has many other lines of activity that don’t solely relate to football; it might have a catering or hospitality operation, which if it went into liquidation, could drag the club into difficulties. Setting up a holding company structure could enable the various activities to stand-alone as independent businesses – if they prosper, the club ultimately gets the benefit, as the whole operation is wholly owned by the club’s holding company. However, if the offshoot companies fall into difficulty, the club simply loses its catering operation and has to find a third party to manage it, or set up a new one.
Asset stripping - This looks similar to protection; indeed it’s usually undertaken with the above as the rationale. However it exposes a club to the risk of losing its major assets. If the club is a separate company, and the holding company owns the land, then if the club goes into liquidation, the holding company is left with a valuable piece of land and no longer has a football club to play on it. If the club was allowed to run up debts deliberately, it could bring the club into liquidation, leaving the holding company free to develop the land at huge profit.
Alternatively, the holding company could sell the football club and retain the land; a club without any major tangible assets is obviously worth less, but the holding company would not sell the club for a profit – more to release the club from their control. They would then be able to evict the club and develop the land.

The danger then comes down to the nature of the agreements between the club and the holding company, and the motives of the people who are running both.

As regards the motivations, only close scrutiny of the people running the club will guide on this. Contracts are a little different. A club that owns its own land, or owns a long lease on the land, ‘enjoys’ usage of its own property. However, once a holding company becomes involved, the situation changes. The club has to have a lease in place between the two companies – even if those companies are owned by the same people.

That lease will determine how secure the club is – i.e., how long can the club continue to play there? It will also detail what the club has to pay in rent, and what it is responsible for; does it have to maintain the ground and pay for the improvements, and does it have to provide the catering and the staff on match days? Does it get the revenue from the bars and the catering?

All these things are vital to know; in a club that owns its ground, these things are part of what the club does. In a holding company situation, these issues have to have some contract behind them. Depending on the lease, the club can move from a stable situation to a very unfavourable one. For example, it can be in a situation where it pays a large sum each year in rent, and only gets the revenue on match days but not from the conferences and events held during the week.

This is particularly attractive in today’s climate given the financial difficulties many clubs are in. The football side of the business is often run at a loss and it is difficult to generate any profit whatsoever and give a return on the investment. However, a holding company structure allows owners to set up companies that are more likely to generate revenue, leaving the football side to the supporters or others who want to be involved in this aspect. Catering, hospitality and the stadium itself can be let at a fixed price to the club, and if the club cannot pay, then that is the responsibility of the club. It can be an attractive revenue raiser for the holding company – but potentially disastrous for the club. The club can’t move anywhere else, and may not be able to provide its own services cheaper, as the holding company that owns the stadium may prevent the club from providing its own services under the terms of the lease.

The key aspect will always be the motivation of the people running the club, and most club owners fight shy of announcing their intentions. So how do Trusts guard against it?

Own shares

If you or your Trust has shares in the club, any attempt to transfer assets into a holding company will have to go to the shareholders first. Of course, with a large majority, existing owners can force through the proposals in most cases, but at least you are forewarned and can start researching.

Owning shares in the holding company (often, shares in the club are swapped for shares in the holding company) means you can analyse the accounts and see how much money the club is paying out the holding company.

Get information on your club and its ground

Supporters Direct can help access information on your club and ground from Companies House and the Land Registry. See the next section (3.2.3) for more information on these services.

Ask the right questions

Ultimately, the main weapon Trusts have is publicity – asset stripping of a club will be a big local news story. However, because of this, people attempting to asset strip a club will often go to great lengths to cover their tracks, making the Trust’s task difficult. Trusts might be able to prove that the arrangements being proposed aren’t good for the club, but the key documents are often confidential to the clubs and the holding company, and you may not be able to get hold of them. Instead, it might be more useful to ask simple and reasonable questions and challenge the club to answer them. If they can’t, alarm bells should start ringing and you can go public with your fears – the proof, such as it is, is the club’s failure to re-assure.

Such questions are:

  • If creditors can't liquidate the land upon winding up of the club, the vehicle for finance must be the holding company, as they have the asset that can secure any loans. This means that it must make loans to the club - under what terms will those loans be made? If they are made at above a market rate, it becomes a way for the holding company to take money legally out of the club under the much more palatable heading of debt servicing.
  • Is there a veto of sale of the land / holding company?

These are questions people at clubs that have been asset stripped wish they had asked at the time. It is not scaremongering, just asking sensible questions about the mechanics in the light of experiences at clubs like Brighton and York. Ultimately, if the people at the club have the best interests of the club at heart, they can make sure that vetoes on the sale of the land can be given to the club – they own both, so can make this happen. The argument against this is that whilst those people are in charge of both, everything will be OK. It may ultimately be a matter for the future, but taking the argument at face value still leaves the problem of the subsequent owners of a holding company. If future owners have less than honorable intentions, they won’t provide for the club’s security. The people in charge now can do this though, and it is worth asking them to do so – there is no reason for them not to, if they have the best interests of the club at heart.

Trusts may well be accused of being anti-board, but can use the argument that since the holding company is separate, the owners of it could sell to an unscrupulous character and so the terms of the lease and the terms of loans could be altered unilaterally to the detriment of the club. Trusts can use the line that they wouldn't dream of accusing the current owners of wanting to do this - but if someone makes an offer the current owners can't refuse, and if the safeguards aren't in place, then supporters could be left high and dry. Therefore, whilst the people running the club may well have its best interests at heart, it's important to get safeguards in place now, as a future owner who turns out to be not what everyone thought will be the only victor.

How safe is your ground? A checklist for supporters

Supporters concerned about the future security of their football club at their ground, particularly in relation to the existence of, or proposal to agree, a Sale and Leaseback scheme, may wish to pose the following questions:

  • To whom does the freehold and the ground currently belong?
  • To whom might the freehold and ground be sold?
  • Does the current/prospective ground owner have a role in the management of the football club?
  • How much would any proposed sale and leaseback raise?
  • What is the length of the lease?
  • Is there an option to renew the lease?
  • How much would the cost of the rent be?
  • What rights of tenure does the club have?
  • How would these costs compare to existing commitments (e.g. loan repayments)
  • Could the cost of the rent be increased? How much? Under what circumstances?
  • Does the club have a right to repurchase the freehold and stadium should it wish? And at what price?
  • Can the club afford to pay the rent and save to re-purchase the freehold?
  • What would the implications be if the club defaults on lease payments?
  • How would any cash injection from a sale and leaseback be invested?
  • What assets can the club secure loans against in the future?
  • If the club is planning to relocate, has it identified and secured a new site?
  • How successfully have other local clubs been in relocating?
  • Does the club have a strategic plan for long-term financial health?

3.2.3 Finding out information about your club and its ground

The Memorandum and Articles of Association of a company can be used to find out much; see section 3.2.1 for more details on the type of information that can be found.

The London Stock Exchange, Alternative Investment Market or PLUS, or the Soccer Investor website at http://www.soccerinvestor.com, can be used to find out if a club’s shares are traded on a share market.

Companies House Information

Supporters Direct Development Officers can access information about football clubs from Companies House, and check whether the club secretary is complying with Company Law by submitting the required documents. In particular, the Share Register, Annual Returns, Annual Accounts, the Memorandum and Articles of Association and the details on Director Appointments may be useful to Trusts. Please contact a Supporters Direct Development Officer if you would like any of this information. Information for Scottish companies is also handled by Companies House.

Understanding football club accounts

All Football League clubs are organised as Limited Companies.

Companies are required to file accounts annually with Companies House (http://www.companieshouse.org.uk). Additionally, a company is required to file a return at Companies House, each year, listing its directors and shareholders. A register of the company’s mortgages and charges is also maintained at Companies House.

Many Premiership clubs are listed companies and will publish a detailed annual report on their club’s finances. League clubs will generally file the minimum information required by law.

Typically the annual accounts will be organised as follows:

  • Chairman’s Statement
  • Directors Report
  • Auditors Report
  • Profit and Loss Report
  • Balance Sheet
  • Cash Flow Statement
  • Notes to the accounts

Chairman’s Statement

Although not mandatory, few chairmen pass up this opportunity to pontificate on the state of the game, the recent season and the season to come.

Directors’ Report

This is a statutory report, stating the directors’ responsibility for preparing accounts, and listing the directors and their interests in the club’s shares.

Auditors’ Report

Required for companies with a turnover in excess of £1 million. This report gives the auditors’ opinion on whether the accounts give a true and fair view of the company’s affairs. Look out for any qualifications of the auditors’ opinion, as this is a strong indicator of potential problems.

Profit and Loss Account

This is a summary of the club’s financial results for the period, with a comparative column for the prior period.

Operating Profit or Loss is the key indicator of stability. The operating profit or loss is a guide as to what to expect in future years without any transfer income and before interest costs. Profit on sale of fixed assets includes income from player transfers. Income from this source cannot be relied upon in future years.

Interest costs are also important for football clubs. In the current climate of low interest costs many clubs are able to borrow at around 6%. If borrowing rates start to rise to say 8% these costs can be expected to rise by 25%. Hence the importance of bringing down borrowings when players are sold or the club makes a profit.

Balance Sheet

The balance sheet is basically a statement of what the club owns and the amounts it owes.

Net Current Assets (Liabilities) is an important figure to the banks. If this is positive the club can expect to meet its immediate liabilities. If this is negative the club may have to rely on bank borrowings to meet its obligations in the coming year.

Net Assets (Liabilities) – A positive figure means the value of the club’s assets are greater than its debts. Negative equity is a sign of insolvency.

Cash Flow Statement

This report reconciles the profit or loss for the year with the amount in the bank, or against the overdraft.

Notes to the Accounts

The notes are probably of most interest to supporters and the following items are usually worth reviewing:

Operating Profit or Loss – This note includes the amount of directors’ remuneration.
Staff Costs – The principal expense for most clubs. A ratio of staff costs to turnover in excess of 70% is considered by many commentators to be an unsustainable level of expenditure.
Intangible Fixed Assets – The estimated value of the players’ contacts can be found here.
Tangible Fixed Assets – The original cost or current value of the ground or lease together with stands and other assets of a permanent nature are detailed in this note.
Creditors – Amounts due within one year. Loans from directors are often included in this category, together with the bank overdraft and other debts payable on demand. Deferred income within this heading usually refers to amounts received for season tickets, or TV income in respect of the next season.
Creditors – Amounts due after one year. Long-term debts, principally mortgages, are included here and followed by an analysis of debt maturity showing when the amounts are due for payment.
Share Capital – The number and type of shares in issue, at face value.
Related Party Transactions – Transactions with directors, their companies or other related parties.

Understanding Insolvency

What is insolvency?

A company or individual is said to be insolvent if they either do not have enough assets to cover their debts (i.e. the value of assets is less than the amount of the liabilities), or are unable to pay their debts as they fall due.

Options under insolvency / bankruptcy

Once a company or individual has become insolvent, there are several courses of action open under the Insolvency Act 1986:

Procedure What does it mean?
Administration (see below) Moratorium by creditors to allow company to restructure
Company Voluntary Arrangement (CVA) Voluntary Arrangement between the company and its creditors - supervised by an insolvency practitioner
Receivership Appointment of receiver under a charge or debenture to recover a creditor's funding (usually a bank)
Liquidation Winding up a company voluntarily or through the courts
Dissolution Dissolution of a company

Understanding Administration

Administration is a route of rescue when a company is insolvent (unable to pay debts owed). One of the main aims of the Insolvency Act 1986 is “the survival of the company and any part of its undertaking as a going concern”. This is to allow businesses to be rescued or at least allow a company to realise assets in a better way than liquidation (which is the final stage of insolvency, when all other routes are closed). Administration happens if a creditor(s) – someone owed money – is not willing to accept the terms of repayment offered by a business, and as a result they may petition the courts for a Winding up Order. The Insolvency Act says the creditor(s) will have to satisfy the court that the football club “is or is likely to become unable to pay its debts” and that an order “would be likely to achieve one or more of the purposes set out” (Insolvency Act 1986).

To obtain an order the creditors must have prepared an independent report on the company’s affairs as part of the application. It is unlikely that creditors will be allowed sufficient access to the company’s affairs to enable this to be carried out. Therefore, the directors are the ones who normally present the petition for an administration.

Administrators do not have to consult supporters, but a good idea is for supporters to form one body, whose spokesman can ask for an early meeting with the administrator and request details of his proposals (i.e., is it the intention to trade for a period and return the club to the existing ownership, or to sell the assets of the club?) An approach like this could be of assistance and could crystallise the administrator’s mind on the appropriate route. In fact s/he may be interested in disposing of the assets to a properly constituted group (a Supporters’ Trust for example) representing the supporters, provided they offer a realistic price based on his/her own valuation of the club.

It is important to remember, however, that the administrator can be faced with a lot of problems that the supporters may be unaware of, including dealing with the Football Association and the respective league, and possibly the Professional Football Association in respect of players’ wages and contracts.

Assuming that the administration objectives have been met, the administrator will apply for his release, and this should leave the club in whichever guise it emerges as a solvent entity able to trade on.

What can Supporters’ Trusts do?

Unfortunately, a lot of Trusts are born out of a response or reaction to financial crisis, such as insolvency or administration. However, this does tend to mean more members, more quickly. What it also means is that the club is in a position which means it is more inclined towards, indeed often reliant on, discussions and ideas from supporters’ groups. A Supporters’ Trust, if able to raise members and funds quickly, has a real opportunity to acquire or increase its stake in the club. Purchasing shares, offering a financial rescue package, negotiating with administrators and creditors, local businesses and local authorities – all of these options are available to a Trust. At clubs such as Bradford City and Leicester City, administration was the catalyst for increased dialogue between the club and the fans, via the Trusts, as the realisation for a need to rebuild new partnerships transpired.

Essentially, a Trust is constituted to act as any other consortium would – enlisting support from potential investors, asking for details regarding the accounts and liabilities, etc – but crucially, can act as a check on the administrator, whose task is to ensure the best possible solution for the club and its future.

Land Registry information

Supporters Direct can access a great deal of information about football clubs and the grounds on which they play on from the Land Registry. The service is free of charge to Trusts, so get in touch with your Supporters Direct Development Officer to find out more. Having detailed background information on whether and how your club owns the ground can put your Trust in a powerful position, helping you to become more informed and ready to take the initiative if the security of the ground is called into question at any time. Finding out who owns the land and the terms of that ownership status is very useful. It may be the land is ‘covenanted’ and can’t be used for housing – this means that the potential to develop the land for more profitable uses is much lower. It may also be that agreements on the land are filed with the Land Registry, and so you can see what the terms of the lease are.

Provided the ground is registered with the Land Registry’s index map, your Development Officer can obtain three vital pieces of information:

The Property Register describes the land and estate comprised in the title including the leasehold and/or freehold details; the official address; an A3 ordnance survey map of the land owned; any rights of way; and details on covenants.

The Proprietorship Register specifies the class of the title and owner’s details including the proprietor’s address and, if applicable, the company registration number; any valuation of land (and the date this was provided); and any restrictions on the disposal of the land.

The Charges Register details any mortgages, debentures and further charges on the land.

In Scotland the land register is managed by an Executive Agency of the Scottish Parliament called the Registers of Scotland (http://www.ros.gov.uk). This agency has the responsibility for the Register of Sasines, which covers land transactions back to 1617, and the Land Register, the modern equivalent. The map-based Land Register should cover all of Scotland by the end of 2003.

The information available is similar to that in England and Wales, although there appears to be more coverage and therefore less likelihood of information being unavailable. Ownership, covenants and charges are all available, with an online account-only system giving easier access.

3.2.4 The officers of a company: directors, secretaries and the board

Football club shareholders should check that the club is being run in an open and transparent way, and in the interests of shareholders. A starting point is to ensure that the club has the right number of officers; that their appointment and/or election complies with company law (and in the case of PLCs listed on the London Stock Exchange, the Combined Code of Corporate Governance); that there are no conflicts of interest; and that the company has appointed a Company Secretary.

Private companies are required by law to have at least one director and one company secretary. Although it is not a legal requirement for the directors of private companies to be elected or to submit themselves for re-election at regular intervals, it is good practice and most companies submit directors for election every three years.

Public limited companies are required to have at least two directors and one company secretary. PLCs listed on the London Stock Exchange are required by the Combined Code of Corporate Governance to have a formal and transparent mechanism for the appointment of new directors to the board, and to submit directors for re-election every three years. Shareholders are entitled to see copies of the service contracts of directors, and their terms of employment.

Types of directors

There are different types of directors:

Executive: a member of a company’s board of directors who is also an employee of the company.

Non-executive: a director who is not employed by the company.

Independent non-executive: a non-executive director who is independent from the company and from other directors. For a non-executive director to be independent they must meet certain criteria, including not being affiliated with the company in any other capacity, and not having had an association with the company for more than 9 years.

Senior independent non-executive: the Combined Code of Corporate Governance requires that a senior independent non-executive director other than the chairman be identified to allow shareholders to raise issues in the event that they prefer not to do so with the chairman.

Associate or Divisional: technically, these are not statutory directors but senior employees who have been given this title for management and/or other operational purposes. The basis upon which directors are appointed is dealt with primarily by the Articles of Association. Ordinarily, directors are elected by shareholders by a simple majority or appointed by the existing board (but subject to re-election at the next AGM). Other than the basic restrictions set out below, anyone can be a director. For instance, unless otherwise stated in the company’s Articles of Association or in a shareholders’ agreement, there is no level of share ownership that automatically guarantees membership of the board. Minority shareholders/investors frequently require the right to have a director as a condition for their investment and such rights could be set out in the Articles or in a shareholders’ agreement, but by default there is no legal requirement for directorial shareholding.

Restrictions that prevent someone becoming a director include:

  • A person must not have been disqualified by a court from acting as a company director (courts may give special permission for some directors to continue to operate)
  • The person must not be an undischarged bankrupt
  • For a PLC listed on the stock exchange, a person must not be over the age of 70 unless specifically approved by a general meeting of the company.

Please note that the term ‘Associate Director’ is sometimes also used to describe a person who has been appointed on an honorary, non-voting basis as a way of acknowledging past services or financial contributions. It is not a ‘real’ directorship of the company, but is sometimes offered to a supporters’ club or Trust representative. (See 2.7.4 above).

To be a real director of any company, with the full rights and responsibilities of the post, a Form 288a must have been completed, signed and sent in to Companies House. If Trusts are in any doubt as to whether their representative is a ‘real’ director, this is the acid test. This can be checked with Companies House by your Supporters Direct Development Officer.

Responsibilities of directors

The directors of a company are collectively responsible for running the company and complying with all relevant aspects of company law, including preparing and submitting audited accounts, holding AGMs and so on. Directors are also under obligation to act in good faith, to avoid conflicts of interest, and to disclose all interests in the company, for example, interests in contracts.

The company secretary

The company secretary (CS) is an officer of the company charged with the task of maintaining company records and providing copies to shareholders who request them. Supporters should approach the CS if they require information about the club.