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Trust Shares: The Ugly Truth


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This is what Leeslover and I have found out about the trust shares. The man who's looked into it for us is a massively qualified company finance consultant, but as I'm posting it, any errors can be attributed to me.

 

*****

 

The original company – Oldham Athletic Supporters Foundation Ltd – was incorporated in July 2003 Co.no. 04836301.

 

According to the accounts it filed for the year to 31.07.2004, it raised £247k, of which it then lent £200k to Oldham Athletic (2004) Association Football Club Ltd (Co. no. 04989487 (’the Club’)) on the basis that this would be exchanged in due course for a 3% shareholding and a right to a seat on the board. Almost surprisingly, this looks like it might actually have been executed correctly. The Articles of the Club look as if they were amended properly (via special resolution in lieu of an AGM) to create ‘B Shares’ for this purpose, and that class is indeed given the ability to appoint (and remove) a Director. The shares were issued for a nominal £1 each and look as if they’re accounted for correctly I.e. As £3 of issued capital and £199,997 of share premium. (It sounds daft, but its a non-distributable reserve – the other shareholders can’t pay it to themselves as dividends).

 

What’s then happened is that this original company has been converted to an Industrial & Provident Society under the 1965 Act. This isn’t quite the same as being ‘FSA regulated’. Its more that FSA stood (by virtue of the 2001 Act) in the place of the Registrar of Friendly societies (as it used to be). Whilst it then carried on under the same name, it was ‘Limited’ by virtue of s.3 of the Industrial & Provident Society Act (with no. 29820 R), NOT as a limited company under the Companies Act. What then happened is mildly comical. You can see it here in the Notice in the London Gazette for 23 August 2012. The FSA struck them off the register for not filing returns (basically accounts) for 7 years from 2005.

 

The Gazette states:

 

"Oldham Athletic Supporters Foundation Limited (Register No. 29820 R) the registered office of which is at 16a Chester Street, Werneth OLDHAM OL9 7BD. The grounds of the cancellation are that the society has wilfully violated section 39 of the Industrial and Provident Societies Act 1965 by not submitting to the Financial Services Authority any annual returns acceptable for filing since that submitted for the society’s financial year ending 31 December 2005."

 

 

The effect of this striking off is not the same as with a LtdCo. A LtdCo is dissolved at this point, and its property reverts to the Crown (‘bona vacantia’). With an IPS, the effect of the striking off is that loses its own legal personality and limited liability, but otherwise reverts to an unincorporated association. This is why its rather important to understand who the members were at the time of dissolution: the assets of the society will vest in its members and, in so far as they are physically controlled by the old officers of the Society, will still be held on trust for the members. That they’ve now incorporated co.no. 08860767 with the same name as the old company doesn’t alter that, nor by itself cause the 3% shareholding to somehow transfer. The new company is a new legal person. Looking at the Annual Returns of the Club, the shares have always been registered to the old company/IPS with no transfer showing: even though it has the same name, being a new legal person would require the old owners to somehow transfer the shares to the new owners (and according to the Club's Articles of Association, that needs a resolution of the Club’s Directors to consent).

 

 

I’m waiting for the FCA to send me the rules of the original company/Society which might be informative.

 

*****

 

That's the situation as we see it. The current trust owns no shares. They're in the wind. They're probably owned by the members of the trust at the time when the IPS was disolved.

 

We've been told the Trust isn't going down the Supporters Direct route. In fact, Supporters Direct won't have anything to do with the new Trustco because, to all intents and purposes, it isn't a supporters trust. I have no idea what it is, but calling it a supporters trust is somewhat off the mark.

 

Not filing accounts for seven years? Really? What was all that crap about "due diligence", Barry?

 

I heard at the time of the change of status that it was an administrative nicety. In fact, it was a crude attempt to disguise farcical mismanagement.

 

In my view, Barry used the Trust to get a seat on the board and then basically abandoned it. That tale of woe up there just shows he was the wrong man for the job for more reasons than being an incorrigable gob:censored:e.

 

I've no idea where we go from here.

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This may be way over my head, but, does this mean that there is no actual seat on the board for the supporters trust, because as it stands the supporters trust doesn't own any shares?

 

The IPS owns the shares, although what that means in practice is anyone's guess. The current trustco does not own the shares. Whether that means it isn't entitled to a seat on the board is another question. It's up to Corney really.

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This may be way over my head, but, does this mean that there is no actual seat on the board for the supporters trust, because as it stands the supporters trust doesn't own any shares?

There are 3 shares - somewhere which carry the right to a place on the Board. The current organisation doesn't own them.
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I had no idea, until reading your recent posts, that the Trust had been dissolved and then continued under a new registration.

 

In light of that, I couldn't see how the new company could hold the shares in the club but well done on getting the confirmation and detail above.

 

I think the Trust members may need to apply to the Courts to have the shares transferred to the Trust company, as the new trustee.

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There are 3 shares - somewhere which carry the right to a place on the Board. The current organisation doesn't own them.

At least this explains why Barry did :censored: all for the trust as a director, his hands were tied all along. Mind you it looks like he tied them himself..

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I had no idea, until reading your recent posts, that the Trust had been dissolved and then continued under a new registration.

 

In light of that, I couldn't see how the new company could hold the shares in the club but well done on getting the confirmation and detail above.

 

I think the Trust members may need to apply to the Courts to have the shares transferred to the Trust company, as the new trustee.

 

Possibly. I'm down the rabbit hole with this stuff already, but my understanding is that, because the ownership of the shares is so vague, there's no longer any suitable body to which to apply to transfer ownership. I'm willing to bet the old trust administration does not even have a kosher list of members at that time. (If they couldn't be arsed to file accounts, what hope is there that they fulfilled less basic tasks?)

 

Corney probably can't sell the club without resolving that issue. He can sell 97% of it on the understanding that the other 3% is owned by :censored:-knows-who, but who's buying in that situation?

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Dear all, this was raised the other night to the committee members and clarification is being sought by the commitee with it's legal representation.

 

Thanks to 24 and Leeslover for their research.

 

Myself, Chris and lookers have asked for clarification/update by the next trust meeting.

 

Thanks everyone and we will let you know

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... I'm willing to bet the old trust administration does not even have a kosher list of members at that time....

Some people were made Honorary Lifelong Members (HLMs) of the Trust, because they had paid monthly the annual membership fee, thereby being many years in credit. Even if there is no list of members, those HLMs will have membership cards to prove their status.

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Dear all

 

This was raised to the committee members by Chris, myself and Lookers.

 

The committee are seeking legal clarity and we hope to get an answer by the next trust meeting if not sooner.

 

thanks to 24 and Leeslover for their research and raising the query

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Some people were made Honorary Lifelong Members (HLMs) of the Trust, because they had paid monthly the annual membership fee, thereby being many years in credit. Even if there is no list of members, those HLMs will have membership cards to prove their status.

 

What if it's not possible to transfer shares from a dead entity to a live one? There's no point having a roll call of members if it's not possible to transfer the shares in any case.

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If £247,000 was raised and £200,000 lent to the club, then where did the £47,000 go? If the £200,000 was lent by 'The Oldham Athletic Supporters Foundation Ltd.' and that trust no longer exists, where is the £200,000 to be repaid to? Will this loan be repaid if the club is taken over by an owner who doesn't want a trust member on the board?

All this seems very dodgy and could end up in court, so who is responsible for paying for legal representation to get this sorted out?

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What if it's not possible to transfer shares from a dead entity to a live one? There's no point having a roll call of members if it's not possible to transfer the shares in any case.

The previous Trust entity should have been holding the shares on trust for the Trust members, who should be the beneficial owners of those shares. I say 'should' because I am not confident this will all have been executed correctly given what has transpired. The beneficial owners (if they can be identified) should be able to apply for the shares to be transferred to a new Trustee.

 

I think.

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Possibly. I'm down the rabbit hole with this stuff already, but my understanding is that, because the ownership of the shares is so vague, there's no longer any suitable body to which to apply to transfer ownership. I'm willing to bet the old trust administration does not even have a kosher list of members at that time. (If they couldn't be arsed to file accounts, what hope is there that they fulfilled less basic tasks?)

 

Corney probably can't sell the club without resolving that issue. He can sell 97% of it on the understanding that the other 3% is owned by :censored:-knows-who, but who's buying in that situation?

 

If someone bought the 97% of shares them they woudlbe able to compulsorily purchase the balance. If no-one came forward as the owner then the amount outstanding (i.e the square root of diddly squat) woud remian as a liability for the new owner which coudl be claimed at any time should any person or body be able to demonstrate that they were the rightful owner at the time of the compulsory purchase - but they would no longer be shares.

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If £247,000 was raised and £200,000 lent to the club, then where did the £47,000 go? If the £200,000 was lent by 'The Oldham Athletic Supporters Foundation Ltd.' and that trust no longer exists, where is the £200,000 to be repaid to? Will this loan be repaid if the club is taken over by an owner who doesn't want a trust member on the board?

All this seems very dodgy and could end up in court, so who is responsible for paying for legal representation to get this sorted out?

It was only loaned up to the point at which the sale of the shares for that sum was completed, is my understanding. It's the club's money now.

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If £247,000 was raised and £200,000 lent to the club, then where did the £47,000 go? If the £200,000 was lent by 'The Oldham Athletic Supporters Foundation Ltd.' and that trust no longer exists, where is the £200,000 to be repaid to? Will this loan be repaid if the club is taken over by an owner who doesn't want a trust member on the board?

All this seems very dodgy and could end up in court, so who is responsible for paying for legal representation to get this sorted out?

It wasn't a loan.

 

The other £47,000 (ish) was 'injected' into the club over the years, by way of the purchase of equipment for the groundstaff and many other things.

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