Rangers & the Incubator – Part 3 – What Have Newco, SPL and SFA To Do?

 

The processes and procedures by which Rangers FC Acquisitions Ltd take over Rangers’ assets and put out a team at Perth on Sunday (which seems to be the plan) is fraught with complication.

The SPL Articles of Association and the SPL Rules need to be consulted, along with the SFA Handbook, Articles and Rules.

Bearing in mind the SPL chairmen are meeting today, indeed as I type, I thought I would see if there is a quick way to look at the issue.

I think, and my analysis is detailed below, that even if the SPL chairmen today consider the matter, they cannot admit newco Rangers, as right now it does not own a football club. In addition, newco does not satisfy the membership criteria for the SPL as regards Financial Disclosure Requirements. It is too late to apply, although that time limit can be excused.

The Rules clearly do not envisage a newco arising from scratch. The rules do not make adequate provision for this happening. If the Rules are changed to permit newco in, these rule changes need to be approved by the SFA before coming into effect.

So what newco needs is (a) approval in principle from the SPL to his deal (because Mr Miller won’t hand over the cash otherwise) (b) approval at the point of the sale of the Share Transfer (c) an alteration to the Articles of Association and Rules of the SPL and (d) approval of such a change by the SFA.

I am rather doubtful about the prospect of this all being done by Friday!

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On 15^th August 2011 a letter was sent out by the Secretary of the SPL to all members and potential members of the Scottish Premier League. It can be found here – SPL Membership Letter dated 15th August 2011

It contained a copy of the SPL Rules as they stood at that time, and deals with “Membership of and Promotion to the League (the SPL) for Season 2012/2013”.

It continues:-

“Membership Criteria

 The Membership Criteria of the League and related Rules are to be found in Sections A and H of the Rules. Your attention is drawn, in particular, to Rules A1.1 to A2.9 (inclusive) and Rules H6.1 to H6.7 (inclusive). There are additional requirements in relation to stadia elsewhere in the Rules. In addition there are requirements in Section B which must be complied with as a condition of being permitted to Play in the League.

 

For full details of the criteria, arrangements and requirements reference should be made to the Rules.

 

Set out below is a summary of the principal provisions of the Rules as they relate to, Membership of the League, promotion to and relegation from the League, Ground Registration, stadia requirements, pitch condition and protection and Artificial Pitch requirements.”

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As I want to keep this simple (hah, I hear you say) I will only refer to the directly relevant sections of the letter.

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Rule A2.1; the 12 Clubs eligible to participate in the League in any Season shall be the 11 Clubs which comprised the first 11 places in the League in the preceding Season …

 

If a Club, in the opinion of the Board, fails or would fail to fully comply with the Membership Criteria if it participates or were to participate in the League in any Season and no waiver etc is granted by the Board, then that Club is liable to such sanction or action as may be decided on at a General Meeting of the Company. This is provided for in Rule A2.4.

 

Rule A2.5; the Membership Criteria of the League are:-

 

Ÿ membership of the SFA;

 

Ÿ a Club participating in the League must either own its Registered Ground, whether by itself or through a holding or subsidiary company, or have such rights of occupation or tenure in its Registered Ground as may be approved by the Board;

 

Ÿ all Clubs and the Candidate Club must comply and have complied with the Financial Disclosure Requirements.

 

The Financial Disclosure Requirements are set out at Appendix 3 to the Rules.

 

In effect, the Financial Disclosure Requirements are that Clubs and the Candidate Club must by the dates set out in the Scottish Football Association National Club Licensing Manual provide to the Company the information required by the Criteria listed in section 7 and all of the relevant Criteria in section 8 of the manual. There are additional requirements for information as set out in Appendix 3. The date by which this material will require to be provided to the Company in any year is 31 March.

 

Depending on the content of the material provided to the Company, and the assessment undertaken, certain further material may be required as set out in section 8 of the National Club Licensing Manual.

 

The Rules require compliance with the Membership Criteria by 31 March preceding any Season.

 

Rule A2.7; the Board may, in its absolute discretion, waive, relax or grant a period of grace in respect of any Club’s … requirement to comply with any part of the Membership Criteria and/or the time limit for applications for approval, waiver, relaxation or period of grace etc. and/or for Registration of a ground with the League.

 

 

Key Dates

31 March 2012 – the date by which the Financial Disclosure Requirements must be complied with.

 

NB for SFL clubs this is one month earlier than the date for compliance with relevant SFA National Club Licensing Requirements by SFL clubs.

 

31 March 2012 – the last date for making an application for a waiver, relaxation or period of grace in relation to all or any part of the Membership Criteria for Season 2012/2013.

 

Any of the above applications and Registration must be made/notified to me in writing not later than the relevant specified date.

 

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So what does all this mean?

 

The first issue relates to what is a “Club” as it is “clubs” which are eligible to play in the SPL.

 

The SPL Articles define a club as “the undertaking of an association football club which is, for the time being, entitled, in accordance with the Rules, to participate in the League”.

 

The SFA Articles define a club as “means a football club playing Association Football in accordance with the provisions of Article 6”.

 

SFA Article 6.1 states that clubs can be admitted as registered members, associate members or full members.

 

SFA Article 6.2 states that a club shall be admitted as a registered member if admitted as a member of a league, such as the SPL.

 

SFA Article 6.3 provides that a club seeking full membership must first be an associate member. It cannot be admitted as an associate member unless it fulfils the membership criteria.

 

SFA Article 6.4 states that the Board of the SFA decides on associate membership.

 

SFA Article 6.6 states that a club, after 5 years as an associate member, can apply to become a full member.

 

 

Does this assist? Is “Rangers” the “club”, even if ownership passes to another company?

 

The SFA Articles do not make that clear. However, the SPL Articles do, I think.

 

SPL Article 6 states:-

 

“A Share may only be issued, allotted, transferred to or held by a person who is the owner and operator of a Club and if a Member shall cease to be the owner and operator of a Club then such Member shall cease to be entitled to hold a Share.”

 

If Rangers FC Acquisitions Ltd is to take over all the assets of Rangers Football Club PLC, then that includes ownership of the SPL share.

 

Therefore the “person”, which includes a company, holding the share for newco must be Rangers FC Acquisitions Ltd.

 

Has Rangers FC Acquisitions Ltd applied for membership of the SFA? If it is admitted to the SPL, then it will be a registered member of the SFA, but either a full nor an associate member.

 

Having established therefore that the Club is linked to the SPL share, as far as the SPL is concerned, what must a Club do, under the SPL Membership Criteria, to be eligible?

 

From above therefore:-

 

Ÿ membership of the SFA;

 

Ÿ a Club participating in the League must either own its Registered Ground, whether by itself or through a holding or subsidiary company, or have such rights of occupation or tenure in its Registered Ground as may be approved by the Board;

 

Ÿ all Clubs and the Candidate Club must comply and have complied with the Financial Disclosure Requirements.

 

So, to be a member of the SPL, one needs first of all to be a member of the SFA. Being admitted to membership of the SPL confers SFA membership. But what comes first, the chicken or the egg?

 

Rangers FC Acquisitions Ltd is a member of neither just now. The SFA would need to approve an application for membership prior to SPL entry, although the relationship of the rules of ach company is unclear.

 

To play as Rangers FC Acquisitions Ltd, that company would need either (a) to own Ibrox or (b) to have a suitable lease agreement with Rangers Football Club PLC. Even though no games are left at Ibrox this season, the club still needs a ground registered to it.

 

Has Rangers FC Acquisitions Ltd complied with the Financial Disclosure Requirements? No, as it was formed on Friday.

 

The Disclosure Requirements have to be fulfilled by 31 March 2012 for the coming season. That is also the last date for a club to apply for a waiver or extension.

 

For information what must be provided is proof and details of the following:-

 

Club Statutes

Security of Ground Tenure

Club Administration

Finance Manager

Safety Officer

Media Officer

Employer Liability Insurance

Public Liability Insurance

Product Liability Insurance

Personal Accident Insurance

Annual Financial Statements

Financial Information.

 

Rangers FC Acquisitions Ltd therefore cannot have provided the historical data, and indeed, with no mention of intended executives, no proof of the position regarding officials.

 

There is a catch all clause which allows the SPL Board to allow applications late and also applications for waivers late, in Rule A2.7. It is therefore that from which Rangers FC Acquisitions Ltd will seek aid, otherwise Rangers FC Acquisitions Ltd cannot become a member, even ignoring share technicalities.

 

 

As far as the Share Transfer goes, the following rules in the Articles apply.

 

11. Except where such transfer is occasioned by the promotion of an association football club from and relegation of a Club to the SFL the consent of the Board shall be required before the transfer of any Share shall be registered.

 

13. The Board shall refuse to register the transfer of a Share:-

(i) to a person who is not the owner and operator of a Club;

(ii) unless the instrument of transfer is lodged at the Office or at such other place as the Board may appoint and is accompanied by the certificate for the Share to which it relates;

(iii) except where the transfer arises on promotion of an association football club from and relegation of a Club to the SFL, the consent of the Board has not been given to the transfer;

(iv) if the transferor and/or transferee shall fail to provide such evidence as the Board may require to show the respective rights of the transferor to make the transfer and the transferee to become a Member;

(v) if the instrument of such transfer is in respect of more than one Share; or

(vi) if the transferee or an Associate of the transferee shall own or have an interest in any other Share.

 

14. If:-

(i) a Member shall cease to be entitled to hold a Share; or

(ii) a trustee in sequestration, manager, receiver or administrative receiver shall be appointed in respect of a Member or any property of a Member, or an administration order shall be made in respect of a Member or any property of a Member or an order shall be made or an effective resolution passed for the winding up of a Member otherwise than for the purpose of reconstruction or amalgamation;

then that Member or its manager, receiver, administrative receiver, administrator or liquidator or any other person entitled to the Share shall, on receiving notice in writing from the Board following the Company in General Meeting passing a Qualified Resolution that such notice should be issued by the Board and confirming the identity of the proposed transferee, transfer its Share to such other person as the Board shall direct at the price of £1 and the Club owned and operated by such Member shall forthwith cease to be a member of the League and the Club owned and operated by the transferee shall become a member of the League in its place.

 

15. Notwithstanding the terms of Article 14, the Board shall be entitled, at any time following the final League fixture in any Season, to require a Member to transfer its Share, at a price of £1, upon the Club owned and operated by that Member ceasing to be entitled to participate in the League as a result of its relegation from the League and as and from the date of such request such Member shall have no rights in relation to such Share save in relation to Articles 94 and 95 hereof and shall cease to be entitled to be and remain the holder of such Share.

 

16. The transfer by a Member of a Share shall not prejudice any entitlement to receive any sum from the Company in accordance with the Rules.

 

17. Whenever a requirement to transfer a Share shall arise, if the relevant Member shall fail to transfer its Share within seven (7) days of notice having been given of the requirement to transfer, the Board may authorise any Director of the Company to execute a transfer thereof and a transfer so executed shall be valid and effective as if the same had been executed by the Member concerned and the transferee shall on payment of the sum of £1 to the Secretary to be held in trust for the transferee be entered in the register of Members as the holder of such Share.

 

 

Under Article 11, the SPL Board must provide its consent to a Share Transfer, or else it cannot proceed.

 

Under Article 13 (1) the Board SHALL refuse to transfer the share to a person who is not the owner and operator of a Club. Therefore Rangers FC Acquisitions Ltd needs to own a club first, and to own a club they require to be compliant with the membership criteria.

 

Under Article 14 the share of an SPL club in administration must be transferred following a Qualified Resolution passed at a General Meeting of the SPL. A qualified resolution requires a 90% vote in favour. This makes the transferee a member of the SPL, but of necessity it must satisfy eligibility criteria.

 

So, as with any private limited company, the Board must consent to a transfer of a share. The share can only be transferred to a “person” who is the owner and operator of a football club. A General Meeting of the SPL can order the transfer of the share, at a cost of £1, from Rangers Football Club PLC to Rangers FC Acquisitions Ltd. But

 

But again we come back to the issue that Rangers FC Acquisitions Ltd is not, until the purchase is completed, the owner or operator of a football club.

 

So, to conclude, at least for now, it seems to me that, if the SPL clubs want to approve Rangers FC Acquisitions Ltd taking over oldco this week, they will have to change their rules.

 

Whilst they can, at the Board’s discretion, waive membership criteria and time limits, this will not amend Article 13. As the SPL Rules require any change thereto to be approved by the SFA, then it becomes ever harder to see how all of this can be done by Friday this week!

Posted by Paul McConville

To follow –

Part 4 – What, if anytihng, does this mean for the “history”?