Ewan Hall of Wright, Johnston & Mackenzie LLP, spoke at the recent consultation event on the proposed restructuring of the club and since that event, Ewan has compiled a summary of the key provisions in the new Articles of Association in order to further assist the debate.
An additional consultation meeting has been agreed for 7.30pm, Thursday 15th July at Broadwood Stadium.
This meeting is specifically for Trust members and shareholders of Clyde FC. Both Trust members and shareholders will have specific opportunities on the evening to give their opinion on the recently circulated draft articles, put forward their views on the change and discuss with representatives from each Board the impact of any proposed change as it relates to their current membership and/or shareholding.
The proposed new Articles of Association constitute a relatively large document – adding up to 40 pages and 76 Articles.
The reason for this level of detail is because the Articles of Association set out the rules for how almost every aspect of the club should function.
We recommend that you do read the full set of Articles, but to help orientate you around some of the provisions, we summarise below some of the key changes.
• Click here to download the document (Microsoft Word, 171kb).
Article 1 – Defined terms
This section sets out all the definitions used in the Articles. Where the meaning of a word or term is not clear, you may find that the explanation is here.
Article 4 – Objects
This is a statement of the club’s objects. It sets out the overriding objects and principles that must guide the club going forwards.
As you will see, the primary object is to promote the company as a successful football club for the benefit of the community in the area (west central Scotland).
As a Community Interest Company, the club will need to submit an annual return to the CIC regulator explaining each year how it has met these objects.
Article 6 – Asset lock and transfer of heritable property
As a Community Interest Company, the club is prohibited from disposing of any of its assets for anything less than market value (unless transferring assets to another asset locked company).
In the event that the club is ever wound up, its assets are not distributed to its shareholders – they must be transferred to another asset locked company.
If the club ever owns any land, it may not dispose of that land without the prior approval of a special resolution of the members (which requires a 75% majority to vote in favour).
Article 7 – Not for a profit
As a Community Interest Company, the club is not to be run for private gain; any profits or assets must be used principally for the benefit of the community.
Profits or surplus assets cannot be distributed to members via dividends or similar distributions.
Article 25 – Methods of appointing directors
The directors are appointed by the shareholders to look after the day-to-day running of the club.
Directors shall serve for terms of up to three years. At the end of his term, a director can step down or stand for re-election. Additional directors can be elected at annual general meetings. A director is elected if more than half the members attending the relevant meeting vote in his or her favour.
Note that all directors must also be shareholders.
Article 26 – Suspension and termination of directors’ appointment
Note in particular that the members can remove a director by an ordinary resolution (which requires a simple majority vote), provided that they follow certain procedures (e.g. the director must be given an opportunity to make his or her case to the shareholders).
Article 35 – Classes of shares
It is proposed that the club has two classes of shares: Member Shares and Founder Shares.
Member Shares are the voting shares. No member can hold more than one Member Share. Each Member Share entitles a member to vote on shareholder matters. To maintain their voting rights, a member must pay an annual subscription set by the board each year (as detailed in Article 37).
Founder Shares do not carry any voting rights and represent the pre-existing shares of the club issued over the years.
This will move the club to a one member one vote structure – no one person will have more votes than anyone else, even if they hold more shares (although members can still grant proxies which could allow a members to cast additional votes on behalf of their fellow shareholders).
Article 49 – Dividends and other distributions
The club may not pay dividends to shareholders.
Article 66 – Directions
The members / shareholders can give Directions to the board if there is a two thirds majority shareholder vote in favour of the Direction. These are binding instructions that the board must comply with.