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The Purpose of the Trust 15:49 - Apr 12 with 5920 viewslondonlisa2001

With apologies for starting yet another thread, but this doesn't really fit anywhere.

The time is surely right for asking 'what is the purpose of the Trust'?

Because I'm not sure I think it was ever 'to own shares in Swansea City FC' but believe instead it is 'to ensure the permanent existence of Swansea City FC' .

The distinction is in many ways an important one as it determines the available options in the current situation.

The discussions are being terribly distorted at the moment by the constant banging on about 25%. Well some actual facts. The ownership by the Trust of 25% of shares (or actually voting rights) does NOT stop the club from issuing more shares irrespective of what certain posters keep saying. In order to issue shares in a company, the company needs 50% plus 1 to agree to it (an ordinary resolution). The Trust is certainly not in a position to get to 50% plus 1 of the club. If the club gets an ordinary resolution of shareholders to issue shares it can do so. However, the articles of the club (and possibly the shareholders agreement reiterates this) means that when the club issues these new shares, all shareholders are entitled to take up their proportion of the new shares issued to retain their relative ownership %. So if new owners wanted to inject £20m into the club, the Trust would be entitled to buy shares for £4.2m to remain at 21%. This is called pre emption rights and means that the Trust would not be diluted.

In order to issue shares without pre emption rights, the club needs a special resolution, which is 75% plus 1 to vote in favour of it. At that point, the Trust would not have the ability to buy new shares issued and would be diluted.

In many ways though, this is moot, as the Trust wouldn't have the money to take up its rights anyway, so can't maintain its share irrespective of the shareholding it has at this point.

The ONLY change to this is if the shareholders agreement states something different ( eg that shareholders cannot be diluted in this way) which is probably not the case. So the Trust could never stop shares being issued even if it had 25%, it could only ensure they had the right to buy whenever they were issued.

There are certain other decisions which also require a special resolution - these include altering the articles of the club, reducing share capital and also anything else that is specifically stated either in the articles or a shareholders agreement (there may be certain things mentioned that require this that we are not aware of).

It is obviously the case that the new owners want the ability to pass special resolutions, so they are either concerned to make sure that the Trust cannot raise money and retain its percentage shareholding, or there is something else which is specified that they want to control (could be anything - unless we saw the articles or SA we can't guess what it may be).
In general though, new owners will want 75% as it gives them the ability to do anything they want.

So if it's accepted that the Trust will not be allowed to own enough to get to 25% with these potential owners, there are only a few things they can do.

They can hold onto shares as is, with a minority say and an acceptance that they could be outvoted on everything.

They can sell the shares and bank the money.

They can attempt as I mentioned on Sunday, to find different purchasers who may be more prepared to work alongside them.

This is where the question of what the Trust is for comes in. The Trust need to decide whether it may be better to cash out and retain the money for a rainy day or whether to stay in with these or others.

Some comments have been made that they can't cash out as no offer has been made for their shares. Well firstly, the shareholders agreement may give certain rights to insist on a sale at the same value as the others. It is rare that a minority shareholder can be left hanging in this way. However, even if the shareholders agreement is silent, there are certain actions that can be taken. One is an acknowledgement that there are minority protections in place - a minority shareholder cannot be diluted down to a reduced value of the shareholding - if the Trust were diluted and left with worthless shares, they could take action against the new owners to force a purchase of their shares at the proper value (I.e. £21m assuming £100m valuation now). But there are also provisions for a situation called a 'quasi partnership' which may well apply here. It covers a situation where people have entered into a business relationship with the intention of a partnership, collaborative business decisions, no one having control etc etc. but using a limited company to do it. Given the provisions that we understand of no one being able to get to more than 25% and so on at present, there may be a good chance of the court ruling that this past 10 years or so has been a quasi partnership. If that is the case, the Trust can force purchase of their shares at value.

If the Trust want to remain, then either these owners or others is the next question. It is perfectly possible that the Trust could find others who are willing to be more collaborative. We know there is other interest in the club - those people from last year for starters - they didn't buy Everton - are they still interested? There have also been rumours about Terry Matthews - has he been spoken to?
If there are no other more pleasant options, then it comes down to in or out with these people.

There are some benefits of staying in, but if the Trust just has a director who is ignored and a vote which is worthless, then all that really exists is that the Trust have invested £21m (by not cashing it in) in U.S. Investors that don't value them.

As a final unrelated point - the new Trust statement says that the books have been made available to the new people and yet the supporters director didn't know. How many directors are required for a board decision on that and why was the board decision not minuted and made available to all board members?
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The Purpose of the Trust on 15:56 - Apr 12 with 4245 viewsmonmouth

Yes, that's been playing on my mind too.

Poll: TRUST MEMBERS: What DID you vote in the, um, vote

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The Purpose of the Trust on 16:11 - Apr 12 with 4194 viewsUxbridge

The Purpose of the Trust on 15:56 - Apr 12 by monmouth

Yes, that's been playing on my mind too.


Heh.

This is much more in Jacko's territory plus, well, I do have a job I should pay lip service to but my understanding is that a lot of this depends on the Articles and the SHA.

I think you're wrong on the aims of the Trust though. A stake was a founding principle. Maintaining a professional football club in Swansea was also another.

As for the last point, I think a whole lot of questions need to be asked asto how the SD could simply be bypassed. The conduct of certain people leaves a lot to be desired.

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The Purpose of the Trust on 16:48 - Apr 12 with 4124 viewslondonlisa2001

The Purpose of the Trust on 16:11 - Apr 12 by Uxbridge

Heh.

This is much more in Jacko's territory plus, well, I do have a job I should pay lip service to but my understanding is that a lot of this depends on the Articles and the SHA.

I think you're wrong on the aims of the Trust though. A stake was a founding principle. Maintaining a professional football club in Swansea was also another.

As for the last point, I think a whole lot of questions need to be asked asto how the SD could simply be bypassed. The conduct of certain people leaves a lot to be desired.


I understand that both were founding principles but one has to be a sub set of the other.

The ultimate aim has to be to retain the club. The thought at the time was the part ownership served that aim but if they become separated, maintaining the club has to be paramount rather than owning shares. If the best way to do the former is to ignore the latter that has to be considered surely.

My question on the last bit is not to do with whether behaviour is unacceptable or leaves a lot to be desired - it is to do with whether it was legal. The time for asking questions is over - if it's gloves off, then it goes further than that and I'm asking was it legal - in most cases in my experience it would not be. You're not on the same side any more. Shareholders can have private conversations about selling shares but the second the books of the company are made available they can't do what they want without the board knowing. It changes everything if the books were opened up without permissions that were required under company law.
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The Purpose of the Trust on 17:10 - Apr 12 with 4087 viewsmonmouth

The Purpose of the Trust on 16:48 - Apr 12 by londonlisa2001

I understand that both were founding principles but one has to be a sub set of the other.

The ultimate aim has to be to retain the club. The thought at the time was the part ownership served that aim but if they become separated, maintaining the club has to be paramount rather than owning shares. If the best way to do the former is to ignore the latter that has to be considered surely.

My question on the last bit is not to do with whether behaviour is unacceptable or leaves a lot to be desired - it is to do with whether it was legal. The time for asking questions is over - if it's gloves off, then it goes further than that and I'm asking was it legal - in most cases in my experience it would not be. You're not on the same side any more. Shareholders can have private conversations about selling shares but the second the books of the company are made available they can't do what they want without the board knowing. It changes everything if the books were opened up without permissions that were required under company law.


Plus, as you say, if memory serves right, the minority interest protections were designed to stop exactly this sort of stitch up by majority collusion.

I agree about the gloves being off too. In the heat of Saturday, I said it was a declaration of war. I haven't changed that view. Until proved otherwise (and if it is then fantastic) everyone's ingoing hypothesis should be that both buyer and seller are simply using the club for their own ends. Everything that was fought for in 2001 is up for grabs here. No benefit of the doubt allowed...total scepticism.
[Post edited 12 Apr 2016 17:16]

Poll: TRUST MEMBERS: What DID you vote in the, um, vote

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The Purpose of the Trust on 17:14 - Apr 12 with 4063 viewsDafyddHuw

Can any Trust official tell us if a lawyer's been hired to look into the shenanigans thus far?
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The Purpose of the Trust on 17:19 - Apr 12 with 4050 viewslondonlisa2001

The Purpose of the Trust on 17:10 - Apr 12 by monmouth

Plus, as you say, if memory serves right, the minority interest protections were designed to stop exactly this sort of stitch up by majority collusion.

I agree about the gloves being off too. In the heat of Saturday, I said it was a declaration of war. I haven't changed that view. Until proved otherwise (and if it is then fantastic) everyone's ingoing hypothesis should be that both buyer and seller are simply using the club for their own ends. Everything that was fought for in 2001 is up for grabs here. No benefit of the doubt allowed...total scepticism.
[Post edited 12 Apr 2016 17:16]


Exactly.

The worry I have is that this is not being seen for what it is - a very agressive, hostile act that has been designed to outmanoeuvre the Trust. Now fine, if that's what it is then that's what it is. In many ways it's a very sensible piece of work on behalf of the other shareholders - fairly classic tactics.

But stop the collaborative thinking. If they have made a mistake and not done what was required of them (as may well have been the case in making books available without board approval or knowledge of all board members - I say that as they MUST have had a board meeting since this was all done so even if the board was quorate without Huw Cooze then it should have been minuted so he would have been aware) then take action. Take action to find another buyer if these aren't right. In other words, behave like corporate investors.
[Post edited 12 Apr 2016 17:20]
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The Purpose of the Trust on 17:22 - Apr 12 with 4037 viewswaynekerr55

The Purpose of the Trust on 17:14 - Apr 12 by DafyddHuw

Can any Trust official tell us if a lawyer's been hired to look into the shenanigans thus far?


If I'm correct we have a very good one pro bono, or at least for initial advice

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The Purpose of the Trust on 17:25 - Apr 12 with 4016 viewsJoe_bradshaw

As my dear wife and I read the Trust statement released late last night she asked whether due diligence could legally take place without a major shareholder knowing that it was taking place.

So do we know?

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The Purpose of the Trust on 17:35 - Apr 12 with 3992 viewslondonlisa2001

The Purpose of the Trust on 17:25 - Apr 12 by Joe_bradshaw

As my dear wife and I read the Trust statement released late last night she asked whether due diligence could legally take place without a major shareholder knowing that it was taking place.

So do we know?


It's actually more likely that it can't take place without the board members knowing. Same result, but may have slipped up because of the board situation rather than shareholding.

The board have to agree to open up the books and to agree anything they must be quorate. In other words, the statutes will have a number of board members stated who have the power to agree things on behalf of the board. If not stated, then it's 2 members. However, and this is an important bit, in counting the members who can vote on any decision, members who have an interest in the decision (perhaps because they are also shareholders who stand to sell their shares) are not allowed to be counted to make up a quorum or to vote. It's possible that the non shareholder board members were enough to form a quorum. But even so, the decision HAS to be minuted at the next meeting. If it was not, or the board were not quorate when the decision was made, they have not followed the law.
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The Purpose of the Trust on 17:39 - Apr 12 with 3968 viewsClinton

The Purpose of the Trust on 17:35 - Apr 12 by londonlisa2001

It's actually more likely that it can't take place without the board members knowing. Same result, but may have slipped up because of the board situation rather than shareholding.

The board have to agree to open up the books and to agree anything they must be quorate. In other words, the statutes will have a number of board members stated who have the power to agree things on behalf of the board. If not stated, then it's 2 members. However, and this is an important bit, in counting the members who can vote on any decision, members who have an interest in the decision (perhaps because they are also shareholders who stand to sell their shares) are not allowed to be counted to make up a quorum or to vote. It's possible that the non shareholder board members were enough to form a quorum. But even so, the decision HAS to be minuted at the next meeting. If it was not, or the board were not quorate when the decision was made, they have not followed the law.


Embarrassing question, but what the heck.
Has anyone checked the minutes?

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The Purpose of the Trust on 17:43 - Apr 12 with 3952 viewswaynekerr55

The Purpose of the Trust on 17:39 - Apr 12 by Clinton

Embarrassing question, but what the heck.
Has anyone checked the minutes?


Are they available?

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The Purpose of the Trust on 18:06 - Apr 12 with 3902 viewsMillie

The Purpose of the Trust on 17:43 - Apr 12 by waynekerr55

Are they available?


Trust minutes are, club minutes aren't, isn't this an issue for a shareholders meeting ?
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The Purpose of the Trust on 19:06 - Apr 12 with 3787 viewsA_Fans_Dad

By keeping all of this secret from the trust, they have prevented most of the actions Lisa outlined, especially finding alternative buyers due to the lack of time now left.
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The Purpose of the Trust on 19:20 - Apr 12 with 3760 viewsNookiejack

I'll defer to your superior knowledge on this but thought special resolution requiring 75% voting rights were required to allot (create and issue) more shares.

http://www.shareholderrights.co.uk/RightsOfAShareHolder/75.html

Are you definitely sure only an Ordinary Resolution is required for a share allotment?
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The Purpose of the Trust on 19:29 - Apr 12 with 3722 viewslondonlisa2001

The Purpose of the Trust on 19:20 - Apr 12 by Nookiejack

I'll defer to your superior knowledge on this but thought special resolution requiring 75% voting rights were required to allot (create and issue) more shares.

http://www.shareholderrights.co.uk/RightsOfAShareHolder/75.html

Are you definitely sure only an Ordinary Resolution is required for a share allotment?


Key words in that is to issue without restriction (pre emption). Ordinary to just issue.
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The Purpose of the Trust on 19:33 - Apr 12 with 3706 viewsNookiejack

The Purpose of the Trust on 19:29 - Apr 12 by londonlisa2001

Key words in that is to issue without restriction (pre emption). Ordinary to just issue.


What about to create?
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The Purpose of the Trust on 19:39 - Apr 12 with 3677 viewsNookiejack

The Purpose of the Trust on 19:33 - Apr 12 by Nookiejack

What about to create?


Don't bother answering that one I get it.
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The Purpose of the Trust on 19:48 - Apr 12 with 3653 viewsNookiejack

The Purpose of the Trust on 19:29 - Apr 12 by londonlisa2001

Key words in that is to issue without restriction (pre emption). Ordinary to just issue.


So what you are saying is they just issue new shares which will have pre-emption rights - but Trust won't have funds to take up their proportionate share. So gets diluted away.

I suppose the thing is any new issue would mean the assets of the club would increase by the cash received for the new shares, or if that cash is used to buy stadium or more expensive players.

Hence the Trust would own a smaller share of a larger pot?

If the club manages to get into the Champions League - the Trust's stake could be veery valuable and would in short term at least Trust would have certain information rights until diluted away - to ensure club was not being mortgaged away?
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The Purpose of the Trust on 20:03 - Apr 12 with 3617 viewsNookiejack

Do you need a special resolution to wind up the club?

For example The Yanks know that if things go wrong and we get relegated - all they have to do is sell the players - replace them with youth team players on £100 a week contracts - then bank the parachute money.

The thing is say without the 75% they can't wind the company up and get their cash back.

They could get it out through dividend but only if the club is making distributable profits and this would be unlikely in a relegation situation. Or take years to do so?
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The Purpose of the Trust on 20:17 - Apr 12 with 3594 viewsjasper_T

Our youth players are on a lot more than £100 a week these days.
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The Purpose of the Trust on 20:22 - Apr 12 with 3581 viewsSwansNZ

The Purpose of the Trust on 20:17 - Apr 12 by jasper_T

Our youth players are on a lot more than £100 a week these days.


Not after the yanks take over

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The Purpose of the Trust on 20:23 - Apr 12 with 3569 viewsSwansNZ

If the current shareholders are prepared to give total power to a single entity, then the trust board position becomes meaningless, I’ve also been wondering if selling for the same price offered (assuming they would be offered it) and banking the money, would be the best choice. If all goes wrong, they would be in a better position to try and rescue the club, than from within and possibly having less or worthless shares.

Of course, if all goes wrong, the club could be in debt to a far greater degree than the 20+ million in the trust bank account.

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The Purpose of the Trust on 20:36 - Apr 12 with 3533 viewsNookiejack

The Purpose of the Trust on 19:29 - Apr 12 by londonlisa2001

Key words in that is to issue without restriction (pre emption). Ordinary to just issue.


Sorry one more question.

Do you need approval of ALL classes of shares So if the Trust holds a separate class need 75% of that class?

Just asking as a long shot?
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The Purpose of the Trust on 20:43 - Apr 12 with 3499 viewsDafyddHuw

The Purpose of the Trust on 20:23 - Apr 12 by SwansNZ

If the current shareholders are prepared to give total power to a single entity, then the trust board position becomes meaningless, I’ve also been wondering if selling for the same price offered (assuming they would be offered it) and banking the money, would be the best choice. If all goes wrong, they would be in a better position to try and rescue the club, than from within and possibly having less or worthless shares.

Of course, if all goes wrong, the club could be in debt to a far greater degree than the 20+ million in the trust bank account.


The Yanks would have no reason to want to buy the Trust's shares. They'll already have enough do what they want.
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The Purpose of the Trust on 20:50 - Apr 12 with 3481 viewsFearOfAJackPlanet

The Purpose of the Trust on 20:23 - Apr 12 by SwansNZ

If the current shareholders are prepared to give total power to a single entity, then the trust board position becomes meaningless, I’ve also been wondering if selling for the same price offered (assuming they would be offered it) and banking the money, would be the best choice. If all goes wrong, they would be in a better position to try and rescue the club, than from within and possibly having less or worthless shares.

Of course, if all goes wrong, the club could be in debt to a far greater degree than the 20+ million in the trust bank account.


Tend to agree with this view.

It's a Supporters Trust, not an investment vehicle. Now that the 'by the fans, for the fans' model (as specious as it was) has been firmly confined to the history books, why should the Trust play ball? All this 'want to keep the Trust on board' talk is just a way to keep it docile as a passive, materially irrelevant shareholder whilst the carve up happens.

Find a buyer, sell up. Be a truly independent Trust, not paying lip service to the controlling shareholders. Check-out with a massive war-chest and use it to champion fan issues and to nurture a fund to secure a club in Swansea should it all go tits up (it inevitably will at some point...).

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