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General information on SHA s

edited October 2018 in The Lounge
Some easy to understand  general information on shareholder agreements for the non legal people like me.  Articles are the basic rules that are public and go to Companies House. The SHA is a private arrangement. 

https://www.informdirect.co.uk/shares/what-is-a-shareholders-agreement. ;

From what I understand in order for the minority shareholders to have the obligatory right to be involved in sales they should have  'tag along rights'.  

The majority owner would like the minority owner to sign up to  'drag along rights'. This obliges the minority holder to sell up as well in light of an offer for the company. 

 I read and noted this on another site. 

"Frequently in cases such as this the High court will order one shareholder to purchase the shares of another share holder and can order the COMPANY to repurchase the shares of one or more of the shareholder".  I can see this as being a much tidier solution especially where there for example  are a multitude shareholder many of whom have moved on or overseas. 

 "One will commonly find that a party to a shareholders agreement is a director as well as being a shareholder. In these circumstances it must be bourne in mind that the Director has an overriding duty to act in the best interests of the company and cannot fetter in his duties in that regard" .   
 
It seems to me that a good  SHA should have had these 'drag along' or 'tag along' features.   



  

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Comments

  • edited October 2018
    Another interesting link explaining partially the 25% protection issue.  

    https://www.translegal.com/lesson/3254

    It says in here that Unfair prejudice cases offer limited remedies and rarely end satisfactorily.   
  • Ponty,
    Before jumping to conclusions, when we find out what is in the shareholders agreement that Jenkins and his lawyer Farnell initially denied wasn't actually there, no doubt the lies Jenkins spoke under oath and the falsifying of minutes of a meeting that didn't take place, will no doubt not be a good start for the sell-outs.


  • Ponty - 

    Reading between the lines of your post, it looks like you have access to the SHA and that you already know it has no tag and drag clauses. If that is correct, the Trust's lawyers will have been fully aware of this of course and have concluded whether it is significant ; they still said we had a strong case so one can only conclude that they thought it was not relevant . It was also stated in the last Trust meeting that the case was now even stronger since the QC made that statement over a year ago. I don't think the Americans and so called sell outs will have helped their case with the way they have behaved in relation to mediation.

    Also, I understand that the "unfair prejudice" covers a lot more than just the existence and clauses of the SHA.

    I think the Trust will win it if it gets as far as the courts.


    enaitch
  • Jeff, 
    I have no inside track and like you are reading between the line mostly from Trust statements. I suspect the SHA is not for public airing. 

    Following SCFC sure is a journey.  Hedge funds, articles, SHA, non disclosure documents. drag on and tag on rights  unfair prejudice. Well if it turns  nuclear yours truly will have learned some stuff along the way. It's all interesting and logical. 
  • One thing that strikes me about that article is that it defines minority shareholders as being holders of less than 50% of the shareholding. That being the case, then everyone was a minority shareholder, with the trust being the second largest shareholder. Not sure how the article then applies to our situation. 

    Clearly, the sellers legal team thought the SHA had some standing, otherwise they wouldn't have bothered to get the trust to sign it away.

    It was certainly an issue in the proposed sale in late 2016, as that included a drag clause and the article may therefore be relevant with there now being major shareholder.


  • There were several minority shareholders that agreed with each other on one route and another, the Trust with a different approach.  The others had the 75% majority. They all would have signed drag on and tag on rights ideally.  

    In that case the U.S. would have offered to buy the whole club and the Trust would not been able to stop it as the others had drag on rights.  (Some argue the the U.S. guys did not have enough money to do this).

    On the other hand the other 79% would not have been able to sell their shares without the Trust as they would have 'tag on' rights.  Presumably they would  not necessarily need to take this option.  

    The sellers confronted with the "selling behind our backs" argument would say "we had no obligation to include you because you did not sign up to tag on and drag on rights" . 

    I suspect when the U.S. people talked in 2017 they were certain to want drag on right over the Trust to allow for a complete clean sale down the line.  The Trust could have accommodated this by putting in buy out clause of some form.£x million plus inflation. 
  • Far too much speculation in there for me. 

    We can all speculate as much as we like, but this will only be decided by one person and in a court of law. 
  • The members can take control and ditch 'Sumblerism'  and all it stands for.

    Fiesty conflict, massive asset value loss, empty bank balance,  missed opportunities, membership decline and toxic atmosphere. 

    The ' thorn in the side'  mantra does not work. The thorn has gone sceptic. 

    "Greedy barstewards get out of our club". They are called Sebastian from Surrey not Chuck from Washington.  Truly modern operators 2009 style.   White collar home counties  smoothies from the legal firms. Only the members can send them packing.  
  • So, would you allow sellers to ignore a signed SHA that had been abided by for 15 years, even when Mel Nurse sold his shares, they had to be offered inwards in the first instance.
    Why would the sellers, through their lawyer, Chris Farnell try to make a deal with the Trust to get the SHA null and void if it wasn't legally binding?
    Why would Jenkins, and possibly his lawyer cook up minutes of a meeting that never was, submit them to companies house so that the sale could go through?
    Why would Jason Levien say on video that he was told not to engage with the Trust?
    Yes, this may cost the Trust in legal fees but it has to do what's right, it has offered mediation to try and resolve differences, other than Steve Kaplan acknowledging this in the press, there has been no attempt to meet up, Jenkins and Morgan are running scared as they have privately met with the Trust, they realise they f******* up and its going to cost them to put it right.
    Finally, a loss in court will see the Trust keep all 21% in the club (some would prefer that anyway)
    A win will see them being bought out at the 2016 price with legal fees paid on top, over £20m after tax is my best estimate.
    Jackareme
  • Defaming a guy like Phil Sumbler, a prominent member of the Trust who was a thorn in the side of the sell-outs for many years really shows how desperate Ponty and his employers are getting in their mis-information tirade. 

    Keep it up Ponty, we are getting closer to the day when justice will be had for the Trust and the fans. 
    deekayDubDragonJackareme
  • massive asset value loss, empty bank balance,  missed opportunities, membership decline and toxic atmosphere.  That’s what has happened since the yanks took over at the club but I don’t see you complaining about the dire straights they’ve caused the club . I read somewhere that the yanks are over the moon with DC United getting to the play offs and they’re concentrating on that 
  • Well Yanks don't like trade unions and always try to remove or marginalise them
    Over the years they have tended to put the boot into labor unions
    I think that is what they see a strong Trust as - in the way of them doing whatever they like
    If the Trust had enough shares to block decisions they disagreed with, you would not see these owners for dust
    SeaJack
  • A no win no fee will see 40% -50% of win go to the lawyers for a win. Millions.

    A loss without no win no fee will see the Trust in a fire sale of their 21% at a knockdown price to pay the lawyers fees.

    A win will be £14m loss for the owners and will be paid for by the Club and the fans over the following years. The owners are human and will want retaliation.  It's common sense. 

    Legal action is a gamble and bonkers. Didn't anyone tell the fans that life as a minority holders is hard?  The Trust could have got the £20m with no conflict in 2015 and 2016 with no legal fees which might be over £5m.  

    If the Trust leave there may  be  no way back for decades.  The members have the forum opinion and another one to consider. The club might object to the Trust using their name. This will see nembership plummet. 

    No mediation means the US guys fancy their chances and presumably  could counter sue. They will  be real tough opponents. 

    The Trust was given a place on the board by well meaning people to share the profits working in cooperation. It looks as if that vision is dead unless the members call the shots.  

    Personally I have  no objection to a good will payment to sooth hard feelings. 

    As I see it the fans own 21% and with constructive management can get back to the 2016 and more under Potter with the risk on grass in front of their eyes not logged in 40 documents of 200 pages someone gets £500 an hour to read and interpret. 


  • That they are tough opponents to employee ( fan ) representatives is taken as read
    A Trust owning enough shares to have a voice ( and block unwelcome proposals ) is the only way to deal with these owners
    Otherwise it's more of ^ let them eat cake^ as has been said many times before
    US owners - phrase speaks for itself
    And yes that vision of partnership is dead - the new owners killed it along with the sellers
    Timely legal action could have averted all that but it's a bit late to be confident that would do any good

    Support the team, oppose the owners
  • A no win no fee will see 40% -50% of win go to the lawyers for a win. Millions.

    A loss without no win no fee will see the Trust in a fire sale of their 21% at a knockdown price to pay the lawyers fees.

    A win will be £14m loss for the owners and will be paid for by the Club and the fans over the following years. The owners are human and will want retaliation.  It's common sense. 

    Legal action is a gamble and bonkers. Didn't anyone tell the fans that life as a minority holders is hard?  The Trust could have got the £20m with no conflict in 2015 and 2016 with no legal fees which might be over £5m.  

    If the Trust leave there may  be  no way back for decades.  The members have the forum opinion and another one to consider. The club might object to the Trust using their name. This will see nembership plummet. 

    No mediation means the US guys fancy their chances and presumably  could counter sue. They will  be real tough opponents. 

    The Trust was given a place on the board by well meaning people to share the profits working in cooperation. It looks as if that vision is dead unless the members call the shots.  

    Personally I have  no objection to a good will payment to sooth hard feelings. 

    As I see it the fans own 21% and with constructive management can get back to the 2016 and more under Potter with the risk on grass in front of their eyes not logged in 40 documents of 200 pages someone gets £500 an hour to read and interpret. 


    Just to say that if the Trust lose they will have taken out insurance against the costs (PS has already intimated this) 
    & if they win  60% of something is better than 100% of nothing. They must build up their asset base, as the Trust cannot/should not stay in the club, as they cannot "sleep with the enemy" now or in the future
  • Ponty

    Yet more spin and misrepresentation

    The owners are human and will want retaliation.  It's common sense. 

    The Trust was given a place on the board by well meaning people to share the profits working in cooperation. It looks as if that vision is dead unless the members call the shots.  


    We as members are also human and may want retaliation. It's common sense !

    The Trust were not given a place on the board, it was theirs as of right. Any shareholder holding 5% + was entitled to a place on the board.
    Jackareme
  • deekay

    Yes ......  "given a place on the board by well meaning people" is clear evidence that the writer lied in
    his/her statement yesterday evening that he/she has "no inside track".

    If the board meant well for the club, players, staff and fans perhaps he/she can explain where it went
    wrong.  And whether "well meaning" means that two people at the top in Swansea  continue to pay
    themselves exorbinant (excessively high) salaries for not even kicking a ball.
     
    Maybe they can earn their money by showing their talent as the famous Cyril and Sybil the Swan taking
    half time penalties against children.    
  • The desperation oozing out of ponty is telling. Its going to get worse as the noose tightens. Expect ever more outlandish anti trust claims. 
    enaitch
  • Ponty the only bonkers thing is your post . You mention a goodwill payment ... how much will your pals offer because they withdrew the £5 mill offer last January and wouldn’t pay the £100000 compensation to the two boards members unlawfully sacked . They won’t pay sweet fa for anything  wake up man 
  • its up to you gents, but for me, given the continuous stream of drivel targeting one subject, it's clear PJ has more than just a passing interest in the legal situation.
    The more you engage with him in it, the more propaganda he can release on here ...

  • Just to say that if the Trust lose they will have taken out insurance against the costs (PS has already intimated this) 
    & if they win  60% of something is better than 100% of nothing. They must build up their asset base, as the Trust cannot/should not stay in the club, as they cannot "sleep with the enemy" now or in the future
    "100% of nothing"  where does that come from?   SCFC have 21% of an improving championship club  amongst the favoutites for the pay off with Bony and Montero possibly back and one of the best up and coming managers in Europe. 

    If they succeed the Trust shares will be worth £21m again and up for sale once  the existing board is shown the door.

    So you then have a choice sit tight and wait for promotion with  £21m for sale with an option to reinvest later  or £14m (possibly a lot less) by legal means and orphaned on the street.  Could the Trust continue with no links to the club?  I doubt it. 

    The insurance is another red herring.  The premiums would be massive and money down the spout. The insurers would ptobabnly see it as 50:50 call. 

    The Trust have not lost a shareholding.   They had 21% and they still have 21%.  Relegation is part of the deal and level and income fluctuates.  The Trust is in it for the long term and have no urgent need for cash.  The lawyers have an urgent need for cash not the Trust. 

    As it says in the enclosure above  'Unfair prejudice' cases  rarely end satisfactory.  The judge might assess the tiny investment the Trust made in the club in 2002 and give them a win but well below what the promoters promise.  They were worth £21m when the two chairmen walked out of talks in 2017.   At best legal action wil give them £14 and it could be a whole lot less than that.  

    I accept the result of the members. If they want to support Mr Sumbler's  gamble that is up to them.  I do not understand why they do not form a gambling club and go to Vegas together and catch a show.   They would not even consider legal action if it was their own money.  They will be offered big rewards and low risk. This is a dellusion. 

    If the Trust give the owners a kicking the argument for keeping fans out of the boardroom gets stronger with SCFC as a test case.    

    The members need to know some facts provide above and an alternative vision. Mine is re-engagement and a clear out of the Trust board.  Wait for promotion sell £11m and agree a new Shareholders agreement and be prepared to reinvest in the club the Trust cash like Exeter city Trust. 

    I am impartial with no links the the club and want the best for the club and belong to no pollitical group.  Those that accuse me of being an insider should put their own affiliations in writing.  

    The Trust is only useful if it invests cash into the club like Exeter city Trust does. It is not here to fight class wars or act as a trade union. 




  • BigG said:
    its up to you gents, but for me, given the continuous stream of drivel targeting one subject, it's clear PJ has more than just a passing interest in the legal situation.
    The more you engage with him in it, the more propaganda he can release on here ...
    It's not a boys club Big G.   I am temporarily off work at present and have time to read up on things and share them with the readership.  One post I started had 7000 reads.  Not bad for the forum with only say 25 or so activists like yourself.   The fact is the Trust had at least two opportunities to sell in the PL and did not deliver.  

  • Just to say that if the Trust lose they will have taken out insurance against the costs (PS has already intimated this) 
    & if they win  60% of something is better than 100% of nothing. They must build up their asset base, as the Trust cannot/should not stay in the club, as they cannot "sleep with the enemy" now or in the future
    "100% of nothing"  where does that come from?   SCFC have 21% of an improving championship club  amongst the favoutites for the pay off with Bony and Montero possibly back and one of the best up and coming managers in Europe. 

    If they succeed the Trust shares will be worth £21m again and up for sale once  the existing board is shown the door.

    So you then have a choice sit tight and wait for promotion with  £21m for sale with an option to reinvest later  or £14m (possibly a lot less) by legal means and orphaned on the street.  Could the Trust continue with no links to the club?  I doubt it. 

    The insurance is another red herring.  The premiums would be massive and money down the spout. The insurers would ptobabnly see it as 50:50 call. 

    The Trust have not lost a shareholding.   They had 21% and they still have 21%.  Relegation is part of the deal and level and income fluctuates.  The Trust is in it for the long term and have no urgent need for cash.  The lawyers have an urgent need for cash not the Trust. 

    As it says in the enclosure above  'Unfair prejudice' cases  rarely end satisfactory.  The judge might assess the tiny investment the Trust made in the club in 2002 and give them a win but well below what the promoters promise.  They were worth £21m when the two chairmen walked out of talks in 2017.   At best legal action wil give them £14 and it could be a whole lot less than that.  

    I accept the result of the members. If they want to support Mr Sumbler's  gamble that is up to them.  I do not understand why they do not form a gambling club and go to Vegas together and catch a show.   They would not even consider legal action if it was their own money.  They will be offered big rewards and low risk. This is a dellusion. 

    If the Trust give the owners a kicking the argument for keeping fans out of the boardroom gets stronger with SCFC as a test case.    

    The members need to know some facts provide above and an alternative vision. Mine is re-engagement and a clear out of the Trust board.  Wait for promotion sell £11m and agree a new Shareholders agreement and be prepared to reinvest in the club the Trust cash like Exeter city Trust. 

    I am impartial with no links the the club and want the best for the club and belong to no pollitical group.  Those that accuse me of being an insider should put their own affiliations in writing.  

    The Trust is only useful if it invests cash into the club like Exeter city Trust does. It is not here to fight class wars or act as a trade union. 




    A question re: "100% of nothing". If, as Andrew et al suspect, the current owners put the club into administration once they have cleaned it out.  what will the Trust's shares be worth? I assume nothing, but happy to be advised otherwise. If I am correct & Andrew is correct, then surely the Trust MUST get their money out, ASAP or risk losing it all!
  • Ok Thanks for the reply.  It is my view that the Trusts legal case, if they had a complete win would be the thing that made the US owners consider administration. It is very unlikely with out it.

    The club is worth around £40m  to £50m.  A £20m bill for the owners would make them look at a range of options.  These could include administration, savage job loses, closing the academy selling all the best players.  While this is going on the Trust will have £10m in the bank. "Good work lads we won. What do we do now?  Better to ask Sebastian our expensive lawyer ".    "He' s not answering your calls he is in Barbados until next May." 

    I sense you have  accepted that the US owners are suspect.   Both Kaplan and Levien are respected business people and very sucessful too.  They are not the enemy.  Hedge funds are not a mystery. They are methods by which rich people can make risky investments like Swansea city.  Levien did not asset strip D.C. United did he?  No he helped build a brand new stadium and a good team.  He has a good track record.  

    The time to get money out was   2015 or 2017. The Trust rejected 2015 offers and two chairmen walked away from talks in 2017.  By 2018 they realised their mistake.  I made the anology of 21 £1m gold  bars in the safe of the Titanic.  They went down with the ship and they did not leave any dockside. They now need divers to get them back but that is going to cost a fortune.  They are going to want 7 to 10 bars as a fee.  The Trust leadership have been given a very easy ride by the members and have cleverly deflected all blame elsewhere. 
  • What about the Exeter City Trust, you having mentioned them!!!
    deekay
  • Ponty, you keep telling everyone we are getting promotion soon. We seem to be stumbling in the wrong direction.  And with usa guys looking to sell anyone good and not back the manager, it's not going to happen. The sooner they leave the better for Swansea City  
  • The club has spent much of the last decade building up the Academy and its time has come.  The strategy is backed by the U.S. owners.  This is not the strategy of asset strippers. 

    They will give Potter time to develop these players many of them local.  They will need  a few seasons to develop.  Roberts and Rodon signing will be a welcome moral boost. 

    This strategy could be undone by the consequences of  internal feuding between shareholders over complex corporate governance issues.  
  • The club has spent much of the last decade building up the Academy and its time has come.  The strategy is backed by the U.S. owners.  This is not the strategy of asset strippers. 

    They will give Potter time to develop these players many of them local.  They will need  a few seasons to develop.  Roberts and Rodon signing will be a welcome moral boost. 

    This strategy could be undone by the consequences of  internal feuding between shareholders over complex corporate governance issues.  
    Two points of order,
    1, Mediation has been offered, not saying it will solve complex issues but its a start
    2, Sellers stuck two fingers up to a legally binding document, even warranting to buyers that no such shareholders agreement existed, which was signed.

    I agree that this will cause OUR club a lot of unecessary headwork but your'e got to lay that blame at both the buyers and sellers door first, the Trust has been reasonable in everything its done

    BigG

  • Ok Thanks for the reply.  It is my view that the Trusts legal case, if they had a complete win would be the thing that made the US owners consider administration. It is very unlikely with out it.

    The club is worth around £40m  to £50m.  A £20m bill for the owners would make them look at a range of options.  These could include administration, savage job loses, closing the academy selling all the best players.  While this is going on the Trust will have £10m in the bank. "Good work lads we won. What do we do now?  Better to ask Sebastian our expensive lawyer ".    "He' s not answering your calls he is in Barbados until next May." 

    I sense you have  accepted that the US owners are suspect.   Both Kaplan and Levien are respected business people and very sucessful too.  They are not the enemy.  Hedge funds are not a mystery. They are methods by which rich people can make risky investments like Swansea city.  Levien did not asset strip D.C. United did he?  No he helped build a brand new stadium and a good team.  He has a good track record.  

    The time to get money out was   2015 or 2017. The Trust rejected 2015 offers and two chairmen walked away from talks in 2017.  By 2018 they realised their mistake.  I made the anology of 21 £1m gold  bars in the safe of the Titanic.  They went down with the ship and they did not leave any dockside. They now need divers to get them back but that is going to cost a fortune.  They are going to want 7 to 10 bars as a fee.  The Trust leadership have been given a very easy ride by the members and have cleverly deflected all blame elsewhere. 
    Do keep up, its not a bill, its purchasing the Trust shares, they would then own 100%
  • The judge will decide the price hypothetically and if he considers how much the Trust invested the members might get a nasty shock.   In all this it should not be forgotten what a wonderful job the sellers did in getting the asset price to x 100 times the invested sum by 2016. 
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