More Questions Than Answers

By on Nov 14, 2007 in Non-League | 7 comments

I’ve been doing a lot of reading today. I felt kind of obliged to – after all, I was criticised in the comments section on here last night for not having done any research into the proposed take-over of Ebbsfleet United by My Football Club. To be honest with you, I’m not encouraged by the reading that I have done – in fact, what I might have described as my “mild concerns” over the long term well-being of this club have now escalated to what I can only describe as “alarm”. From what I can gather, the devil is in the detail, and the detail is, so far as I can see, something that should probably be made public. Obviously, for legal reasons I need to be careful with what I say here, so you may have to read between the lines if you’re looking for my opinion on what I’ve found, but there are certainly questions raised by the detail in these documents which the people running this little charabanc should answer, and should answer quickly.

I was fortunate enough to find myself in possession of copies the following documents (all of which are, with a little digging, freely available):

- The application for the registration of My Football Club Society to the FSA as an Industrial & Provident Society.

- The “Operating Agreement” between My Football Club Limited and My Football Club Society Limited.

- The Rules Of My Football Club Society Limited.

- The “Conditions Of Payment” for My Football Club – to put it another way, small print of what you get for your money once you hand over your £35 per year. The “Terms & Conditions”, if you like.

Firstly, here’s a quick explanation of who is who, here. The FSA is the Financial Services Authority – these are the people that regulate the financial services in the UK, including Industrial & Provident Societies. Trusts are one type of Industrial & Provident Society. Trusts are mutual, not for profit organisations – the people that run AFC Wimbledon and Stockport County are Supporters Trusts. My Football Club Society Limited is the Trust that will be taking ownership of Ebbsfleet United. My Football Club Limited is the company that is maintaining the website. All Trusts are governed by the Industrial & Provident Societies Act of 1965, and have certain undertakings that they have to agree to before the FSA will grant them Trust status.

The application for registration as a society – made to the FSA to get Trust status – is striking for two reasons. There are certain questions that one has to answer in order to get the approval of the FSA, and question 4 (b) reads as follows: “What groups or categories of people are the society’s activities intended to benefit?”, to which the answer reads as follows: “Football supporters and the local community”. Which football supporters and which local community, though? They couldn’t have known when the application was submitted. This is important because it is being used as proof that they should be given Trust status, which they have to do under FSA rules.

It’s worth pointing out at this point that in organisations of this type, the job of Secretary is a critical one. The secretary could be described as the “conscience of the organisation”. With no specific remit, they will be the first point of contact for all officials. They will be directors of the company, and are entrusted as an internal check that everything is being run above aboard. Why, then, is the section for the secretary on the My Football Club Society application to the FSA an illegible scribble, with the section marked “Full Name (BLOCK CAPITALS)” completed, “On behalf of My Football Club Limited”. So, who’s the secretary of My Football Club Trust Limited, then? Well, it’s not Joshua Levine, Anne Faul or Duncan John Neale. They are the applicants, and the signature is different to any of theirs. One final thing: why is the date that the application was submitted “8 June 2008″? I could be getting this wrong, but… isn’t that next summer? If this what I’m reading is correct, My Football Club Society Ltd won’t even become a Trust until next year.

On, then, to the Rules Of My Football Club Society Limited. It’s a dense read, that’s for sure. Thirty-two pages of legal jargon, to be precise, and most of it is pretty standard stuff. Interestingly, it’s dated 16th July 2007 – eleven months before the date given on their application to the FSA. There were, however, one or two sections that aroused my interest. Firstly, there is the first part of it, which is about the definitions of what the society exists to do. Under the section marked “Objects”, it says the following:

i. To appoint the Operator to identify a football club within England and Wales which is suitable for purchase and to instruct the Operator to act as the Agent of the Society in connection with the purchase of the whole or a controlling interest in the interest in the issued share capital of that football club on behalf of the Society.

They define the “Operator” as follows: My Football Club Limited in its capacity as the owner and operator of the website and includes any successors to My Football Club Limited. So, to clarify: The Trust is obliged by its own rules to employ the web site. Also, as you probably already know, they are contractually obliged to pay £7.50 of every £35 membership to the limited company. Finally, for this section, comes the strangest thing of all. Under the section marked “Role Of The Secretary”, comes the following:

6. The Society shall appoint the Operator to act as the secretary of the society.

Then, under the section regarding the auditing of the Society, comes the following: The Board may delegate this power to the Operator. Just to clarify this point, I would remind you of the following: the Secretary of the Society is in charge of ensuring that the day-to-day business of an organisation is above board. The Auditor’s job is to ensure that the business of an organisation is carried out above board on an annual basis, through their audit. Under the rules of this Society (and this is something that I have simply never seen before), all responsibility for ensuring that they operate within the law can be delegated to the website. In other words, the web site, a commercial company, can completely dictate the way in which the Trust operates.

There is plenty more that I could write on this subject. Some of what I have noted above may have been included with the best of intentions. Some of it may be mere administrative errors. I didn’t get the time to point out the clause that allows the proportion of money to be paid by the Trust to the Web Site from two or three year memberships to be paid up front, for example. That said, though, this particular trust certainly seems to vary in the wording of its paperwork from the “best practice” that is put forward by Supporters Direct, and it strikes me that I now have more questions that I would like to ask than questions that have been answered. The mutual status of the Trust protects the people that have signed up for it. The limited liability status of the web site protects the people operating that from the potential ramifications of any financial difficulties that the project may run into.

Anybody that wants a copy of The Rules of the Society,The Operating Agreement between the Limited Company and the Trust or a copy of the Supporters Direct Best Model Rules Pack can feel free to contact me. I’ll see if I can get a copy of the FSA Application scanned in.

Ballhype: hype it up!

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    7 Comments

  1. Good sleuthing.

    And I think you’re wise not to jump to the conclusion that there’s something sinister going on: it could always be simple naivete or incompetence.

    But they are very important questions that someone needs to answer, and soon.

    Antonio G

    November 15, 2007

  2. Well, the date on the application is clearly a typo (lawyers do make mistakes, you know). They are in fact registered as an Industrial and Provident Society, and have been since 16 July 2007, as you can see here: http://mutuals.fsa.gov.uk/SocietyDetails.aspx?Number=30275&Suffix=R. And while not an expert on such registrations, I would be willing to bet quite a bit that illegible signatures and vague statements of purpose are not unique.

    None of that, however, takes away from the fact that the questions you (and others) have raised about the relationship between the My Football Club Society Limited (the registered non-profit Industrial and Provident Society) and the My Football Club Limited (the for-profit limited company) deserve to be answered, especially given the fact that they are apparently news to at least some of the people who paid their 35 quid.

    ursus arctos

    November 15, 2007

  3. UA: I am absolutely certain that the name of the company secretary would have to be on the registration form – having had plenty of dealings with the FSA over the years (I work in the financial sector myself), I would be betting on them not having noticed it and/or having just let it go unquestioned. Whilst I am willing to accept that the incorrect date is a typo and that a vague statement of purpose is acceptable, I do not accept that it is acceptable for such paperwork to be sent without through without the name of a company secretary on it. I also consider this combination of vagueness, mistakes and typos on what is only a four page document to be concerning, to say the least.

    200percent

    November 15, 2007

  4. No argument there; the signature block should have been filled out, and given that it wasn’t, the application should have been bounced and the registration only completed once it was complete.

    My point was only that I very much doubt that such errors are unique, especially given the fact that the FSA treats its oversight responsibility over mutual societies rather like an ugly stepsister in comparison with its primary role of regulating “the City”.

    My guess (and it is a complete guess) is that you fill find that the secretary of the industrial and provident society is one of the directors of the limited company.

    The industrial and provident society’s annual report will be a very interesting document to read. I’m afraid that I don’t know how much time they have after year end to produce it.

    ursus arctos

    November 15, 2007

  5. Their year end is noted on the application as 31st December, so not much. All paperwork has be submitted by then (they choose this date on their registration form).

    200percent

    November 15, 2007

  6. I read that as their fiscal year end.

    According to the relevant Information Note on the FSA website, they have until an unspecified “due date” after that date point to submit their accounts.

    Whenever they appear, they will make for interesting reading.

    ursus arctos

    November 15, 2007

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  1. Laws Of Diminishing Returns - Twohundredpercent - [...] done Ebbsfleet on here before. Several times over, in fact. We’ve taken a long at their unusual set-up, questioned …

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