Update for Fans on Investment

Dear Fan

There has been a huge amount of gossip, rumour and argument about the recent news that the Chairman is in talks with Mr Abdallah Lemsagam about investment / takeover at the club.

We felt it a good time to clarify a number of points and give you some clear guidance on the governance/process of any investment/takeover.

As a Trust we always welcome the potential of new investment, especially when it moves the club forward in the right way.

The Trust and our representative on the board are fully up to date with the same information the rest of the board of directors have regarding the situation.

For clarification, the current club board of directors are Simon Corney (Chairman), Anthony Gee, Barry Owen, Ian Hill and Simon Brooke.  Mark Moisley is the Chief Executive and (unlike his predecessor) has no vote at board level.

Perhaps understandably the Chairman has chosen to maintain a tight grip on the negotiations and is dealing directly with Abdallah.  We very much respect that position.

Again for clarification, Simon Corney owns 97% of the shares which are classed as “A” shares.  Trust Oldham holds 3% classed as “B” shares which means they sit separate to the 97% shares.  There is also a shareholder agreement in place which was amalgamated into the Articles of the club back in 2004 which gives the Trust shareholding parity with the other 97%.

The club board runs on a “one vote per director” system.  Each of the directors listed above has one vote.

Our representative remains in close contact with a number of parties in respect of the current situation and has kept the Trust board up to date with any appropriate information.

Having taken some time to speak with a number of authorities and advisors we thought it best to outline, in very basic terms and to the best of our advice, the steps that would need to happen for any investment/takeover to occur.

1. Semantics are important

A pedantic but important point, there is a difference between a takeover and investment (even a majority one).  As we understand it, the Chairman would be looking to remain involved with the football club so in our eyes this would constitute an investment rather than takeover.

2. Agents involved with clubs

Mr Abdallah Lemsagam identifies himself a licensed FIFA agent (http://sport2jlt.com/team).  Though this is not an accredited/governed position, it is our understanding that by identifying himself as an agent his activities fall under the FA’s Intermediaries regulations.

Under these regulation an agent is prevented from owning more than 5% of a football club.  However, this is not an absolute position.An agent can own more than 5% of a football club providing they take no part in directly influencing contractual matters at the club ie. Players/signings.

This would also apply to any time before they became an official owner / director of a football club.  It is our understanding that the FA / EFL would investigate any indication of this influence happening if it is drawn to their attention and individuals and possibly the club could face sanctions if found to be in breach.

3. Ownership

Football League clubs must now list shareholders on their official websites and all owners must be notified to the EFL.  If any shares were to change hands the new owners of them, be it Abdallah Lemsagam or anyone he is ultimately acting for, their name/details would have to be disclosed in full to the EFL.

Again, clubs can face sanctions if this is breached.Even side-deals done between individuals to pass shares or security can be subject to investigation.

4. FA Fit and Proper Person test

This test has been tweaked last year, however the basic point is this.  A club cannot appoint a new director/owner without the individual passing the F&PP test.  This approval must come before Companies House notifications.  Though there remains some cynicism of the F&PP test, it is a process the FA/EFL take extremely seriously in light of recent cases.

5. Current club ownership path

In order for anyone to invest or takeover the club there are a number of stages that would need to be passed through.  This example is a deliberately best case scenario with all parties happy at each step, in reality this is rarely the case.

However the scenario goes as follows: 

  • Negotiations with the current shareholder who is looking to sell shares
  • Potential investor would seek Due Dilligence in order to confirm details disclosed/not disclosed in negotiations
  • Initial consultation with EFL/FA regarding F&PP test requirements
  • Acceptable proposal to the current shareholder
  • Proposal presented to the club board of directors and Trust Oldham
  • Permission would need to be sought from the current debenture holders (Brass Bank and Necarcu) as both debenture agreements do not permit the sale of any of the 97% shareholding without the settlement of the debentures*
  • Debentures settled, board permission granted and Trust Oldham blessing acquired
  • F&PP test undertaken on relevant individuals (potential new directors/shareholders disclosed to FA/EFL)
  • Appointment of any new directors at Companies House
  • Investor/Takeover largely completed

*At present it should be noted that due to the debentures in place, the control of the 97% shares rests with them and therefore permission would have to be granted by them for any sale.  Both the Oldham Athletic board of directors (via a majority vote) and Trust Oldham would have to give their approval for any investment/sale before the 97% shareholder can complete any investment/takeover.

Even in the case of exclusive negotiations, a new investor / shareholder can not be exercising influence over club contractual issues, and certainly if an agent is involved this should extend towards the team or playing staff.

There is in theory quite a way to go with regards to any investment/takeover.  The case outlined above is a best case scenario and would largely constitute the “best” way a process should run.

We’ve outlined the major steps to try and dispel any myths, but appreciate there will be other minor steps/a possible alternative order. Most of the steps outlined are not simple tick-box exercises, though the timescales can vary based on the resources and will of all parties involved.

We hope this goes someway to outlining to you how any new investment / takeover could happen (regardless of who is involved) and clarifies a few basic governance points.

We remain hopeful that the current interest (and indeed any other) can be progressed in a manner that suits all parties.

It is important that we all keep backing Shez and the team!