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New share issue EGM ?

New share issue EGM ?

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I help out on a voluntary basis at a full-time professional football club. The owners want to convert a significant amount of the existing directors loans (over £1m) to a new class of redeemable B shares. 

Having spoken to the clients auditors briefly I am still unclear what the minimum requirement is to achieve this.

The company currently has 1.2m authorised and fully issued shares. The club (private limited company) wants to remove the share capital limitation and issue a second class of non voting redeemable B shares. These shares will be bought back by the club from specific future profits generated by player transfer fee income.

The football club is 90% owned by a holding company who are backing the share amendments. There are 70 or so minority shareholders holding the remaining 10%. Must the club call an EGM to vote on the new resolutions or can it proceed on the basis of a document signed by the holding company (majority shareholder) and simply notify the shareholders in writing of the changes.

Finally, the club's balance sheet consists of a significant P & L deficit. Can the company therefore buy back the new class of B shares in the future if there is insufficient reserves on the balance sheet to cover the cost ?

I appreciate I am asking a lot but any comments would be helpful.       


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By johngroganjga
20th Feb 2015 13:10

These are questions for a company lawyer.  If you are an accountant you should not attempt to answer them yourself.

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Big Daddy's Diner
By mookgirluk
20th Feb 2015 13:37

Shareholders Resolutions

Whether passed at an EGM or passed in writing all shareholders with voting rights are entitled to receive notice of the resolutions and decide whether or not to pass them. 

The removal of the share capital limitation and creation of a 2nd share class (with varying rights) will require the adoption of new Articles of Association which will need a Special Resolution.

A Special Resolution can be passed by shareholders representing 75% of the voting rights.

If you're not familiar with this process you should refer to a specialist in this area, as any discrepancy could invalidate the whole procedure.


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By brash
20th Feb 2015 14:19

It is the club's intention to seek a specialist in this field however we were hoping to establish first

1. If we have to run to the costs of calling an EGM and inviting all the minority shareholders as we already have 90% of the vote

2.The new B class will only work if the shares can be bought back by the company even though the reserves are likely to be negative. 

Thanks for your comments

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