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.