devonexile
First XI
As more and more information seeps out about the Blues parlous financial condition, the thought had crossed my mind that some consideration should be given to the role of the SUFC Board in matters reaching the state they have.
Until very recently, I was Chairman of a small transport company in this neck of the woods and Chairman of one of its wholly owned subsidiaries. As a director there are a number of clearly defined duties and responsibilities in which the failure of observance can lead to disqualification as a director and, in the more extreme cases, to directors being jointly or severally financially liable for the consequences, if they act collectively in breach of their responsibilities. Liability is unlimited and individual directors can be made bankrupt as a result of the decisions of other directors, even in a limited company such as SUFC.
Before 2006, the duties of company directors were established and defined by case law, which gave rise to plenty of wriggle room for the people concerned. However, the 2006 Companies Act set out Directors responsibilities in a clear single statement and closed off a number of the previous loopholes.
The 2006 Act has many provisions, amongst which are:
1. Directors must exercise a degree of care in their actions as directors. The test of an acceptable level of care is “what a reasonable person would do in looking after their own affairs”
2. That all directors have a duty to be fully informed about the companies affairs.
3. In exercising directors powers, directors are required to exhibit such a degree of skill as may reasonably be expected from a person with their knowledge and experience.
4. The principle responsibility of directors is to the companies shareholders, however minimal their shareholding and communication should always take place on significant matters.
5. The best interests of the company are not always the same as the best interests of the principal shareholders. Directors must consider the interests of other stakeholders such as creditors and employees and must consider the long term prospects of the company and its reputation.
6. If a director has interests in another company with which their company is planning to do business they should not vote on such a deal or their vote should be disregarded and if the planned deal is substantial it must be approved by the shareholders. This provision applies to business between subsidiary companies and their parent companies.
7. If there is no reasonable prospect of moving into profit, and there are doubts about whether the companies’ assets will cover its liabilities, or whether it can pay its debts, the company is probably trading wrongfully (or even fraudulently). In such circumstances directors can be held personally liable for the companies’ debts if it subsequently becomes insolvent.
8. Directors must ensure that the correct amounts of tax, VAT and National Insurance are paid on time.
9. Directors can be held legally liable for providing misleading information to shareholders.
10. Even in a limited liability company directors can be held personally liable for losses resulting from some acts or omissions particularly in respect of items 1,3, 6, 7 8 and 9 above.
This is only my synopsis of the key points of the 2006 Companies Act that may apply in relation to the situation that SUFC Ltd finds itself in. I am not alleging or even implying that anyone has acted in a wrongful or improper way.
I’m not a shareholder in SUFC Ltd, so have no personal knowledge of any information provided or not provided to shareholders of SUFC Ltd, nor do I have particular expertise in company law beyond the information issued by Companies House in relation to my own responsibilities as a Director of the transport company to which I referred earlier and briefing notes on Director responsibilities provided by the English and Welsh Institute of Chartered Accountants (the emboldened bits above are those of the ICAEW).
However, I trust SZ members will find the synopsis of interest, particularly in relation to the possibility of SUFC entering administration and the threat of a winding up order due to the Company becoming insolvent.
As I’m not a shareholder of SUFC Ltd, I have not seen a copy of the Companies Memorandum and Articles of Association. I would find these of great interest and would be grateful if any shareholders amongst you could post a copy on the board or e-mail them to me. It would also be helpful if the Shrimpers Trust had a copy of the Covenant applying to Roots Hall, though I may be able to help in that respect if a copy cannot be found.
In the meantime let us all hope that RM can find a way through the current cash flow crisis and that, even at this late hour, administration can be avoided.
For the Shrimpers Trust though it has got be a case of hope for the best but plan for the worst, so give all you can to their fund raising efforts and really get behind the Blues on Friday night, because by god they’ve never needed your support more!
Until very recently, I was Chairman of a small transport company in this neck of the woods and Chairman of one of its wholly owned subsidiaries. As a director there are a number of clearly defined duties and responsibilities in which the failure of observance can lead to disqualification as a director and, in the more extreme cases, to directors being jointly or severally financially liable for the consequences, if they act collectively in breach of their responsibilities. Liability is unlimited and individual directors can be made bankrupt as a result of the decisions of other directors, even in a limited company such as SUFC.
Before 2006, the duties of company directors were established and defined by case law, which gave rise to plenty of wriggle room for the people concerned. However, the 2006 Companies Act set out Directors responsibilities in a clear single statement and closed off a number of the previous loopholes.
The 2006 Act has many provisions, amongst which are:
1. Directors must exercise a degree of care in their actions as directors. The test of an acceptable level of care is “what a reasonable person would do in looking after their own affairs”
2. That all directors have a duty to be fully informed about the companies affairs.
3. In exercising directors powers, directors are required to exhibit such a degree of skill as may reasonably be expected from a person with their knowledge and experience.
4. The principle responsibility of directors is to the companies shareholders, however minimal their shareholding and communication should always take place on significant matters.
5. The best interests of the company are not always the same as the best interests of the principal shareholders. Directors must consider the interests of other stakeholders such as creditors and employees and must consider the long term prospects of the company and its reputation.
6. If a director has interests in another company with which their company is planning to do business they should not vote on such a deal or their vote should be disregarded and if the planned deal is substantial it must be approved by the shareholders. This provision applies to business between subsidiary companies and their parent companies.
7. If there is no reasonable prospect of moving into profit, and there are doubts about whether the companies’ assets will cover its liabilities, or whether it can pay its debts, the company is probably trading wrongfully (or even fraudulently). In such circumstances directors can be held personally liable for the companies’ debts if it subsequently becomes insolvent.
8. Directors must ensure that the correct amounts of tax, VAT and National Insurance are paid on time.
9. Directors can be held legally liable for providing misleading information to shareholders.
10. Even in a limited liability company directors can be held personally liable for losses resulting from some acts or omissions particularly in respect of items 1,3, 6, 7 8 and 9 above.
This is only my synopsis of the key points of the 2006 Companies Act that may apply in relation to the situation that SUFC Ltd finds itself in. I am not alleging or even implying that anyone has acted in a wrongful or improper way.
I’m not a shareholder in SUFC Ltd, so have no personal knowledge of any information provided or not provided to shareholders of SUFC Ltd, nor do I have particular expertise in company law beyond the information issued by Companies House in relation to my own responsibilities as a Director of the transport company to which I referred earlier and briefing notes on Director responsibilities provided by the English and Welsh Institute of Chartered Accountants (the emboldened bits above are those of the ICAEW).
However, I trust SZ members will find the synopsis of interest, particularly in relation to the possibility of SUFC entering administration and the threat of a winding up order due to the Company becoming insolvent.
As I’m not a shareholder of SUFC Ltd, I have not seen a copy of the Companies Memorandum and Articles of Association. I would find these of great interest and would be grateful if any shareholders amongst you could post a copy on the board or e-mail them to me. It would also be helpful if the Shrimpers Trust had a copy of the Covenant applying to Roots Hall, though I may be able to help in that respect if a copy cannot be found.
In the meantime let us all hope that RM can find a way through the current cash flow crisis and that, even at this late hour, administration can be avoided.
For the Shrimpers Trust though it has got be a case of hope for the best but plan for the worst, so give all you can to their fund raising efforts and really get behind the Blues on Friday night, because by god they’ve never needed your support more!
