Trust AGM resolution 3

[SEA Grecian]

I haven't put this on the general AGM thread as i think this issue is too important. and I don't want it to get lost.

As some of you may remember, a few years ago I stood for election to the TB. This was in the time following the PFA loan and the honest admission by the TB that they had "taken their eye off the ball". At that election, myself, fellow candidate and ex webber Terry Hall, Clive Harrison and Matt Phillips put out a joint statement saying that if elected we would be working towards ensuring full accountability of the club board to the TB. We were supported in that aim by then sitting trustees, Pete Martin and John Kanefsky. At that time I think we were all of the belief that the attitude of the club board to the Trust and TB was that they were a minor irritation that occasionally required lip service but could ultimately be ignored. I and i believe the others I mentioned believed also that we needed to flex our muscles as majority shareholders and work towards putting measures in place to ensure this could no longer happen and we would have appropriate control.
Although I came within just a few votes I was however unsuccessful in getting elected to the board, as was Terry. However, Clive and Matt were successful and were able to join Pete and John pushing for change from within and I'm sure they were instrumental in in getting the rule change that ensured voting parity between Trust appointed director and those appointed from elsewhere. As a result for the first time we the trust had genuine control as majority shareholders should in my opinion.

However, that hard fought for, landmark change is now under threat, as there is a proposed resolution for the AGM that this voting parity be abandoned. I feel very strongly about this. If we abdicate our power in this way, for me the "we own our club" statement becomes meaningless, and we will go back to the dark days when the club board simply ignores the Trust other than the kudos that comes with being able to claim supporter ownership. If we have no real power, then what is the point of the Trust ownership, we might as well sell our shares and go back to the private ownership model that for 101 years of our history failed to produce a viable and sustainable business and hope we don't fall would of another Russell and Lewis.

I feel so passionate about this and don't want to go back to the dark days where the constant accusations of the prevalent 'village fete mentality' justifiably in some cases re-emerge. I strongly urge all trust members to give this matter serious thought and vote down this resolution.

This is the proposed resolution and its supporting info. Below each point is my response:

Trust Board Resolution No 3
Resolution:
The Trust Board shall remove the requirement for there to be parity of voting directors between those appointed directly from the Trust, and those appointed from external sources.
Supporting Information
1) The Trust already appoint and approve ALL DIRECTORS regardless of how they were sourced. The Trust may choose to appoint the entire Trust Board to the Club Board or none.
This is true but as with electing politicians, you can say what you like to get in, but once you're in you're in and can do and say what you like. The difference being that politicians are forced to do their work in the public eye, and you can see when they mess up, but as a company director, it's all done behind closed doors. The second sentence of this is a bit of a red herring as we know in reality the Trust won't and almost certainly shouldn't appoint the whole TB, and the idea of appointing none of then is at odds with the statement in section five below so is plainly untrue.
2) The Trust can dismiss ANY DIRECTOR with immediate effect;
True again, but as far as I know in the nearly 20 years of Trust ownership, this has never happened, suggesting their is no appetite for this kind of intervention and it would no doubt be suggested it would result in bad publicity causing future recruitment difficulties if it were suggested. Plus as the only people who will be aware of how they are operating will be the Trust appointed directors, who will be bound to an extent by confidentiality in that role, so how will the trust as a whole know there is a problem that requires their removal.
3) There is no requirement for Trust Directors to vote in unison. Indeed, this could be detrimental to the legal requirement of being a company director and there is a danger of fettering individuals.
Again this is true, company directors are legally bound to act as individuals solely for the benefit of the company and cannot act as agents of another organisation. So as such they are not Trust representatives in that role. However these directors qualify for their positions through their membership of the TB having been elected in an open democratic process, where diversity of opinion is recognised, understood and accepted. We accept their will be diversity of opinion on the TB and it is reasonable to accept this will be transferred in their role as club directors. The imortant factor is that they are Trust appointments and well known to their fellow trustees who would be able to veto the appointment of a Trustee who is likely to 'go rogue'.
4) The time commitment required to perform a directorial role is significant and it may not always be possible to achieve parity simply due to the availability of people willing or able to do so. As such, the only way to achieve parity would be to reduce the club board by removing people who may already be playing a valuable role;
There is of course a huge time commitment for anyone undertaking the role of club director, and it is very feasible that at time there may not be enough people on the TB to fill the spaces. However, in reducing the number of director to accommodate this you do not need to reduce personnel, you merely need to remove their status as directors and therefore their ability to vote. Why do we need so many directors anyway? They would still be able to be fully active members of the management board, give advice, join in all discussions and put their case for courses of action to take. They can continue to fulfil their "valuable role', they just couldn't vote. I'm sure the argument would be that this would put people off wanting to perform these role if the status was changed, in this case I would question their motives for wanting to do them in the first place, as It would seem to me that rather than doing the role because they want the company to succeed, they are more likely in my opinion therefore doing it for personal self aggrandisement.
5) The number of Trustees appointed to the Club Board shall never be less than two. This would ensure that there is an appropriate check & balance function.
So what! If you're in a minority of two, you are powerless anyway and will always be outvoted, so what check and balance function could you possibly have. It didn't go well before did it!

Thanks for flagging this up; I'm definitely yet to be convinced this is a good idea. Out of interest what do you make of the other resolutions. The first one seems sensible but I have to admit I don't really understand the second one.

 

[Red Bill]

Thanks for flagging this up; I'm definitely yet to be convinced this is a good idea. Out of interest what do you make of the other resolutions. The first one seems sensible but I have to admit I don't really understand the second one.

I've always been in favour of increasing our shareholding so if this provides a way of getting towards the target of 75%, I definitely support it. Although I have to admit I get a bit lost in the detail.
As for the CTA resolution, I find that slightly worrying and don't find the explanation for this move very illuminating. If the CTA is removed from the articles, what happens to the CTA? Is it abandoned? The CTA does seem to be the document that ensures the primacy of the Trust and the parity (as a minimum) of Trust appointments to the club board. So maybe abandoning it, if that's what's happening, is necessary to allow the adoption of resolution 3?
I think the reasoning behind, and the effect of this resolution aren't explained well at all. It seems like it's being portrayed as simply to ease a procedure that doesn't appear that complicated in the first place, but who's removal could have far reach consequences. It would be good to hear the thoughts of someone involved in drawing up the CTA in the first place, as when it was first agreed it was certainly in my understanding, held up as the document that provide the control and accountability that I was hoping for. I think Pete Martin may have been involved in this so perhaps he could help explain the implication of this resolution better. Can you help here Pete?

 

[John William]

An earlier poster referred to a post I had made some time ago about governance issues. I can't lay my hands on this at present, but for what it's worth my comments on the current topic.

Resolution #3 is evasive nonsense, and I agree it should be rejected.

However, and in any case, the IMO Trust cannot directly implement this Resolution, it is wrongly worded as it says "The Trust Board shall remove the requirement...". They cannot actually do so, they can only use their voting power to instruct the Company (Club) do this, by changing the Company's Articles of Association, which the Trust has no direct control over except by using its strength as majority shareholder.

So IMO the Resolution fails anyway as being ultra vires. (For context, when the resolution relating to Paul Tisdale's contract was passed, it told the Trust Board to instruct the Club Board to implement it, as it was recognised that the Trust did not have the power to do this directly)

The Trust Board can of course get their way and make the Club do what they want eventually; but not via this Resolution.

____________________

However, in reality, the Club and Trust Boards are already completely ignoring the "parity" principle. But this is partly the fault of the TB and Membership for having let this state of affairs arise. I did try to pursue this some time ago but eventually gave up, and no-one else seemed interested. Mea culpa

______________________

There are actually currently 9 Directors of Exeter City AFC Ltd, only 3 of whom are Trust Board members. At one time there were thirteen.

EXETER CITY A.F.C. LIMITED people - Find and update company information - GOV.UK (company-information.service.gov.uk)

The current Chairman justified this to me by saying that two of the other Directors were "adopted Trust appointments". He argued that they are in any case "non-voting directors" and that this was "legitimate, albeit unusual".

Weasel words.

Firstly, as I understand it (and I am a director of two companies) there can be no such thing as a non-voting company director. You are either a director, with authority and joint liability for the conduct of the company, or you ar not. Individual directors may choose to agree not to vote, as part of some self-denying ordinance, but this cannot be binding in law. In fact it is their legal duty to vote in accordance of what they consider to be the best interests of the Company (and not one shareholder), even if they are aware that that shareholder does not agree..

Secondly, I doubt if most Trust members would regard a director who is not a member of the Trust Board as qualifying as a "Trust Director", that is surely not what was intended when the parity principle was implemented.

Thirdly, the Resolution contains factual inaccuracies and is not consistent with the current Articles of Association. For example, although the Resolution says the Trust can dismiss any director this is not true. Under the Articles the Trust can only dismiss the directors it appoints under the parity principle (see articles 17.4 and 17.6 below), not the other Directors appointed by the Board under Article 17.2. As I understand it, the only way the Trust Board could dismiss a director that the Club Board wanted to retain is to call an emergency general meeting and vote their majority sharreholding on a resolution to do so.

ARTICLES OF ASSOCIATION (exetercityfc.co.uk)

Methods of appointing directors

17.
17.1. The number of directors appointed to the Board shall always be an odd number, and for the avoidance of doubt, the chair of the Board is included in calculating the number of directors for this article 17(1).
17.2. Any person who is willing to act as a director, and is permitted by law to do so, may be appointed to be a director - (a) by ordinary resolution, or (b) by a decision of the Board.
17.3. Any number of directors may be appointed in accordance with article 17(2).
17.4. The Trust shall appoint a number of directors to the Board equal to the number of directors appointed under article 17(2).
17.5. For the purposes of article 17(3) and article 17(4), any director appointed as chair of the Board in accordance with article 12(1) shall not be counted for calculating the number of directors appointed under each of these articles.
17.6. The Trust can remove and reappoint any of its directors appointed under article 17(4) at any time. For the avoidance of doubt, the Trust can exercise this power to remove a director it has appointed but which has been appointed as chair of the Board under article 12(1).
17.7. A director shall be appointed for a maximum period of 3 years, whereupon they shall resign but be entitled to immediately be reappointed to the Board by: (a) the Board passing a resolution to reappoint them, or (b) the Trust reappointing them.
17.8. If a director is reappointed to the Board: (a) under article 17(7) (a), the director will be one of the directors which the shareholders and Board are entitled to appoint under article 17(2); (b) under article 17(7) (b), the director will be one of the directors the Trust shall appoint to the Board under article 17(4).

And as Red Bill says in commenting on point 5, having a rump of two directors who are Trust Board members on a board of 9 would make them practically powerless. Which was exactly the reason why the parity principle was implemented in the first place.

 

[ExmouthMart]

An earlier poster referred to a post I had made some time ago about governance issues. I can't lay my hands on this at present, but for what it's worth my comments on the current topic.

Resolution #3 is evasive nonsense, and I agree it should be rejected.

However, and in any case, the IMO Trust cannot directly implement this Resolution, it is wrongly worded as it says "The Trust Board shall remove the requirement...". They cannot actually do so, they can only use their voting power to instruct the Company (Club) do this, by changing the Company's Articles of Association, which the Trust has no direct control over except by using its strength as majority shareholder.

So IMO the Resolution fails anyway as being ultra vires. (For context, when the resolution relating to Paul Tisdale's contract was passed, it told the Trust Board to instruct the Club Board to implement it, as it was recognised that the Trust did not have the power to do this directly)

The Trust Board can of course get their way and make the Club do what they want eventually; but not via this Resolution.

____________________

However, in reality, the Club and Trust Boards are already completely ignoring the "parity" principle. But this is partly the fault of the TB and Membership for having let this state of affairs arise. I did try to pursue this some time ago but eventually gave up, and no-one else seemed interested. Mea culpa

______________________

There are actually currently 9 Directors of Exeter City AFC Ltd, only 3 of whom are Trust Board members. At one time there were thirteen.

EXETER CITY A.F.C. LIMITED people - Find and update company information - GOV.UK (company-information.service.gov.uk)

The current Chairman justified this to me by saying that two of the other Directors were "adopted Trust appointments". He argued that they are in any case "non-voting directors" and that this was "legitimate, albeit unusual".

Weasel words.

Firstly, as I understand it (and I am a director of two companies) there can be no such thing as a non-voting company director. You are either a director, with authority and joint liability for the conduct of the company, or you ar not. Individual directors may choose to agree not to vote, as part of some self-denying ordinance, but this cannot be binding in law. In fact it is their legal duty to vote in accordance of what they consider to be the best interests of the Company (and not one shareholder), even if they are aware that that shareholder does not agree..

Secondly, I doubt if most Trust members would regard a director who is not a member of the Trust Board as qualifying as a "Trust Director", that is surely not what was intended when the parity principle was implemented.

Thirdly, the Resolution contains factual inaccuracies and is not consistent with the current Articles of Association. For example, although the Resolution says the Trust can dismiss any director this is not true. Under the Articles the Trust can only dismiss the directors it appoints under the parity principle (see articles 17.4 and 17.6 below), not the other Directors appointed by the Board under Article 17.2. As I understand it, the only way the Trust Board could dismiss a director that the Club Board wanted to retain is to call an emergency general meeting and vote their majority sharreholding on a resolution to do so.

ARTICLES OF ASSOCIATION (exetercityfc.co.uk)

Methods of appointing directors

17.
17.1. The number of directors appointed to the Board shall always be an odd number, and for the avoidance of doubt, the chair of the Board is included in calculating the number of directors for this article 17(1).
17.2. Any person who is willing to act as a director, and is permitted by law to do so, may be appointed to be a director - (a) by ordinary resolution, or (b) by a decision of the Board.
17.3. Any number of directors may be appointed in accordance with article 17(2).
17.4. The Trust shall appoint a number of directors to the Board equal to the number of directors appointed under article 17(2).
17.5. For the purposes of article 17(3) and article 17(4), any director appointed as chair of the Board in accordance with article 12(1) shall not be counted for calculating the number of directors appointed under each of these articles.
17.6. The Trust can remove and reappoint any of its directors appointed under article 17(4) at any time. For the avoidance of doubt, the Trust can exercise this power to remove a director it has appointed but which has been appointed as chair of the Board under article 12(1).
17.7. A director shall be appointed for a maximum period of 3 years, whereupon they shall resign but be entitled to immediately be reappointed to the Board by: (a) the Board passing a resolution to reappoint them, or (b) the Trust reappointing them.
17.8. If a director is reappointed to the Board: (a) under article 17(7) (a), the director will be one of the directors which the shareholders and Board are entitled to appoint under article 17(2); (b) under article 17(7) (b), the director will be one of the directors the Trust shall appoint to the Board under article 17(4).

And as Red Bill says in commenting on point 5, having a rump of two directors who are Trust Board members on a board of 9 would make them practically powerless. Which was exactly the reason why the parity principle was implemented in the first place.

So in your opinion what is motivating this and who exactly is behind this?! You don’t sound very complimentary about the two board chairman which in its self is worrying……. Any shenanigans need to be dealt with firmly and those involved removed. It’s also worrying that you say you have mentioned your concerns and no one was interested!
I’ve said it before and I’ll say it again I am worried that there seems to be a way control could be taken from The Trust by the Club Board. I don’t understand what goes on but I trust the people elected on our behalf to run the club in the spirit it was intended and not to have any other reason for doing so.

 

[David Treharne]

What concerns me most about all three resolutions is that not only have they come from the Trust Board, but, perhaps even more importantly, we will have (at best) about 30 minutes to discuss all three at the AGM. One, appears to be such a contentoius issue that I think it ought to be available for greater and less cursory discussion. The AGM's in recent years have been hurried, to say the least and I think its incumbent of the Trust Board to put up someone, other than the Trust Chair to explain in an unhurried way the thinking behind each of them. If possible Trust members ought to press to a seperate meeting to discuss these items. In a way this seems to be a return to Russelll and Lewis' dictum that "Amateurs can't run football clubs".

 

[C j phill]

I've always been in favour of increasing our shareholding so if this provides a way of getting towards the target of 75%, I definitely support it. Although I have to admit I get a bit lost in the detail.
As for the CTA resolution, I find that slightly worrying and don't find the explanation for this move very illuminating. If the CTA is removed from the articles, what happens to the CTA? Is it abandoned? The CTA does seem to be the document that ensures the primacy of the Trust and the parity (as a minimum) of Trust appointments to the club board. So maybe abandoning it, if that's what's happening, is necessary to allow the adoption of resolution 3?
I think the reasoning behind, and the effect of this resolution aren't explained well at all. It seems like it's being portrayed as simply to ease a procedure that doesn't appear that complicated in the first place, but who's removal could have far reach consequences. It would be good to hear the thoughts of someone involved in drawing up the CTA in the first place, as when it was first agreed it was certainly in my understanding, held up as the document that provide the control and accountability that I was hoping for. I think Pete Martin may have been involved in this so perhaps he could help explain the implication of this resolution better. Can you help here Pete?

The CTA provides the governance arrangements between the Club and Trust Boards. I recall a fair amount of work by the Trust Finance and Governance Group, in formulating the document and the schedule can be found on the Supporters Trusf Website, under "Documents". I recommend anyone interested in the resolution to view the document. The web also shows that the schedule is dated September 2020, so I am unclear why the agreement that was only recently approved is now being recommended for removal.

In terms of the three resolutions proposed, I see the validity of item1 but do not see any validity in items 2 and 3.

 

[SEA Grecian]

The CTA provides the governance arrangements between the Club and Trust Boards. I recall a fair amount of work by the Trust Finance and Governance Group, in formulating the document and the schedule can be found on the Supporters Trusf Website, under "Documents". I recommend anyone interested in the resolution to view the document. The web also shows that the schedule is dated September 2020, so I am unclear why the agreement that was only recently approved is now being recommended for removal.

In terms of the three resolutions proposed, I see the validity of item1 but do not see any validity in items 2 and 3.

Thanks, very helpful.

 

[SaintJames]

What concerns me most about all three resolutions is that not only have they come from the Trust Board, but, perhaps even more importantly, we will have (at best) about 30 minutes to discuss all three at the AGM. One, appears to be such a contentoius issue that I think it ought to be available for greater and less cursory discussion. The AGM's in recent years have been hurried, to say the least and I think its incumbent of the Trust Board to put up someone, other than the Trust Chair to explain in an unhurried way the thinking behind each of them. If possible Trust members ought to press to a seperate meeting to discuss these items. In a way this seems to be a return to Russelll and Lewis' dictum that "Amateurs can't run football clubs".

David, you are correct that this issue which is fundamental needs proper not rushed discussion. Is it too late to put an emergency proposal forward seeking that this proposal is subject to greater scrutiny and discussion at a seperate open meeting of Trust members? If it is too late under the rules can an amendment to this effect be proposed ans seconded at the AGM itself? For the record until I hear what the reasoning is behind the proposal I cant say I would accept or reject

 

[Alistair20000]

What concerns me most about all three resolutions is that not only have they come from the Trust Board, but, perhaps even more importantly, we will have (at best) about 30 minutes to discuss all three at the AGM. One, appears to be such a contentoius issue that I think it ought to be available for greater and less cursory discussion. The AGM's in recent years have been hurried, to say the least and I think its incumbent of the Trust Board to put up someone, other than the Trust Chair to explain in an unhurried way the thinking behind each of them. If possible Trust members ought to press to a seperate meeting to discuss these items. In a way this seems to be a return to Russelll and Lewis' dictum that "Amateurs can't run football clubs".

I agree with this.

There will be insufficient time to properly debate these matters. As JW has pointed out, Resolution 3 may also be ultra vires and illegal as currently drafted. Will be interesting to see if the TB moves for it to be amended.

 

[Spoonz Red E]

I've always been in favour of increasing our shareholding so if this provides a way of getting towards the target of 75%, I definitely support it. Although I have to admit I get a bit lost in the detail.
As for the CTA resolution, I find that slightly worrying and don't find the explanation for this move very illuminating. If the CTA is removed from the articles, what happens to the CTA? Is it abandoned? The CTA does seem to be the document that ensures the primacy of the Trust and the parity (as a minimum) of Trust appointments to the club board. So maybe abandoning it, if that's what's happening, is necessary to allow the adoption of resolution 3?
I think the reasoning behind, and the effect of this resolution aren't explained well at all. It seems like it's being portrayed as simply to ease a procedure that doesn't appear that complicated in the first place, but who's removal could have far reach consequences. It would be good to hear the thoughts of someone involved in drawing up the CTA in the first place, as when it was first agreed it was certainly in my understanding, held up as the document that provide the control and accountability that I was hoping for. I think Pete Martin may have been involved in this so perhaps he could help explain the implication of this resolution better. Can you help here Pete?

This, for me, is the crux of the matter.

If the Trust have a reason for proposing a fundamental change - explain it well.