Message for shareholders | Vital Football

Message for shareholders

L

LE14_Gill

Vital Newbie
Is this change to the Articles to allow new money to be invested, or a retrospective change for the Galinson change?
 
Like PuB, absolutely no idea. May as well be written in Chinese. But this is what it says, anyway (from https://www.gillinghamfootballclub.com/news/2022/december/message-to-shareholders/)

Company number 39175

PRIVATE COMPANY LIMITED BY SHARES


WRITTEN RESOLUTIONS

of

GILLINGHAM FOOTBALL CLUB LTD

Circulated on 9th December 2022

The Directors of Gillingham Football Club Ltd (“the Company” or “the Club”) propose that the resolutions set out below (“the Resolutions”) are passed as special resolutions:



SPECIAL RESOLUTIONS

  1. That the Articles of Association of the Company be altered by deleting Article 3 and replacing it with the words: “3. [Article deleted]”.
  2. That the Articles of Association of the Company be altered by deleting Article 4.1 and replacing it with the following words:
“The Directors may unconditionally exercise all the powers of the Company to allot, grant options over, offer or otherwise deal with shares in the Company to or in favour of such persons, on such terms and conditions, at a premium or at par, and at such times as the Directors think fit. Section 561 of the Companies Act 2006 shall not apply to any allotment of shares in the Company.”



The Directors propose that the Resolutions are passed because they may have an opportunity to secure investment into the Club for shares. The alterations to the Articles of Association made by the Resolutions will enable the Directors to take up such opportunity should such occur, and to take up any further opportunities for cash investments into the Club which may arise in the future.



GFC Holdings Limited, which holds 35,257,700 ordinary shares in the Company (amounting to 75.0082% of the issued ordinary shares in the Club), has confirmed to the Directors that it intends to agree to the Resolutions.
 
I have had a look at Companies House records and I think these are the current Articles, which are being altered:
application-pdf

You will see that Article 3 limited the company to a share capital of £6,000,000 divided in to £600 million 1p shares and that is being deleted suggesting they want to give directors the power to make it unlimited?

Could be done that way to give the new owner millions of newly created shares so Scally holds the same number but a smaller percentage, and will water down minority shareholdings like those held by fans, but not sure.
 
A pure speculation on my part. But might this allow a buyer to buy all shares at the rate agreed by Scally?
 
GillsBluenose said:
I have had a look at Companies House records and I think these are the current Articles, which are being altered:
application-pdf

You will see that Article 3 limited the company to a share capital of £6,000,000 divided in to £600 million 1p shares and that is being deleted suggesting they want to give directors the power to make it unlimited?

Could be done that way to give the new owner millions of newly created shares so Scally holds the same number but a smaller percentage, and will water down minority shareholdings like those held by fans, but not sure.
Click to expand...

It does sound as if they want to flog more shares which presumably will water down the existing share holding. Sounds a bit like quantitative easing. Perhaps if they take the limit off the number of shares it won't actually diminish the current shares in terms of value but would decrease the percentage held. Any experts about? Anyway, I've checked the majority that you need to make a change to the articles and it is 75% so I don't think there's much we can do about this. If it allows more investment it's probably a good thing on the whole.
 
I’m no expert but reading between the lines it would seem that there’s no investment coming in, the club is not for sale for any price and Scally’s going to be more involved than ever, with a smaller budget and three sided ground.

Really hope I’m wrong (first time for everything).
 
GillsBluenose said:
I have had a look at Companies House records and I think these are the current Articles, which are being altered:
application-pdf

You will see that Article 3 limited the company to a share capital of £6,000,000 divided in to £600 million 1p shares and that is being deleted suggesting they want to give directors the power to make it unlimited?

Could be done that way to give the new owner millions of newly created shares so Scally holds the same number but a smaller percentage, and will water down minority shareholdings like those held by fans, but not sure.
Click to expand...
You are on the right track.

S561 of the Companies Act is titled:
"Existing shareholders right of pre-emption".

What that means is that existing shareholders are supposed to be protected against dilution of value.
This could happen by issuing a zillion shares to a new investor at a discount.

BUT
S561 has four exceptions or conditions.
Without checking each of them....
I know that at least one of them allows the Directors to propose a Resolution that removes "shareholders right of pre-emption".
i.e. remove that protection.

Scally has form.
Back when GFC had AGMs, each year Scally would propose a Resolution allowing GFC to issue 60,000,000 shares.
It was:
"disapplication of pre-emption rights"
(Aside from the jargon, IIRC it was further disguised. Something like "£600,000 nominal")

Given that total shares outstanding were 47,000,000 - that allowed Scally to dilute massively.
(Not that he actually did.)
 
girlie_gfc_lurker said:
It does sound as if they want to flog more shares which presumably will water down the existing share holding. Sounds a bit like quantitative easing. Perhaps if they take the limit off the number of shares it won't actually diminish the current shares in terms of value but would decrease the percentage held. Any experts about? Anyway, I've checked the majority that you need to make a change to the articles and it is 75% so I don't think there's much we can do about this. If it allows more investment it's probably a good thing on the whole.
Click to expand...
Last time I looked (years ago) Scally owned 81%.

EDIT: I assume that was GFC Ltd.
I note the reference above to GFC Holdings Ltd.
 
Last edited:
Tarian said:
Last time I looked (years ago) Scally owned 81%.

EDIT: I assume that was GFC Ltd.
I note the reference above to GFC Holdings Ltd.
Click to expand...
GFC Holdings has one Director - Paul Scally.

Shares in issue = 1 held by Paul Scally.

GFC Holdings owns at least 75% of GFC Ltd.
My remark about Scally owning 81% of GFC is either wrong - or he bought 6% of GFC Ltd in person.
 
For me it means one of two things:



- Galinson is buying in alongside Scally

- Galinson is buying out Scally in a rather convulted fashion



Either way, changes are coming!
 
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