Sons' sorrow

[Doctor Jobby]

3 minutes ago, BallochSonsFan said:

No.

Brabco are majority shareholders. They are effectively defacto owners in that they have the majority shareholding and can therefore dictate what happens via shareholder votes (if we ever held an AGM).

But they don't own the club privately. They're majority shareholders. Dumbarton FC is still a legal entity and the board of directors are tasked with running the club in the best interests of the club. Any move to change the ownership of the land from Dumbarton FC to Brabco, Rankine or anybody else would almost certainly be questionable under companies law. Anything that wasnt at a reasonable market value would see the directors of the club failing in their fiduciary duty that exists under law.

Its a fine line between ownership and majority shareholding as majority shareholders can essentially act as owners and force their will on the club if they really want to go down that route. It would mean starting a war with the club's board of directors. They own shares in the football club. They don't own Dumbarton FC or any of it's assets.

 Brabco's last accounts,  lists fixed assets worth £2,263,969.00.  I'd be surprised if this weren't the heritable assets of Dumbarton FC

[BallochSonsFan]

3 minutes ago, Doctor Jobby said:

 Brabco's last accounts,  lists fixed assets worth £2,263,969.00.  I'd be surprised if this weren't the heritable assets of Dumbarton FC

You'll be surprised then.

The club owns it's assets. Brabco are merely majority shareholders in the club. If there had been any transfer of legal ownership of any asset then the club would need to obtain an appropriate price or the directors would potentially be acting illegally under the Companies Act.

Brabco's ownership, and liability, is limited to it's shareholding in the club. It cannot own the assets of the club unless the club chooses to transfer ownership of those assets. To do that the board would need to obtain an appropriate sale price. Anything less would be a failure of the board's fiduciary duty and would open them up to criminal investigation.

Whatever Brabco are recording as assets, they can only own assets previously belonging to Dumbarton FC if the club has sold them those assets. Which it hasn't.

[SilverWolfe]

No.
Brabco are majority shareholders. They are effectively de facto owners in that they have the majority shareholding and can therefore dictate what happens via shareholder votes (if we ever held an AGM).
But they don't own the club privately. They're majority shareholders. Dumbarton FC is still a legal entity and the board of directors are tasked with running the club in the best interests of the club. Any move to change the ownership of the land from Dumbarton FC to Brabco, Rankine or anybody else would almost certainly be questionable under companies law. Anything that wasnt at a reasonable market value would see the directors of the club failing in their fiduciary duty that exists under law.
Its a fine line between ownership and majority shareholding as majority shareholders can essentially act as owners and force their will on the club if they really want to go down that route. It would mean starting a war with the club's board of directors. They own shares in the football club. They don't own Dumbarton FC or any of it's assets.

Sorry BSF but most of that is just wrong. Brabco as majority shareholders are the owners of the club and they task the Board of Directors with running the football club in the best interests of Brabco. They appoint the Directors and the Directors run the club to make Brabco money or they lose their jobs.

As for Rankine, he is now a secured creditor with a fixed charge over a part of the stadium. Should a liquidation event occur he is first in line to get paid with the sale of whatever part of the stadium is secured.

It's a genuine worry that this was submitted 2 week's before the accounts were due, especially now that the accounts have not been submitted at this late stage. It might well be pure coincidence but both of these combined is, in my opinion, a sign of major financial trouble and possible bad news on the way.

[BallochSonsFan]

6 minutes ago, Tartantony said:

Sorry BSF but most of that is just wrong. Brabco as majority shareholders are the owners of the club and they task the Board of Directors with running the football club in the best interests of Brabco. They appoint the Directors and the Directors run the club to make Brabco money or they lose their jobs.

As for Rankine, he is now a secured creditor with a fixed charge over a part of the stadium. Should a liquidation event occur he is first in line to get paid with the sale of whatever part of the stadium is secured.

It's a genuine worry that this was submitted 2 week's before the accounts were due, especially now that the accounts have not been submitted at this late stage. It might well be pure coincidence but both of these combined is, in my opinion, a sign of major financial trouble and possible bad news on the way.

They're really don't. If the club is a limited liability company (which it is) then the majority shareholders don't own the club.  They simply own a majority shareholding. Their liability exists only as much as their shareholding. If Brabco owned the club then they'd be liable for it's debts as much as they'd also control it's assets. They may be able to act as if they owned the club because no other shareholder could oppose their will in any EGM/AGM vote. Thats some way off ownership. If Dumbarton went bust tomorrow owing £10million (it won't) then Brabco's liability would be £0 and the loss of the value of their shares.

The board of directors are appointed to act on behalf of the company. Their responsibility towards shareholders extends to acting in a way that protects their interests. They have no legal obligation to run the club in a way that makes a financial return for Brabco, only to run the company in the general best interests of it's shareholders. Those best interests don't extend to specifically making a profit - if they did then the directors of any loss making company could be said to have failed their fiduciary duties under the Companies Act 2006. 

Sections 171 to 177 set out the 7 general duties that company directors must comply with. Protecting the company as a going concern is as much a duty of the directors as trading with a profit. Virtually no football club directors could run their business for a profit. Brabco can act to remove any directors they want to by way of an EGM and can vote in a board who will act according to their preferences. That still doesnt get round the issue of transferring assets. The business exists as a legal entity. Any transfer of assets from Dumbarton FC to Brabco for anything other than an appropriate amount of money would see the directors who signed off on such a deal being liable to proceedings under The Companies Act 2006. You can't simply sell major business assets to majority shareholders at below market value without regards to the law. Any board making such a decision would be failing in it's duty to all shareholders and to the company's employees and would be acting in a clear conflict of interest. If proven, the court could re-award ownership of any stripped asset back to the club.

Rankine can be a secured creditor. That doesnt give him the right to mortgage against any asset that the club may own. It simply gives him first dibs on any money that the business may have in the event that it is wound up. He may have a secured right to repayment.  That security may involve holding security over a particular asset. That's a long way off ownership of an asset.  He only gets to enforce any security he may hold in the event of a breach of the terms of any agreement between him and whoever owns the asset on which any debt he's owed is secured. If those terms are breached then he could gain ownership of whatever asset he's secured his debt against or could force a sale in order to recover the value of the secured debt. What he can't do is directly borrow against that asset.

There are significant concerns. Clearly a set of club accounts would be very helpful. It would also be helpful if Brabco would list the items they're claiming as fixed assets. Without those? It's just not justified to suggest that Brabco own particular assets or that Rankine either has a preferred/secured debt or that he holds security against a particular asset. Too much would need to have been done to transfer the ownership of any club asset for it to have been done on the quiet and the current board members would walk - and would do so with much noise and fanfare - before they did anything that could be seen as a breach of their legal duties or a conflict of interest.

 

 

[O'Kelly Isley III]

They're really don't. If the club is a limited liability company (which it is) then the majority shareholders don't own the club.  They simply own a majority shareholding. Their liability exists only as much as their shareholding. If Brabco owned the club then they'd be liable for it's debts as much as they'd also control it's assets. They may be able to act as if they owned the club because no other shareholder could oppose their will in any EGM/AGM vote. Thats some way off ownership. If Dumbarton went bust tomorrow owing £10million (it won't) then Brabco's liability would be £0 and the loss of the value of their shares.
The board of directors are appointed to act on behalf of the company. Their responsibility towards shareholders extends to acting in a way that protects their interests. They have no legal obligation to run the club in a way that makes a financial return for Brabco, only to run the company in the general best interests of it's shareholders. Those best interests don't extend to specifically making a profit - if they did then the directors of any loss making company could be said to have failed their fiduciary duties under the Companies Act 2006. 
Sections 171 to 177 set out the 7 general duties that company directors must comply with. Protecting the company as a going concern is as much a duty of the directors as trading with a profit. Virtually no football club directors could run their business for a profit. Brabco can act to remove any directors they want to by way of an EGM and can vote in a board who will act according to their preferences. That still doesnt get round the issue of transferring assets. The business exists as a legal entity. Any transfer of assets from Dumbarton FC to Brabco for anything other than an appropriate amount of money would see the directors who signed off on such a deal being liable to proceedings under The Companies Act 2006. You can't simply sell major business assets to majority shareholders at below market value without regards to the law. Any board making such a decision would be failing in it's duty to all shareholders and to the company's employees and would be acting in a clear conflict of interest. If proven, the court could re-award ownership of any stripped asset back to the club.
Rankine can be a secured creditor. That doesnt give him the right to mortgage against any asset that the club may own. It simply gives him first dibs on any money that the business may have in the event that it is wound up. He may have a secured right to repayment.  That security may involve holding security over a particular asset. That's a long way off ownership of an asset.  He only gets to enforce any security he may hold in the event of a breach of the terms of any agreement between him and whoever owns the asset on which any debt he's owed is secured. If those terms are breached then he could gain ownership of whatever asset he's secured his debt against or could force a sale in order to recover the value of the secured debt. What he can't do is directly borrow against that asset.
There are significant concerns. Clearly a set of club accounts would be very helpful. It would also be helpful if Brabco would list the items they're claiming as fixed assets. Without those? It's just not justified to suggest that Brabco own particular assets or that Rankine either has a preferred/secured debt or that he holds security against a particular asset. Too much would need to have been done to transfer the ownership of any club asset for it to have been done on the quiet and the current board members would walk - and would do so with much noise and fanfare - before they did anything that could be seen as a breach of their legal duties or a conflict of interest.
 
 

I won't attempt to add to the debate on the legal aspects of all of this, simply because I can't, but I would hazard that anyone viewing affairs at DFC may find that they don't always conform to the conventional norms.

[BallochSonsFan]

They might not conform to norms OK3 but unless Brabco have gone completely crazy they at least need to conform to legal standards.

Normal for Dumbarton isn't normal by many people's definition. 

[SilverWolfe]

Too big to quote all that but Dumbarton are not a Limited Liability Company.

[BallochSonsFan]

4 minutes ago, Tartantony said:

Too big to quote all that but Dumbarton are not a Limited Liability Company.

You might want to tell that to the good people at Companies House.

I'll give you a hint - it's company number sc009005.

We're not a publicly listed and traded company. We are still a limited liability company that is bound by the requirements of The Companies Act 2006.

[SilverWolfe]

You might want to tell that to the good people at Companies House. I'll give you a hint - it's company number sc009005.

We're not a publicly listed and traded company. We are still a limited liability company that is bound by the requirements of The Companies Act 2006.

 

 

 

Apologies, misunderstood your LLC chat, ive never seen anyone refer to a private limited company as a LLC. We are a subsidiary of Brabco which is perfectly fine under the Companies Act and they are very much in control of the club.

 

I don't want to clog up the thread with this stuff, I just feel there are signs of something bad coming.

 

The £150k loss over the previous 2 years while still in the championship, the net current liability position at the time of relegation, the drop in revenue last season which would make it even harder to meet those liabilities, Rankine being given the fixed security over part of the stadium right before the accounts are due out then the accounts not being submitted.

 

I hope I'm wrong.

 

[BallochSonsFan]

No we're not.

Brabco are majority shareholders. They are not the sole shareholders and we are not a subsidiary of them. Whatever problems we actually have, we don't need to fill in the blanks by inventing new ones or making claims that aren't actually correct.

[Doctor Jobby]

2 hours ago, BallochSonsFan said:

You'll be surprised then.

The club owns it's assets. Brabco are merely majority shareholders in the club. If there had been any transfer of legal ownership of any asset then the club would need to obtain an appropriate price or the directors would potentially be acting illegally under the Companies Act.

Brabco's ownership, and liability, is limited to it's shareholding in the club. It cannot own the assets of the club unless the club chooses to transfer ownership of those assets. To do that the board would need to obtain an appropriate sale price. Anything less would be a failure of the board's fiduciary duty and would open them up to criminal investigation.

Whatever Brabco are recording as assets, they can only own assets previously belonging to Dumbarton FC if the club has sold them those assets. Which it hasn't.

You are technically correct. However, read over what you have written, in bold print.

Brabco owns 75% of the shares in DFC.

The sum it has recorded in fixed assets in its accounts, is listed as their investment in DFC.

DFC has one heritable asset, the C and G Systems Stadium.

Go figure.

 

[SilverWolfe]

No we're not.
Brabco are majority shareholders. They are not the sole shareholders and we are not a subsidiary of them. Whatever problems we actually have, we don't need to fill in the blanks by inventing new ones or making claims that aren't actually correct.

Yes we are. We might not be a wholly owned subsidiary but we are a subsidiary due to their 75% shareholding and control over us. That is why they have to disclose our numbers in their Accounts per the comment earlier.

[BallochSonsFan]

4 minutes ago, Doctor Jobby said:

You are technically correct. However, read over what you have written, in bold print.

Brabco owns 75% of the shares in DFC.

The sum it has recorded in fixed assets in its accounts, is listed as their investment in DFC.

DFC has one heritable asset, the C and G Systems Stadium.

Go figure.

 

Which still doesn't get round the requirements set out in law.

Brabco own a % stake in the club. That stake is big enough to allow them to throw their weight around if they choose to do so.  It doesn't give them direct ownership of any of the club's assets.

If Brabco value their asset at £2.2million and their asset is a 75% stake in the club then that values the club as a whole at around £2.9million. it's a crude way of doing things because the shares in Dumbarton are essentially worthless. The club has no real value as a business because as a going concern it generates minimal to no profit and pays no divided. If the value is purely a book exercise based on the value of the assets owned by the club as a potential return to shareholders then at £2.9million total, and £2.2million Brabco's estimated share, they're placing a pretty big valuation on a former industrial site as a land asset.

It's a book exercise because Brabco can't sell the land. Only the club can. Brabco can influence the board. It can call an EGM and vote out the current board. It can vote in new directors of its own choosing. That still places the new directors in the same position as the current ones regarding fiduciary duty and conflict of interest.

Focus on the things we actually know about - the fundraising needed for infrastructure projects, the need to increase matchday attendance from both season ticket sales and walk up tickets and the need to generate more income. Going on flights of fantasy gets us nowhere when we have genuine and real issues to try to address.

 

[SilverWolfe]

2 minutes ago, BallochSonsFan said:

Which still doesn't get round the requirements set out in law.

Brabco own a % stake in the club. That stake is big enough to allow them to throw their weight around if they choose to do so.  It doesn't give them direct ownership of any of the club's assets.

If Brabco value their asset at £2.2million and their asset is a 75% stake in the club then that values the club as a whole at around £2.9million. it's a crude way of doing things because the shares in Dumbarton are essentially worthless. The club has no real value as a business because as a going concern it generates minimal to no profit and pays no divided. If the value is purely a book exercise based on the value of the assets owned by the club as a potential return to shareholders then at £2.9million total, and £2.2million Brabco's estimated share, they're placing a pretty big valuation on a former industrial site as a land asset.

It's a book exercise because Brabco can't sell the land. Only the club can. Brabco can influence the board. It can call an EGM and vote out the current board. It can vote in new directors of its own choosing. That still places the new directors in the same position as the current ones regarding fiduciary duty and conflict of interest.

Focus on the things we actually know about - the fundraising needed for infrastructure projects, the need to increase matchday attendance from both season ticket sales and walk up tickets and the need to generate more income. Going on flights of fantasy gets us nowhere when we have genuine and real issues to try to address.

 

You're absolutely spot on that we should focus on all of that but there are genuine worries regarding the finances/ Brabco and should be mentioned.

You are also spot on that Brabco do not technically "own" any of the clubs assets and cannot just sell the stadium (the class C shares "Golden Share" prevents this anyway), but the point is that given we are a subsidiary of Brabco, in the event of Liquidation and the sale of the stadium, they stand to make a lot of money and therefore they effectively own the stadium.

Regarding the £2.2m/ £2.9m valuation, even though they only own 75% of the Company, Brabco have to disclose the 100% amount of the assets that they control in their Accounts. 

[O'Kelly Isley III]

In my ignorance I would say this.  The Chairman of the DFC Board is a lawyer by profession and that is to be welcomed.  However, if Brabco decide they are off via a sale of their shareholding (unlikely), or by just putting a padlock on the front door, I don't consider that in the UK of 2019 there aren't ways for a clever legal advocate for Brabco to enable the latter, Companies Act or not. 

From where I'm sitting the DFC Board may hold the moral high ground but Brabco hold most of the meaningful cards, and whilst the Golden Share was designed to protect the club I can't imagine where the money would come from to prove its legal worth.

[RGD89]

My god !!

The last 3 pages of this thread is like

“ I know more about the laws of companies than you do”

This is all hear say and people reading far to much into ridiculous rumours. It’s 2 weeks since the season ended and apparently we are going bust !!

Really ???

Let’s just see how things pan out instead of arguing about the legality of who owns the club and who can tell the directors what to do.

People getting there knickers in a twist when we don’t actually know any actual hard facts about what is happening.

[PWL]

Season ticket renewal posted this morning. Wonder how quickly the cheque will be cashed? 

[C'mon_the_Sons]

22 minutes ago, PWL said:

Season ticket renewal posted this morning. Wonder how quickly the cheque will be cashed? 

Should've paid by credit card. That way you'll get your money back when we go bust! 

[TheFarPost]

13 hours ago, BallochSonsFan said:

Which still doesn't get round the requirements set out in law.

Brabco own a % stake in the club. That stake is big enough to allow them to throw their weight around if they choose to do so.  It doesn't give them direct ownership of any of the club's assets.

If Brabco value their asset at £2.2million and their asset is a 75% stake in the club then that values the club as a whole at around £2.9million. it's a crude way of doing things because the shares in Dumbarton are essentially worthless. The club has no real value as a business because as a going concern it generates minimal to no profit and pays no divided. If the value is purely a book exercise based on the value of the assets owned by the club as a potential return to shareholders then at £2.9million total, and £2.2million Brabco's estimated share, they're placing a pretty big valuation on a former industrial site as a land asset.

It's a book exercise because Brabco can't sell the land. Only the club can. Brabco can influence the board. It can call an EGM and vote out the current board. It can vote in new directors of its own choosing. That still places the new directors in the same position as the current ones regarding fiduciary duty and conflict of interest.

Focus on the things we actually know about - the fundraising needed for infrastructure projects, the need to increase matchday attendance from both season ticket sales and walk up tickets and the need to generate more income. Going on flights of fantasy gets us nowhere when we have genuine and real issues to try to address.

 

Spot on. Thank you.

Please be assured that the chairman and club board are fully engaged and doing all they can in seeking to ensure the current and future financial and asset security of the club. These are tough and complicated issues (to state the obvious), and the trust is also being fully engaged -- we have a trust director on the board, and I'm also closely involved as the nominated trust board rep on these issues. There is also an important conversation with the C-share (so called 'golden share') company, who have a crucial role in ensuring that our assets are not disposed in any way that imperils the club. I can't discuss all the details here, but they are being handled carefully and responsibly -- along with the need to secure a sustainable player budget. For practical reasons, the latter has taken longer than any of us (not least the manager) would have liked, but there will be news soon.

In the meantime, all those of us who love this club and want to see it continue and flourish can do some very practical things: * buy season tickets and get friends and family to do so too -- which also backs the 'under-12s go free' initiative. * support the 'buy a brick scheme' and similar fundraising plans  * refuse to get dragged into doom-mongering, gossip and nay-saying. * watch out for updates from the trust.

Best,  Simon

 

[FifeSons]

11 hours ago, RGD89 said:

My god !!

The last 3 pages of this thread is like

“ I know more about the laws of companies than you do”

This is all hear say and people reading far to much into ridiculous rumours. It’s 2 weeks since the season ended and apparently we are going bust !!

Really ???

Let’s just see how things pan out instead of arguing about the legality of who owns the club and who can tell the directors what to do.

People getting there knickers in a twist when we don’t actually know any actual hard facts about what is happening.

That's accountants for you - boring b*****ds with a vastly inferior intellect to their actuarial superiors!