Swapping the boardroom for the terraces

Swapping the boardroom for the terraces
Corporate analysis: Are Community Interest Companies (CICs) the right match for football supporters? With the Rangers First CIC making headlines for its recent intervention in the running of Rangers FC, Oliver Hunt, solicitor in the charity and social enterprise team at Bates Wells Braithwaite, considers the role CICs can play in shaping the direction of a club.

Background

The supporters club, Rangers First, has recently made headlines by taking steps to intervene in their efforts to intervene in how Rangers FC is run. Rangers First is a CIC, established to receive donations from Rangers’ supporters to purchase AIM shares in the club’s holding company Rangers International Football Club (RIFC), and use that shareholding to influence how the club is run. Rangers First has since announced that it used its amassed shareholding in RIFC, to vote in favour of shareholder resolutions to remove existing, and appoint new directors to the RIFC board that were passed at RIFC’s extraordinary general meeting held on 6 March 2015. The case raises interesting questions about the obligations of CICs and the use of this company model in supporters’ attempts to ‘reclaim’ their club.

What are the legal forms for supporters’ clubs?

Supporters’ clubs have existed for many years, and traditionally took the form of an unincorporated association and, more recently, a co-operative form such as the community benefit society. Since their introduction in 2005, CICs have grown in popularity as a vehicle for supporters’ clubs because of their combination of operational flexibility and mission locked governance.

What accountability does a CIC have to its supporters’ goals?

The essential feature of a CIC is that, while being a private company limited by shares or guarantee, it exists for the benefit of the community, as specified in its company objects. For example, Rangers First’s objects state it will ‘carry on activities which benefit the community’ in particular through buying shares in RIFC and utilising that shareholding to ‘repair, improve and enhance the engagement between the owners and followers’ of Rangers FC. Although in reality the main purpose of the CIC is clear—to buy shares in Rangers FC and so influence how it is run—the opening words of the objects also give the directors discretion to pursue any ‘activities which benefit the community’, so conceivably not all its efforts must go towards buying those shares. This flex

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