Given another adjournment of Hereford United's winding-up petition yesterday and the promise of £1.5M fresh investment in the club, Moorsfan questions whether it can go ahead.
A new £1.5m investment in the company is now being suggested.
But it is wondered whether the new investors and the company
are overlooking various Company Law issues?
As was recognised at the time of the proposed CVA, voted down by creditors, the company's Articles of Association contain a borrowing limit, and that has already been far exceeded. Accordingly it is currently impossible for the company to borrow more, unless shareholders agree at a General Meeting to vary the Articles of Association.
If it is proposed that the company issues more shares then company law is clear. Simply any new shares need to be issued to existing shareholders pro-rata to their existing shareholdings, unless shareholders agree to waive such pre-emption rights.
Special Resolutions, at least 75% voting in favour, would be needed, either to alter the company's Articles of Association (section 21, CA2006), or to waive Pre-Emption Rights (section 571, CA2006). The majority shareholder has about 55.3% of the shares, but it is debatable whether sufficient other shareholders would support the needed resolutions, in order to get past the 75% mark.
In other words it is totally impossible for new investors to introduce any new Loan Capital or Share Capital into the company without the consent and agreement of the current shareholders. And it is not certain that such agreement would be forthcoming.
As was recognised at the time of the proposed CVA, voted down by creditors, the company's Articles of Association contain a borrowing limit, and that has already been far exceeded. Accordingly it is currently impossible for the company to borrow more, unless shareholders agree at a General Meeting to vary the Articles of Association.
If it is proposed that the company issues more shares then company law is clear. Simply any new shares need to be issued to existing shareholders pro-rata to their existing shareholdings, unless shareholders agree to waive such pre-emption rights.
Special Resolutions, at least 75% voting in favour, would be needed, either to alter the company's Articles of Association (section 21, CA2006), or to waive Pre-Emption Rights (section 571, CA2006). The majority shareholder has about 55.3% of the shares, but it is debatable whether sufficient other shareholders would support the needed resolutions, in order to get past the 75% mark.
In other words it is totally impossible for new investors to introduce any new Loan Capital or Share Capital into the company without the consent and agreement of the current shareholders. And it is not certain that such agreement would be forthcoming.