IN THE MATTER OF: (i) DORKING WANDERERS FOOTBALL CLUB (DWFC); (ii) THE FOOTBALL CONFERENCE LIMITED (t/a the National League)(TFCL) PRELIMINARY WRITTEN REPRESENTATIONS [On behalf of Dorking Wanderers Football Club] These Preliminary Written Representations are provided in relation to the above ‘MATTERS’ by DWCL. They are preliminary only, due to the urgency of the situation that DWCL (and indeed many other National League Clubs) find themselves in. Depending on developments over the coming days DWFC reserves the right to produce further and/ or more detailed Representations in relation to the issues raised below or in relation to any other matters that may arise. Background
1. On Monday 1st February 2021 (the Circulation Date) TFCL sent to all clubs within the National League, National League South and National League North a document entitled ‘WRITTEN RESOLUTIONS’. This stated:
“Under Chapter 2 of Part 13 of the Companies Act 2006, the directors of the Company propose that in light of the continued absence of crowds from fixtures as a result of the ongoing COVID-19 pandemic and funding arrangements of the Government Sports Winter Survival Package via Sport England, the Clubs vote upon Resolution 1 be passed as a special resolution and Resolutions 2, 3 and 4 be voted upon as ordinary resolutions”. 2. Resolution 1 (identified as a special resolution for all clubs):
“That Resolution 2 about whether to end the 2020/21 Playing Season of The National League (Step 1) be taken only by Clubs in the National League and that Resolution 3 about whether to end the 2020/21 Playing Season of the National League North and the National League South (Step 2) be taken only by Clubs that play in the National League North or the National League South with votes cast for Resolution 3 being counted on a one member, one vote basis for National League North and National League South Clubs.” 3. Resolution 2 (identified as an ordinary resolution – for National League clubs (step 1) only:
“That, conditional upon Resolution 1 being passed, the 2020/21 Playing Season of the National League (Step 1) shall immediately end on the date this Resolution 2 is passed and be declared null and void and subject to the approval of The Football Association, those Regulations that provide for promotion and relegation to and from Step 1 be suspended for the 2020/21 Playing Season.”
4. Resolution 3 (identified as an ordinary resolution – for National League North and South (step 2) only:
“That, conditional upon Resolution 1 being passed, the 2020/21 Playing Season of the National League North and the National League South (Step 2) shall immediately end on the date this Resolution 3 is passed and be declared null and void and subject to the approval of The Football Association those Regulations that provide for promotion and relegation to and from Step 2 be suspended for the 2020/21 Playing Season.” 5. Resolution 4 (ordinary resolution – all clubs): “That conditional upon Resolution 1 not being passed, the 2020/21Playing Seasons of The National League (Step 1) and The National League North and The National League South (Step 2) shall immediately end on the date this Resolution 4 is passed and be declared null and void and subject to the approval of The Football Association, those Regulations that provide for promotion to and relegation from Step 1 and Step 2 be suspended for the 2020/21 Playing Season.” 6. With the ‘WRITTEN RESOLUTION’ were some Explanatory Notes. Inter alia they provided the following explanations:
6.1 In relation to Resolution 1 (a special resolution) this was to enable the Clubs to decide by a 75% majority of all Clubs (the voting to take place in the prescribed manner (i.e. Step 1, each Club one vote and Step 2, National League North 4 votes, National League South 4 votes)) whether (i) the decision to end the Playing Season for Step 1 (National League) and Step 2 (National League North and National League South) should be taken by all Clubs in Steps 1 and 2, or; (ii) whether the decision to end the Playing Season for Step 1 (National League) should be taken only by Clubs in the National League (Step1); and the decision to end the Playing Season for Step 2 (National League North and National League South) should be taken only by the Clubs in Step 2 (National League North and National League South) with votes cast for Resolution 3 being counted on a one member, one vote basis for Step 2 Clubs. 6.2 Resolutions 2 and 3 would only apply if Resolution 1 was passed, with Regulation 4 only applying only if Resolution 1 was NOT passed, whereon Resolution 4 would be decided by the vote of all Clubs in the prescribed manner (Step 1, each Club one vote and Step 2, National League North 4 votes, National League South 4 votes).
7. On 18 February TFCL announced:
7.1 Resolution 1 was passed, such that Step One and Two be split in deciding the outcome o f the 2020/21 Playing Season. As a Special Resolution, a voting percentage of 75% or higher under standardised National League voting criteria was required to pass. Here the voting was: (i) National League: 21 for – 0 against; (ii)National League North: 16 for - 6 against; (iii)National League South: 9 for - 12 against. As a result Resolution 4 was disregarded.
7.2 Resolution 2 (a vote by the Step one clubs to end the National League 2020/21 Playing Season) was not passed. A minimum 51% majority was required for Resolution 2 to pass – but only 7 clubs voted to end the season, as compared to 13 that voted to carry on with the season. 7.3 Resolution 3 was passed with the effect that both the National League North and the National League South 2020/21 Playing Season was declared null and void and that the remaining fixtures should cease with immediate effect.to be declared null and void. A minimum 51% majority was required for Resolution 3 to pass. In National League North 15 clubs voted to end the season with 7 clubs against ending the season. In the National League South League only 9 clubs voted to end the season, whereas 12 voted to carry on with the season. 8. In summary, in relation to the Resolution 3 votes: (i) by a rough majority of two thirds to one third the clubs in National League North voted to end their 2020/ 21 playing season;(ii) by a majority of approximately 60% clubs in National League South voted to carry on with their 202/ 21 playing season; (iii) even amalgamating the voting figures, in relation to the clubs in both Leagues, the vote to end the season was 24 for and 19 against (i.e. only approximately 58% voting for an end to the season). The Articles of Association of TFCL (AOA) 9. Pursuant to Article 25 (‘ALTERATIONS TO RULES’): 9.1 Article 25.1 provides that the activities of the Competition shall be administered by the Company(i.e. by TFCL)in accordance with the Rules to which all clubs shall adhere. 9.2 Article 2.1 provides that ‘Rules’ (in such context) means the Rules of The Football Conference (subject to such amendments as shall from time to time be made or adopted by the Company); 9.3 Article 25.2 provides that TFCL may, by special resolution passed at an annual general meeting or at an extraordinary general meeting specially called for the purpose, amend or replace any or all of the Rules. No alteration of the Rules may be made otherwise than by way of a special resolution AND shall be subject to approval in accordance with Sub-Article 26.5 (see paragraph 9.6 below). 9.4 Article 25.5 provides that no amendment or addition to the Rules shall become operative until approved by the Football Association. Subject as aforesaid, Rules and decisions made in accordance therewith will be effective when notified to the members in writing. 10. Pursuant to Article 12.1 (VOTING AT GENERAL MEETINGS– TO INCLUDE THE ANNUALGENERAL MEETING AND ANY EXTRA ORDINARY MEETING):“At any General Meeting a member being a member Club in the Conference Premier Division of the Competition shall have one vote. The members of the Conference North shall have four votes between them and the members of Conference South shall have four votes between them and such votes shall be cast on a show of hands”. The League Rules (applicable to the National League, National League North and National League South) 11. The Rules are ones which all Clubs, which comprise all three Leagues, ‘shall adhere’ to (see Rule 1.4). They are also the Rules to which the Articles of Association refer. 12. The Rules cover a wide range of issues, including the arrangement of fixtures (Rule 8) and Champion and Relegation issues (Rule 12). 13. Rule 12.1 provides for the award of points, with Rule 12.2 providing for a table, which will be compiled, at the end of the Playing Season, showing the playing record of each club in each division of the Competition. Thereafter promotion, relegation and lateral movement of Clubs shall be in accordance with the principles established by the Leagues Committee of the FA.
14. Rule 12.9 provides that a club which, for any reason, ceases to operate at any time during a Playing season may have its season expunged. Likewise there are sanctions for any club that becomes insolvent (see Rule 13). 15. The Rules, therefore, provide, that a Playing Season is to be completed, and completed subject to the Rules. The Rules do not provide for any early cessation or end to a Playing Season.
16. In addition Rule 19 provides that no alteration to the Rules shall be made until they have been approved by the FA. This Rule also clearly states that: “Alterations to Rules shall be approved at a general meeting of the Company (i.e. of TFCL)in accordance with article 25 of the Articles of Association of the Company”. The Rule goes on to state that proposals for alterations to Rules, together with the name of their proposers and seconders, shall be received by the Company Secretary not later than 31st January prior to the date fixed for the Annual General Meeting of TFCL in each year and not later than eight weeks before the holding of an Extraordinary General Meeting called for the purpose of amending the Rules. The National League System Regulations 2020/ 21
17. These provide a regulatory framework for the operation and management of the National League, the National League North and the National League South. For example: (i) Regulation 2.2 provides that the aims and objectives of TFCL involves a “framework for discussion on matters of policy and common interest to Leagues and Clubs”; (ii) Regulation 2.4 specifically provides for: “A co-ordinated approach between Leagues regarding the final date of the Playing Season.” 18. Regulation 4 provides for seasonal promotion, relegation or the movement of clubs. Subject to regulation 5.5 (where a vacancy appears in NLS) Regulation 5 provides for promotion and relegation at the end of the 2020/ 21 playing season.
19. As with the Rules, the Regulations do not provide for the cessation of the 2020/ 21 Playing Season before the normal end to the season and after all fixtures have been completed. Resolutions/ the provisions of the Companies Act 2006 (the Act) 20. Pursuant to section 33 of the Act: “The provisions of a company's constitution bind the company and its members to the same extent as if there were covenants on the part of the company and of each member to observe those provisions”. Unless the context otherwise requires, a company’s constitution is defined under the Act to include: (i) the company’s Articles of Association, and; (ii) any resolutions and agreements affecting a company’s constitution.
21. Under the Act various company decisions must be made via resolutions. Certain of these decisions, generally those that are most important or sensitive, must under company law be passed by a special resolution. A special resolution is a resolution of the company’s shareholders/ members which requires at least 75% of the votes cast, by shareholders in favour of it, in order to pass. 22. The provisions of section 26(1) of the Act (Amendment of Articles of Association) provides that a company can only amend its articles by ‘special resolution’. 23. The provisions of section 282(1) of the Act provides that a resolution of members must either be passed as a written resolution in accordance with Chapter 2, or at a meeting of the members in accordance with Chapter 3. 24. The provisions of section 281(3) of the Act state that where a provision of the Companies Act requires a resolution, but does not specify what kind of resolution is required, what is required is an ordinary resolution unless the companies articles require a higher majority (or unanimity).
25. Further, section 284(1) of the Act provides that on a vote on a written resolution every shareholder and member has ‘one vote’. Section 285A provides that where a companies articles provide that a member has a different number of votes in relation to a resolution, when it is passed as a written resolution, then the provisions about how many votes a member has in relation to the resolution passed on a poll is void and a member has the same number of votes in relation to the resolution when it is passed on a poll as the member has when it is passed as a written resolution.
26. An act of a corporation is ultra vires (and is unlawful) when the corporation acts beyond the scope of its powers and authority (e.g. beyond and/ or contrary to the purposes provided in its charter documents/ constitution/ Articles of Association). Representations (taking into account the above)
27. The four resolutions were all written resolutions. Despite this, and unlawfully, Resolution 1 proceeded on the basis that each of the National League clubs had one vote each, but that each Club in National League North and in National League South did not have one vote each (they only had 4 votes per division). This is a clear and unequivocal breach of sections 284(1) and 285A of CA. Resolution 1 is therefore unlawful. TFCL acted unlawfully and ultra vires.
28. In addition(and without prejudice to that set out in paragraph 27 above) the Articles of Association (Article 12.1 – see paragraph 10 above) only applies to a general meeting/ annual general meeting/ extraordinary general meeting when voting takes place by a show of hands. Resolution 1, and its subsequent passing, not only contravenes the provisions of CA, but also the provisions of the Companies Articles of Association. It is therefore unlawful and ultra vires on such basis too.
29. As such Resolutions 2, 3 and 4 have no standing at all. Each stood or fell to be determined on the outcome of Resolution 1. As Resolution 1 was unlawful/ ultra vires Resolutions 2, 3 and 4 are also unlawful.
30. Notwithstanding that set out in paragraphs 27, 28 and 29 above (and without prejudice to that set out therein) Resolution 3 is also unlawful in its own right (even if Resolution 1 had been lawfully constituted and passed). The proposal, put forwards by TFCL, in the Resolution was to: (i) prematurely end the playing season, and; (ii)that the Regulations that provide for promotion and relegation to and from Step 2 be suspended for the 2020/21 Playing Season.
31. Both these proposals alter(indeed fundamentally alter)the Rules of the competition: (i) the League Rules do not provide for early cessation of the playing season (indeed, as set out above, there are even sanctions for clubs who fail to see out the Playing Season and/ or who become insolvent); (ii) the Resolution also proposes an alteration to the Rules, as regards promotion and relegation, as set out in both the National League System Regulations and the League Rules. In addition, the fact that the proposals/ Resolutions must be the subject of FA approval is a clear recognition that the proposal amounts to a rule alteration/amendment. 32. In view of the above (in Relation to Resolution 3):
32.1 The proposals advanced in the Resolution amounted to, and can only have amounted to, an alteration to the Rules; 32.2 Any alteration to the Rules required passing by a special resolution (i.e. in accordance with Article 25.1 of the Articles of Association). Any written resolution had to be a special resolution. 32.3 Despite this, the Resolution was proposed, and indeed decided, on the basis of a general resolution.
32.4 As such Resolution 3 was unlawful and, again, TFCL acted in a way that was ultra vires.
32.5 For the companies Articles of Association to have been amended (i.e. for Article 25.1 to be amended so that a change of the Rules could be passed by ordinary resolution) section 26(1) of CA provides that the same would have to be put forward and passed as a special resolution. No such resolution (special or otherwise) was ever put forward for a vote – let alone passed with a 75%+ majority.
32.6 Had Resolution 3 been a special resolution (which it should have been) then it would not have been passed and the vote would, therefore, have been for National League North and National League South Playing Season 2020/ 21 to continue.
33. Further, Resolution 3 states that both Step 2 Leagues shall immediately end on the date the Resolution is passed and be declared null and void (as did the announcement followed the purported passing of the same). The terms of this Resolution also amounts to, and the announcement following the same likewise amounts to (in addition to all the other matters and contentions raised above), a contravention of Article 26.5 of the Articles of Association and of Rule 19 of the League Rules as no amendment to the rules can become operative until approved by the FA. Accordingly, even if Resolutions 1 and 3 were legally correct, constituted and passed (none of which is the case) the season cannot be null and void until the unlawful decisions/ Resolutions have been approved by the FA. As this hasn’t happened the 2020/ 21 Playing Season cannot have been declared null and void with immediate effect. This, again, is yet another unlawful act.
34. Further, it is our considered opinion that the Resolutions leading to the decision to declare this current season, in relation to National Leagues North and South, at an end is open to challenge on a further basis. The decision to end the Playing Season for Step2 (National League North and National League South) was one that “should be taken only by the Clubs in Step 2 (National League North and National League South) with votes cast for Resolution 3 being counted on a one member, one vote basis for Step 2 Clubs”. The Resolution, and the Explanatory Notes, are patently unclear as to whether the one vote per club applied to a vote for the cessation, or otherwise, of the League in which that club were situate or whether it was vote for cessation, or otherwise, of both Step 2 Leagues. Irrespective of this observation, it is important to note that it was only the Clubs in National League North that voted to end their season. The clubs in National League South did not vote to end theirs. They voted to continue theirs. On no basis, therefore, should the National League South season be deemed at an end. It is an utterly perplexing and extraordinary situation whereby TFCL have determined that the votes from the clubs in one League, bringing to an end their season, can also result in prematurely bringing to an end the season in another League, which they are not part of, and where the Clubs in that other League has voted to continue with their season. That cannot be right and is totally contrary to natural justice.
35. The situation referred to above can also be compared with the way that TFCL was happy to split one League from the others (i.e. the National League from National Leagues North and South) and allow them to determine their own destiny. The same rules should have applied to National Leagues North and South. Each should have been entitled to determine their own destiny, by a lawfully constituted Resolution, without input or effect from voting by clubs from a different League. The intention of Resolution 1 was to allow each League to make their own decision The aim of the Resolutions was to give each of the three Leagues control over their own destiny when it came to the curtailment or otherwise of their season. If such would have caused any issues concerning promotion or relegation (due to any absence of National League North from the equation) this could easily have been sorted by way of one or more other carefully, and lawful, Resolutions.
36. In addition, Resolution 1 was clearly one that, if passed, was designed to split the National League (Step 1) from National Leagues North and South (Step 2). As such it proposed, and allowed, for different outcomes in relation to the three Leagues, rather than a single outcome for the entire National League. This was contrary to the ethos and aims of the National League System Regulations (specifically Regulation 2.4 which provides for a co-ordinated approach between Leagues regarding the final date of the Playing Season).On this basis alone Resolution 1 totally undermines the Regulations (in fact not only regulation 2.4, but also 2.2). Conclusions
37. The starting point is straight forward. The FA not only should not, but cannot, ratify the Resolutions (they were unlawful in the way they were drafted, constituted and passed). They were unlawful as: (i) Resolution 1 should have been one vote per Club from all three Leagues(which didn’t happen),and; (ii) Resolution 3 should have been a special resolution (which it wasn’t– and had it been it would not have been passed). Accordingly all the Resolutions are null and void (they are clearly unlawful).
38. The decision to then immediately declare the 2020/ 21 Playing Season null and void is also unlawful: (i) not only in view of that stated in paragraph 37 above, but also; (ii) irrespective of that set out in paragraph 37 above, the Playing Season cannot be declared null and void with immediate effect as the matter has not been ratified by the FA. On both bases, independently, the season should be ordered to continue immediately.
39. In the alternative (and without prejudice to that set out in paragraphs 37 and 38 above):(i) as Resolution 3 should, legally, have been a special resolution there should be a finding/ determination that this Resolution was not passed and that, accordingly, both National Leagues North and South have not voted to end the current Playing Season and that it should, therefore, continue; (ii) alternatively National League South voted, even on the basis of a general resolution, to continue with its season and, accordingly, National League South should be able to/ should be ordered to continue with the current Playing Season, with further Resolution(s) being tabled to deal with issues of promotion and relegation.
40. Moving forwards, it is appreciated that there is an issue that needs resolving. Nothing set out in these Preliminary Written Representation should be taken as ignorance of either this fact or that there are some clubs that do not wish, for understandable reasons, to complete the 2020/ 21 Playing Season. Notwithstanding (and leaving to one side for a moment the unlawfulness of the Resolutions tabled and passed) the Resolutions proposed were not the way forwards to resolve the issue. There should have been lawful Resolutions, with a lawful vote on the same, permitting all three Leagues to determine their own destiny, alongside other carefully drafted Resolutions relating to issues pertaining to promotion and relegation or Resolutions permitting those clubs in National Leagues North and South to complete a whole Playing Season with appropriate provisions for promotion and relegation.
41. In addition TFCL, and the Resolutions to which these written representation relate, have now put those clubs that want to continue with, and complete, the 2020/ 21 Playing Season in a position that is likely to put them in serious financial difficulty. Many of the clubs that have voted to continue with the season now, potentially, have to deal with many different commercial partners and sponsors who’s financial help they are currently relying on. So, by taking into account the financial difficulty of some clubs, they are now potentially placing every club (including those who were trading and financially viable) into the position where they will not only be forced to cease trading, but also will potentially be forced to a position where they too may no longer exist as a football club. This factor has not been taken into consideration. There were alternative ways to allow those clubs who did not wish to carry on with the 2020/ 21 Playing Season to stop playing, but to allow those clubs who wished to carry on, to carry on. None of these alternative ways seem to have been the subject of any consideration at all. The bottom line is that 19 clubs have now been significantly impaired, and their survival put at risk, because of the process that has been (unlawfully) carried out.
42. In addition, the way in which this matter has been dealt with amounts to a restraint of trade when it comes to those clubs in both National Leagues North and National League South. More to the point, due to the unlawful nature of the Resolutions and their passing, the same amounts to an unlawful restraint of trade.
43. Further no account seems to have been taken that the National Lottery provided £11 million to the National League at the start of the season. This was provided as the Clubs in all divisions of the National League were deemed to be community Clubs and that, as such, the same was important to enable them to trade as community Clubs. The National League is answerable to the National Lottery in relation to these funds and in ensuring that all steps are taken to ensure that the 2020/ 21 Playing season is completed and that the £11 million fund has not been wasted.
44. Finally, as if the above matters were not enough, concern is being raised as to whether there may have been a conflict of interest in relation to those who, on behalf of DWFC, drafted and then placed the Resolutions before all the various Clubs in the three Leagues and the position they may have held in relation one or more of the Clubs who were voting on the same. Unless provided by the Articles of Association, a Committee Member is not entitled to vote on any resolution concerning a matter in which they have, directly or indirectly, an interest or duty which is material and which conflicts or may conflict with the interests of the Company. This is a matter that requires further investigation.
45. In addition, the COVID picture and how it may impact on the next five or six months is not yet clear. One thing that is clear, however, is that things are improving and that, in the near future, current COVID restrictions will gradually be relaxed. No account has been taken of the same and, to this extent, any move to end the 2020/ 21 Playing Season at this stage can only be seen as premature.