The Telegraph - check your facts

We should no longer be shocked by inaccuracy when the media reports issues relating to Chelsea but we have to confess to being a little taken aback by the Daily Telegraph's report on yesterday's AGM by Ben Rumsby. The report, which not surprisingly had little to say that reflected the rare positive side of the meeting focused on the board's agreement to write to certain shareholders;

"But the annual meeting at Stamford Bridge saw shareholder Theresa Magee point out the company's Articles of Association allowed it to remove the voting rights of anyone who failed to respond to a letter asking them to state whether or not they had any connection to the club. Magee told Telegraph Sport: 

"I'm absolutely staggered that nobody's paid any attention to Article 41 of the Articles of Association before.

"I'm a layperson, I've got absolutely no knowledge of the law, and I found this out simply by reading them."

CFCTruth stated yesterday that it felt the decision to write to shareholders was on balance a wise one in order to try to bring the issue of these shares to some sort of conclusion. However, as has been the media's general slant, the Telegraph was a little bit hasty in their sensationalism.

In his report to the board some months ago (published on the CPO website) director Gray Smith set out the limited legal measures available to the board when it comes to the controversial shares. At the meeting, too, he was very explicit in his belief that there was little that can be legally achieved. Ms Magee may be "staggered" that "nobody paid attention to article 41" but she wouldn't have been if she had taken the trouble to read the report, an extract of which we print below. For someone so concerned with the matter, we are a little "staggered" that she doesn't appear to have read the report we might reasonably expect her to have been eagerly awaiting;

Notice Requiring Information re Shares
Given that there are concerns with regard to the share issue, CPO could make use of the provisions in the articles of association, coupled with the Companies Act, to serve notice on any person who is interested in the shares. The notice can require the shareholder to:

Indicate in writing the capacity in which he holds the shares or any interest therein, or ….the persons who have an interest in them and the nature of their interest or whether any of the voting rights attached to the shares are the subject of an agreement or arrangement under which another person is entitled to control the exercise of those rights.

The serving of the notice would require the recipient to give the information within a set time. If someone is holding as a nominee, this should be disclosed. There is a possibility of tying this in with a Companies Act request, which would lead to the making of a false reply a crime. Under article 41 of the Company's articles of association if a person does not comply with this information request their rights to vote, receive dividends and transfer their shares may be suspended.

Ms Magee would have been less staggered still had she been listening to Mr Smith speak at the meeting when he said writing the letter had been considered and rejected as likely to be an academic and pointless exercise.

The problem is simple; the board have undertaken to write to certain individuals and ask them questions about their connection to the club. Having a connection to the club is not disallowed and so those individuals may well declare that  they do. They may not. However, this means nothing when it comes to taking action. If a person refuses to reply then legal pursuit is possible but it may well be costly and subject to counter action. We would all like to see the issue resolved but we must be realistic about what can be achieved under law. 

Mr Smith, a corporate lawyer no less, has made it very clear what he thinks about these shares but he is very certain that little can be done. It is unfair to criticise when the critic hasn't even read a report which proves the very person under attack was well aware of the Article so sensationally "revealed".  Such continuing, unfounded hostility to the board is unhelpful - surprising as it is, too, towards a director who the SayNo camp have in the past claimed as their own. 

We are happy to set the record straight for those concerned.