Jubilant scenes by the red half of Merseyside greeted the decision of the High Court in London to reject the attempt by Liverpool Football Club’s American Co-Owners, Hicks & Gillett, to oust fellow board members, to prevent the sale of the club to New England Sports Ventures.
The case highlights the conflicting interests and duties of company directors and shareholders in difficult financial times. Directors have a duty to act in the best interest of the company and members as a whole but in this instance, the board members were going against the wishes and arguably the interest of the company’s major shareholders who, by virtue of a sale, inevitably face significant financial loss.
Credit facilities with the RBS came to an end on Friday and LFC, perhaps unthinkably, faced administration, leaving the directors having to consider the interests of creditors, despite this conflicting with the interest of the shareholders.
Shareholders usually have the ability to determine who is to be a representative of the board controlling a company but in this case, the court held that RBS had imposed conditions requiring its consent before action was taken to make boardroom personnel changes. With the composition of the board now clarified, it is anticipated that the sale to New England Sports Ventures will be sanctioned.
As an Everton fan, I hope that this will be one of few reasons for the reds to celebrate this season.
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