What are my duties as a director of a football club?
Whilst shareholders own the club, the directors are there to plan and make decisions for the short-term and long-term running of the club. With that responsibility comes several legal obligations to ensure that the club’s (and its shareholders’) position is safeguarded, protected and advanced.
A director of a football club has the same duties and obligations towards the club as a company director would have towards its company – the same as a director of Nike or a small, local owner-managed limited company.
Before taking on the role, directors of football clubs (and other people in positions of managerial control within a club) must also pass the ‘fit-and-proper-person’ tests laid out by the Premier League (page 129) and the English Football League.
The Companies Act 2006 sets out a number of duties that directors should comply with:-
- To act within their powers
- To promote the success of the club
- To exercise independent judgement
- To exercise reasonable care, skill and diligence
- Not to accept benefits from a third-party
- To declare an interest in a proposed transaction or arrangement with the club.
The above duties can be interpreted in a number of different ways, and the specific circumstances of a situation must be carefully considered to determine whether or not a breach has occurred.
Where a director acts in breach of any of the above duties, or other fiduciary duties (such as not mis-applying company property/funds e.g. making a prohibited loan to a director), the club and / or the shareholders can bring legal action.
This could be to set-aside any unlawful transaction; or it could be an action against the director for compensation for any loss suffered as a result of the breach(es) and termination of the director’s service contract. In certain circumstances, a director can also be disqualified from acting as a director. This is not only an expensive and time-consuming piece of litigation for a club, it can also bring embarrassing reputational damage.
There are a number of practical steps a director can take to mitigate risk of breaching his / her duties and obligations.
We are experienced in advising directors on allegations of breaches of duties; as well as acting for club’s / shareholders (or other board members) who believe the best interests of the club are not being served by an errant director. Contact us on confidentially on 020 7315 4810 or make an enquiry online.