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Lord Pityme

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With the Smisa AGM almost upon us there are a couple of issues i believe the membership should be aware of before Saturday.
At the most critical point in the season, now more than ever it is important that we are all in it together, and we ensure as a support, club, and membership we take everyone with us and tackle the big challenges and decisions together.

You will probably be aware as a Smisa member that the committee took a unilateral decision to loan the club £12k last December to fix the USH (under soil heating). What you may not be aware of is that by failing to properly inform (give detail of risk, security of loan, term, interest repayment schedule) and consult with the membership (put it to a vote) the committee not only broke our constitution, but also contravened the legislation set out by the FCA (Financial Conduct Authority) that is in place to protect the rights of the membership from committee's that fail to properly inform & consult.

 There is and remains no excuse for their actions that rode roughshod over the membership's democratic rights. The rules and law are are clear, the committee chose to break them on the back of a poorly timed request from the club. And to this day it is still not clear if the USH was ever fully repaired?

There were several comments by members on here that it would have taken little effort, and caused no delay for the committee to simply inform the membership, and put the clubs request to a vote. They failed to do this.

And unfortunately, unless called out by the membership they intend to do the same by lending a huge amount to the club whilst neither properly informing nor consulting the smisa members.

A small part of the committee (4) were responsible for negotiating the purchase of Smisa's shares from the selling consortium last year, in addition they agreed a Share Purchase Agreement with Gordon Scott that covers the deal in respect of Smisa and GS, separately to the agreement to buy the selling consortiums shares.
One of several controversial clauses in the agreement with GS is where the four committee members agreed to loan the club £50,000 on the loosest possible terms of risk, repayment, interest and with no discernible contingency for security.

So if the club cant pay the loan back, the membership have little scope to recover their monies. On top of that the committee do not want to properly inform and consult you the membership, they intend to briefly mention it at the AGM and move on.
This is fundamentally at odds with our legal rights, the constitution and the legislation intended to safeguard members and their subscriptions. We as the members cannot simply let the committee dole out the membership's funds when everyone was assured before, during and after the 'Buy The Buds' campaign that apart from the £2 discretionary pot, all other subscriptions paid would be ringfenced until there was enough in the bank to complete the purchase of the majority shareholding from Gordon Scott.

This must be stopped, if any funds have been made available to the club they should be repaid and a full and thorough consultation take place with the membership culminating in a vote to approve or otherwise this arrangement. No one can promise a third party they will loan them money from your Smisa subscriptions without membership approval. Thats the law!

The committee may try to insist they did inform and consult the membership, they will base their whole case on one person asking at a Buy The Buds Q&A "will there be a rainy day fund" to which the answer was "aye"....
No information was given on who was contributing to this fund, when or how much. And no consultation process discussed. It will be embarrassing, but this is all the committee have, and are likely to trot it out.

Information about the loan never appeared in any leaflet, presentation slide or email, but the committee are intent in ignoring the founding principle of 'One Member, One Vote' to appease Gordon and the club, rather than admit a mistake and set things right. It is important you talk to any Smisa member you know, get them to come along to the AGM on Saturday and insist the committee stop this folly, engage with the membership and do the right thing!

To simply sidestep democracy, the constitution and governing legislation on the two biggest decisions affecting Smisa since we! Bought The Buds is unacceptable. No one wants to go down the road of Special General Meetings, confidence votes etc... they broke it, they should fix it and reset the Smisa compass so we don't have a repeat of this shocking disrespect of the membership and its rights.

having given the club £8k for player budget, lent them £12k to fix the USH Its is important to emphasis Smisa is not the clubs 'Cash Cow' and its subscriptions are being banked to achieve what we all signed up to.... Buy The Buds! We are not the Bank of Fans...
Your thoughts on this please.

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It should be highlighted that the 50,000 loan facility was suggested by Supporters Direct, was key to Buy the Buds being completed and hasn't yet been fully setup. You know all of that Tony, but didn't add that in to your above post. You're also fully aware that it was agreed to discuss this at the AGM. You state it is a decision that effects SMISA since we bought the buds, but in actual fact the decision was made before the deal went through and without it we may not be discussing buy the buds or being in any position of control.

Now, I'm no yes man by any stretch of the imagination and there are members on here who will have seen that elsewhere. I have asked the questions and received what I believe are reasonable answers, which lead me to trust the members of the committee. It's obvious that there's a need to communicate the 50,000 loan facility properly, a rant not being that for what it's worth, and if it was currently live then yes I'd have pushed a bit harder at the meeting you attended. Likewise if it had been fully agreed since that meeting then again I'd have pushed. The AGM is now the natural place to give full detail and allow questions to be asked. So, here's hoping a good number of members attend and we can all look over what has been achieved and what happens next.

The loan for the USH, if you remove all the noise around notification from the club and subsequent competition of the work, wasn't in itself that problematic. A request came in, members of the commitee raised concerns around completion in time for the Morton game and it was felt the decision had to be made there and then. The loan was negotiated as involving interest, an agreement put in place and the repayments have been made to date. Not perfect, with regards member involvement, but it's been very much a one off and I'd hope lessons have been learned by the club with regards requests for assistance.

I'm going to leave it there though, the AGM is on Saturday and like you I hope members come along and engage with he commitee as they see fit.

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35 minutes ago, TsuMirren said:

It should be highlighted that the 50,000 loan facility was suggested by Supporters Direct, was key to Buy the Buds being completed and hasn't yet been fully setup. You know all of that Tony, but didn't add that in to your above post. You're also fully aware that it was agreed to discuss this at the AGM. You state it is a decision that effects SMISA since we bought the buds, but in actual fact the decision was made before the deal went through and without it we may not be discussing buy the buds or being in any position of control.

Now, I'm no yes man by any stretch of the imagination and there are members on here who will have seen that elsewhere. I have asked the questions and received what I believe are reasonable answers, which lead me to trust the members of the committee. It's obvious that there's a need to communicate the 50,000 loan facility properly, a rant not being that for what it's worth, and if it was currently live then yes I'd have pushed a bit harder at the meeting you attended. Likewise if it had been fully agreed since that meeting then again I'd have pushed. The AGM is now the natural place to give full detail and allow questions to be asked. So, here's hoping a good number of members attend and we can all look over what has been achieved and what happens next.

The loan for the USH, if you remove all the noise around notification from the club and subsequent competition of the work, wasn't in itself that problematic. A request came in, members of the commitee raised concerns around completion in time for the Morton game and it was felt the decision had to be made there and then. The loan was negotiated as involving interest, an agreement put in place and the repayments have been made to date. Not perfect, with regards member involvement, but it's been very much a one off and I'd hope lessons have been learned by the club with regards requests for assistance.

I'm going to leave it there though, the AGM is on Saturday and like you I hope members come along and engage with he commitee as they see fit.

Like i said Kenny, in short the membership have been completely sidelined in the two biggest decisions since Buy The Buds.

have to correct you Kenny, if we hadnt bought the buds, there would be no membership funds to raid by the club. You cant promise other people's subscriptions, before:

A - they have actually been paid.

B - the members have been informed, consulted and approved, or not. 

Simple point of law. No one can lend trust funds to a third party without due process being concluded.

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f**k me, Sevco in minature. Two words, fiduciary duty. I think the smisa committee need guidance in governance. Let me know if assistance is required here, I know (and a couple of smisa office bearers did meet) a recognised expert in this area.

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Kenny, have smisa taken legal advice on their proposed constitutional amendments?

 

It's been put past Supporters Direct, who are happy with it as it stands. I should also add that the vast majority of the constitution is taken directly from the Supporters Direct model rules. If the constitution is adopted by the SMISA members it will then be Supporters Direct who will handle the submission to the FCA.

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Since when do they provide independent legal advice? A lot of this is very concerning, bordering on "we don't know what we're doing but we'll make it up anyway".

Where in the rules allows for smisa to act as a lender? Is the lending a regulated actively? If smisa have no powers to lend, is the agreement null and void?

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2 hours ago, TsuMirren said:

 

It's been put past Supporters Direct, who are happy with it as it stands. I should also add that the vast majority of the constitution is taken directly from the Supporters Direct model rules. If the constitution is adopted by the SMISA members it will then be Supporters Direct who will handle the submission to the FCA.

Supporters Direct are not, and have never claimed to be legal experts. (And wont be at your side during a FCA investigation) The committee have broken the constitution and the governing legislation to please Gordon, sadly they dont seem willing to go that extra mile to ensure their members can exercise their democratic rights.

an honest question Kenny, I have spent the best part of a year trying to convince the smisa committee that their £50k Revolving Credit Facility (we shouldnt call it a loan, as loans have set conditions, this RCF is as loose as a goose) should be put to the membership, as i did after learning of the USH loan (i wasnt at the meeting where it was proposed and granted in one go, and was never asked to vote on it).

on both occassions and over several months of conflict with committee members insisting I had offended them, and marching out of meetings because I insisted these big decisions need the approval of the membership, i would simply ask... what is the point of being a Smisa member when the committee simply do as Gordon requests, and deny the membership their democratic rights?

if the membership are never consulted on the big issues, whats the incentive to keep subscribing? To join? To get involved on/with the committee? 

The commitee need a reset, and they need to stop running Smisa like a PLC, and start running Smisa as an independent, Community Benefit Society. If they continue to play 'Gordon Says' members will see it for what it is and walk.

Edited by Lord Pityme

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11 hours ago, TsuMirren said:

It should be highlighted that the 50,000 loan facility was suggested by Supporters Direct, was key to Buy the Buds being completed and hasn't yet been fully setup. You know all of that Tony, but didn't add that in to your above post. You're also fully aware that it was agreed to discuss this at the AGM. You state it is a decision that effects SMISA since we bought the buds, but in actual fact the decision was made before the deal went through and without it we may not be discussing buy the buds or being in any position of control.

the £50k Revolving Credit Facility was insisted on by G Scott, i am sure SD approve of it. And the decision was only MADE when the offer to the selling consortium was made and accepted. I do excuse your lack of knowledge here Kenny as you werent working with or attending committee meetings during the BTB campaign.

Now, I'm no yes man by any stretch of the imagination and there are members on here who will have seen that elsewhere. I have asked the questions and received what I believe are reasonable answers, which lead me to trust the members of the committee. It's obvious that there's a need to communicate the 50,000 loan facility properly, a rant not being that for what it's worth, and if it was currently live then yes I'd have pushed a bit harder at the meeting you attended. Likewise if it had been fully agreed since that meeting then again I'd have pushed. The AGM is now the natural place to give full detail and allow questions to be asked. So, here's hoping a good number of members attend and we can all look over what has been achieved and what happens next.

Kenny i attended meetings for the best part of a year, and raised the issue on the day the offer was made to the selling consortium as that was the first time the whole committee knew about it.

The loan for the USH, if you remove all the noise around notification from the club and subsequent competition of the work, wasn't in itself that problematic. A request came in, members of the commitee raised concerns around completion in time for the Morton game and it was felt the decision had to be made there and then. The loan was negotiated as involving interest, an agreement put in place and the repayments have been made to date. Not perfect, with regards member involvement, but it's been very much a one off and I'd hope lessons have been learned by the club with regards requests for assistance.

Sadly the USH loan it is not a 'One Off' constitution and legislation breach. It is being repeated with the £50k Revolving Credit Facility.

I'm going to leave it there though, the AGM is on Saturday and like you I hope members come along and engage with he commitee as they see fit.

 

Edited by Lord Pityme

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I thought the premium membership funds were to act as a rainy day fund?
Loaned to the club if required to cover short term cash flow situations/ emergencies with proviso it was paid back at an agreed time.

Was this not the case?

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6 minutes ago, garzo said:

I thought the premium membership funds were to act as a rainy day fund?
Loaned to the club if required to cover short term cash flow situations/ emergencies with proviso it was paid back at an agreed time.

Was this not the case?

No mate, the monies from the premium members who paid up front was used mainly to cover the large initial payment to the selling consortium. If we hadnt got as many as we did that would have been an issue.

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12 minutes ago, Lord Pityme said:

No mate, the monies from the premium members who paid up front was used mainly to cover the large initial payment to the selling consortium. If we hadnt got as many as we did that would have been an issue.

This was my understanding... and of course to pay an initial deposit to the outgoing consortium.

" The £2,500 contributions are crucial to ensuring the viability of the deal. If we sell all 20 it means we would start the process with £50,000 in the bank, which would protect against any problems, either with the trust or with the club's cashflow."

Edited by garzo

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19 minutes ago, garzo said:

This was my understanding... and of course to pay an initial deposit to the outgoing consortium.

" The £2,500 contributions are crucial to ensuring the viability of the deal. If we sell all 20 it means we would start the process with £50,000 in the bank, which would protect against any problems, either with the trust or with the club's cashflow."

It was all needed to pay the sellers as it would take a few months to build up subscriptions at £12 or £25 a head.

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4 minutes ago, Lord Pityme said:

It was all needed to pay the sellers as it would take a few months to build up subscriptions at £12 or £25 a head.

all? how much was that then?

 

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Sure these points will be raised at the AGM, especially now they have been published here.

As SMiSA build up cash reserves (£149K as per the published accounts) and it continues to grow there's a greater and greater responsibility on the committee to ensure the rules are kept to. If there is a provision for the club to borrow funds from that fund at any time to smooth cashflow bumps then personally I've no massive problem with it but it should be as a formal loan with the usual conditions and not seen as a easy access piggybank.

I'm sure all of this will be clarified in due course.

 

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2 minutes ago, div said:

Sure these points will be raised at the AGM, especially now they have been published here.

As SMiSA build up cash reserves (£149K as per the published accounts) and it continues to grow there's a greater and greater responsibility on the committee to ensure the rules are kept to. If there is a provision for the club to borrow funds from that fund at any time to smooth cashflow bumps then personally I've no massive problem with it but it should be as a formal loan with the usual conditions and not seen as a easy access piggybank.

I'm sure all of this will be clarified in due course.

 

I am sure many will share your view. That said it must always be done with full membership consultation, and approval. If we dont have that fundamental principle what incentive is thier to be a member?

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There is no provision which allows smisa to be a lender to the club. 

Smisa's assets are ring fenced for community benefit not to allow the club interest free loans when needed. It may be prudent for the AGM to be postponed as I think the committee should really be taking urgent legal advice on what they've got smisa into with a revolving credit agreement to the club (if that is true). If it's ultra vires, I would have thought that committee members would need to step down.

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1 hour ago, Stu said:

If another loan has been made to the club - why? What has it been used for? Or are we in such dire straits that the club couldn't continue without some extra cash?

My reading of the above is that there is an agreement built in to the deal that IF the club were to need short term cash that they could access the SMiSA money up to £50K.

That option hasn't been exercised (again going by what I'm reading above) but the OP is concerned that the option exists. I think.

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Maybe I'm being overly simplistic here, but surely it makes good financial sense for the club to "borrow" money from the SMISA kitty (which is sitting there) - rather than adjust budgets and inherit cashflow/budget problems? (avoiding eating into the wage budget during the season)

If I'm reading this correctly - they simply borrowed the cash to fix the USH issue short term - with a promise to put the cash back into the SMISA kitty once money becomes available? 

I have no problem with this if so

 

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Just now, Doakes said:

Maybe I'm being overly simplistic here, but surely it makes good financial sense for the club to "borrow" money from the SMISA kitty (which is sitting there) - rather than adjust budgets and inherit cashflow/budget problems? (avoiding eating into the wage budget during the season)

If I'm reading this correctly - they simply borrowed the cash to fix the USH issue short term - with a promise to put the cash back into the SMISA kitty once money becomes available? 

I have no problem with this if so

 

No one seems able to confirm the USH was fixed?

If not, where did the money go?

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10 minutes ago, faraway saint said:

No one seems able to confirm the USH was fixed?

If not, where did the money go?

If that's the case, it's not really SMISA to blame, (they transferred the money over in good faith that it was to be used on fixing the USH) It's then down to whoever controls budgets within the club. 

If I took out a loan and told the bank it's for a car - but instead decided to spend it on debt consolidation, that's my choice, but still have to pay the money back as promised. (unless the loan agreement stated that the funds must be used for that purpose.)

Agree that questions need to be asked of the club, if the USH isn't actually fixed.

 

Edited by Doakes

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1 hour ago, div said:

My reading of the above is that there is an agreement built in to the deal that IF the club were to need short term cash that they could access the SMiSA money up to £50K.

That option hasn't been exercised (again going by what I'm reading above) but the OP is concerned that the option exists. I think.

 

1 hour ago, Doakes said:

Maybe I'm being overly simplistic here, but surely it makes good financial sense for the club to "borrow" money from the SMISA kitty (which is sitting there) - rather than adjust budgets and inherit cashflow/budget problems? (avoiding eating into the wage budget during the season)

If I'm reading this correctly - they simply borrowed the cash to fix the USH issue short term - with a promise to put the cash back into the SMISA kitty once money becomes available? 

I have no problem with this if so

 

 

1 hour ago, Doakes said:

If that's the case, it's not really SMISA to blame, (they transferred the money over in good faith that it was to be used on fixing the USH) It's then down to whoever controls budgets within the club. 

If I took out a loan and told the bank it's for a car - but instead decided to spend it on debt consolidation, that's my choice, but still have to pay the money back as promised. (unless the loan agreement stated that the funds must be used for that purpose.)

Agree that questions need to be asked of the club, if the USH isn't actually fixed.

 

The issue is not smisa lending the club, the issue is that is for the membership (the people whose money it is) to decide. Not a committee just giving Gordon whatever, whenever. We have a constitution and governing legislation to protect trusts like Smisa and its members.

respect the membership, if its a good idea i have every confidence they would see it as such. If you take away the members influence there is little reason to subscribe to something if others keep giving your funds away as the wish.

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