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ASHLEY CUKIER ON THE OWNERS AND DIRECTORS TEST IN ENGLISH FOOTBALL

Recently the English Football League (“EFL”) ratified the takeover of Nottingham Forest FC by Evangelos Marinakis, a Greek shipping magnate and the owner of Greek champions, Olympiakos. The EFL confirmed that Marinakis had passed its ‘Owners and Directors’ test, despite UEFA stating earlier in the week that it was still monitoring allegations from last year – denied by Marinakis in their entirety – that he was involved in match-fixing in Greece. The EFL’s confirmation that Marinakis has satisfied the Owners and Directors test constitutes the green light for a rumoured £50m takeover of the club. The Nottingham Forest takeover comes at a time of heightened interest in football club ownership in England, with, for instance, Leyton Orient FC and Arsenal FC – at separate ends of England’s football hierarchy – having both finished their domestic seasons amid renewed attention on the clubs’ fortunes under the current ownership.

1. What is the ‘Owners and Directors’ test, and to whom does it apply?

The Premier League and the EFL both apply an ‘Owners and Directors’ test to football clubs. The tests, whilst forming part of separate Regulations, are substantively similar in their requirements, and are applicable inter alia to owners of clubs (whether in direct or indirect control of the club), directors and officers of clubs and any associated persons who are themselves directors of a company incorporated under the Companies Act 2006. Per the FA’s Policy on Financial Regulation, the tests are designed “to meet standards greater than that required under law so as to protect the reputation and image of the game”. The test therefore stands alongside – albeit separate to – the ordinary directors duties and obligations which apply under English law.

2. What does the test require?

The Premier League Handbook (at Section F) lists the ‘Disqualifying Events’ which, if founded, prevent a person from acting as an owner or director of a club. The EFL Rules and Regulations (at Appendix 3) list a similar series of ‘Disqualifying Conditions’, the existence of which are similarly preclusive of directorship or ownership of a football club. The Disqualifying Conditions/Events are wide in scope and pertain to events and matters abroad as well as in England. These include:
  • association and/or involvement with another Premier League or EFL club;
  • holding, whether directly or indirectly, any significant interest in another Premier League or EFL club;
  • being subject of a suspension or ban or other form of disqualification issued by another sporting or professional body;
  • unspent criminal convictions;
  • being required to notify personal information pursuant to Part 2 of the Sexual Offences Act 2003;
  • being subject to a disqualification under the Company Directors Disqualification Act 1986 (or any like sanction pursuant to similar provisions in any other jurisdiction);
  • being found to have breached (irrespective of any sanction imposed) rules in force from time to time in relation to the prohibition on betting on football;
  • being subject to insolvency proceedings (whether individually or as director of a company).

3. At what stage is the test applied?

The test is not only applicable in advance of a person assuming ownership or directorship of a football club. The requirement to comply – or, more specifically, to demonstrate the absence of any applicable Disqualifying Events/Conditions – is ongoing, and there are strict reporting requirements imposed by both the Premier League and the EFL in respect of any changes in circumstances and/or in circumstances where a team is promoted or demoted to the relevant league. Moreover, both the Premier League and the EFL, under the respective tests, require teams to resubmit confirmation that all ‘Relevant Persons’ comply with the ‘Directors and Owners test’ requirements before the start of each football season.

4. If a person is disqualified under the test, is there scope for appeal?

Yes. Under the Premier League Rules, a person who has received a Notice of Disqualification has 21 days to deliver to the Premier League Board a notice of appeal setting out full details of his or her grounds of appeal. The grounds of appeal are set out at Section F.15 of the Premier League Rules and are relatively restrictive. A person can only appeal inter alia:
  • if none of the Disqualifying Events apply;
  • if it can be proven that the Disqualifying Event has, or will within 21 days of the notice of appeal cease to exist;
  • if the Disqualifying Event is a conviction which is the subject of an appeal which has not yet been determined and in all the circumstances it would be unreasonable for the person to be disqualified pending such appeal; and
  • if there are ‘compelling reasons’ why the relevant Disqualifying Event should not lead to disqualification.
The EFL grounds of appeal are broadly identical.

Under the Premier League Rules the appeal lies to an appeal tribunal, appointed by the Premier League Board, comprising 3 members of the Premier League’s Panel, including a legally qualified member who sits as chairman of the tribunal. Under the EFL Rules, the appeal lies to the ‘League Arbitration Panel’, to be convened in accordance with Section 9 of the EFL Rules (Arbitration). The tribunals’ powers on appeal are wide: in addition to granting or dismissing appeals, their powers extend to granting declaratory relief re: the existence, or status, of the Disqualifying Event; requiring the forfeiture of the appeal deposit; and the power to award costs.

5. Is change on the horizon?

Given the often-sensitive nature of the issues feeding into the test, the contents of Board and/or Appellate decisions in respect of the test tend to be confidential, and little is known about the contents of previous rulings. What is clear, however, is that disqualifications under the test have been relatively few, and the enthusiasm of investors for English football clubs appears wholly undiminished. This has given rise in some quarters – including Westminster – to a desire to see the ‘Owners and Directors’ tests strengthened, possibly to include rumoured new provisions to entitle the Premier League and the EFL to disqualify persons for offences which were not criminal in a foreign jurisdiction but which might have been liable to criminal prosecution in England & Wales. Plainly, as Premier League and EFL ownership becomes increasingly international in its scope, both leagues will need to continue grappling with club governance issues which often escape national characterisation, whilst simultaneously encouraging renewed investment in the national game at every level.

Ashley Cukier is a member of the Littleton Sports Law Group and advises regularly on football matters. Littleton has particular expertise in sports law and is ranked as a leading sports law set in the directories. For enquiries, contact one of the clerks on 0207 797 86900 or clerks@littletonchambers.co.uk.
Posted: 23.05.2017 at 12:05
Tags:  Comments  Sports Law
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