Rules, Standards & Sanctions (Prof David Kinnon)

[Frankie 8,164]

The latest article from The Rangers Standard guys:

 

http://www.therangersstandard.co.uk/index.php/articles/current-affairs/123-rules-standards-and-sanctions

 

I am neither a lawyer nor a specialist in jurisprudence. These views may provide a basis for ordinary people to properly consider the position of Rangers at this time of uncertainty.

 

RULES

 

Rules and sanctions come from many sources.

 

* Key categories of law which affect the conduct of companies are company law, tax law, insolvency law and employment law.

* A company is formed to carry on a business or undertaking

* A company is the persona which acts by contract and otherwise to operate the business

* A company is run by directors. Directors can be "natural persons" or corporate entities. In either case, directors have an individual â??personaâ?.

* Directors are appointed by shareholders and are accountable to shareholders for the conduct and performance of the business whilst the company is a going concern.

* Each director is responsible for ensuring that they have the information necessary to understand the affairs of the company at all times. It is not an excuse or a defence to allegations of misconduct to say that information was not available or withheld

* When the company becomes or is about to become insolvent, the duty of the directors shifts from the duty to shareholders to become a duty to protect the interests of creditors

 

SANCTIONS

 

* The company incurs sanctions and penalties if it fails to abide by company law.

* The directors incur personal sanctions and penalties, including disqualification as a director for a period of up to fifteen years, for not ensuring the company abides by company law

* The directors act within the powers laid down by the company's constitution, which conforms to the requirements of company law. The company's constitution is in the form of its Memorandum of Association (setting its objects) and its Articles of Association (governing the rights of shareholders, powers of directors including the power to borrow, and the like

* If directors act outside of these powers, the acts can be challenged

* A company becomes insolvent when it fails one or both of two tests. One is when it cannot pay its debts as they fall due - the "cash flow" test. The second is when its total liabilities exceed its total assets â?? the â??balance sheetâ? test.

* A company trades when insolvent from the point where "the directors knew or ought to have concluded" that there was no prospect of avoiding insolvent liquidation.

* If a company trades whilst insolvent, under company law individual directors may be compelled to contribute to the deficit of assets to the extent that the deficit became worse in the period of trading whilst insolvent

* Under tax law, directors can be compelled to contribute personally to the extent to which National Insurance contributions have not been paid over to HMRC.

 

STANDARDS

 

The Deloitte website sets out clearly the standard of a directorâ??s conduct as follows.

 

â??Directors of all types of companies are required to meet the same standards of conduct and behaviour as defined in the Act.

 

A person, acting in the capacity of director, must exercise his/her powers and perform his/her functions:

 

* In good faith and for a proper purpose

* In the best interest of the company, and

* With the degree of care, skill and diligence that may reasonably be expected of a person carrying out the same functions and having the general knowledge, skill and experience of that director�

 

Thus it is fair to say

 

* Directors are individually and collectively responsible for ensuring that a company abides by company law

* The company is responsible for the consequences of its actions

* The business has no persona; its affairs are conducted by the company whose affairs are in turn conducted by the directors. By definition, a business cannot be held to account for standards of conduct of the directors or of the company, which in turn is under the control of the directors

 

Because these distinctions are not clear within the rules of football's governing bodies or within the minds of those applying the rules, there is lots of confusion about what is appropriate.

 

WHAT PURPOSES DO SANCTIONS SERVE?

 

Morally and philosophically, the objectives of a system of punishment should be

 

* To deliver retribution proportionate to the seriousness of the crime

* To deter the offender and others from offending,

* To deprive the offender of the benefits of having offended

* To deprive others of the benefits of the offense

* To rehabilitate the offender

* To provide recompense to the victim

 

HOW DOES THIS AFFECT THE RANGERS SITUATION?

 

Arguably, only retribution has been under public discussion. Notably, the SFA Tribunal applied maximum punishments to subjectively judged offences and attempted to step outside of the SFA rule book to increase punishment. The SPL applied a ten-point penalty, no small penalty, which Doncaster as CEO of SPL in a recent BBC interview said is â??insignificantâ?. The clamour for relegation, regardless of policing and other practicalities, is fierce in certain quarters. What then is just and fair?

 

* The directors of Rangers who permitted the Club to fail in its obligations must take responsibility for their actions and suffer what penalties, under whatever law, are appropriate.

* The company must do likewise

* These are the proper responsibility of Mr Cohen as Liquidator.

 

But what of the Club? Here, Rangers fans may dislike some conclusions, but as they follow logically from the analysis above, here goes.

 

* The Club had no legal persona. The only sanctions which can apply to the Club are sporting sanctions. The Club cannot be punished for the actions of its directors or the company as controlled by the directors

* Sanctions ought to be those applicable at the date of misconduct under sporting regulations. The SPL has levied its penalty.

 

 

 

Next, we see the worst impact of the failure to understand separateness of Club from company.

 

* The share held by the company is not extinguished upon the insolvency event of the Oldco and yet the Newco cannot be entitled to it without the consent of the SPL. If the SPL rules provided for suspension of voting rights from the date of entry into insolvency proceedings until the date of emerging from it, and for cancellation of the share at the end of the season in which the insolvency event occurred, the question would become one of allocating a new share to the Newco or to another company operating a football club which would then enter the SPL.

* Similarly, no provision exists for demotion from the SPL to the SFL except by relegation according to league position at the end of the season. If such a provision were introduced, and no club could enter the SPL without having spent three consecutive seasons in the SFL, that problem too would be resolved, neatly fitting with ineligibility to enter UEFA competition. Then a Club could resume life in any of the three divisions on a civilly and socially practicable basis.

* The SFA Tribunal has already accepted that suspension or expulsion would be too severe.Perhaps a ban on player registrations to the extent that net registrations were zero would be fair; no-one in before someone is out, in other words.

* This is the unpalatable part. Fans will say they are innocent but are being punished.In fact, this is no more than depriving the fans of the benefits of past offences and is therefore just and fair

 

In summary it is fair to conclude that

 

* the company and its directors will be dealt with under company , tax , insolvency and other law

* The Club ought to be dealt with under sporting regulations bearing in mind that

 

1. Retribution through massive reputational damage has already been inflicted

2. Retribution through substantial competitive disadvantage was suffered from the SPL points sanction, triggering as it did a collapse in sporting performance mid-season

3. Deprival of any benefit of wrongdoingby the companydue tofinancial damage,through inability to compete in European competition for a period of three years

4. Deprival of any benefitobtained by the fans through the offense,has taken place because of (1) and (3) above

5. Rehabilitation through the sweeping away of the former company and the directors who controlled the company

6. Recompense to the victims will be achieved through continuation of the Club and the undoubtedly beneficial impact it brings to the Scottish football industry.

 

Over to you, Mr Regan and Mr Doncaster.

[aweebluesoandso 290]

God i hope Mr Keen QC is not on holidays any time soon then.

[der Berliner 3,263]

As I said before, IMHO, penalizing Rangers more than what was being done is essentially the same as blaming and punishing the Costa Concordia herself, their low-level crew, and the passengers for the ship's sinking.

[Guest Dutchy]

It seems as though we're aready guilty.

 

http://www.bbc.co.uk/sport/0/football/18496571

[bluebear54 0]

Many thanks for the post Frankie.

This has sharpened my senses, and in particular the references to retribution, reputational damage and the Club to be proactive and take some unilateral action.

Let's call them the three "rs"

In my opinion it's now time for the Club to be proactive and take some unilateral action.

I think we can all see that this situation will be ongoing, and will not stop with the first, second, third or further punishment.

This will be a demeaning act of retribution, played out fully in the public arena, and with the intention of maximising advantage for the other SPL clubs while maximising reputational damage for the Rangers.

I hope everyone can see that it isn't going to end soon, and will quite possibly continue ad infinitum.

Apart from the reputional damage to the Club, this is destroying Scottish football. No one else apart from us can apparently see this. Am I wrong?

And so, the proactive unilateral action.

In suggesting this, I find inspiration from a surprising direction, which is a quote from Lawel on another thread:

â??Our guiding principle is that we will do what is in the best interests of Celtic Football Club and our supporters, consistent with upholding the interests and reputation of Scottish football. I can also give assurance that we will communicate further and directly with supporters at the appropriate time.â? Thursday, May 10

To this end, I would suggest that we withdraw our application for the SPL, and apply to join SPL 3.

I believe it would satisfy the majority of Scottish fans' blood lust, it would silence the media and it would allow us to slowly build again - out of the limelight - and build a repution that once again follows the principles on which the Rangers were founded.

The third "r" - rehabiltation.

[RANGERRAB 3,269]

I've got a better idea. Let's get out of Scottish football altogether and watch it go part time and die. I say again - let's try & join the Dutch league. If we get kicked out of the SPL/SFL then we can go to UEFA & ask their permission to play under an another association

[Juancornetto 1]

These idiots are literally tying a noose around their own necks, it' s insanity.

[bluebear54 0]

My point was not about oneupmanship.

It was about taking matters into our own hands.

We are going to be screwed slowly, and bit by bit until there's nothing left. A blind man could see that. Equally, Scottish football will continue to become so polarised that it will be unsustainable.

My suggestion takes the heat off, while providing the solution that most fans want - ie rid of us.

It will the let the media concentrate on the good side of Scottish football, and how our game is on the rise.

It will also emasculate any further or future attempts by the SPL to progressively "punish" us.

[Zappa 0]

My point was not about oneupmanship.

It was about taking matters into our own hands.

We are going to be screwed slowly, and bit by bit until there's nothing left. A blind man could see that. Equally, Scottish football will continue to become so polarised that it will be unsustainable.

My suggestion takes the heat off, while providing the solution that most fans want - ie rid of us.

It will the let the media concentrate on the good side of Scottish football, and how our game is on the rise.

It will also emasculate any further or future attempts by the SPL to progressively "punish" us.

 

We don't deserve to be playing in SFL3 next season though bluebear!

 

It would be an unprecedented punishment for our supposed crimes, not only in British and European football, but possibly even in world football, so where's the justification?

 

There is absolutely no justification whatsoever for such heavy punishment, whether self-imposed (as you and many other fans are suggesting) or handed out to us by those allowed to make the decision on behalf of Scottish football.

 

Why should the new Rangers owners cave in to peer pressure from the twisted Scottish media & other member clubs whose prime objective is not only self-serving, but kamikaze in nature?

 

Why would the new owners (or the fans for that matter!) want to condemn the club to the 3rd Division, a real bona fide "fire sale" of the extremely valuable playing squad and the sort of financial uncertainty for several years that could see the club forced into administration for second time?

 

I really don't understand the growing backing for the idea that we should fall on our sword, resign ourselves to defeat by those trying to kill us or however else you care to word it because it's madness. Sheer madness!

 

[der Berliner 3,263]

It remains the question what they can actually do under current rules? Can they actually whip up new laws and rules as they go along? Would they do that if something similar happened to another club? Did they do it when Gretna bit the bullett, Dundee and Motherwell went into admin.

 

What I, as zappa rightly pointed at, would look for are precedents. There are none in Scottish football, there are in English football though. I asked it before: who voted fro newco Leeds United to join the English league place instead of "vacated Leeds United oldco"? All member clubs of that division?