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  • FIRST POST
    • Tolkny
    • By Tolkny 17th May 17, 9:29 AM
    • 69Posts
    • 6Thanks
    Tolkny
    Investment Vehicle to hold funds of people saving to buy shares in a Ltd Company.
    • #1
    • 17th May 17, 9:29 AM
    Investment Vehicle to hold funds of people saving to buy shares in a Ltd Company. 17th May 17 at 9:29 AM
    The actual company is irrelevant.

    The situation is that fans of a football team are fed up with the owners not giving sufficient attention to the concerns of those fans.

    As a group they hold a few shares as do some in the group hold shares individually, but not currently enough to have any significant influence on the company directors.

    At some point the current company shareholders will sell shares and when that happens the group of fans want to be immediately ready to purchase as many as they can afford, having saved up by making monthly deposits.

    The fans are in an association with a formal constitution but are not wanting to set up to hold the funds themselves as they have enough else to do, they do not want to themselves want to satisfy the UK Financial Regulators.

    What sort of organisation would be competent and willing to hold funds for such a purpose in accounts of the individual investors, who themselves may need to withdraw all or some of the funds as their personal circumstances change?
    Andrew S Hatton
Page 1
    • Tolkny
    • By Tolkny 17th May 17, 9:31 AM
    • 69 Posts
    • 6 Thanks
    Tolkny
    • #2
    • 17th May 17, 9:31 AM
    • #2
    • 17th May 17, 9:31 AM
    It may well be that similar issues have been considered before in the MSE Forums, I welcome signposting to such considerations.
    Andrew S Hatton
    • Tolkny
    • By Tolkny 17th May 17, 12:46 PM
    • 69 Posts
    • 6 Thanks
    Tolkny
    • #3
    • 17th May 17, 12:46 PM
    • #3
    • 17th May 17, 12:46 PM
    BUMP - I hope I get a response or two - please?
    Andrew S Hatton
    • Eco Miser
    • By Eco Miser 17th May 17, 1:05 PM
    • 2,886 Posts
    • 2,676 Thanks
    Eco Miser
    • #4
    • 17th May 17, 1:05 PM
    • #4
    • 17th May 17, 1:05 PM
    Since you say "in accounts of the individual investors" sounds like something any bank, building society or credit union could do.
    Each member opens an easy access savings account.
    Eco Miser
    Saving money for well over half a century
    • jimjames
    • By jimjames 17th May 17, 1:07 PM
    • 11,896 Posts
    • 10,279 Thanks
    jimjames
    • #5
    • 17th May 17, 1:07 PM
    • #5
    • 17th May 17, 1:07 PM
    Each member opens an easy access savings account.
    Originally posted by Eco Miser
    I was going to suggest the same thing. I'm not sure why it needs to be any more complicated
    Remember the saying: if it looks too good to be true it almost certainly is.
    • Tolkny
    • By Tolkny 17th May 17, 2:47 PM
    • 69 Posts
    • 6 Thanks
    Tolkny
    • #6
    • 17th May 17, 2:47 PM
    Yes But
    • #6
    • 17th May 17, 2:47 PM
    Thank you both very much for that idea.

    However, I want the funds to be under the control of the overall fans organisation - if at all possible - so that without reference to the investors as individuals a quick decision can be made if necessary to buy shares on behalf of all those who gave advance permission - subject to a right to a refund given a specific period of notice.
    Andrew S Hatton
    • Reaper
    • By Reaper 17th May 17, 3:02 PM
    • 6,083 Posts
    • 4,123 Thanks
    Reaper
    • #7
    • 17th May 17, 3:02 PM
    • #7
    • 17th May 17, 3:02 PM
    Maybe set up an "Investment Club".
    https://www.sharesmagazine.co.uk/article/join-the-club

    You could all add money to the pot and decide what you want done with it while waiting for the opportunity to come up.
    • Tolkny
    • By Tolkny 17th May 17, 3:18 PM
    • 69 Posts
    • 6 Thanks
    Tolkny
    • #8
    • 17th May 17, 3:18 PM
    • #8
    • 17th May 17, 3:18 PM
    Thanks - in haste & without looking that up right now a query comes to mind - can it be done free of the Financial Regulation authority, please?
    Andrew S Hatton
    • AnotherJoe
    • By AnotherJoe 17th May 17, 3:18 PM
    • 6,789 Posts
    • 7,216 Thanks
    AnotherJoe
    • #9
    • 17th May 17, 3:18 PM
    • #9
    • 17th May 17, 3:18 PM
    The actual company is irrelevant.

    The situation is that fans of a football team are fed up with the owners not giving sufficient attention to the concerns of those fans.

    As a group they hold a few shares as do some in the group hold shares individually, but not currently enough to have any significant influence on the company directors.
    Originally posted by Tolkny
    You're going to be waiting a long time to get enough Arsenal shares to make a change

    • Tolkny
    • By Tolkny 17th May 17, 3:23 PM
    • 69 Posts
    • 6 Thanks
    Tolkny
    Ho, ho, ho AnotherJoe - hence I said the Company is irrelevant - it is how it can easily be done in principle that is relevant - so that the available funds can be used by the "Fans' Group" Treasurer when s/he thinks the time is right - having been trusted by the Investors.
    Andrew S Hatton
    • Reaper
    • By Reaper 17th May 17, 4:10 PM
    • 6,083 Posts
    • 4,123 Thanks
    Reaper
    Thanks - in haste & without looking that up right now a query comes to mind - can it be done free of the Financial Regulation authority, please?
    Originally posted by Tolkny
    You would be using an investment platform provided by a 3rd party. For example The Share Centre:
    https://www.share.com/accounts/dealing-accounts/investment-club/account-overview/

    Normally Share Clubs are used for regular groups investing but I see no reason why it could not be used for what you propose.

    You would need to agree a constitution, appoint people to run it etc so there would be some paperwork to do. But that's essential to make sure everybody understands the rules about what will happen to the money while you wait (risk investing it elsewhere or sit there earning nothing?), who decides when to invest, under what circumstances can people get their money back etc.

    My understanding is if you are not giving investment advice, the person(s) managing it are unpaid, and you are using an execution only broker then the regulators do not have to get involved. As long as you are a cooperative you should be OK, if run as a business then you would not.

    However I am no expert on the subject. If you are talking large sums of money then paying for professional legal and/or financial advice on the subject may be a good idea.
    Last edited by Reaper; 17-05-2017 at 4:14 PM.
    • Tolkny
    • By Tolkny 17th May 17, 4:53 PM
    • 69 Posts
    • 6 Thanks
    Tolkny
    Thank you Reaper
    Uhm - that is pretty much what I thought.

    I am an ordinary member of this group of fans and only involved on the periphery & not wanting to become more active - so I was a little surprised that this well educated and professionally advised group were (for quite some long while) reluctant to use such a method to raise extra money - as presumably it will suit at least some members - in addition to me - who do not want to donate outright to what is ultimately a commercial organisation.

    However, they have been reluctant to go forward - reasonably enough because they are busy folk with much else to attend to, but the need for extra money for probable share purchase is now a very real matter, amidst considerable uncertainty of the current company directors plans , as they (if they have any - beyond muddling along) are not publicising any information about what is ultimately a private limited company.

    For the first time I have had a direct answer to my oft repeated suggestion from the Fans Group's committee , which also seemed reasonable & prompted me to enquire here.

    The answer that I received - in part - (to prevent identifying folk) was " we are not able to set up investment funds as we are not legally allowed to this is a highly regulated area under the control of the Financial Conduct Authority. The models we are looking at are a capital funding share issue (also known as community shares) which we are allowed to do, should we need to raise funds quickly, and a ˜crowdfunder" campaign that would offer incentives for donating. Both ideas are yet to be developed as we don't know yet if either will be needed, as it will depend on what situation the club (eventually) is in "

    I have make this exchange available to the committee - however other observations are still welcome - though I will not necessarily respond to every further comment.

    I am very grateful for the responses thus far and also any other observations you may have.

    Please do not attempt to guess the organisation that you think maybe involved.

    It is definitely not an organisation like The Arsenal Football Club PLC.
    Andrew S Hatton
    • GarthThomas
    • By GarthThomas 17th May 17, 10:46 PM
    • 147 Posts
    • 229 Thanks
    GarthThomas
    Thanks - in haste & without looking that up right now a query comes to mind - can it be done free of the Financial Regulation authority, please?
    Originally posted by Tolkny
    So what you are asking is whether you can solicit money from people on the promise of action later, out it in an account that you control, and want to keep it hidden from the regulators?

    How could anyone see anything wrong with such an idea?
    • Tolkny
    • By Tolkny 18th May 17, 12:14 AM
    • 69 Posts
    • 6 Thanks
    Tolkny
    well that is putting it at its worst.
    No solicitation involved - any funds would come from members of one organisation and be controlled by that organisation - acting in concert with the wishes of the members.

    Not trying to avoid regulation in order to cheat or deceive but just to keep it as simple as possible.
    Last edited by Tolkny; 18-05-2017 at 8:42 AM. Reason: Wanted to edit the subject line, but that appears to be more complicated - so I have left it as before uncapitalised or alter
    Andrew S Hatton
    • Malthusian
    • By Malthusian 18th May 17, 10:23 AM
    • 2,374 Posts
    • 3,285 Thanks
    Malthusian
    Surely "as simple as possible" would be for the fans to give their money to the fans' association as a charitable donation.

    If the fans want a guarantee that the money will be used to buy the club's shares, well, then it gets complicated. As it always does when you try to give away money but retain control over it.

    Why not do the following:

    1) Ask the owners how much they will sell the club for.

    2) Launch a crowdfunding page to raise this amount from the fans. If the target is met, the fans association collects the money and buys the club, if not, the crowdfunding fails and the fans keep their money.

    I don't see the need to wait for the owners to move. If the fans' association can raise enough money to make the owners a good offer, then make them an offer.

    If the fans buy more shares but still end up holding only a minority stake, then the fans have spent a load of money but will have no more say than they did before. That doesn't mean it was a waste of time (they won't have to spend as much to get a majority in the future) but it does mean that if I was running the fans association I would want it very clear that the money used to buy the shares was an irrevocable donation to the association.

    The owners are exceedingly unlikely to sell the fans' association a majority stake unless they can afford to buy 100% of their shares. Otherwise they will have their money tied up in a venture they can't control and might be run into the ground, plus they don't get to be interviewed on TV any more. All of the risks of ownership with virtually none of the benefits.
    • Tolkny
    • By Tolkny 18th May 17, 3:57 PM
    • 69 Posts
    • 6 Thanks
    Tolkny
    Thank you Malthusian but - please do not try to solve problems that have not been explained, or are not even problems.

    Forget about the organisation - as I said initially that is not relevant - all that is at issue are possible investment schemes to collectively hold moneys ahead of the possible purchase of shares in a private Ltd Company should some or (most unlikely) all the shares become available.

    The savings need to be in individual accounts for eventual return or repayment to the individual investors in circumstances to be determined.
    Andrew S Hatton
    • Reaper
    • By Reaper 18th May 17, 4:49 PM
    • 6,083 Posts
    • 4,123 Thanks
    Reaper
    As it's a private limited company you can discard my suggestion of using an Investment Club & execution-only broker. As private limited company shares are not traded on any exchange you would be unable to buy them through a broker.
    • Tolkny
    • By Tolkny 18th May 17, 5:53 PM
    • 69 Posts
    • 6 Thanks
    Tolkny
    Yes - thank you for confirming that Reaper - I am sorry if anything I wrote enabled readers to determine that I was NOT referring merely to a UK registered Limited Company
    Andrew S Hatton
    • Malthusian
    • By Malthusian 18th May 17, 8:50 PM
    • 2,374 Posts
    • 3,285 Thanks
    Malthusian
    The savings need to be in individual accounts for eventual return or repayment to the individual investors in circumstances to be determined.
    In which case I really can't see beyond the individual fans' own bank accounts. There is certainly no arrangement that would be practical for the fans' trust to open that will keep each individual fan's money in segregated accounts. And what would be the point in the trust opening individual accounts for every fan over the fans just holding onto the money in their own accounts, until the time comes when it can actually be used?

    If the fans' trust is going to hold the money on behalf of the fans then it will have to be in an account belonging to the trust and the fans will have to rely on it to keep proper records of how much is owed to whom.
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