Carlisle United takeover: EFL owners' and directors test?

The league, before approving a change of control at its member clubs, requires suitors to pass its Owners’ and Directors’ Test.

This includes a range of checks which, the EFL says, is intended to “protect the image and integrity of the league and its competitions, the well-being of the blubs, and the interests of all of the stakeholders in those clubs, by preventing anyone who is subject to a ‘disqualifying condition’ being involved in or influencing the management or administration of a club.”

These measures have been tightened over recent years after some high-profile crises at EFL clubs.

Appendix 3 of the EFL’s handbook for 2023/24 sets out the requirements in detail.

The rules state that anyone who is subject to a ‘disqualifying condition’ will be prohibited from being a ‘relevant person’ at a club.

There is no suggestion the Piataks will encounter any difficulty there – but on a financial front the Americans will need to be transparent about their financial commitment to United.

The EFL rules state that the league will not permit “any person(s) to acquire control of a club until such time as the information relating to source and sufficiency of funding has been provided and approved by the league.”

The ‘disqualifying events’ which would bar an individual from taking control of a club include if they have been found by a commission to have acted in breach of certain rules regarding the failure to provide all relevant information, or provided false, misleading or inaccurate information.

The EFL has tightened its owners' and directors' test in recent years (Image: PA)

They must also have not been found to be “influencing the management or administration” of another EFL or Premier League club, or to directly or indirectly hold or acquire any “significant interest” in a club whilst holding any class of shares in another club.

Would-be owners must also not have been banned by law from being a company director, or been subject to “two disqualifications, suspensions or like sanctions” over some of the above matters, “irrespective of whether any such disqualification, suspension or sanction is current or not”.

Any conviction by a UK court “or competent court of foreign jurisdiction” could also see a would-be owner fall foul of the test, should they receive an unsuspended prison sentence of at least 12 months, or a conviction for any act which would be considered (i) to be dishonest; (ii) to have involved violence, (iii) to constitute fraud of any kind; (iv) to constitute corruption; (v) to constitute perverting the course of justice; (vi) to constitute a serious breach of any requirement under the Act or the Companies Act 1985; (vii) to constitute a Hate Crime.

The owners’ and directors test is also stringent on broadcasting breaches, with disqualifying acts including “an offence of dishonestly receiving a programme broadcast from within the UK with intent to avoid payment under section 297 of the Copyright, Designs and Patents Act 1988,” as well as admitting fans to watch a game at unlicensed premises.

People subject to banning orders under the Football Spectators Act of 1989 are also frowned upon in terms of the test, as well as those guilty of ticket touting.

On a financial front, potential owners must also confirm they are not subject to an Individual Voluntary Arrangement, a debt relief order, an administration order, an enforcement restriction order, a debt management or repayment scheme or a bankruptcy order.

New owners cannot also have been directors of previous clubs where, during their time there, have suffered “two or more unconnected events of Insolvency in respect of each of which a deduction of points was imposed”.

The EFL’s Appendix continues to set out that new owners must not be “subject to any unsatisfied judgment or court order for payment of any monetary amount (provided all appeal rights have been exhausted)”.

Nor must they be subject to a suspension or ban from involvement in the administration of a sport by any ruling body of a sport that is recognised by the International Olympic Committee, UK Sport, or Sport England, another of the home country sports councils, or any other national or international sporting association or governing body.

Carlisle United directors must not announce a takeover until the EFL has approved it (Image: Barbara Abbott)

Similar suspensions or bans by professional bodies such as the Law Society, the Solicitors’ Regulation Authority, the Bar Council or the Institute of Chartered Accountants of England and Wales, or by government-appointed regulatory bodies, also apply – as do cases where the individuals have been removed from acting as a trustee of a pension scheme, or have been a director or held a senior role at a club that has been expelled from the EFL, the National League, Isthmian League, Northern Premier League, Southern Football League, the FA Women’s Super League or the FA Women’s Championship whilst they were in that role.

Breaches of rules relating to betting in football could also cost a would-be owner the ability to pass the test.

The EFL adds: “A person who is not already a director of a club shall be disqualified from becoming a director of a club if they are subject to a potential disqualifying event and no club shall permit a person to become a director of a club if they are subject to a potential disqualifying event.”

The league, meanwhile, also sets out certain procedural regulations about club takeovers.

They say the club and would-be owners must satisfy a number of requirements no more than ten days before the proposed change of control at the club.

This means United and the Piataks will need to submit to the league a completed declaration and signed copy of the owners’ charter in respect of each person who will become a director.

Along with this, they will need to provide documentation and materials that are requested by the League, including “up-to-date future financial information prepared to take into account the consequences of the acquisition of control on the club’s future financial position.”

The League says it has the power to require the club and would-be owners to appear before it and provide evidence of “the ultimate source and sufficiency of funds” which it is intended to invest in or otherwise make available to the club.

The EFL says it will not ratify a takeover until all the above has been complied with, and any director or club official allowing a takeover without this happening will be liable to be sanctioned.

Nor must a club announce that an agreement has been concluded “subject to the approval of the league”.

This in itself appears to highlight why United, having so far stated they are in “advanced talks”, will not be able to formally announce a Piatak takeover until the EFL have registered their satisfaction with the above.

Should members of the Piatak family become club directors, meanwhile, they will be required to attend an “induction” meeting with the EFL no more than 14 days after a takeover goes through.

The full EFL regulations can be found HERE