When is a director not a director? Who cares and why does it matter?

For what will become obvious reasons, I want to take a moment to circle back to the announcements made at the last Q&A in terms of the new structure of the club.
Included within the structure unveiled was a new title for Steve Dewsnip who had previously been employed as Head of Commercial and Operations. His title was changed, upon the takeover being confirmed, to Chief Operating Officer. Late on Friday 29th December however came the news that he had resigned from his position at the club.

“We have today received Steve Dewsnip’s resignation from his role at Southport FC and he will not be returning to the football club after the Christmas break.

We would like to thank Steve for all of his efforts during his time at Southport FC and we wish him well for the future.”

Neither party have disclosed the reason for Steve’s abrupt and shock departure however it is understood that the club are set to unveil an interim Chief Executive in the very near future. Sources have indicated to me that it is someone who previously worked for a short period with Oliver Gottman at Wigan Athletic.

In response to the short statement and the outpouring of positive comments towards Steve on social media, the club have committed to a further Q&A session in January.

“Our next Fans Forum will take place in January to keep supporters updated with our plans and proposed changes for the future.”

As a general rule, a company is owned by its shareholders and run on a day-to-day basis by its directors. As is the case at Southport, shareholders (who at a football club are usually long term supporters also) often have a limited say in operational decisions with company business generally conducted by directors acting collectively as a board or a committee, or by individual directors with particular specialisms. Prior to the takeover, there were three company directors, Ian Kyle, Steven Porter and Liam Watson, and all three of whom were also shareholders.

The Q&A in November was used by the new majority shareholders The Big Help Group (who now hold >75% of all shares) to unveil, via their chairman Peter Mitchell, a new management structure.

At companies house the company directors have been updated with Peter Mitchell, Steven Porter and Liam Watson now listed as company directors.

The Q&A announced the following new additions under the banner of “Board of Directors“.
Peter Mitchell – Chairman
Tammy Burgess – Sporting Director
Mike Black – Commercial Director
Oliver Gottman – Non-executive Director

Also introduced as members of the board were Colette Goulding and Joe Goulding, although like Liam Watson and Steve Porter, no specific titles were given.
Colette Goulding is the Assistant Chief Exec and Head of Community Engagement at the Big Help Group.
Joe Goulding who was not present at the “top table” for the Q&A is the Head of Governance and Bid Writing at the Big Help Group.

Introduced under the banner of “Operational” were:
Lydia Davies – Head Of Finance – introduced as Director of Operations at Big Help Group.
Simon Cowie – Head of Hospitality – introduced as Chief Operating Officer at Big Help Group.
Andy Burgess – Head of Football Operations (& Assistant Manager)

What is a director anyway?

There are a few different types of director so it is sometimes a little confusing.

The most frequently used terms used are executive and non executive directors. It is important to note that there is no difference in law between them but there is an implied difference which relates to their duties.

An executive director is a person responsible for the day-to-day management of the company as well as its strategy. As they are charged with the running of the company they should be declared at Companies House. When you first incorporate a company, you need to give details of its first directors to Companies House. After that, every time a role changes, you have to notify Companies House again within 14 days of the change.

Non-executive generally don’t get involved in operations and usually hold more of an oversight role. They are not normally employees and often (but not always) receive a fee for acting as a director under a director’s service contract.

A good balance of directors helps the decision-making processes with non-executive directors often acting as consultants bringing specialist knowledge. If a business is short of a particular skillset, a non-executive director may be able to provide it.

Sometimes the line between executive and non-executive directors can become a bit blurred, as specialist non-execs do sometimes end up helping with management tasks. They are often not listed at companies house but they probably should be.

Because the title of “director” carries a certain gravitas, it’s often included in the job titles of individuals who aren’t, in law, directors.

But it doesn’t really matter……really there are only two types of director, “de jure” and “de facto”.

De jure means a director in/by law. They are properly appointed to the board and registered with Companies House. They can be either exec or non-exec.

De facto means a director in reality, and is someone who has not been properly appointed and notified to Companies House as a director but who nevertheless acts as a director and holds themselves out to third parties as a director. Sometimes (but not always) they will have the word “director” as part of a job title.

A person might meet the definition of a director without being formally appointed as one, provided they are carrying out the functions of a director. This person could be a shareholder, a company secretary, an employee or a third party. Under the Companies Act 2006, the definition of a “director” includes any person occupying the position of director, regardless of their title. A person in this situation may be deemed to be a de facto director.

In any situation in which a person is labelled a director, or appears to be a director, there is the chance of confusion about what they can and can’t do. Whilst it is not clear whether some of these new appointments are executive or non-executive directors (read that as “day to day” or “consultants”), they are at the very least “de facto” directors so it doesn’t matter. They may not have been properly or legally appointed as a director (de jure) but do, in reality, do things that only directors are normally allowed to do, including signing contracts or taking decisions on behalf of the company.
The point is that even though a person is a not a registered company director, they may (depending on the circumstances) still be treated in law as if they were. During their time as a “de facto” director, the person will owe the company the same general duties as a statutory director and can still become criminally liable for their actions if they breach their directors duties. In addition, they may become personally liable to the company if they abuse their position for personal gain.

There has been some confusion with some of the new appointments being referred to by different titles (even within the same publication). Mike Black has been referred to as both Head of Commercial and Commercial Director. Whilst there shouldn’t be an inconsistency, legally it may not matter.