The Community Empowerment (Scotland) Bill was introduced for consideration by the Scottish Parliament in June 2014 and much has been written about the community “right to buy” proposals in respect of abandoned or neglected land.
It is now proposed that the legislation should also give football supporters a right to buy their Clubs in certain circumstances.
According to the draft amendments, a group of supporters should be able to establish a Supporters’ Trust and register an interest in the Club they support. This would include any Scottish Professional Football League Club.
The owner of the Club would then be prohibited from “taking any action with a view to transferring ownership of that football club” to a third party without first allowing the Supporters’ Trust an opportunity to purchase it. There would also be a right to buy if the Club entered formal insolvency.
At a glance, this might seem a logical extension of the Community Empowerment Bill, but in legal terms it is a significant new undertaking. The Football Clubs in question are limited companies.  The process of buying a controlling interest in a company is quite different to the process of buying a plot of land – and this proposal will require significant consideration and refinement if it is to become law.
One important issue is valuation. In the event that the Supporters’ Trust and the seller cannot agree a price, the amendments provide for the appointment of an independent valuer. But how do you value a company if its shares are not listed on a stock exchange? There are several approaches that may be used, and if it is left completely to the discretion of the valuer then it is perhaps inevitable that the buyer or the seller will be unhappy with the method of calculation and the opportunity to purchase may be lost.
Parties with existing rights of pre-emption (which may be set out in the articles of association of the company or a private shareholders’ agreement) will also be unhappy if new legislation prejudices their position.  It is unclear whether existing contractual rights will be respected, or even if this point has been considered at Holyrood.
What will happen if there is more than one Supporters’ Trust in respect of a particular Club? The amendments say that will be permissible, and in the event more than one Trust wants to exercise the right to buy, the Scottish Ministers shall have the job of deciding which Trust shall have the opportunity to purchase! That does not seem to be a particularly good plan.
As regards timescales, it is expected that a Supporters’ Trust will be required to have funding in place to complete the purchase within 6 months of confirming their intention to purchase (and it is even proposed that an application for funding could be made to the Scottish Ministers), but if a Club is running out of money will that timescale not increase the chance of it going into administration?  Even if a viable purchaser was waiting in the wings a rescue deal could not be made.
While the idea may have support, further consideration must be given to the legal consequences.  We are interested to see if these amendments will become law, and indeed where the “right to buy” will take us next.