It seems that completing and signing the relevant document (Deed of Adherence), and paying the prescribed fee of £10, is not enough for Sutton Education Services to accept those Sutton schools choosing to participate in Sutton Council’s latest company, as Shareholders.
The issue of the status of what is called ‘B’ Shareholders came to light when Sutton Council published a decision notice concerning the change of name of the company to Cognus. A few ‘B’ Shareholders, surprised not to have been sent details of the resolution, made enquiries.
Sutton the Inside has seen an email sent by Gerald Almeroth, Strategic Director, Sutton Council, in which he states:
Whilst the absence of a signed Shareholders Agreement may appear to be a technicality, this means in reality that the Company must act in accordance with the adopted Article of Association and the Companies Act. In effect this means that the Council is the only current shareholder.
Now that’s interesting, because the Shareholders’ Agreement, and the signing of it, was never, according to ‘B’ Shareholders Sutton the Inside has spoken to, a prerequisite to becoming a ‘B’ Shareholder.
Further from the Shareholders’ Agreement that Sutton the Inside has seen, it looks like the agreement is between Sutton Council and the Company. That being the case, it would seem that it is the Counci that is delaying the formal recognition of ‘B’ Shareholders. If correct, then the Council could go on for as long as it likes not signing the agreement and thus preventing the Sutton schools that have paid to become a shareholder of this company, from becoming a shareholder.
All this is, of course, is true if one accepts the notion that a shareholder is only a shareholder once the Council has signed the Shareholders’ Agreement. It would seem by any normal logic that once a school has signed the agreement and paid the fee, they are a shareholder. The fact that the Articles of the company are unclear about how the relationship between the ‘A’ and ‘B’ shareholders work, does not prevent those schools applying under the ‘B’ shareholder category from legally becoming shareholders.
Sutton Council and Sutton Education Services Ltd seems to have got themselves into a bit of a pickle over this. In an email sent by Gerald Almeroth he says:
This issue was discussed at CMT today where we considered a range of measures to strengthen the arrangements and governance of Council/shareholder interests in companies either wholly or partially owned by the Council. This will include potential arrangements for company secretarial support that will help to reduce the likelihood of this instance happening again.
It has to be asked why there was not adequate company secretarial support for these companies in the first place and why the Council is only now looking at a range of measures to strengthen the governance.
Finally it is worth noting that whilst the ‘B’ Shareholders were not actually shareholders, they elected two directors to be part of the Board of SES. What now is the status of those two Directors?
SuttON the Inside 