As the end of Massimo Cellino’s reign at Leeds United looks to be coming to an end. His time with the club will not only be shrouded by the failure to reach the top flight of English football, but also the controversy he caused in his infamous reign as a director and owner of an English football club. It is worth analysing the difficulties he faced when taking over the club and fulfilling the requirements relating to ownership and directorship of a football club in England.
For an individual to become a director or owner of a football club, they have to satisfy the Owners’ and Directors’ Test set out by the Football Association (FA). This test sets out many hurdles that must be satisfied for one to become a director or owner of a football club. These requirements are stricter than those set out in Company Law, which means that often legal advice should be sought before one is appointed a director of a football club.
The FA is the regulatory body which effectively places its own rules on the members (Football Clubs) and can therefore impose higher hurdles than those set out in the Companies legislation.
Perhaps the most infamous requirement laid down by the FA on its members is the requirement to adhere to The Owners’ and Directors’ Test. This test is set out in the Football League Regulations, specifically in Appendix 3. This test was formerly known as the “Fit and Proper Persons Test”, which has had some notable situations of Owners and Directors falling foul (excuse the pun).
When considering the “Fit and Proper Persons Test” and the Owners’ and Directors’ Test, one cannot do so without mentioning Leeds United and their owner and director Massimo Cellino. In the case of Mr Cellino, initially, he had not passed the Fit and Proper Persons Test, on the basis he had a conviction for a dishonest act in his native Italy. The Owners’ and Directors’ Test sets out that you cannot be a director/owner of a football club where you are subject to a Disqualifying Condition (as defined in the ‘Fit and Proper Persons Test’). Mr Cellino subsequently appealed this decision, and the matter was referred to an independent QC who overturned the Football League’s decision to prevent his ownership of Leeds United, citing that Mr Cellino’s conviction did not involve conduct that would ‘reasonabl[y] be considered to be dishonest’. Mr Cellino was allowed to take over Leeds United.
However, this was just the beginning of the saga. Mr Cellino failed the Fit and Proper Persons Test in December 2014 after being found guilty of tax evasion in Italy. This was considered to be one of the “Disqualifying Conditions”, as a result of this conviction, Mr Cellino was asked to resign as owner of Leeds United. He was, however, allowed to return once this conviction was spent. After this, Mr Cellino failed the new Owners’ and Directors’ Test (which replaced the Fit and Proper Persons Test), as he was found guilty of an offence under Italian tax legislation (relating the the failure to pay tax on importing a Range Rover from the USA to Italy). This conviction under Italian legislation was viewed by the FA as a “Dishonest Act” of a “competent jurisdiction” outside of England and Wales, which is considered a Disqualifying Condition by the Football League under the Owners’ and Directors’ Test. His Italian conviction was appealed, and, was overturned, which, allowed Mr Cellino to continue as an owner and director of Leeds United to todays date, which could be soon in the past if his whole shareholding is sold and he no longer stays on in any directorship role.
The case(s) of Mr Cellino portray the Football League’s test in practice and illustrate how the requirements of the Owners’ and Directors’ Test goes over and above the general company legislation in England and Wales. On this basis, it is therefore advisable that should one wish to become an owner or director of a football club, legal advice should be sought in relation to whether an individual would pass the extra requirements laid out in by the Football League, and that they are not subject to any of the disqualifying conditions.
If you would like to find out more please feel free to contact our associate Harry Clark.
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