November 24 – The Premier League clubs have majority-agreed changes to the league’s Associated Party Transaction (APT) rules at a shareholders’ meeting held last Friday.
The rule changes are a result of Manchester City’s legal challenge to the APT regulation earlier this year where an arbitration panel ruled that some aspects of the APT rules were unlawful.
This triggered a consultation led by the Premier League and a new set of rules being proposed to address the areas of the rules that needed amending.
In a vote by clubs on the proposed rule changes, Manchester City and Newcastle United voted against (the two clubs in the Premier League owned or related to state-backed wealth funds) along with Aston Villa and Nottingham Forest.
Aston Villa had requested the vote to be postponed but 16 clubs voted in favour of the new rules that will come into force immediately.
“The new rules seek to ensure that there is appropriate parity between the treatment of shareholder loans and other APTs going forward, with transitional rules clarifying the treatment of existing shareholder loans within that framework,” said a Premier League statement.
The rules are in place to ensure clubs compete commercially under the same criteria rather than benefitting from inflated commercial deals or reductions in costs that come via their relationships with Associated Parties (ie their owners’ other businesses or closely related businesses). All deals and loans will be evaluated according to Fair Market Value (FMV).
“These rules were introduced to provide a robust mechanism to safeguard the financial stability, integrity and competitive balance of the League,” said the Premier League.
Going forward any shareholder loans made after 22 November 2024 will be classified as an APT and subject to an FMV assessment. If the Premier League Board decides the loan is not at FMV, the club will have to terminate or vary the loan to come into line with the board’s definition of FMV.
Any shareholder loan made before 22 November 2024 but which is replaced with other forms of financing within 50 days (e.g. by conversion to equity or being repaid) will not have to be submitted as an APT or assessed for FMV.
Loans made between 14 December 2021 and 22 November 2024 and still in effect on 11 January 2025 must be submitted as an APT.
If the loan is deemed not to be at FMV, the club can keep the loan on its existing terms, but must make adjustments to its Annual Accounts for 2024/25 onwards as if, from 22 November 2024, the loan was at FMV.
The Premier League also said that under the new rules “any shareholder loan made before 14 December 2021 and still in effect on 11 January 2025 must be submitted as an APT and be subject to an FMV Assessment upon any drawdown taking place after the 22 November 2024.
“If the Premier League Board determines the loan is evidently not at FMV, the club is permitted to retain the Shareholder loan on its existing terms, though adjustments must be made to its Annual Accounts for 2024/25 onwards as if any drawdowns made after 22 November 2024 were at FMV.”
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