In a ground-breaking move designed to trigger a much-needed cash injection, clubs have given EP Rugby the green light to change its constitution so negotiations can start with equity partners, president George Malgas said.
The radical proposals were discussed when rugby bosses and club leaders gathered for a high-stakes special general meeting.
If the union can secure a partner, it would transform the EP Elephants, who are hoping to win promotion to the Currie Cup Premier Division in 2026.
Before the meeting, clubs were warned that if EP did not make changes and acquire an equity partner it ran the risk of staying out in the cold when it came to playing top-league rugby in the foreseeable future.
Earlier, Malgas had written a letter to clubs saying amending the constitution and the consideration of an outside interest in the union would be on the agenda.
“At the meeting, we had an overwhelming vote in favour of us pursuing equity,” Malgas said.
“It was quite a robust meeting, but at the end of the day, the overwhelming majority of delegates spoke in favour of us amending the constitution.
“There were one or two clubs which had some issues.
“The issues they raised were more about the negotiation process in terms of what the equity deal should look like.
“I believe they are jumping the gun because we first needed to have the constitution amended, which we did.
“Regarding the resolution to pursue equity, we had a 91% resolution in favour.
“So it is looking good and it is now over to us to pursue equity now that the constitution has been amended.
“Negotiations can now start in all earnest and I am sure we will have a good period of negotiation and hopefully at the end of it we will find common ground.
“At the end of it [negotiations], we will go back to clubs and explain if we succeed.
“We will present what we have to the clubs and then it is up to them again to decide in favour of or not to vote for the equity partner
“I do believe it is in the best interest of EP rugby that we should, by all means possible, try to have this deal.
“But there will be a period of tough negotiations and we will set up committees to look at various aspects of the negotiation process
“I am confident we will get there.”
SA Rugby CEO Rian Oberholzer and Malgas hinted in May that their bodies were working hand-in-hand with EP in an effort to find a cash-flush backer.
Obtaining an equity partner is vital if EP want to bolster their semi-professional Currie Cup squad with top-quality players and win promotion to the top-tier leagues.
The new clauses outlined to clubs at the meeting were:
• “EPRU shall not permit any person, club, body corporate, partnership, trust or any other entity or group of entities, acting alone or in concert, directly, to acquire an interest of whatever kind in EPRU without Saru’s prior written consent, which consent Saru shall not unreasonably withhold, and which consent shall be based on criteria to be determined by their executive council;
• “A change in the identity of the controlling shareholder of an equity partner that results in an indirect change of control of the commercial entity shall not require Saru’s prior written consent, but shall require the written consent of the EPRU general meeting;
• “The concept ‘interest’ is to be widely construed and will include, without limitation, the holding of any number or class shares or debentures or any other interest in a commercial company, but shall not include loans;
• “EPRU shall not permit any entity, other than the member itself, acting alone or in concert, to hold or have beneficial interest of more than 74% of the issued shares in a commercial company;
• “Or control, whether by ownership, contract, licence, agency or otherwise, more than 74% of the voting rights that could be exercised at any general meeting of the shareholders of a commercial company;
• “EPRU’s commercial entity is subject to and shall abide by World Rugby bylaws and regulations to the game, Saru’s Constitution Code of Conduct and Rules and Regulations, and the Rules and Regulations of any rugby entity to which Saru is affiliated;
• “EPRU’s commercial entity shall not do anything which would negatively affect the existing relationship between Saru and its stakeholders;
• “Saru shall allocate licence agreements only to members of Saru, that is, EPRU in our case.
• “These are all necessary clauses which will be amended and/or added, as per this annexure, and,
“There may also be other clauses which will similarly be adjusted so that the EPRU constitution only deals with amateur rugby and makes provision for a commercial entity.”
The Herald
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