Foundation of Hearts will hold an important vote at its AGM next month as it seeks to strike the "right balance" between protecting the organisation's shareholding in Heart of Midlothian while allowing the club to move forward.

The Foundation sent an email to all members with details of the AGM on Wednesday, December 4 at 6pm while explaining that it will hold a vote on a resolution to amend the articles of association which proposes a change to voting majorities.

The resolution surrounds any potential investment in the club including a possible share issue. Such a scenario would result in FOH's 75.1 per cent majority shareholding being reduced. 

The Foundation board has discussed the possibility of a share issue by the club. Hearts would need the support of FOH to do so as a reserved shareholder matter with the group keen to be ready for all possibilities. 

 There has been much speculation surrounding Tony Bloom investing in the club while the club are yet to publicly announce any partnership with Jamestown Analytics.  

"It is possible that at some time in the future, the club may wish to issue new shares in connection with new external investment," the Foundation stated in a document sent to members.

"There are therefore two purposes behind the proposed amendments to the Foundation’s Articles. The first concerns such a future potential share issue by the club. If the club issues new shares, then the proportion of shares held by the Foundation would decrease below its current holding of 75.1 per cent of shares in the club. But in order to issue those shares, the club requires the support of the Foundation.

"At present, in order to authorise the Foundation board to sell any of its shares in the club, you and the other current members of the Foundation must vote by a 90 per cent majority. In other words, 90 per cent or more of the members who vote must vote in favour of a proposed sale."

The proposal for members to vote on at the AGM would be for 75 per cent members who vote to back a share issue which would reduce the Foundation's majority shareholding to between 50.1 per cent and 75 per cent.

While if the club wanted to issue shares that would see the Foundation owning 50 per cent or less it would require 90 per cent of members who vote to back it.

The Foundation has always been maintained that they would welcome investment if it was "game-changing" and would ensure the club would not become a feeder club. The third condition is that the organisation would remain the majority shareholder with at least 50.1 per cent.

"The Foundation Board is therefore proposing that a new rule be introduced which would allow the Foundation to support a share issue which had the effect of reducing the Foundation’s shareholding to between 50.1 per cent and 75 per cent of the shares in the club provided 75 per cent of those Foundation members who voted on the issue voted in favour of the share issue. That is still a significant majority of the voting members. But the Foundation believes that the 75 per cent figure strikes the right balance between protecting the Foundation’s shareholding and allowing the club to move forward.

Read more

"If the club wanted to issue shares which would lead to the Foundation owning 50 per cent or less of the shares in the club, the Foundation Board would recommend that it would support such a course only if 90 per cent of Foundation members who voted on the issue voted in favour of the share issue. The much higher majority required reflects the Foundation’s continuing commitment to being the majority shareholder of the club.

"We are also seeking your backing to bring a sale of shares into line with an issue of shares as explained above. So, we are proposing that the rules governing the sale of shares reflect the same majority votes required. So, if the sale of shares reduced the Foundation’s shareholding to between 50.1 per cent and 75 per cent of the club’s shares, that would require 75 per cent of those voting to agree. If the sale reduced the shareholding to 50 per cent or below, that would require 90 per cent of those voting to support that. Once again, that is intended to reinforce the Foundation’s commitment to continued fan ownership of the club."

The Foundation revealed that the decision for the resolution is "not directly" related with a "specific potential investment".

"We don’t know whether any specific investment will go ahead and even if it does, we don’t know whether it will result in the club seeking to issue further shares in the club," the organisation said.

"It may be, for instance, that existing minority shareholders would sell their shares to any new investor. Or it may be that a new investor wouldn’t want to acquire shares as part of any investment. We simply don’t know. But we need to be ready in case the club comes to us at some time in the future and asks us whether we would be prepared to support a share issue."

Meanwhile, the three candidates to join the Foundation of Hearts board will be announced at the AGM. Voting is currently open on the seven candidates running for the three spots. Current chairman Gerry Mallon is one of the seven as he seeks re-election, while Andrew Brown has decided not to stand for re-election and Louise Strutt is ineligible for reelection having served three terms on the noard.