Stock market embarrassment for Rangers as shares are suspended

TRADING in Rangers shares have been suspended on the Plus stock market as a result of the club’s failure to publish its audited accounts on time.

The delay in publication has been caused by the continued uncertainty about the outcome of Rangers’ tax case with Her Majesty’s Revenue and Customs, and the club still hopes to complete the audit around the end of the month. Club chairman Craig Whyte said that, in any case, Rangers had already been considering a full-time withdrawal from the Plus market.

For the time being the suspension is only a symptom of the Scottish champions’ current difficulties, albeit an embarrassing one which has drawn more attention to the doubts over Rangers’ future.

However, the delay in publication could have serious repercussions if it stretches to the end of March, as in that case Rangers would face being barred from European competition by the Scottish Football Association under club registration rules.

Rangers’ hope of being able to complete their audit in a little over three weeks from now is based only on a guesstimate of how long the HMRC hearing will take. The club, while an interested party which would face a bill of £49million if the case goes against it, cannot know for sure when a decision will be reached.

If it is reached within that timeframe, and if the judgment is in Rangers’ favour, all will be well at Ibrox. Even a further delay of several weeks would be no more than a technicality, but if audited accounts had still not been filed by then, Rangers would face a race against time to ensure they were passed fit to compete in European football next season.

Since taking over from Sir David Murray, Whyte has always expressed his confidence that the HMRC hearing would find in Rangers’ favour. The club’s reaction to yesterday’s suspension struck a similar note, implying it was something they may well have done of their own accord in due course.

“The club’s board is currently considering the merit of maintaining its listing on the Plus market after 6 May 2012,” a statement on the Rangers website read. “The May 6 date will be 12 months following the acquisition of 85.3 per cent holding by The Rangers FC Group Limited. The board is currently assessing the benefits of remaining a listed company on Plus.

“As a result of the delay in publishing its audited accounts to 30 June 2011, the board announce that the company’s shares have been suspended from trading on Plus pursuant to Rule 51. The delay has been caused as a result of finalising the audit, which the board believe will be complete on or around 31 January 2012. The delay in finalising the audit is related to an ongoing HMRC tax tribunal.

“Last year’s postponed annual general meeting will be held as soon as possible after the accounts are finalised.”

Suspension of trading on the Plus exchange does not mean it is impossible to buy or sell Rangers shares by other means. There has in any case been very little trading on Plus over the past two months, with the total number of shares traded since the start of November reaching only 6,800. Whyte explained it was for that reason, among others. that the club had been contemplating withdrawal from Plus.

“Given the structure of the shareholding in the club, there is very little, if any, tangible benefit for the club to be a listed company,” Whyte said, again on the Rangers website. “The fact that the club has a majority shareholder controlling more than 80 per cent means there is very little trading in shares. In reality, a public listing means more bureaucracy.

“Rangers does not need to remain a listed company in order for people to buy and sell their individual shares, and since becoming chairman I have always questioned what is really being achieved with a public listing.

“Whether or not we are a listed company, accounts will still be published and there will still be a shareholders’ agm. All shareholders would be able to hold the directors to account.” But, while Rangers would indeed publish their accounts and hold an agm, information available to those thinking of becoming shareholders would not necessarily be so plentiful as it is while the club’s shares are listed on Plus.

For club owner Whyte, a public listing may mean “more bureaucracy”. For others, “more bureaucracy” could translate as better access to information they would like to have about the club.

Whatever happens to its listing on Plus, the club’s primary concern remains that potential bill, for tax and penalties, of £49m.

If there is an inordinate delay in a conclusion to the case, there would be serious doubt about the club’s ability to be passed as a going concern by the auditors. And if the case went against Rangers, the club would appear doomed to administration, in which case it would not be able to compete in Europe anyway under Uefa’s financial rules and regulations.

Rangers shares were trading at 12.5p before yesterday’s suspension on the Plus exchange, a figure that has been static over the past six weeks but down from a high over the past 12 months of 32.5p.