What is a "Syndicate"?
By Roger Mccourtney
By Roger Mccourtney
During the course of the last few months, many anglers have used the word "syndicate" to describe an organization that does not fit in with the generally held view or opinion of a "club".
This is quite understandable, as the subject is confused. I have embarked upon this article, purely and simply to clarify what a syndicate might be in the eyes of the law.
I will stress here and now that I am not a lawyer, nay, I am the victim! From the other side of the fence, if you like. One day I may write a sequel to this and you will then realize how I have gleaned my knowledge.
What then is a "syndicate" and how does it differ from a club, association or society?
Well it might interest you to know that in the eyes of the law they are all the same- up to a point! The general definition is "Body of persons organized for joint purposes".
We in the fishing world use the term "syndicate" to describe the said body of people that rents or leases a fishery that no club, association or society do for whatever reason.
Most "syndicates" are formed to rent a fishery for a variety of reasons. The reason most often, being that the landowner (?) or to put it correctly, "The Riparian Owner" (the person who owns the fishing rights) has had bad experiences with "clubs" and won't have them on his land. He may be looking for a rent that clubs cannot afford but a "syndicate" can. There could be other reasons.
So the enterprising individual makes an offer to the owner assuring him that the fishery will be safe in his hands but he will need to recruit "syndicate members" to help with the finance and the physical work.
The landowner agrees. Often at this point an agreement/lease will be discussed. Owners in the main like to keep things away from lawyers as they cost money. So an "informal" agreement might be drawn up. At this juncture the syndicate leader will often invite his tried and trusted mates to join him. He might suggest, quite reasonably, that he would like to be Secretary, someone else would like to be the treasurer and so on.
The die is cast. The informal agreement is drawn up stating the obvious such as rent payable etc. Everyone concerned signs up and the water is secured. All that needs to be decided is whom shall they recruit as members. The pre-agreed members are all recruited. The Syndicate is formed, right? WRONG!
Although this is a typical "syndicate" and there are hundreds in existence, what has happened is that a "Members Club" has been formed! I will elaborate in due course. The implications of this quite typical scenario is horrendous if even the slightest of things go wrong.
So what is a syndicate then? To answer that we need to see what the well meaning "committee" did wrong.
What they did wrong was to do anything! A true syndicate has no committee. Every single member has exactly the same rights and responsibilities as everyone else. It does not matter who signed the agreement. If rules are decided upon it is each and every member that decides not a secretary nor committee. Every member of a syndicate is equally liable to any expenses that might be incurred. Each member has a completely equal share of everything, liabilities and assets alike. How many syndicates do you know that run like that?
Let us go back to where our enterprising individual decided to form a "syndicate" and see where he went wrong.
I feel sure that what he intended was to get the fishery and have some control, certainly, that is what I thought I was doing when I and a couple of friends embarked upon a similar venture.
What he should have done was to have got and retained the fishing rights for himself. He should not have invited his pals to form a committee. He should have come up with a set of rules. OK he could have had consultations with his mates as to what rules would be fair, but he should then have recruited the members on condition that they abide by HIS rules.
But this scenario is dictatorial you cry! Well it might be to some but at least everyone knows the terms and conditions that are expected of them. After all they can still fish the place.
If this last scenario was implemented, by virtue of the fact that our enterpriser now has the fishing rights the organization is now referred to in law as a "Proprietors Club" He is in fact in total control he can do anything within reason and his own rules. If someone steps out of line he can throw him or her out. He can change the rules. He can do anything he wants.
What about the "Members Club" referred too earlier? This type of organization is the most common type of "syndicate" that is around. After all it is run by a fair minded committee and as the members are all hand picked and vetted there is no need for a rule book, after all we are like minded, committed enthusiasts interested in a bit of special fishing. Yep! That's what I thought. How wrong I was!
Do latch onto the "Members Club" label, it is so important. Avoid getting involved if you can. If you are already in such a syndicate my advice is "Keep your head down and your mouth shut unless you want real grief"
If you are a member of such a "syndicate" what will happen if someone steps out of line and you wish to remove him? You had better pray that he is ignorant of what I am about to say!
To implement any changes requires that ALL the members reach 100% agreement and that includes the offending party! He is entitled to vote too. Is he going to vote himself out of the syndicate? Highly unlikely! Daft as it seems THAT IS THE LAW.
So what happens if everyone else wants rid of him. Sorry, you cannot vote him out. He is a founder member and can stay for the whole duration of the lease term. Further, he doesn't even have to pay as long as the total rent is met. Likewise, any shortfall, he would have to make up himself. So if any of the other founder members left because of him, unless they were replaced, he would have to make up the shortfall!
Odd though it seems that is the law.
So if you are a member or organizer of a "Members Club" such as above, hurry up and get a rulebook sorted out you will need 100% agreement to do so by law. Unless you can bluff and the others are ignorant of the law.
So what is the difference between a Closed Syndicate and an Open Syndicate? None really!
Go back to what I wrote earlier about a True Syndicate. To recap: A true syndicate is a combination of persons to promote a common interest. These persons must have equal rights pertaining to both assets and liabilities. All rules have to be agreed between the members. These rules should also include mechanism for expulsion etc.
Should an organization have a "Proprietor" such as I described earlier, it is a "Proprietors Club"
Likewise if the organization has say, a committee, no matter how small, and no written constitution, it is a "Members Club" God help you if it is! Anarchy is just around the corner!
If you were invited to join a "syndicate" I would bet it's actually a club, certainly legally anyway.
There are lots of these "clubs" around. Some have a fairly rapid turn round of members, which usually means something is wrong with it! Or it could be a "Dead Man's Shoes" club.
Sorry but it is as simple as that. We must learn to live with that. If someone offers an obscene amount of money to a riparian that previously let the fishery to an association and the term of the agreement has come to an end, that is a tough break. It is a great shame but whether we like it or not, it happens. I have every sympathy. Perhaps Associations should learn to have "Rights to Renew" clauses built into agreements!
If these "Rights to Renew" or "First Refusal" clauses were built into agreements, many of the "take over plots could be foiled"
It is worth looking at agreements. There are quite a few different types in existence. There is the good old fashioned "sealed with a hand-shake" gentlemens agreement. This is by far and away the worst type of agreement possible. Neither party has any guarantees or real legal obligation.
Then there is the informal agreement. This is often drawn up by the riparian or possibly the secretary of the "syndicate". This agreement might be quite comprehensive,listing many promises from both parties. It may appear to be a legally binding contract. Everyone is happy. In all probability it is not worth the paper it is written on! I hate to say it but if the fishing is really worth anything, it is vital that one goes to a specialist lawyer and have him do it. It will cost but at least some security of tenure might be gained. There is a good chance that the riparian will have nothing to do with lawyers. In which case you are back to the informal agreement. You had better hope that you are dealing with an honourable riparian!
Another type of agreement is a "lease" This is basically another way of describing any agreement wherby one is allowed usage of land and or fishing rights. This IS a legally binding contract. It must be drawn up by a lawyer acting for the owner and the lease must be scrutinized by YOUR lawyer. It cost a lot of money.
There is VAT to consider. Chances are that the syndicate is not VAT registered so who pays the Revenue?
And so it goes on!
Then there is another type of agreement called a "License" This agreement is used nowadays more and more. As I understand it a license can only be drawn up for a maximum of three years, essentially it is the same as a lease but with a shorter period of duration. It gives both parties the right to refuse renewal after the term. It is not ideal for obvious reasons.
It is possible however to get two licenses "back to back" thereby giving a total of six years tenure.
It is true that the majority of riparian are honourable folk as are most syndicate leaders but THE ONLY way to safeguard the fishing is to have a true lease drawn up.
I mentioned earlier about the "Proprietors Club". As well as the "syndicate" leader being a "proprietor" assuming he does what I said earlier. The riparian may choose to run a syndicate, he will become a "proprietor" too, as long as HE dictates the entire rules etc. He will then be in sole charge. He will have the right to include or exclude members as he sees fit. Of course being fair minded and in all probability, ignorant of the law, he will almost certainly adopt an open-minded policy. Sooner or later he will regret it!
As with so many subjects, the law is very complicated, often lawyers have conflicting opinions, and the courts are then required to make judgment, very expensive. My advise to anyone thinking of starting a syndicate, is either make it a "Proprietors Club" and YOU control the whole thing, or, if you really are happy to include your mates in the running of the organization; form a "Members Club" but by jingo, make sure you have a good set of rules. Make sure you include some sort of expulsion clause, and make sure everyone understands those rules. Then make them all sign an acceptance slip.
I will tell you now, in the wake of not one but two, expensive legal battles, trust NO-ONE, take charge yourself. If you are concerned about being solely responsible for finding the rent for the fishery, then form a "Members Club" rules and everything! If you already run a "syndicate" beware! Take heed from what I have written. This may not be written very professionally, and I apologize, but all the information is here.
It is a fact that most "syndicates" muddle along, even though most are being run in ignorance of the law; indeed many Associations, Societies, Clubs and the like, are too! Both my solicitor and barrister are secretaries of fishing clubs. In fact when I needed advice, they were forced to research the subject; they promptly went away and re-wrote the rulebooks for their respective clubs which I unwittingly paid for!
I am not trying to use scaremonger tactics here, rather, I am hoping to save anyone the grief and expense that I have suffered. Tread carefully.
by Roger Mccourtney