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Monday, October 28, 2019

Did Wetherspoons break the law over Brexit?

I admit that I am not shedding many tears for the owner over this report in the Guardian, that JD Wetherspoon has been accused of breaching the Companies Act after failing to seek shareholder approval for spending on almost 2m pro-leave beer mats before the 2016 EU referendum.

The paper says that the pub chain spent £94,856 during the referendum campaign, comprising £18,000 on 1.5m “Brexit beer mats”, £8,400 on a further 200,000 mats, and £68,186 on another 200,000 mats, 5,000 posters and 500,000 booklets. But legal experts believe that shareholder approval was necessary because the spending constituted political expenditure under the 2006 legislation:

JD Wetherspoon’s chairman and founder, Tim Martin, is one of the business world’s most vocal Brexit supporters and has used his pub chain as a platform for his views.

Martin owns 32% of JD Wetherspoon. Most of the remaining shares are held by pension funds and managed by City investors. The Guardian understands some large investors have objected to Martin using the pub chain to promote his views.

JD Wetherspoon distributed the Brexit beer mats in more than 900 pubs during the referendum campaign featuring the message “‘vote ‘leave’ – take back control”. On one set of mats, Martin criticised Christine Lagarde, the then head of the International Monetary Fund. On another, he took aim at George Osborne, the then chancellor.

The company also published an edition of its Wetherspoon News magazine featuring a two-page pro-Brexit editorial by Martin, nine pages of Eurosceptic articles and just four pages of pro-EU articles.

The Companies Act 2006 states political expenditure includes activities “capable of being reasonably regarded as intended to influence voters in relation to any national or regional referendum”.

The legislation says political spending must be approved in advance by shareholders, but JD Wetherspoon did not pass such a resolution before the referendum. Companies are also meant to declare annual political spending above £2,000 in their annual report, which JD Wetherspoon did not do.

The more we look into it, the more unsafe the 2016 referendum result appears to be.
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