Explained: Norwich City's general meeting to allot shares

While speculation around the long term implications has been rife, what it simply means is that the club will be creating new shares, the purchase of which would reduce the size of other shareholders' stakes without a direct transaction between shareholding parties.

This means that every shareholder would retain the number of shares they currently own, but the overall percentage of the club they owned would be reduced. 

For example, if there were only 8 shares in the club and Delia Smith owned four, she would have a 50pc stake. If the club then allotted two more shares to take this number to 10 and an external party purchased them, Smith would still own four shares but only 40pc of the club.

In reality, the club are planning to allot 194,512 new shares, which would take the number available from 616,913 to 811,425. This means that the additional shares would be 23.97pc of the increased number of ordinary shares.

Some may be wondering why this has been elected as the course of action to take. The benefit for the club in this scenario is that they can sell shares and receive direct investment.

Had Smith and Michael Wynn Jones, who are currently joint majority shareholders with a 53pc stake, simply sold some shares to another party, they would receive the money directly for selling and there would be no requirement for the club to see any of it.

By opting to allot shares, the club creates a situation in which they are able to sell the 23.97pc created and benefit from that investment.

The implications of this are clear to see - the percentages are set to shift regarding the ownership at Carrow Road. Much speculation has already assumed that new shareholder and director Mark Attanasio could be increasing his stake in the club.

This is certainly a possibility, and Attanasio's admission to BBC Radio Norfolk that "we're interested in getting more involved" suggests that his stake could increase in future, and if he purchased all of the newly created shares he'd take his shareholding from at least 98,000 and 15.98pc to 292,512 and 36.05pc. Add in the potential future conversion of the C-preference shares he owns and that would increase even further.

What's important to stress, however, is that the statement released by the club gives no indication as to who could be involved in the purchase of the new shares.

This means, technically, that the prospective owner of these new shares could be anyone, but to see an entirely foreign face invest would be a surprise.

What this does not mean is the increased likelihood of Attanasio or anyone else purchasing shares directly from others. That could, of course, take place without a general meeting required, but this notification looks at present to be solely tied to the release of new shares in the club.

Many have speculated that Canaries director Mark Attanasio could purchase the new shares being made available by the Canaries. (Image: Paul Chesterton/Focus Images Ltd)

There are unspecified trigger events in the American's purchase of those C-preference shares that could relate to events taking place at this meeting, but without the disclosure of what they are it's difficult to speculate on how those shares could be affected.

What many will have noted in that statement is the justification for the new shares, which states that the allotting is coming "as the club seeks to strengthen its financial sustainability by reducing the need for borrowings".

This is perhaps the most worrying section of the statement, as it suggests that the club's options to keep finances ticking over are either to take out further loans or create these shares. The club has already secured £66million worth of loans on their Premier League parachute payments, with those liabilities adding pressure to the quest for promotion this season.

The purchase of these shares would clearly ease the burden, though, on on-pitch matters in the short term.

A statement has already said that the club will provide further information upon the conclusion of the meeting, with much of the discourse between now and then remaining pure speculation. What's clear, however, is that change is on the horizon at Norwich City.