29 Apr Racehorse syndicate agreements- key considerations and regulatory developments
Racehorse syndicates offer an accessible and cost-effective way for individuals to participate in the ownership of racehorses by sharing both the expenses and the excitement of racing. To ensure clarity and prevent disputes, it is essential for syndicates to have a well-structured agreement in place. Emma White at HRJ Foreman Laws Solicitors outlines the key components of a well drafted racehorse syndicate agreement and recent regulatory developments.
Key components of a syndicate agreement
Ownership structure
- Clearly define the ownership percentages or shares each member holds in the horse(s).
- Specify whether the syndicate owns a single horse or multiple horses.
Financial commitments
- Detail all costs involved, including the initial purchase price, training fees, veterinary expenses, insurance, and other associated costs.
- Set out how these expenses will be divided among members and the process for collecting payments.
Duration and exit strategy
- Outline the intended duration of the syndicate.
- Include procedures for members wishing to exit, including any restrictions or conditions on the sale or transfer of shares.
- This should also include what happens on the death or bankruptcy of a syndicate member. The other syndicate members may not want this share to fall into the hands of a third party, so it is important to include this in the agreement.
Management and decision-making
- Specify who will manage the syndicate (for example: a syndicate manager) and their powers.
- Set out how decisions will be made, including voting rights and procedures for resolving disagreements.
Sale of the horse(s)
- It is important to include who decides when the horse(s) is sold and at what price.
- The agreement should also stipulate what happens when one party wants to sell their share in the horse(s) and whether the share must first be offered to the other syndicate members and at what value.
Distribution of returns
- Explain how prize money, sale proceeds, or other income will be distributed among members.
- Address the handling of losses or additional calls for funds.
Liabilities and responsibilities
- Clarify the extent of each member’s liability and their responsibilities within the syndicate.
- Consider indemnities and insurance arrangements. Adequate insurance should be put in place to cover any liability incurred in respect of injury or damage caused by the horse(s) at all times.
Regulatory considerations
The British Horseracing Authority (BHA) has introduced several measures to enhance transparency and protect syndicate members. For example:
- Syndicate code of conduct: Since 2017, syndicates must provide members with a comprehensive agreement detailing costs, duration, decision-making processes, and financial reporting. This is designed to ensure transparency and protect all parties involved.
- Licensing requirements: From 1 January 2025, individuals or entities managing syndicates or racing clubs that advertise publicly or receive payment for their role must obtain a licence from the BHA. Existing managers must secure this licence by 1 January 2026.
A robust syndicate agreement is fundamental to the smooth operation of a racehorse syndicate. With increasing regulatory oversight and the growing popularity of shared ownership, instructing a specialist equine solicitor will ensure that these agreements are comprehensive, compliant, and tailored to the specific needs of the syndicate and its members.
If you are looking at creating your own syndicate or joining one and would like some advice on the legalities, please do not hesitate to contact us.
For legal advice
- Email info@hrjforemanlaws.co.uk
- Call Hitchin, 01462 457711, Welwyn Garden City, 01707 887700, Old Harlow 01279 709 100.
- Complete our contact form here