Sports Direct set for stormy AGM but Mike Ashley will win in the end

Minority investors are justifiably concerned about what's been going on, but under the UK's corporate governance rules there's not much they can do if Mr Ashley opts to tell them where to go

Investors are concerned at Ashley's habit of seeing family members right at their expense (PA)

It looks like Sports Direct – the Selfridges of Sport (copyright Mike Ashley esq) – is set for another un-Selfridges like bust up at this week’s AGM.

Various voting advisors have urged minority investors to kick up a stink about the firm’s numerous governances issues, with non-executive chairman, and former copper Keith Hellawell, in the firing line again for failing to police Mr Ashley, the company’s founder and boss.

The big cheese may also face a significant vote against his re-election.

The biggest bugbear for investors is his habit of seeing family members right at the expense of his investors.

The latest example is the appointment of prospective son-in-law Michael Murray to the role of, um, "head of elevation", and the proposal to pay the former nightclub promoter £5m for "property consultancy". That would likely spark a scandal at the best of times. With memories of the fuss over the treatment of workers at the company’s Derbyshire warehouse still fresh, the optics are even worse.

Then there was the proposed payment of £11m to Mr Ashley’s brother, whose company had handled online orders outside the UK.

But there have also been a run of highly questionable business decisions, such as the purchase of a minority stake in Debenhams that wrecked the most recent results.

Investors have good reasons to be cross.

But beyond shaking their fists, there’s not a lot they can do to effect change.

A majority of those not named Mike Ashley voted against the re-election of Mr Hellawell at the 2016 AGM, only for Mr Ashley to persuade him to stay. There was another sizeable rebellion last year, but he squeaked through.

If the minority shareholders vote him down again this year, a fresh poll will have to be held after 90 days at which Mr Ashley, as the majority investor, will be able to once again bring his shares into play.

When the rules were put in place the theory held that this would never happen. Any normal director would find their position untenable and resign before it got to that stage.

But this is Sports Direct, and this is Mike Ashley, who has been thumbing his nose at the City since he took the company public.

Mr Hellawell is his guy, so it won't come as any real surprise if there is a repeat performance.

The Sports Direct CEO carries on like he does because he can. The corporate governance rules, such as they are in the UK, are light touch and predicated on companies wanting to do the right thing by complying with "best practice".

There’s a lot of self-congratulatory guff written about the way they work.

But Sports Direct exposes the problem their supporters like to ignore. It is that there’s nothing anyone can really do if someone like Mr Ashley chooses to play by his own rules.

The events at the company really ought to spark a debate about whether they’re fit for purpose.

Trouble is, with Britain and the City of London likely to be desperate for any business they can get their hands on thanks to the disaster of Brexit, that’s not going to happen.

So in all likelihood, Mr Ashley will be able to continue to quite legitimately tell the City what it can do with its concerns about his business dealings.