This article is more than 1 year old

This article is more than 1 year old

Mike Ashley faces a shareholder rebellion after the advisory firm Institutional Shareholder Services joined calls for Sports Direct investors to vote against his continuing as a director amid “significant operational and governance concerns” at the retail group.

ISS said Sports Direct’s acquisition of House of Fraser had “led to concerns about the company’s viability as a whole”. It also raised concerns about financial deals with Ashley’s brother and his daughter’s partner, Michael Murray, who received payments of more than £5m in the past year.

The report also highlighted Sports Direct’s acquisition of stakes in businesses that had collapsed into administration – Debenhams – or whose accounting practices are now being investigated – namely Goals Soccer Centres.

It added that Sports Direct had failed to issue profit guidance for the year ahead after receiving an unexpected €674m (£605m) Belgian tax bill.

It said the tax bill had resulted in “further uncertainty” that had led to the resignation of Sports Direct’s auditor, Grant Thornton. The audit firm is already under investigation over Sports Direct’s failure to disclose a transaction with a company owned by Ashley’s brother.

Grant Thornton is to resign at the annual meeting on 11 September and Sports Direct is struggling to sign up a successor.

Mike Ashley-backed Goals Soccer Centres put up for sale Read more

The report said: “ISS’s policy for UK companies provides for withholding support from directors under extraordinary circumstances for material failures of governance, stewardship, or risk oversight. Recent events at Sports Direct appear to indicate that in this case, all three criteria apply. A vote against the re-election of Mike Ashley is therefore considered appropriate.”

Ashley, who founded the business in 1982, is the chief executive and owns 62% of Sports Direct.

The group’s shares have crumbled to 247p from about 400p a year ago. Five years ago they were changing hands at more than 900p.

ISS’s criticisms come after shareholder advisory firms Pirc and Glass Lewis also came out against Ashley.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

Glass Lewis said the billionaire was “inextricably linked with the myriad controversies, past and ongoing” at Sports Direct. It also criticised the multiple delays to the company’s annual results last month, saying it was the most recent manifestation of a “disregard for the rights and concerns of independent shareholders”.

Pirc also advised opposing the re-election of Sports Direct’s chair, David Daly, an ex-Nike executive who took over last autumn, and three of its four non-executive directors: Richard Bottomley; Nicola Frampton and David Brayshaw.

The advisory notes set up another potential showdown after nearly 37% of independent shareholders who voted at Sports Direct’s annual shareholder meeting last year made it clear they wanted to block his reappointment as a director.

In response, Ashley accused shareholders of stabbing him in the back and “repeatedly hounding” the former chair Keith Hellawell.