Local Authorities (Companies) Order 1995
| Jurisdiction | UK Non-devolved |
| Citation | SI 1995/849 |
| Year | 1995 |
1995 No. 849
LOCAL GOVERNMENT, ENGLAND AND WALES
The Local Authorities (Companies) Order 1995
Made 21th March 1995
Laid before Parliament 23th March 1995
The Secretary of State for the Environment as respects England, and the Secretary of State for Wales as respects Wales, in exercise of the powers conferred upon them by sections 39(5) to (7), 67(4), 70(1) and (5) and 71(1)(b) of the Local Government and Housing Act 19891and all other powers enabling them in that behalf, hereby make the following Order:
PART I
GENERAL
Citation, commencement and interpretation
1.—(1) This Order may be cited as the Local Authorities (Companies) Order 1995 and shall come into force as provided in paragraph (2) below.
(2) This Order shall come into force—
(a)
(a) for the purposes of article 4, on 1st July 1995;
(b)
(b) for the purposes of articles 5 to 10 in so far as they relate to companies formed on or before 31st March 1995, on 1st July 1995; and
(c)
(c) for all other purposes on 1st April 1995.
(3) Except where the context otherwise requires, any reference in this Order to a section or Part is to a section or Part of the 1989 Act.
(4) In this Order—
“the 1985 Act” means the Companies Act 19852;
“the 1989 Act” means the Local Government and Housing Act 1989;
“the Audit Commission” means the Audit Commission for Local Authorities and the National Health Service in England and Wales;
“controlled company” means a company (other than a company within a description set out in the Schedule to this Order) which for the purposes of Part V is under the control of a local authority or is treated as being under the control of each of two or more local authorities;
“director”, except in so far as the context otherwise requires, includes, in relation to a company which is an industrial and provident society, a member of the committee of management of the society and its chief officer;
“relevant authority”, in relation to a regulated company, means any local authority having control of that company or to whose influence the company is subject, or which is, by virtue of section 73 (authorities acting jointly, etc.) treated as having such control or influence;
and any reference to a regulated company is a reference to a company which is for the time being either—
(a) a controlled company, or
(b) a company which for the purposes of Part V is, or is treated as, subject to the influence of a local authority (the “relevant authority”) and which—
(i) is an unlimited company or a society registered or deemed to be registered under the Industrial and Provident Societies Act 19653or under the Industrial and Provident Societies Act (Northern Ireland) 19694; or
(ii) satisfies either or both of the first and second conditions set out in paragraphs (5) and (7) below,
but is not within any description set out in the Schedule to this Order.
(5) The first condition mentioned in paragraph (4)(b)(ii) above is that the relevant authority would, if it were a company registered under the 1985 Act, be treated by virtue of section 258 of that Act5as having the right to exercise, or as having, during the relevant period, actually exercised, a dominant influence over the company in question.
(6) For the purposes of paragraph (5) above “the relevant period”, in relation to any duty or any action referred to in Part II of this Order, means the financial year of the relevant authority which ended immediately before the financial year in which, if the company in question were a regulated company, that duty would fall to be fulfilled, or in which that action is performed.
(7) The second condition mentioned in paragraph (4)(b)(ii) above is that if the authority were a company registered under the 1985 Act it would be required, by virtue of section 227 of that Act6, or of accounting standards such as would, by virtue of that Act, be applicable in the circumstances, to prepare group accounts in respect of the company in question.
(8) For the purposes of paragraph (7) above, in determining whether a local authority would be required to prepare group accounts it shall be assumed that no exclusion of or exemption from such requirement, other than those referred to in section 229(3)(a) and (c) of the 1985 Act, would be applicable by virtue of that Act.
Companies subject to the influence of local authorities
2. In determining for the purposes of this Order whether a company is subject to the influence of a local authority no account shall be taken of any condition specified in any paragraph of subsection (1) or (3) of section 69, in so far as that condition is fulfilled by reference only to another company which is of a description mentioned in the Schedule to this Order, or to a person who is both an employee and either a director, manager, secretary or similar officer of such a company.
Application of the Order
3. No provision in this Order shall be construed as requiring a company to act (or refrain from acting) in breach of any provision made by or under any enactment, or any obligation subsisting on the day on which such provision comes into force.
PART II
REGULATION OF CONTROLLED AND INFLUENCED COMPANIES
Identification of companies
4.—(1) A regulated company shall have mentioned on all relevant documents the fact that it is a company controlled, or, as the case may be, influenced, by a local authority, within the meaning of Part V; and naming the relevant authority or authorities.
(2) In this article “relevant documents” means business letters, notices and other documents of the company, being of any kind mentioned in paragraphs (a) to (d) of section 349(1) of the 1985 Act.
Requirements applicable to regulated companies
5.—(1) A regulated company shall not—
(a)
(a) in respect of the carrying out of any relevant duty, pay to a regulated director remuneration in excess of the maximum amount;
(b)
(b) in respect of expenditure on travelling or subsistence in connection with the carrying out of a relevant duty, pay to a regulated director an allowance, or reimburse expenses, in excess of the maximum amount;
(c)
(c) publish any material which the relevant authority would be prohibited from publishing by section 2 of the Local Government Act 19867.
(2) Where a director becomes disqualified for membership of a local authority otherwise than by being employed by a local authority or a controlled company, the company shall make such arrangements as may be necessary for a resolution to be moved for his removal in accordance with section 303 of the 1985 Act.
(3) In this article—
(a)
(a) for the purposes of paragraph (1)(a), the maximum amount is the greatest amount which would for the time being be payable by the relevant authority in respect of a comparable duty performed on behalf of that authority, less any amount paid by that authority in respect of the relevant duty to the regulated director in question;
(b)
(b) for the purposes of paragraph (1)(b), the maximum amount in relation to a director is the maximum amount of travelling or subsistence allowance which would for the time being be payable to that director by the local authority of which he is a member if the relevant duty were an approved duty for the purposes of section 174 of the Local Government Act 19728;
(c)
(c) “regulated director” means a director of the company who is also a member of a relevant authority; and
(d)
(d) “relevant duty” means a duty carried out on behalf of the company.
Provision of information to authority’s auditor
6. A regulated company shall provide, and authorise or instruct its auditors to provide—
(a) to the person who is for the time being the auditor in relation to the accounts of the relevant authority, such information and explanation about the affairs of the company as that person may require for the purposes of the audit of the local authority’s accounts; and
(b) to any person authorised by the Audit Commission, such information as that person or the Commission may require for the discharge of any function under Part III of the Local Government Finance Act 19829.
Provision of information to members of local authority
7.—(1) Subject to paragraph (2), a regulated company shall provide to a member of a relevant authority such information about the affairs of the company as the member reasonably requires for the proper discharge of his duties.
(2) Nothing in this article shall require a company to provide information in breach of any enactment, or of an obligation owed to any person.
Provision of financial information to authority
8.—(1) A regulated company shall, on the request of any relevant authority, provide to that authority, within such reasonable time as may be specified by the authority, such information about the affairs of the company as that authority may require for the purposes of any order for the time being in force under section 39 (revenue accounts and capital finance) of the 1989 Act.
(2) Information required under paragraph (1) shall be supplied in such form as the relevant authority may reasonably require.
Appointment of auditor
9. A controlled company shall, before it first appoints any person as auditor of the company, obtain the Audit Commission’s consent to the appointment of that person.
PART III
CONTROLLED COMPANIES WHICH ARE NOT ARM'S LENGTH COMPANIES
Public inspection of minutes
10.—(1) A controlled company which is not an arm’s length company shall, until the expiry of the period of four years...
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