The Local Authorities (Companies) Order 1995

Explanatory Note

(This note is not part of the Order)

Part V of the Local Government and Housing Act 1989 provides for the regulation of companies in which local authorities have interests.

This Order, which (except in respect of article 4 and with certain savings) applies in England and Wales from 1st April 1995, contains requirements applicable to companies subject to the influence or control of local authorities within the meaning of Part V of the 1989 Act (“regulated companies”) other than the companies which satisfy the conditions described in the Schedule.

Part I of the Order contains definitions and savings.

Article 4 (which comes into force on 1 July 1995) requires regulated companies to mention on their documents the fact that they are controlled or, as the case may be, influenced by a local authority.

Article 5—

(a) restricts the remuneration and allowances of certain directors who are also councillors;

(b) requires steps to be taken to enable the removal of directors who are disqualified for election for office as a councillor, and

(c) places regulated companies under the same restrictions as apply to local authorities as to the publication of party political material.

Articles 6 to 8 require the provision of certain information by regulated companies to the local authorities concerned, their auditors and members.

Article 9 requires a controlled company to obtain the consent of the Audit Commission before a person is first appointed as its auditor.

Article 10 confers on members of the public rights of inspection of minutes of the general meetings of controlled companies, other than arm’s length companies.

Article 11 specifies as authorised companies for the purposes of section 71 (minority interests) any company other than a regulated company or company described in the Schedule in which any person associated with a local authority may exercise voting rights or to which any such person is appointed as a director.

Part V of the Order applies the provisions of Part IV of the 1989 Act (revenue accounts and capital finance of local authorities), subject to modifications, to a regulated company and the local authority by whom the company is controlled or, as the case may be, influenced.

Articles 13 and 14 make provision for treating things done by or to a regulated company as if they were done by or to the local authority concerned, and in respect of such things (other than a reduction made in the company’s liabilities) require the authority to have available an amount of credit cover.

Where a regulated company reduces its liabilities, article 15 allows the local authority concerned to treat as increased a basic credit approval having effect for the financial year following the reduction.

Article 16 makes provision for determining a regulated company’s liabilities.

Article 17 makes provision in relation to dealings between the regulated companies of a local authority and between the authority and any of those companies.

Article 18 makes provision for cases where a regulated company is treated as being under the control, or subject to the influence of, each of two or more local authorities.