Meeting documents
Cabinet
Wednesday, 7th February, 2007
APPENDIX 3
WHAT IS A CONTROLLED COMPANY?
Many of the details governing controlled companies are legally and financially very complex. However, as a simple working summary the position is as follows:
1. When is a company a controlled company?
A company is a controlled company when it is under the control of one or more local authorities, as for example:
(a) when local authorities own more than 50% of the shares, or
(b) when local authorities can appoint more than 50% of the directors.
The question is not whether the company is under the control of a particular local authority, so much as the local authority sector as a whole. Where more than one local authority is involved, their involvements are added together.
Assuming this company is wholly under the control of the four unitaries, it will be a controlled company.
2. What happens if a company is controlled?
The company is regarded as part of the local authority sector for various financial and public purposes. This means that its finances will be treated as part of the finances of the controlling authorities and will be subject to any controls and comparable regimes applicable to local government finance.
It also means that the company will be subject to various obligations as to publicity, access to information, etc., broadly as being part of local government.