Agenda item

Report of the Director of Law and Governance

The Cabinet considered a report of the Director of Law and Governance, that had been considered by the Scrutiny Co-ordination Committee at their meeting on 26^th August 2021 (their minute 16/21 referred) and would also be considered at the meeting of the Council on 8^th September 2021, on proposals for restructuring Coventry City Council subsidiaries. An Appendix to the report provided the Terms of Reference for the Shareholder Committee. A briefing note containing recommendations from Scrutiny Co-ordination Committee consideration of the report, had been circulated.

A corresponding private report detailing confidential financial matters was also submitted for consideration (Minute 27 below refers).

The City Council’s portfolio of wholly owned company investments and joint ventures companies had grown in both volume and complexity over a number of years. A full list of the City Council’s company investments was detailed in the report.

Each of these investments had been considered separately by the City Council at the point of purchase and / or investment through detailed due diligence, along with reports to the Cabinet and Council to recommend the appropriate course of action. Equally each investment had its own governance structure which regulated how the company or joint venture operated and performed. However, there was currently no single internal process to allow the City Council to consider the performance of its investments, including the mix of commercial investments and suitable apportionment of risk across different sectors.

In response to the City Council’s auditors (Grant Thornton) advocating improvements in the overarching arrangements for the Council’s commercial investments, the report sought approval of a revised governance structure for the City Council’s commercial investments through the establishment of new sub-committee of Cabinet , the Coventry City Council Shareholder Committee. Along with the grouping of all wholly owned investments under a single parent

Company, HoldCo. The proposed governance structure for the City Council’s commercial investments was set out in the report.

To facilitate the structure and following independent advice from Pinsent Mason LLP and Deloitte LLP, the report also sought:

·  the transfer of shares in all wholly owned companies to HoldCo, and the assignment to the City Council of new shares in HoldCo.

·  The adoption of all relevant terms of reference and policies for the Shareholder Committee and HoldCo.

·  The financial restructuring of North Coventry Holdings (NCH), in order to release funds back to the City Council.

RESOLVED that the Cabinet:

1)  Approves the following recommendations from Scrutiny Co-ordination Committee, that:

  I.  Cabinet agree the recommendations contained in the report.

  II.  Training is offered to other relevant Elected Members as well as those specifically appointed to the Board of Directors, on an annual basis.

  III.  Annual reports to Scrutiny Co-ordination Committee include information about the income provided by HoldCo. that is spent on public services and that appropriate communications reflect this.

2)  Approves the use of its powers under Section 12 of Local Government Act 2003 and Section 1 of the Localism Act 2011 to establish HoldCo, a wholly owned subsidiary to act as a holding company.

3)  Approves the use of its powers under Section 12 of Local Government Act 2003 and Section 1 of the Localism Act 2011 to transfer the current shares in Tom White Waste Limited, Coombe Abbey Park Limited and North Coventry Holdings which are currently held by the Council, into HoldCo and set up the subsidiary companies as set out in paragraph 3.2 of the report.

4)  Delegates authority to the Chief Executive, following consultation with the Director of Finance, the Director of Law and Governance and the Cabinet Member for Strategic Finance and Resources, to finalise the necessary due diligence and finalise the terms of, and enter into, the relevant legal agreements as well as any associated documents deemed necessary to complete the transaction.

5)  Approves the implementation of the governance structure and Terms of reference for the Shareholder Committee, Delegations Policy and the Conflicts Policy as shown in the appendices to the report.

6)  Notes that the Leader shall exercise his authority under Local Government Act 2000 to appoint Members onto the Shareholders Committee to represent the Council as sole shareholder of HoldCo.

Recommends that Council:

7)  Delegates authority to the Director of Finance following consultation with the Cabinet Member for Strategic Finance and Resources, the ability to carry out the necessary legal and financial transactions to facilitate a reduction in the share capital in North Coventry Holdings. The authority under this delegation shall also include the power to determine how any payments released as a consequence of the reduction in share capital in North Coventry Holdings is to be treated.

8)  Authorises the Director of Law and Governance to make the necessary amendments to the Council’s Constitution arising from this report.