Agenda item

To consider a report of the Head of Legal (Monitoring Officer). In June 2020, the Cabinet requested a review of the shareholder agreement and articles of association. This report setting out options would provide the conclusion to that review.  This report now provides information about the review, an explanation of certain options and the draft documentation for formal review by the Cabinet prior to signature. 

The Cabinet had before it a * report of the Head of Legal (Monitoring Officer). In June 2020, the Cabinet requested a review of the shareholder agreement and articles of association. This report setting out options would provide the conclusion to that review.  This report now provides information about the review, an explanation of certain options and the draft documentation for formal review by the Cabinet prior to signature. 

The Cabinet Member for Housing and Property Services outlined the contents of the report stating that the shareholder agreement proposed was a combination of work using external legal advice and a project team of officers.  This was a living document that would be reviewed from time to time.

Consideration was given to:

·         Whether there was a possible conflict of interest with regard to the whole of the Cabinet fulfilling the shareholder function – the meeting was advised that the shareholder function rested with the Cabinet collectively and it could make further delegations if it chose to

·         The role of the Leader who appointed the Cabinet and the collective decision-making of the Cabinet

·         Confidentiality clauses at paragraph 15.11 of the agreement and the need for the representatives to be able to share information with other Cabinet members and the members of the Council – it was agreed that this clause required some rewording.

·         Interest on late payments and the justification for 2% per annum above the base lending rate and views that it should be increased to the statutory interest rate

·         Directors remuneration, the approval of salary increases and performance related pay awards, who should approve such increases and previous advice received  - it was felt that the company needed to have the freedom to operate and that the shareholder should allow this.

·         Whether recommendation (d) was open and transparent – it was felt that any such changes would have been identified by the Cabinet and that delegated decision forms would be published.

·         Whether the word ‘may’ should be substituted by the word ‘will in paragraph 2.5 of the agreement – members were reminded that the shareholder function rested with the Cabinet.

·         The renumbering of clauses

·         Clause 26.3 with regard to interest on late payments – this was covered by loan agreements

·         Dispute resolutions by the Chief Executive – which would be the normal escalation path

·         Business support provided by the Council and whether there would be any conflict of interest – it was suggested that all professional services had been listed.

RESOLVED that:

(a)        The draft shareholder agreement at Appendix 1 be approved, subject to a review of clause 15.11 (Confidential Information) to ensure that representatives can report back as necessary and to change the interest rate in clause 26.2 (Interest on late payment) to the statutory rate.

(b)       The Deputy Chief Executive (s.151 Officer) be nominated to be the Named Officer for the purposes of the shareholder agreement;

(c)       Subject to recommendation (d)(ii), the draft articles of association at Appendix 2 be approved for discussion with, prior to adoption by, the Company; and

(d)       Delegated authority be given to the Monitoring Officer, in consultation with the Deputy Chief Executive (S.151 Officer) and the Cabinet Member for Finance to –

(i) make such changes to the shareholder agreement as are necessary to address the matters and/or changes identified by the Cabinet and then sign it on behalf of the Cabinet; and

(ii) negotiate a final version of the articles of association for adoption by 3 Rivers Developments Limited.

(Proposed by Cllr B A Moore and seconded by Cllr R B Evans)

Reason for the decision – a review of these documents would provide a conclusion to the work requested by the Cabinet in June 2020 and would regulate the relationship between the shareholder and the company.

Note:  *Report previously circulated, copy attached to minutes.