www.nationalsmartcardproject.org.uk

www.scnf.org.uk

National Smartcard Project

Work Package 8 –

Corporate Structures Report

Corporate Structures Report

Format of report: Executive summary Introduction and Scope of report Overview of Corporate Structures in the UK Separate parts reviewing Key Features of various Corporate

Structures Financing Overview of PFI Regulatory provisions of general application Overview of documentation Capacity

The Executive Summary outlines: What is covered in the introduction to this

report The scope of this report The key points covered in each section of this

report and any conclusions reached

Executive Summary

Introduction

The Introduction explains: Purposes of report Parameters of report Context in which to be read Summary of key legislation and regulation reviewed

Please note that the report should be read in conjunction with the Introductory Report

Scope of report

The Scope of this Report sets out: The focus of this Report

namely the options for the corporate structures which may be adopted to procure and deliver Smartcard Schemes

Other matters which are considered including: funding options, competition law issues, Local

Authority's statutory ability to participate in an incorporated special purpose vehicle

Overview of Corporate Structures in the UK

General introduction to various entities A company A limited liability partnership (or LLP) A partnership A joint venture A non-profit distributing organisation (or NPDO)

Key Features of a UK Incorporated Company

Different types of company company limited by shares company limited by guarantee unlimited company

Public or private? Principal legislation Formation Registration and ongoing obligations to file documents

Key Features of a UK Incorporated Company (cont.)

Constitutional documents Memorandum or association Articles of association Shareholders agreement

Shares and shareholders Capital structure Changes in share capital Share premium Transferability of shares Liability of shareholders

Key Features of a UK Incorporated Company (cont.)

Directors and Officers Appointment and removal Rights and duties Who can be a director Company secretary

Meetings of the company AGMs Other shareholders’ meetings Electronic communications Meetings of directors

Key Features of a UK Incorporated Company (cont.)

Dividends Debt instruments Insolvency Corporate governance

The Combined Code Principles of good practice for companies including risk

management and internal controls Nature of recommendations of Combined Code

Companies conducting certain types of business Additional regulations in certain industries

Key Features of a UK Incorporated Company (cont.)

Companies limited by guarantee Key characteristics

No Share Capital Tend to be used for non-profit making organisations

Key Features of a Partnership

Introduction to partnership law in the UK Some advantages of a partnership set up Some disadvantages of a partnership set up

Key Features of a Limited Partnership

What is a limited partnership?

Main characteristics of a limited partnership

Some disadvantages of a limited partnership

Key Features of a Limited Liability Partnership

What is a limited liability partnership (LLP)? Main legislation

Characteristics of an LLP Similarities to a company Similarities to a partnership Other key characteristics

Formation Incorporation and registration

Key Features of a Limited Liability Partnership (cont.)

Designated members What are they? What are their responsibilities?

Ongoing administration Structure

Need for comprehensive agreement between the members Default provisions

Winding up an LLP Some advantages of an LLP Some disadvantages of an LLP

Key Features of a Joint Venture

What is a joint venture (JV)? No single area of law applies

Different forms of JV Contractual JV Partnership JV (unincorporated) Limited partnership JV (unincorporated) Limited liability partnership JV (incorporated) Limited (or unlimited) liability company JV (incorporated) Other sorts of JV

Key Features of a Joint Venture (cont.)

Which form of JV? Factors to consider

Advantages of forming a JV Some of the benefits

Disadvantages of forming a JV Some of the most common pitfalls Problems specific to Local Authorities

Key Features of a Non-Profit Distributing Organisation (NPDO)

Constitution of an NPDO

Proposed changes to the law Community interest companies

Financing

Partnerships Companies PFI Strategic service partnerships Further types of financing

Loan stock Non-cash transfers Loans from third parties Bank overdrafts Grants

Financing (cont.)

Key issues regarding financing options Guarantees Comfort letters Solvency

Overview of PFI

Background What is it?

Funding Equity/debt split Independent funds Capital markets Finance leasing Application of EU procurement regime

Overview of PFI (cont.)

Key documents Other important points in relation to PFI and Local

Authorities Concession arrangements

Regulatory provisions of general application

Competition law Anti-competitive agreements Abuse of a dominant position Merger control EU public procurement regime

State aid Types of aid Prohibitions EU investigations Block exemptions

Other regulatory provisions

Overview of documentation

Partnership Limited liability partnership Company/incorporated joint venture

Shareholders agreement Memorandum of association Articles of association

Unincorporated joint venture arrangement Generally

Capacity

Local Authorities Generally

S2 Local Government Act 2000 Different classifications of company

Controlled company Arms’ length controlled company Local Authority influenced company Private sector influenced company Minority interest (authorised) company

PFI Contracts S1 Local Government (Contracts) Act 1997 – “provision contracts”

and related contracts

Capacity (cont.)

Local Authorities (cont.) Other contracts for services

System of certification New prudential powers

Local Government Act 2003 – the new capital finance system

Companies LLPs Partnerships NPDOs