Insight Local Government Lawyer Insight July 2017 25 with private sector commercial experience. This would not of course be possible under normal local government structures but is common in the private sector where it is seen as creating a different dynamic the business and offering a different perspective on corporate governance, risk management and other areas. The role of shareholder can, and probably should, be kept separate from that of the board. A decision will need to be taken as to who will exercise the role of shareholder. Some councils delegate the function to a committee of the council or the executive, in others it is delegated to one or more individual officers or members. Separation will give a structure which can hold the board to account, set strategic frameworks, for example through business plan approval, and keep the business under review in terms of ensuring it delivers what the council needs and continues to justify the council's involvement and investment. A company structure would also facilitate a joint venture, particularly where the partners are not other local authorities. Where a private sector partner is involved, careful consideration will need to be given to how the partnership is structured and how the partner is selected to ensure that it does not transgress state aid or public procurement rules. Thought will need to be given to whether, as is common in private sector joint ventures, a shareholder agreement is required to protect the interests of the council rather than relying solely on votes at board and shareholder meetings. The role of the Monitoring Officer For the Monitoring Officer, commercialisation raises a number of issues. Where the Council is not acting through a company structure (for example selling to the public sector under the Local Authorities (Goods and Services) Act 1970), the duties under Sections 5 and 5A of the Local Government and Housing Act 1989 will clearly be triggered in respect of those activities. Whilst it may be arguable that they do not strictly apply to the actions of a local authority company, that is not a point the courts have really had to consider. In any event authorities will want to avoid the reputational damage to them if a trading company it owns was found to be breaking the law. So it will be important for the Monitoring Officer to be aware of rules which may impact on the activities of the company in its areas of business and to have satisfied themselves that they are complied with. And it should not be forgotten that breach of such public law matters give a competitor an opportunity to legally challenge the business activity (see R v Yorkshire Purchasing Organisation ex parte British Educational Suppliers Ltd [1998] ELR 195). The vires question which for many years fettered the ability of a council to undertake commercial activities have largely, though not completely, been eased by the general power of competence under the Localism Act 2011 and the charging and trading powers under the Local Government Act 2003. However there remain restrictions and requirements and the Monitoring Officer will need to be comfortable that they are complied with. Another major consideration will be to ensure that state aid rules are not breached in financing or operating the business. Where a company is to provide services to the council as well as in the market, the structure of the business will need to be kept under review to ensure that the "Teckal" exemption under Regulation 12 of the Public Contracts Regulations 2015 can be sustained. Also, Part V of the Local Government and Housing Act 1989 may apply to the Company. Freedom of information applies not only to the Council but also to a local authority controlled company (see Section 6 of the FOIA). But undertaking commercial activities brings into play legal and regulatory requirements beyond the standard local government and public sector regime. Competition law and the regulation of the Competition and Markets Authority (CMA) applies to public sector-based bodies undertaking commercial activities just as they do to any business. Consumer protection law may apply if selling to private consumers rather than businesses or institutions. The business area it engages in may be subject to external regulation whether in terms of health and safety, consumer protection or industry specific regulations such as in the energy market. The requirements of the Bribery Act should also be borne in mind. New skills Operating as a business may require a different mix of skills than needed for statutory services. The business will be Undertaking commercial activities brings into play legal and regulatory requirements beyond the standard local government and public sector regime. Authorities will want to avoid the reputational damage to them if a trading company it owns was found to be breaking the law. Local authority lawyers may need to familiarise themselves wth new areas of law