Issue - meetings

Cabinet are asked to approve the formation of a trading company for the Yorkshire Purchasing Organisation (YPO). Formation as a limited company will protect the current level of activity and allow YPO to explore opportunities not available to a Joint Committee. Any change to that arrangement will be subject of further reports for member approval as appropriate.

Resolved:  That Cabinet agree to:

i)             Note the preparation of the Business Case by Yorkshire Purchasing Organisation Officers in support of the proposed exercise of the power to trade and approve the final Business Case set out at annex 1 (exempt) of the report.

ii)       The formation of the trading company limited by shares wholly owned by the Founder Members of YPO (to be known as YPO Procurement Holdings Limited) to act as a holding company for a range of special purpose vehicles in order to protect the business of the YPO joint committee.

iii)     The Council becoming a shareholder of the company limited by shares under the name of YPO Procurement Holdings Limited which may trade in accordance with section 95 of the Local Government Act 2003 and the Local Government (Best Value Authorities) (Power to Trade) (England) Order 2009 and or Section 4 of the Localism Act 2011.

iv)     Recommend Council to make appointments as its director and alternate director on the Company Board.

v)       Note that the Chairman of the Board of the company will be as set out in the Shareholder agreement.

vi)     Authorise  the Director of Customer and Business Support Services to exercise the Council’s powers of shareholder at general meetings in the company.

vii)   The governance and funding arrangements for the company as set out in the report.

viii)   Delegate authority to the Director of Customer and Business Support Services, in consultation with the Assistant Director of Governance and ICT, to finalise the detailed arrangements for the formation of the company including relevant financial matters and, governance issues, such as matters to be reserved to the Council as shareholder and to delegate authority to the Assistant Director of Governance and ICT or authorised representatives to enter into all necessary legal agreements or documentation and ancillary to the implementation of the above recommendations in accordance with the following documents substantially in the form set out in the;

·     The Memorandum and Articles of Association of the company – annex 2 of the report (exempt)

·     The Shareholder Agreement - annex 3 of the report (exempt)  

·     The Management Services Agreement – annex 4 of the report (exempt)

Reason:              The business case (as set out at Annex 1) of the report (exempt) is based upon protecting the current business which could be lost if outsourced to private bodies, access to new business to enable continued growth and protection against financial risk, resulting from structural changes in the customer base.

Consideration was given to a report which sought approval for the formation of a trading company for the Yorkshire Purchasing Organisation (YPO), owned by the 13 founder members of the Organisation. It was reported that a limited company would protect the current level of business with schools and academies and allow YPO to explore opportunities not available to a Joint Committee.

It was noted that the holding company would be set up as a company limited by shares which would allow private sector trading for profit, mainly with schools and academies in relation to energy procurement, allowing YPO to offer the energy buying service to non-public sector organisations.

Alternative methods of protecting existing YPO activity had been considered however, this had been found to be the only option available to Local Authorities for trading on a commercial basis with non-public bodies.

Supporting information in relation to the business case for the creation of the new limited company, the Memorandum and Articles of Association and Shareholder and Management Services Agreements were set out in exempt Annexes 1 to 4 of the report.

Officers referred to the changes that had taken place since the establishment of the Organisation in 1974 and to the need to retain existing YPO business whilst expanding the offer to private sector organisations and limiting any risks.

Members referred to the importance of strong membership and governance arrangements, the details of which would be finalised at a later date.

Consideration was then given to the following options:

Option 1:- To form YPO Procurement Holdings Limited. 

Option 2:- Not to form a company.

Resolved:  That Cabinet agrees to:

i)             Note the preparation of the Business Case by Yorkshire Purchasing Organisation Officers in support of the proposed exercise of the power to trade and approve the final Business Case set out at annex 1 (exempt) of the report.

ii)       The formation of the trading company limited by shares wholly owned by the Founder Members of YPO (to be known as YPO Procurement Holdings Limited) to act as a holding company for a range of special purpose vehicles in order to protect the business of the YPO joint committee.

iii)     The Council becoming a shareholder of the company limited by shares under the name of YPO Procurement Holdings Limited which may trade in accordance with section 95 of the Local Government Act 2003 and the Local Government (Best Value Authorities) (Power to Trade) (England) Order 2009 and or Section 4 of the Localism Act 2011.

iv)     Recommends Council to make appointments as its director and alternate director on the Company Board.

v)       Note that the Chairman of the Board of the company will be as set out in the Shareholder agreement.

vi)     Authorise the Director of Customer and Business Support Services to exercise the Council’s powers of shareholder at general meetings in the company.

vii)   The governance and funding arrangements for the company as set out in the report.

viii)  Delegate authority to the Director of Customer and Business Support Services,  ...  view the full minutes text for item 124