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A B C D E F G H I J K L M N O P R S T V W Y

The Regulation of Social Housing (Influence of Local Authorities) (England) Regulations 2017

The Regulation of Social Housing (Influence of Local Authorities) (England) Regulations 2017
Thursday 16th November 2017

These Regulations were enacted on 15 November 2017 and come into effect on 15 May 2018. They will have a profound impact upon stock transfer associations (though not ALMOs). They have come about as a result of the Government’s general drive towards deregulation and their specific desire to remove RP borrowing from its balance sheet.

In brief, the effect of the Regulations will be to:

  1. Limit the number of Local Authority nominee board members to 24% of the total number of board members.
  2. Remove any requirement that a Local Authority board member be present at a meeting of the board for that meeting to be quorate.
  3. Remove any Local Authority voting rights in its capacity as a shareholding member of the RP (their votes will be allocated pro rata amongst the remaining voting membership).

Whilst the Regulations themselves are refreshingly short and simple, their very brevity does perhaps give rise to certain questions:

  • What impact will these have on stock transfer agreements? The Regulations are stated to override any conflicting contractual requirements but presumably controls within a stock transfer agreement that a Local Authority may have which are not in its capacity as a shareholding member (e.g. consent over the sale of a property) will remain.
  • What about the situation where the Local Authority is not a shareholding member but its nominee board members are? The Regulations only refer to the Local Authority losing its voting rights. There is nothing within the Regulations about the nominee board member losing his or her voting rights. However, it seems a little odd that the nominee does not lose his or her rights but the Local Authority does.
  • The Regulations state that the Local Authority cannot continue to hold any voting rights in its capacity as a shareholding member. However, presumably that does not necessarily mean that it cannot remain as a non-voting shareholder of the RP.

We had hoped that these issues would have been addressed but they haven’t been. The Regulations will require stock transfer associations to review and in all likelihood make amendments to their constitutions to reflect these changes prior to 15 May 2018. Whilst the Regulations will automatically override contradictory constitutions, as a matter of best practice the constitutions ought to be changed themselves to avoid any uncertainty.

Should you have any queries concerning these Regulations or any other governance issues please contact Rupert Gill


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