This report sets out the proposed changes to the Articles of Association of the Council’s wholly owned bus company, Reading Transport Limited. (Appendices 2- 5, originally marked ‘to follow’, are now attached)

The Committee, acting in its capacity as sole shareholder of Reading Transport Limited (RTL), considered a report outlining proposed changes to the Articles of Association of RTL.  The following documents were attached to the report:

·         Appendix 1 - Detailed report on changes to the Articles and a list of subsidiaries;

·         Appendix 2 - Proposed Articles of Association (track changes showing);

·         Appendix 3 - Proposed Articles of Association to be adopted by the Council by way of shareholder special resolution for Reading Transport Ltd;

·         Appendix 4 - Proposed Articles of Association for group companies to be adopted by Reading Transport Limited by way of shareholder special resolution for those group companies;

·         Appendix 5 - Proposed Shareholder Agreement between Reading Borough Council and Reading Transport Limited.

The report noted that the Articles of Association had last been reviewed by the Council in 2013 when the current Articles had been adopted.  They were bespoke Articles of Association which disapplied the statutory ‘Model Articles’ and made provision for the unique circumstances of RTL as a council-controlled company which was also subject to the regulation of municipal bus companies through the Transport Act 1985.  A review had been carried out and changes were proposed to modernise and adapt the governing document of RTL to better align with the overall governance structures of the Company and the Council.  This alignment aimed to enhance the Company's ability to serve the interests of the Council as the sole shareholder while ensuring effective and transparent governance.   It also aimed to ensure that the Company was best placed to serving the interests of Reading and the surrounding area to provide an excellent transport service.

A report attached to the report at Appendix 1 set out a detailed breakdown of the Articles and whether changes were required by the review.  The changes which had been identified were either marked up for reference in the proposed new Articles of Association, which was attached to the report at Appendix 2, or had been moved to the proposed new Shareholder Agreement, which was attached to the report at Appendix 5.  The provisions of the Articles were intended to be more permanent governance features, which it was not envisaged would be changed frequently.  The new Shareholder Agreement included matters which could be updated more frequently.

The report further noted that due to previous acquisitions RTL was a group of companies.   Included in Appendix 1 to the report was a diagram of the corporate structure and officers within the Group.  The Articles of the Group had been reviewed alongside the main company Articles and the proposed Articles for the subsidiary companies were attached to the report at Appendix 4.  The subsidiaries were not companies originally formed as municipal bus companies under the Transport Act 1985, but the Transport Act still imposed restrictions on subsidiaries of municipal bus companies such as the power of borrowing.  In order to simplify the running of the Group it was proposed that the subsidiary companies be bound by the rules set out in the Articles of RTL.

Resolved -

(1)        That the reasons for, and the detailed changes to, the Articles of Association as set out in the report and Appendix 1, be noted;

(2)        That the Committee, in its capacity as sole shareholder for Reading Transport Limited, adopt the revised articles as set out at Appendix 3;

(3)        That consent be given for the Articles of the RTL subsidiary companies to be altered in accordance with Appendix 4;

(4)        That the Shareholder Agreement between Reading Transport Limited and the Council be agreed as shown at Appendix 5, and that the Assistant Director for Legal and Democratic Services be authorised to sign the Agreement on behalf of the Council and agree any minor changes to the Agreement in consultation with the Leader of the Council;

(5)        That it be noted that future suggested changes to the Shareholder Agreement would be referred to Policy Committee when RTL presented its annual report or half-yearly review;

(6)        That, with regards to the Shareholder Agreement, the Assistant Director of Legal and Democratic Services and the Director of Finance be authorised to perform those shareholder approvals allocated to them on behalf of the Council, in consultation with the Leader of the Council and the Chief Executive.