595.Section 393 brings the Greater London Authority and the four functional bodies within section 67(3) of the Local Government and Housing Act 1989. It thereby makes them subject to Part V of the 1989 Act, which contains certain requirements and controls with respect to companies in which local authorities have interests. The effect of the section is that the new London bodies will be subject to those requirements and controls in relation to companies controlled or influenced by them. But there is also a financial consequence. The Local Authorities (Companies) Order 1995, made under section 39(5) of the LGHA 1989, provided that a local authority would be treated, for the purpose of capital finance controls, as having undertaken certain transactions of companies under their control or subject to a specified level of influence (“regulated companies”). Any regulated company of the GLA or a functional body will be covered by this order, with the result that capital transactions, including borrowing, credit arrangements, and anything that affects the company’s net liabilities, will be reflected in the capital finance limits and resources of the relevant authority. Equally, if a company builds up cash through profitable trading, the relevant authority’s capital spending power will be increased.
Commentary on Sections Part Xi: Miscellaneous and General Provisions Section 393: Companies in which local authorities have interests