LGPS Central. Joint Committee Training Session. Gary Delderfield

Transcription

1 LGPS Central Joint Committee Training Session Gary Delderfield

2 Joint Committee Agenda Governance overview LGPS Central Limited The Company Shareholder Forum Joint Committee Comparison with other LGPS Pools

3 Governance Overview Shareholder Issues Investor Issues Administering Authority Ongoing Duties POOL GOVERNANCE Board of Directors of LGPS Central

4 GOVERNANCE FRAMEWORK Local Pensions Board Pensions Committee Administering Authority Shareholder Forum (Company matters) Joint Committee (Client matters) Practitioners Advisory Forum Shareholder/Client Company/Regulator LGPS Central (Operator Company) Board Financial Conduct Authority Executive Committee Collective Investment Vehicles Remuneration Committee Nominations Committee Audit Risk & Compliance Committee Investment Committee LGPS Central Limited is authorised and regulated by the Financial Conduct Authority. Registered in England. Registered No: Registered Office: Mander House, Mander Centre, Wolverhampton, WV1 3NB

5 LGPS Central Limited The Company Private company limited by shares Separate legal entity Registered at Companies House Registered office at Mander House Constitution = Articles of Association Separate Shareholders Agreement

6 LGPS Central Limited The Company Special Features Subject to unique combination of legal requirements Companies Act requirements Data Protection Public procurement rules Freedom of Information

7 LGPS Central Limited The Company Special Features Authorised and regulated by FCA Rare in local government sector Imposes special responsibilities and liabilities on directors FCA expect directors to be responsible for day to day management and operation of the company

8 LGPS Central Limited Shareholders 8 shareholders Shares bought by administering authorities Use of pension fund money to buy shares Shares held in the name of the administering authorities Equal voting rights through A shares B and C shares (non-voting) and loans used to provide regulatory capital

9 Shareholders Forum Need to distinguish shareholder vs investor functions Shareholder functions relate to ownership of LGPS Central Limited Collective discussions take place at Shareholders Forum vs. Investor functions relate to your Fund s investment in the collective investment vehicle (ACS) Collective discussions take place at a Joint Committee Joint Committee operates under public law requirements

10 Shareholders Forum Representatives on Shareholders Forum may differ to those on Joint Committee Depends who an authority nominates for each role Not have to be the same person Representative is not the shareholder in an individual capacity Representative represents the administering authority Pooling for LGPS

11 Role of the Shareholders Company s financial supporters Finance the company by buying shares Become co-owners of the company Shareholders can be directors of a company (but not in this case!) Directors are always responsible for day to day management and operation of LGPS Central Limited Pooling for LGPS

12 Role of the Shareholders Role is subject to Companies Act 2006, Articles of Association and Shareholders Agreement Liability is limited save for amount of any shares not paid for (and any additional guarantees etc.) Main duty to pass resolutions at general meetings Ordinary resolutions (51%) Special resolutions (75% or 100%)

13 Shareholders Agreement Shareholders are group of individual investors Free to act and vote as you wish Shareholders Agreement acts as glue to bring shareholders together Ensure act in unified way Agree to set of common principles Private agreement Not lodged at Companies House Provides for greater level of control than find with most private companies

14 Shareholders Agreement Shareholder Reserved Matters Unanimous: Extending scope of Operator business Amending or adopting new strategic plans Changes to shares and related rights Winding up the company Admitting new members to the Pool Appointment and removal of Directors Significant business matters such as sale of material assets, dealing with litigation and incurring significant capital expenditure Approve accounts Appointment of auditors 75%: Altering accounting reference date, setting up new pension schemes for staff, approving capital expenditure over 5M

15 Shareholders Agreement Shareholder Meetings Quorum for shareholders meetings (5) Initial independent chairman for first 12 months Oversee structure and running on the meetings Ensure meeting complies with legal requirements, Articles and Shareholders Agreement Facilitate debate No vote Minimum 2 meetings a year (a shareholder has the right to call additional meetings) Representative must be an elected member as nominated from time to time

16 Joint Committee Representative body Focus on investor issues of the authorities (as distinct from shareholder issues) Use of Joint Committee common in local government Not a separate legal entity Subject to public law requirements and responsibilities Decisions by majority vote i.e. 51% Delegated Representatives Minimum 2 meetings per year

17 Joint Committee Key documents Inter-authority Agreement Terms of Reference Constitution

18 Joint Committee Inter Authority Agreement Sets out Shared Objectives Sets out governing principles Establishes Joint Committee under S102(4) of the Local Government Act 1972 Sets out Terms of Reference i.e. scope of the JC s functions Sets out Constitution of the JC Appoints Cheshire as the lead authority

19 Joint Committee Terms of Reference To support and provide assistance and guidance and recommendations to the Authorities in connection with its Specified Functions: LGPS Central service delivery and KPIs; other LGPS Central Pool related investment issues, for example adopting common approaches at a fund level to responsible investment policies or policies on voting rights); and also on matters requiring investor approval e.g. under ACS To act as the initial forum for LGPS Central to engage with in connection with general service and performance issues applicable to the wider LGPS Central Pool. This does not preclude LGPS Central engaging directly with Authorities in relation to specific matters relating to individual Authorities

20 Joint Committee Inter Authority Agreement In reality Joint Committee is a discussion forum No delegation of actual decision making by the Authorities (deliberate decision) Not make binding decisions on issues It may make recommendations back to each Authority for them to individually approve

21 Joint Committee Constitution Covers: Membership of the JC (elected members only) Clerk to the JC Notice of meetings 2 per year Appointment of Chair and Vice-Chair Quorum of 5 members Voting (by majority) Minutes Access to meetings

22 Practitioners Advisory Forum Working Group of officers Not a separate formal legal entity Terms of Reference for the PAF in the Inter Authority Agreement

23 Practitioners Advisory Forum Central resource for advice, assistance, guidance and support for the Joint Committee (and also if requested for the Authorities as a collective group of investors in the LGPS Central Pool) Works with the Joint Committee to support the functions of the Joint Committee as set out in the Joint Committee s Terms of Reference. Provides technical support at meetings of the Joint Committee Act as a conduit for the Joint Committee to communicate back to the respective Authorities and/or direct to LGPS Central as appropriate

24 How Does Your Pool Compare to Other LGPS Pools? 8 proposed pools Fundamentally different approaches Do you build or rent your operating company? Build BCPP, Brunel, LGPS Central, LPP, London CIV (and Northern?) Rent ACCESS and Wales Do you use formal pooling vehicle e.g. ACS? ACS ACCESS, BCPP, LGPS Central, LPP, London CIV and Wales Non-ACS Brunel (?) and Northern Do you provide other services e.g. pension benefit administration requiring group structure? LPP only to date Eversheds Sutherland 13 April

25 How Does Your Pool Compare? How many shareholders do you have? 2-32 Different approaches impact on structure and governance of the Pool! No two Pools are identical nearest to LGPS Central is BCPP: Built own company Single company structure 8-12 shareholders Use of ACS to pool assets Similar asset size No pooling of LGPS benefit administration Eversheds Sutherland 13 April

26 Eversheds Sutherland 13 April 2018

27 eversheds-sutherland.com This information pack is intended as a guide only. Whilst the information it contains is believed to be correct, it is not a substitute for appropriate legal advice. Eversheds Sutherland (International) LLP can take no responsibility for actions taken based on the information contained in this pack. Eversheds Sutherland All rights reserved. BIR_EMP-#