2.10 Some forms of joint working involve the setting up of a new legal entity which then exists separately from the authorities establishing it.
2.11 In many cases, local authorities can secure joint working satisfactorily without the necessity of establishing a separate entity. However, incorporated entities such as companies and limited liability partnerships and unincorporated associations, such as partnerships, provide ready-made structures which can be useful for particular types of joint working or joint ventures. As each type of legal structure is defined in law, it is necessary to consider the characteristics of each such structure to decide whether it is appropriate for the proposed joint working. It is also necessary to take into account that corporate structures may have a higher liability to tax than non-corporate joint working, and may give rise to conflicts of interest between the entity that is established and the participating authorities.
2.12 Members and officers of local authorities enjoy wide statutory immunity from personal liability where they act in good faith and within the powers of their local authority.2 When they act as members or officers of the authority, but within an unincorporated form of joint working, they will be within that statutory immunity. However, where they act as members of a management committee or as directors of a corporate vehicle, they will be acting under powers derived from that body and will no longer be acting within the powers of the authority. Accordingly, whilst that body may be able to provide them with an indemnity or insurance to protect them from personal liability, they will no longer enjoy the statutory immunity from personal liability.
2.13 It is important to be aware that where a member of a local authority is a member or employee of any such corporate vehicle, the member will have to enter that in the register of members' interest and disclose at least a personal interest when a matter relating to or affecting the corporate vehicle is considered at a meeting of the local authority. Where the matter affects the financial position of the corporate vehicle, or is the determination of its application to the authority, for example for planning permission, the interest is likely also to be a prejudicial interest, and the local authority member may be precluded from acting within the local authority on that matter. Similar provisions apply to officers of local authorities.3 As a result, the use of a corporate vehicle may mean that local authority members can act on a matter either within the authority or within the corporate vehicle but not both.
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2 Public Health Act 1875 s.265.
3 Local Government Act 1972 s.117, any statutory officer Code of Conduct and the employing authority's terms and conditions of employment.