On 25 May 2012 the draft Enterprise and Regulatory Reform Bill
had its first reading in Parliament. Amongst other measures, the
Bill provides powers to the Government to designate formally the
Green Investment Bank ("GIB"), to provide financial
assistance to the GIB and to secure its operational independence
from Government. The proposed target for the designation is the UK
Green Investment Bank plc, a public company limited by shares which
was incorporated on 15 May 2012 and which must be wholly owned by
the Crown at the time of designation.
The proposed legislation sets out 2 criteria which must be met
before the GIB can be formally designated (the designation will be
by a separate Order). Firstly, the Secretary of State must be
satisfied that the GIB's objects set out in its articles of
association are such that the GIB would engage only in activities
that involve, are incidental or conducive to, making, facilitating
or encouraging investments that the GIB considers likely to
contribute to the achievement of one or more of the "green
purposes" in the UK.
Secondly, there must be laid before Parliament a copy of an
undertaking (known as the "operational independence
undertaking") by the Secretary of State to the GIB, the
purpose of which is to ensure the GIB's independence from
Government and allow the GIB's to act as its directors consider
appropriate in the light of the objects.
"Green purposes"
The proposed green purposes for the GIB are:-
- reduction of greenhouse gas emissions (as defined in the Climate Change Act 2008);
- advancement of efficiency in the use of natural resources;
- protection or enhancement of the natural environment;
- protection or enhancement of biodiversity; and
- promotion of environmental sustainability.
Next Steps
The second reading of the Bill is scheduled for 11 June
2012.
Subject to the Parliamentary process and state aid approval from
the European Commission the GIB is expected to be operational this
autumn. In the meantime pending the formal designation, a number of
investments are already being targeted directly by Government to
trigger financial activity via fund managers. Of a number of
proposed investments, recently two specialist fund managers have
been appointed to make and manage investments in small scale waste
infrastructure sector. For this tranche of investment £80m
funding is to be made available which will be match funded.
Separately a further £100 million is to be made available for
investment in the non-domestic energy efficiency sector, the
management of which is to be announced this summer. Other targeted
funding is expected to be announced.
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 30/05/2012.
