Waterfront Enterprise Board: revised Memorandum and Articles of Association.

STATES OF JERSEY

WATERFRONT ENTERPRISE BOARD: REVISED MEMORANDUM AND ARTICLES OF ASSOCIATION

Lodged au Greffe on 27th January 2009 by the Council of Ministers

STATES GREFFE

PROPOSITION

THE STATES are asked to decide whether they are of opinion

t o re fer to their Act dated 12th December 1995 in which they approved the establishment of the

Waterfront Enterprise Board Limited (WEB) as a separate legal entity and approved the Memorandum and Articles of Association of the Company, and -

(a ) to agree that the Memorandum and Articles of Association of the company should be revised in

accordance with the recommendations of the Comptroller and Auditor General in his Report, "Waterfront Enterprise Board Limited: Review of Corporate Governance" dated 24th November 2008 and to approve the revised Memorandum and Articles of Association of the Company as set out in Annex 2 to the Report of the Council of Ministers dated 27th January 2009;

(b  ) to approve the proposed role of the Minister for Treasury and Resources as laid out under the

heading "Role of the Minister for Treasury and Resources" in Section 3 of the said Report.

COUNCIL OF MINISTERS

REPORT

1. I n t roduction

T h is Report and Proposition is presented to States Members solely to ensure that the Board of Directors of the Waterfront Enterprise Board (WEB) is able to continue to be operationally viable when the current

States Directors of the Board come to the end of their terms of office in the near future. The changes to the membership of the WEB Board of Directors proposed herewith address and implement the recommendations of the Comptroller and Auditor General (CAG) in the Review of Corporate Governance

of the Waterfront Enterprise Board (WEB).[1]

F u r th er work and research is currently being undertaken in developing proposals for directing the planning, development and implementation of major property and associated infrastructure regeneration projects in Jersey. These proposals will take on board the comments of the Corporate Services Scrutiny

Panel published in its report on 12th June 2008[2] and will be further shared with the Scrutiny process before being presented to the Assembly in the early part of 2009. These revised proposals will also reflect

issues outlined in the Island Plan and will be cognisant of, and complement, the recommendations outlined in the attached Report and Proposition.

2. T h  e needto maintain theWEB'sBoard of Directors

M  em  bers are asked to note that the term of office of the current States Directors on the WEB Board of

Directors is due to expire on 31st March 2009. In order to maintain the operational viability of WEB's Board of Directors post-March 2009 there is a need to address the issue of membership of the Board in early course. The Council of Ministers is of the view that this should be done in the context of the CAG's recent review of the corporate governance of WEB referred to above.

T h e purpose of this Proposition is therefore a tidying-up' exercise enabling the Board of Directors of

WEB to continue to operate and function.

3. M in isterialcommitment

T h e C ouncil of Ministers recognise that the amendment to the Articles of Association is important in order

that the day-to-day business of WEB can continue and that States' assets under its control be properly administered while further thought is given to the long-term, and the structures for a new property development company are finalised.

M e m bers have accepted the need to have an agency outside the States to be responsible for the land, shore

and areas within the control of WEB so that –

(a ) th e property can be developed efficiently and effectively, and;

(b ) co m mercial private sector operators who are needed for the purpose of such development have the

confidence that they are dealing with an apolitical body.

A t th e same time, Members have had concerns about the need to ensure there is appropriate political

accountability for the activities of WEB and that WEB has an awareness of the political will which ought to, and does, govern the development and use of these areas which are so significant for the Island.

T h e s tructures which are put in place must provide a practical basis on which persons outside the States

will be prepared to work as non-Executive Directors of WEB.

R e c o nciling these objectives is not easy, but the Council of Ministers recommends that the new draft

Articles of Association attached be approved as part of the solution. They provide the mechanism for the internal workings of the company.

In p a rallel with the new Articles, the Council of Ministers recognises that it is appropriate to have some

political commitments for the Minister for Treasury and Resources, who would be politically accountable for  WEB  under  the  proposed  arrangements.  In  order  to  promote  accountability,  transparency  and awareness these commitments are as follows:

R o le of the Minister for Treasury and Resources

(1 ) T o bring relevant States' decisions to the attention of the WEB Directors.

(2  ) T o agree the key elements of the WEB Business Plan (including consolidated accounts, whilst

observing commercial confidentiality) and ensure that they are reflected within the Treasury and Resources Business Plan.

( 3 ) T o  keep  under  review  the  actions  of  WEB  and,  where  necessary,  ensure  that  they  are  in

accordance with States' policies and decisions.

(4 ) T o keep abreast of the latest developments at WEB, ensuring that the Minister is able to respond in

an informed manner to questions by States Members.

(5 ) T o publish Ministerial Decisions relating to property transactions, or in the event of the issuing of

a Direction pursuant to Article  22, or in relation to any other matters on which it is necessary to for the Minister to take decisions.

4. R  ev iew of CorporateGovernance – ComptrollerandAuditorGeneral

M  e m bers will recall that, following debate by the States on the Esplanade Quarter in July 2008, the

Comptroller and Auditor General was requested to review the Corporate Governance of the Waterfront Enterprise Board (WEB).

T h e aim of the review was to examine how the Board reached its decisions concerning the proposed

development  of  the  Esplanade  Quarter.  The  CAG  wanted  to  establish  whether  the  proper  rules  of corporate governance had been established and applied by WEB in this instance. He also wanted to ascertain whether the Board had the required arrangements in place to recognize any potential conflicts of interest. The final aspect of the review was to ensure that the Board had gathered all commercial evidence and advice that was available to them and that their decisions had been based upon this.

T h e C  AG examined WEB's records, met with all members (past and present) of the Board, and also with

the senior officers of WEB. He also consulted with any other individuals whom he considered to have the required knowledge and access to relevant information.

T h e C  omptroller and Auditor General completed his review which was published on 24th November 2008

and this is attached as Annex  1 to this Report for Members' consideration.

5. S u m  maryof Findings:

In s u mmary, the Comptroller has made the following findings and recommendations –

WEB is in compliance with normal corporate governance practice;

that WEB should recruit a professional company secretary;

that WEB should be accountable to a single Minister;

that –

(1 ) t h e p osition of States Director currently enshrined in WEB's Memorandum of Association

should be discontinued,

(2 ) S t a te s members should not ordinarily be members of WEB's Board unless they serve as

representatives of the Sponsoring Minister;

that accountability arrangements should at least include the following –

( 1 ) t h e Sponsoring Minister should be accountable to the States for oversight of WEB's

activities,

(2 ) w h e re appropriate, the Sponsoring Minister's decisions in respect of WEB (for example,

approving proposed transactions) should be recorded in the form of Ministerial Decisions. Decisions would therefore be in the public domain so that States Members would be able to subject them to such scrutiny as they think appropriate,

( 3 ) t h e Sponsoring Minister should be responsible for laying WEB's annual report and

accounts before the States formally when received. Members of the States would therefore be notified of the results of WEB's activities and thus have another opportunity to subject them to scrutiny;

that WEB's Memorandum and Articles of Association should be reviewed and then revised thoroughly.

6. C  o uncil ofMinisters' View

A t it s meeting on 27th November 2008 the Council of Ministers fully endorsed the recommendations

outlined above. It also agreed that WEB's Memorandum and Articles of Association should be revised accordingly and these are included as Annex 2 to this Report for Members' consideration.

C h a n ges to WEB's current Memorandum and Articles of Association are shown in Annex  3 to this Report with tracked changes to aid the identification of the differences between the two sets of documents.

7. R  ec ommendation:

M e m bers are recommended to agree that the Memorandum and Articles of Association of the

Waterfront Enterprise Board Limited should be revised, as laid out in Annex 2 to this Report, in accordance with the recommendations outlined in the Report of the Comptroller and Auditor General: "Waterfront Enterprise Board Limited: Review of Corporate Governance" dated 24th November 2009.

M  em  bers are also recommended to approve the role of the Minister for Treasury and Resources as

laid out in Section  3 above.

8. F i n ancialandmanpower implications

T h e Waterfront Enterprise Board Limited is financially self-supporting. There will not therefore be any

financial and manpower implications for the States arising directly from these proposals.

COUNCIL OF MINISTERS

27th January 2009

WATERFRONT ENTERPRISE BOARD LIMITED

REVIEW OF CORPORATE GOVERNANCE FINAL REPORT

24 NOVEMBER 2008

SECTION ONE ~ INTRODUCTION

1. O  n Monday16June2008, I announcedmy intention of conducting a review of various matters whichhad come to public attention concerning Waterfront Enterprise Board Limited (WEB). In general, these matters relate to the decisionsofWEBregardingdevelopmentofwhat has cometobeknownas the EsplanadeQuarter.Thetermsofreferencefor this review are as follows:

" T o investigate the circumstances surrounding the decisions made by the board of WEB concerning the proposed development to establish:

(1 ) W h ether proper rules of corporate governance have been established and applied by WEB;

(2 ) In particular, whether proper arrangements were made by the board of WEB to identify potential

conflicts of interest and ensure that Board decisions were not affected by them;

(3 ) W h ether in all the circumstances, the decisions which were made by the Board of WEB in respect

of the development were appropriately based on all of the commercial evidence and advice which the Board might reasonably have been expected to obtain and to take into account; and

(4 )  A n y other issues that appear relevant to the matters set out in (1), (2) and (3) above".

2. O n 30June 2008, I publishedan interim report onthe work that I hadbeen able to do by that date: principally certain aspects of items (1) and(2) in the abovetermsof reference. I have nowcompletedmy review ofcorporategovernance within WEBand the results of that work are set out in this report.
3. T h e reviewhas consisted ofan examination of records held byWEB itself, augmentedbydiscussions with eachof the membersofWEB'sboard (both pastand current members)and with seniorofficersofWEB. I have alsospoken to a numberofotherswhoappeared to have relevant information about the matters with which I have been concerned. A list ofthosepeople to whom I have spokenin the course of this review was set out in AppendixOnetothe interim report publishedon30 June 2008.
4. I n accordance with mynormal practice, copiesof a draft of this report were provided to the people who assisted me in this review of corporate governanceso that they were able to alert me to anyrespectsin which the report inadvertently distorted their recollection of events. I have sought to reflect their observations on matters offact. I am grateful to all ofthosewhohaveassistedintheconductof the review and the preparationof this report.
5. A summaryofmy findings and recommendations is set out in Section Twoof this report. My more detailed observations are set out in succeeding sections.

SECTION TWO ~ SUMMARY OF FINDINGS AND RECOMMENDATIONS Corporate governance

Finding

6. T h e effect is that WEBisnowin compliance with normalcorporate governance practice. Recommendation
7. I r e commend that WEB should recruit a professional companysecretary[3]. Accountability
8. I r e commend that WEB should beaccountableto a single Minister.
9. A s it is evident that the existing position of States Directorhas placed thosewho have held this position in an irresolvable conflict of interest and has not served wellthe interests of the States because it has not provided a reliable means of protecting the States' interest inWEB, I recommend that:

(1 ) th e position of States Director currently enshrined in WEB's Memorandum of Association should

be discontinued;

( 2 ) S t ates members should not ordinarily be members of WEB's board unless they serve as

representatives of the Sponsoring Minister (for example, it may be thought appropriate for an appropriate Assistant Minister to serve as a director. In this capacity, the Assistant Minister would be accountable to the relevant Minister.

10. It w ould beinappropriatefor this changein existing practicetobemade unless appropriatearrangements are made to ensure that there is proper accountability tothe States. I recommend that thesearrangements should at least include the following:

(1 ) th e Sponsoring Minister should be accountable to the States for oversight of WEB's activities.

( 2 ) th e role of the Sponsoring Minister should be to maximise the long term value of the States'

interest in WEB and to ensure that WEB operates in accordance with the agreed policies of the States.

(3 ) w h ere appropriate, the Sponsoring Minister's decisions in respect of WEB (for example approving

proposed transactions) should be recorded in the form of Ministerial Decisions. The effect of this would be that the decisions would be in the public domain so that members of the States would be able to subject them to such scrutiny as they think appropriate.

( 3 ) th  e Sponsoring Minister should be responsible for laying WEB's annual report and accounts

before the States formally when received.. The effect of this would be that members of the States would be formally notified of the results of WEB's activities and would thus be afforded another opportunity to subject them to such scrutiny as they think appropriate.

11. A n analysisof the implications oftheseproposalsfor the protection oftheStates' interest in WEB is set out in AppendixThree.
12. A c cordingly, I recommend that WEB'sMemorandum and ArticlesofAssociation should bereviewed and then revised thoroughly.

SECTION THREE ~ CORPORATE GOVERNANCE

Introduction

13. In this Section of the report, I will setout the outcomeofmy review of corporate governance within WEB.
14. A s mentioned in my interim report, a similar review of corporate governance wascarried out by the States' Internal Audit Department in 2005. The principal outcomesof that review aresetoutinAppendix Two.

Work undertaken

15. In the courseof the review, the following subjects were examined in addition to thosecoveredby the interim report:

(1 ) co n duct of general meetings including Annual General Meetings;

(2 ) m a intenance of registers (i.e. register of shareholders, directors, interests, gifts and hospitality; (3 ) re c ords of contracts and agreements;

(4 ) c o nduct of board meetings and of committee meetings (including the maintenance of minutes of

meetings);

(5 ) p re paration and audit of accounts; and (6 ) b u siness plans and accounts. Outcome

16. M y conclusions maybesummarised in the followingway:

( 1 ) o n completion of the Internal Audit report in 2005, WEB sought to implement all of the

recommendations that were made.

( 2 ) a t times since then, compliance with the new arrangements has lapsed from time to time

(specifically the disclosure of interests as reported in the interim report).

(3 ) ce r tain of the lapses in compliance were caused by the fact that requirements of WEB's Articles of

Association do not reflect current practice within the States (e.g. the Articles' requirements with regard to business plans and interim accounting information).

(4 ) th r oughout 2008 these lapses have been corrected.

17. T h e effect is that WEBisnowin compliance with normalcorporate governance practice.
18. N o netheless it remains the case that lapses in governancehaveoccurred from time to time as explained above. It is possible that compliance with normal corporate practice (and in particular the maintenanceof registers andminutes)hasbeen the responsibility of WEB'smanagersin addition totheirnormal duties. It would bemore satisfactory if WEB were to recruit a professionalcompany secretary whose sole duty it should beto ensure that all necessary records and practices are maintained. In view ofthe significance of the business handled byWEB,theexpenseof such an appointmentwouldbe well justified.
19. I t hereforerecommend that WEBshould recruit a professional company secretary. I understand that a recruitment process has commenced.

SECTION FOUR ~ ACCOUNTABILITY

Introduction

20. In my interim reportdated30 June 2008, I indicated that I wasminded to make various proposals to deal with what I perceived tobe conflicts in accountability:

" 5 9 . I n my view, the States should re-consider its customary practice of appointing members of the States to be members of WEB's board. I will consider this matter further before making recommendations in my final report, however I am minded to suggest that:

(1 ) W E B's principal line of accountability should be to the relevant Ministers as

representatives of WEB's shareholder.

( 2 ) S t a tes members should not be members of WEB's board unless they may serve as

representatives of the shareholder (for example, it might be thought appropriate that an Assistant Minister from a relevant department should serve as a director of WEB).

(3 ) t h e States' proper oversight of the activities should be achieved by requiring an existing

committee or creating a new committee whose task would be to oversee the actions of States companies such as WEB.

(4 ) s c r u tinising where appropriate Ministerial Decisions approving the principal transactions

and decisions of WEB (as at present).

6 0 .  I t is implicit in this suggestion that a change of practice with regard to States Members of the

board should not be made unless appropriate arrangements are made to ensure that there is proper accountability to the States.

6 1 .  A n y change of this sort will require a change to WEB's Memorandum and Articles of Association

which in turn will require appropriate legal consideration and drafting. It cannot be accomplished by the simple expedient of the States refusing to appoint States Directors because WEB's Articles require that two States Directors must be present if the directors are to transact business[4]. If there are no such directors, then WEB's board will not be able to transact

business."

21. I have considered these matters further and will set out the recommendations that I believe are appropriate.

Accountability

22. I t is important that WEB's line ofaccountability should be clear and unconflicted. Thiscan best be achieved by confirming that WEB's principal line of accountability is to an appropriate Minister as representative of WEB'sshareholder (the Sponsoring Minister).
23. It i s notnecessary for the purposeof this reportto specify to which Minister WEBshouldbe accountable. In recent times, the Chief Minister has been fulfilling this role and, this may continue tobeappropriatein [5]

view of the significance of the issues being managed by WEB .

24. A s a result of conditions whichwereimposedby the States when land was transferred to the company, WEB is obliged to seektheapprovalof the Treasury & Resources Minister for major land transactions. In effect, for most transactions, WEBis currently obliged toseek approval from two Ministers. I believe that this is unsatisfactory and that WEB should only be required toseektheapprovalofone minister forany particular transaction.This is not to suggest that the Treasury & Resources Minister doesnot have a legitimate interest in WEB'smanagementof assets that are sosignificant to the States' finances. Rather it

is to suggest that the Minister to whom WEB is accountable should be responsible for ensuring that all relevant

Ministers are in agreement with the approval of any particular transaction. WEB should not be obliged to seek parallel approvals from a number of Ministers.

25. O n this basis, I recommend that WEBshouldbeaccountable to a singleMinister.
26. I t would seem sensible that the Minister to whom WEB is accountable should also act in General Meetings ofWEB as the representativeof the States asshareholder.Atpresent, this role is performedby the Greffier of the States who, before attendance at such meetings, seeks the advice of the Chief Minister's Departmentonthewayinwhich the States' votes should beused.Where such advice or instructions are issued, they should beconfirmedasMinisterialdecisions(as,incomparablesituations,is [6]

currently the practice of the Treasury & Resources Department).

States' long term interest in WEB

27. In making decisions, a sponsoring minister is bound to beconcerned with the mannerinwhichWEB is achieving the policy objectives agreedbytheStatesbutisalsoboundto be concerned with the way in which the long term value of the States' assets is being maximised and realised. This aspect of a sponsoring minister'sconcerns is similar to concernswhichmustbe taken into accountwhentherelevant minister is considering the States' interest in otherStates-ownedcompanies (such as jersey Electricity and Jersey Post). The role oftheSponsoring Minister is therefore to maximise the long termvalueof the States' interest inWEB and to ensure that WEB operates in accordance with theagreedpoliciesofthe States.
28. T h e questionofhowthese interests are managedwas raised in the report ("EmergingIssues")which was published in May2008 at the end of the States' Spending Review, and, sincethen, has been the subject of further work. As a result of that work, I am minded to propose that the States should establish an Investment AdvisoryBoardtoadvise sponsoring ministers on the way in which the long term value of the States' interests shouldbe fostered.
29. T h e reports anrecommendationsof this Board would bepublishedin the same way that the reports of the Fiscal PolicyPanel are published.

[7] States directors

30. In discussions since publicationofmy interim report, I have notencounteredanyonewhodisagreed with my tentative proposal that the position of States Directorshouldbediscontinued. It appears to beaccepted that the position is subject conflicts of interest whichcause difficulty for the States Directorsthemselves.
31. A c cordingly, I recommend that:

(1 ) th e position of States Director currently enshrined in WEB's Memorandum of Association should

be discontinued;

( 2 ) S t ates members should not ordinarily be members of WEB's board unless they serve as

representatives of the Sponsoring Minister (for example, it may be thought appropriate for an appropriate Assistant Minister to serve as a director. In this capacity, the Assistant Minister would be accountable to the relevant Minister and not the States.

(3 ) D i rectors should be appointed by the States (as at present) but on the recommendation of the Chief

Minister.

Accountability to the States

32. It w ould beinappropriatefor this changein existing practicetobemade unless appropriatearrangements

are made to ensure that there is proper accountability to the States. I recommend that these arrangements should at

least include the following:

(1 ) th e Sponsoring Minister should be accountable to the States for oversight of WEB's activities.

(2 ) w h ere appropriate, the Sponsoring Minister's decisions in respect of WEB (for example approving

proposed transactions) should be recorded in the form of Ministerial Decisions. The effect of this would be that the decisions would be in the public domain so that members of the States would be able to subject them to such scrutiny as they think appropriate.

( 3 ) th e Sponsoring Minister should be responsible for laying WEB's annual report and accounts

before the States formally when received.. The effect of this would be that members of the States would be formally notified of the results of WEB's activities and would thus be afforded another opportunity to subject them to such scrutiny as they think appropriate.

33. In my interim report, I proposed that the States couldappoint a committeeto over see the activities of States companiessuch as WEB. I have notreceived favourable responses to this proposal and thus donot recommend the appointmentof such a committee.
34. H o wever,concernshave been expressed tome concerning the effectiveness of the States' oversight of WEB.In view of the seriousnessof this subject, I have reviewed all of the principal occasionsonwhich the States may wish andneed to oversee the activities ofWEB to demonstrate that there are effective arrangementsin place andtopermit gaps tobe the more easily identified. The results of this analysis are set outin Appendix Three.

WEB's Memorandum and Articles of Association

35. A decision to discontinue theappointmentof States Directors ofWEB will require a revision ofthe Articles of Association.
36. R e vision of the Articles of Association to remove references to States Directors would afford an opportunity to up-date the Articles generallyin the light of experience. A list of the individual Articles that shouldbe considered for revision is set out in AppendixFour including the following principal issues:

(1 ) th e possible removal of a limit on the number of directors; and

(2 ) th e possible removal of over-detailed references to business planning and accounting information

to be provided periodically by WEB. These requirements could be specified more effectively by means of Ministerial Decisions.

37. A c cordingly, I recommend that WEB'sMemorandum and ArticlesofAssociation should bereviewed and then revised thoroughly.

APPENDIX ONE ~ INTERIM REPORT ~ SUMMARY OF CONCLUSIONS

Introduction

App1-1 T h is summary of conclusions was is taken from the interim report of the review which was dated 30

June 2008.

Register of Directors' Interests

App1-2 I t is the policy of WEB to maintain a register of directors' interests. I regard this practice as

representing good practice.

App1-3 It is evident that between 2005 and 2008, whilst WEB continued to hold the Register that had been

prepared in 2005, directors were not asked by WEB to up-date their declarations and in practice did not do so. As a result, WEB's Register was not accurate. I have not enquired into what happened before 2005.

App1-4 It i s also evident that WEB has up-dated its records recently. Disclosure of conflicts of interest

App1-5 T h e evidence suggests that WEB's board generally observed normal practice with regard to the

[8]

disclosure of conflicts of interest .

Conflicts of interest ~ cases of difficulty States Members of WEB's board

App1-6 In my view, the States should re-consider its customary practice of appointing members of the States

to be members of WEB's board.

Mr Voisin

App1-7 In my view:

(1 ) M r V  oisin should have disclosed to WEB his appointment to the board of AIB CI Limited

(AIB CI) for inclusion in the Register of Directors' Interests. He did not do this.

( 2 ) O  n a strict interpretation, Mr Voisin's appointment to the board of AIB CI did not

represent  a  conflict  of  interest  as  defined  by  Companies  Law  and  thus  he  was  not required to disclose a conflict of interest at board meetings at which WEB's transactions with Harcourt were discussed.

(3 ) N o tw  ithstanding this strict interpretation, it would have been wise for Mr Voisin to make

such disclosures.

(4 ) I h a v e found no evidence that Mr Voisin's failure to disclose distorted WEB's decisions.

APPENDIX TWO ~ RECOMMENDATIONS IN INTERNAL AUDIT REPORT 2005

Introduction

App2-1 T h is is a summary of the recommendations made in the 2005 report of the States' Internal Audit

Department together with notes on the actions that have been taken since the preparation of that report to deal with the issues that were identified.

Annual General Meetings

App2-2 P a ragraph 4.6 of the 2005 report recommended that:

" W  e w  e re informed that no AGM's had been held since WEB was first incorporated but also that no request has been made to WEB to instigate one . . . It is recommended that WEB holds AGM's annually and considers the appointment of auditors at these meetings. Since our audit an AGM for 2005 has been organised for 3 June 2005".

App2-3 A n nual General Meetings have take place regularly since completion of the 2005 report. Register of interests and gifts and hospitality

App2-4 P a ragraph 4.7 of the 2005 report recommended that:

" W  e w e r e concerned to note that at the time of our audit there was no register of interest available for scrutiny at the offices of WEB . . . Whilst a register of gifts and hospitality was located in the safe at WEB's offices we were surprised to note that this only contained three entries, the last one being on 16 May 1996 . . . It is recommended that from now any gifts received and provided are entered into the register".

App2-5 A s I indicated in my interim report, the register of interests was not in fact maintained. Since

publication of my interim report, the register has been brought up to date. Directors have confirmed their understanding of the duty to declare their interests and possible conflicts and the board has made a commitment to refresh the register annually.

App2-6 A register of gifts and hospitality is now maintained electronically.

App2-7 I h ave also inspected the company's other registers (i.e. register of directors, shareholders, sealing of

documents). At the time of my interim report, the registers of directors and of sealing of documents was not up to date. I have been informed that although the written register of the sealing of documents has not been maintained, a complete register of all documents signed for or on behalf of the company is maintained electronically.

Audit Committee

App2-8 P a ragraph 4.9 of the 2005 report recommended that:

" W  E B   h a s an audit committee that meets four times a year. As part of the audit we reviewed the minutes of audit committees held since September 2004. However, it was not possible to review any of the minutes prior to this date as they could not be located in the offices of WEB during our audit visit".

App2-9 M i nutes have been prepared and filed. I was able to inspect them. Remuneration Committee

App2-10 P aragraph 4.10 to 4.15 of the 2005 report recommended that:

" F  o rm  a l minutes of the Remuneration Committee have not been kept, Many of the decisions being taken have been recorded by memo letter and email exchanges . . . It is also recommended that the membership of the Remuneration Committee be considered.

I t i s r e c o mmended that in 2005 and future years the Remuneration Committee should undertake the

salary review for the Managing Director in advance of any pay awards being agreed for the rest of the WEB staff. This is to ensure that the staff pay award does not set a precedent for the increase to the Managing Director's salary".

" It is r e commended that future decisions of the Board regarding remuneration of the Managing Director should be formally recorded in the minutes".

" I t i s re c ommended that all future recommendations regarding the remuneration of the Managing Director should be made to the Board by the Remuneration Committee and should be formally documented".

App2-11 T hese recommendations have been implemented save that some difficulty arises over the recording

of decisions as the company's full time staff do not attend meetings at which their remuneration is to be discussed. In these circumstances it is for the chairman of whichever meeting is considering these matters to ensure that a proper record is included in the minute book and confirmed at the next board meeting.

Business Plans and Accounts

App2-12 P aragraph 4.17 of the 2005 report recommended that:

" A r t ic l e 2 5 (a)(ii) of the Articles of Association reads as follows:

T h e D i re c tors shall cause to be prepared annually and in consultation with all relevant Committees of

the States a Business Plan and Report which shall be sent to the Committee at such time as may be reasonably required by the Committee setting out the objectives, policies and programmes of the Company and reporting on progress".

Article 3 states

" T h e D i r ectors shall cause to be kept proper accounts of the Company for each accounting period to be prepared in accordance with the generally accepted accounting principals in the Island of Jersey consistently applied and that such accounts shall be forwarded to the Committee not more than four months after the end of the period to which they relate".

W  E B a c c epts that this may not have happened in as formal a manner has been desired. WEB does

send a copy of its accounts to every States Member and the Chief Officers of every States Committee, including Policy and Resources. Copies are also sent to the States Treasury. It is intended that in the future six monthly financial reports will be submitted to the Accounts Committee which will include actual spending budgetary information and that a more summarised report will be submitted to cover the intervening quarters."

App2-13 I n practice, the company complies with whatever requests for information are received from the

Chief Minister's and Treasury and Resources Departments.

APPENDIX THREE ~ ARRANGEMENTS FOR STATES' OVERSIGHT OF WEB

APPENDIX FOUR ~ REVISIONS TO WEB'S MEMORANDUM AND ARTICLES OF ASSOCIATION Introduction

App4-1 In this Appendix I will identify the individual Articles of Association which would require revision if

the recommendations set out in this report were to be accepted.

Article 1 – Interpretation

App4-2 T h is Article would require amendments if the distinction between States and non States directors

were to be abolished.

Article 20 – Representative of the States

App4-3 A ssuming that it is agreed that the sponsoring minister (or his delegate) should act as the

representative of the States at General Meetings, this Article will require amendment.

Article 22 – Direction

App4-4 T h is Article refers to the "Committee", which is a reference to the Policy and Resources Committee

of the States of Jersey and thus to the arrangements that preceded ministerial government. This Article requires amendment to reflect changes to the machinery of government.

Article 23 – Numbers of Directors

App4-5 T h is Article will require revision if the distinction between States and non States directors is

abolished. In addition, the Article limits the size of the Board to eight (i.e. seven directors together with an additional director who shall be the managing director). Consideration should be given to whether this maximum number remains appropriate.

Article 25(b) – Powers of Directors

App4-6 In its current form Article 25 states that the objectives of the company include the promotion, co-

ordination and implementation of a comprehensive strategy for the development of the St Helier Waterfront. It may be appropriate to consider whether this description is a correct reflection of the current policy of the States. Further, on occasion, it has been expedient for WEB to undertake development directly. It may be prudent to give consideration to whether the words "implement a comprehensive strategy" include such direct activities and, if not, then the Article should be amended to permit appropriate activity.

Article 25 – Powers of Directors

App4-7 T h is Article requires the directors to prepare and submit an annual business plan and report to be sent

to the Policy and Resources Committee. Consideration should be given to changing this Article so that it obliges the Board to co-operate with whatever reasonable requests for information and reports are made to it. In other words, the Article should take account of the fact that the States' systems for accounting and reporting change from time to time and would be better stated in practice notes than in formal constitutional documents.

Article 28 – Directors

App4-8 T h is Article requires revision if the distinction between States and non States Directors is abolished

(also Articles 29 and 30).

Article 33 – Remuneration of Directors

App4-9 T h is Article will require revision if the distinction between non States directors and States directors is

abolished.

Articles 38/45 – Proceedings of Directors

App4-10 T hese Articles require revision in the event that the distinction between States directors and non

States directors is abolished.

Article 56 – Accounts and Audit

App2-14 T his Article provides that an audited interim accounts should be preferred in respect of each quarter

in each accounting period of a company. In my view, it would be better for this detailed information to be covered by practice notes and decisions of the Board (also Article 58).

COMPANIES (JERSEY) LAW 1991 COMPANY LIMITED BY SHARES

MEMORANDUM OF ASSOCIATION

of

WATERFRONT ENTERPRISE BOARD LIMITED

1. The nameof the Company is: "Waterfront Enterprise Board Limited".
2. The capacity of the Company is unlimited and the Companyshallhaveall the powersof a natural person.
3. The liability ofeachmemberislimited.
4. The capital oftheCompany is £1,000,000 divided into 1,000,000 sharesof£1.00each.
5. We, the personswhose names and addresses are hereuntosubscribed,aredesirousofbeing formed into a Companyinpursuanceof this MemorandumofAssociation, and we respectively agree to take the numbersofshares in the capital of the Company noted opposite our respective names.
6. The Companyshallexistuntildissolvedby special resolution or otherwise accordingto law.
7. The Companyis a public company.

ARTICLES OF ASSOCIATION

OF

WATERFRONT ENTERPRISE BOARD LIMITED INTERPRETATION

1. I n t hese Articles:

"Articles" m e a n s th e A r t ic l es of Association of the Company and "Article" shall be construed

accordingly;

"Auditors"   m e a n s t h e a u d i to rs for the time being of the Company who shall be the auditors for

the time being of the States of Jersey;

"Board"   m e a n s t h e b o a r d o f Directors of the Company from time to time; "Chairman"    m e a n s t h e c h a i rman of the Board from time to time;

"Company"  m  e a n s  th  e   c o m p  any incorporated under the Law in respect of which these Articles

have been registered;

"Director"   m  ea n s   t h e M  i n isterial Appointee or a Non-Executive Director or the Managing

Director;

"executed"  i n c lu d e s a n y m o de of execution;

"holder"   in r e la t io n t o s h a r es means the member whose name is entered in the register of

members as the holder of the shares;

"Managing Director" m  e a n s the person appointed in accordance with these Articles as the Managing

Director;

"Ministerial Appointee" m e ans a designated Assistant Minister for Treasury and Resources (or such other

suitably qualified person (whether a member of the States or not) as the Minister shall determine);

"Non-Executive m e a n s    a     person appointed in accordance with Director"   A r ti c le   3 0   a s  a n o n-executive director of the Company;

"office"   m  e a n s  th e   re g i s te r e d office of the Company;

"ordinary resolution" m e a n s a resolution of the Company in general meeting adopted by a simple

majority of the votes cast at that meeting;

"seal"   m e a n s t h e c o m  m o n s eal of the Company;

"secretary"   m e a n s th e s e c retary of the Company or other person appointed to perform the

duties of the secretary of the Company including a joint, assistant or deputy secretary;

"Minister"   m e a n s  t h e  M  i n is ter for Treasury and Resources "States"   m e a n s t h e S t a te s o f Jersey;

"the Law"     m e a n s th e C o m  panies (Jersey) Law 1991 including any statutory modification or re-enactment thereof for the time being in force.