Airports Act 1986

Part I — Transfer of Undertaking of British Airports Authority

Preliminary

Power to direct reorganisation of BAA's undertaking prior to appointed day

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Dissolution of BAA and vesting of its property etc. in a successor company

Dissolution of BAA and vesting of its property etc. in a successor company

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Cancellation of liabilities of BAA to the Secretary of State

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Initial Government holding in the successor company

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• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (5) The Secretary of State may not exercise any power conferred on him by this section, or dispose of any securities issued or of any rights to securities initially allotted to him in pursuance of this section, without the consent of the Treasury.

• (6) Any dividends or other sums received by the Treasury or the Secretary of State in right of, or on the disposal of, any securities or rights acquired by virtue of this section shall be paid into the Consolidated Fund.

Government investment in securities of the successor company

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Exercise of" functions through nominees

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• (1) The Treasury or, with the consent of the Treasury, the Secretary of State may, for the purposes of section 4 or 5, appoint any person to act as the nominee, or one of the nominees, of the Treasury or the Secretary of State; and—

• (a) securities of the successor company may be issued under section 4 to any nominee of the Treasury or the Secretary of State appointed for the purposes of that section or to any person entitled to require the issue of the securities following their initial allotment to any such nominee, and

• (b) any such nominee appointed for the purposes of section 5 may acquire securities or rights under that section,

in accordance with directions given from time to time by the Treasury or, with the consent of the Treasury, by the Secretary of State.

• (2) Any person holding any securities or rights as a nominee of the Treasury or the Secretary of State by virtue of subsection (1) shall hold and deal with them (or any of them) on such terms and in such manner as the Treasury or, with the consent of the Treasury, the Secretary of State may direct.

Target investment limit for Government shareholding

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• (1) As soon after the date when the successor company ceases to be wholly owned by the Crown as he considers expedient, and in any case not later than six months after that date, the Secretary of State shall by order fix a target investment limit in relation to the shares for the time being held in the successor company by virtue of any provision of this Part by the Treasury and their nominees and by the Secretary of State and his nominees (“the Government shareholding”).

• (2) The target investment limit shall be expressed as a proportion of the voting rights which are exercisable in all circumstances at general meetings of the successor company (“the ordinary voting rights”).

• (3) The first target investment limit fixed under this section shall be equal to the proportion of the ordinary voting rights which is carried by the Government shareholding at the time when the order fixing the limit is made.

• (4) The Secretary of State may from time to time by order fix a new target investment limit in place of the one previously in force under this section; but—

• (a) any new limit must be lower than the one it replaces; and

• (b) an order under this section may only be revoked by an order fixing a new limit.

• (5) It shall be the duty of the Treasury and of the Secretary of State so to exercise—

• (a) their powers under section 5 and any power to dispose of any shares held by virtue of any provision of this Part, and

• (b) their power to give directions to their respective nominees,

as to secure that the Government shareholding does not carry a proportion of the ordinary voting rights exceeding any target investment limit for the time being in force under this section.

• (6) Notwithstanding subsection (5), the Treasury or the Secretary of State may take up, or direct any of their respective nominees to take up, any rights for the time being available to them or him, or to that nominee, as an existing holder of shares or other securities of the successor company; but if, as a result, the proportion of the ordinary voting rights carried by the Government shareholding at any time exceeds the target investment limit, it shall be the duty of the Treasury or (as the case may be) the Secretary of State to comply with subsection (5) as soon after that time as is reasonably practicable.

• (7) For the purposes of this section the temporary suspension of any of the ordinary voting rights shall be disregarded.

Financial structure of the successor company

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• (1) If the Secretary of State so directs at any time before the successor company ceases to be wholly owned by the Crown, such sum (not exceeding the accumulated realised profits of the BAA) as may be specified in the direction shall be carried by the successor company to a reserve (“the statutory reserve”).

• (2) The statutory reserve may only be applied by the successor company in paying up unissued shares of the company to be allotted to members of the company as fully paid bonus shares.

• (3) Notwithstanding subsection (2), the statutory reserve shall not count as an undistributable reserve of the successor company for the purposes of section 831(4)(d) of the Companies Act 2006 ; but, for the purpose of determining under that section whether the successor company may make a distribution at any time, any amount for the time being standing to the credit of the statutory reserve shall be treated for the purposes of section 831(4)(c) as if it were unrealised profits of the company.

• (4) For the purposes of any statutory accounts of the successor company, the value of any asset and the amount of any liability of the BAA vesting in the successor company on the appointed day shall be taken to be the value or (as the case may be) the amount assigned to that asset or liability for the purposes of the corresponding statement of accounts prepared by the successor company under this Act for the period from the end of that dealt with in the last annual statement of accounts published by the BAA down to the appointed day.

• (5) For the purposes of any statutory accounts of the successor company the amount to be included in respect of any item shall be determined as if anything done by the BAA (whether by way of acquiring, revaluing or disposing of any asset or incurring, revaluing or discharging any liability, or by carrying any amount to any provision or reserve, or otherwise) had been done by the successor company.

Accordingly (but without prejudice to the generality of the preceding provision) the amount to be included from time to time in any reserves of the successor company as representing its accumulated realised profits shall be determined as if any profits realised and retained by the BAA had been realised and retained by the successor company.

• (6) References in this section to the statutory accounts of the successor company are references to any accounts prepared by the successor company for the purposes of any provision of the Companies Act 2006 (including group accounts).

Temporary restrictions on successor company's borrowings etc.

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Supplementary

Statements in connection with flotation

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Application of Trustee Investments Act 1961 in relation to investment in the successor company

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Part II — Transfer of Airport Undertakings of Local Authorities

Preliminary

Interpretation of Part II

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• (1) In this Part—

“local authority”—

• (a) in relation to England . . ., means a local authority within the meaning of the Local Government Act 1972 or the Common Council of the City of London; and

• (aa) in relation to Wales, means the council of a county or of a county borough;

• (b) in relation to Scotland, has the same meaning as in the Local Government (Scotland) Act, 1973; and

“principal council”—

• (a) in relation to England and Wales, means the council of a non-metropolitan county, of a district, or of a London borough; and

• (b) in relation to Scotland, means a regional or islands council.

• (2) References in this Part to—

• (a) a public airport company;

• (b) the controlling authority of a public airport company;

• (c) a composite authority;

• (d) constituent councils of a composite authority; or

• (e) an associated company,

shall be read in accordance with the relevant provisions of section 16.

• (3) For the purposes of this Part an airport shall be treated as controlled by a principal council or (as the case may be) be two or more principal councils jointly if it is for the time being owned—

• (a) by the council or jointly by those councils; or

• (b) by a subsidiary of that council or those councils; or

• (c) by the council or those councils jointly with any such subsidiary.

• (4) Any reference in this Part, in relation to two or more principal councils, to a subsidiary of those councils shall be read as a reference to a body corporate which would, if those councils were a single body corporate, be a subsidiary of that body corporate.

Transfer of airport undertakings of local authorities

Transfer of airport undertakings of local authorities to companies owned by such authorities

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• (1) The Secretary of State may give to any principal council who control (whether alone or jointly with one or more other principal councils) an airport to which this section applies in accordance with section 14, a direction requiring the council to form a company for the purpose of carrying on—

• (a) the business of operating the airport as a commercial undertaking; and

• (b) any activities which appear to the council to be incidental to or connected with carrying on that business.

• (2) The company shall be a company limited by shares and registered under the Companies Act 2006, and shall be formed by the council before such date as the Secretary of State may specify in his direction under subsection (1).

• (3) In the case of an airport which is jointly controlled by two or more principal councils the Secretary of State may give a direction under subsection (1) to such one of those councils as he thinks fit; but in any such case the council to whom the direction is given must consult the other principal council or councils before forming a company in accordance with the direction.

• (4) The Secretary of State may revoke a direction given by him under subsection (1) at any time before a company has been formed in accordance with the direction.

• (5) References in subsection (1) to carrying on the business of operating an airport as a commercial undertaking include references to carrying on any activities which, at the time when the direction in question is given, are carried on at the airport or on airport land—

• (a) by the principal council, or (as the case may be) any of the principal councils, who control the airport,

• (b) by any subsidiary by whom the airport is owned as mentioned in section 12(3),

• (c) by any person managing the airport under the terms of any lease or other arrangement made by or on behalf of the principal council or councils who control it or by any such subsidiary, or

• (d) by any person who has been granted a right to carry on activities there by any council, subsidiary or person falling within any of the preceding paragraphs,

with the exception of any activities which the Secretary of State has, before the date referred to in subsection (2), agreed with the principal council or councils who control the airport should not be carried on by the company to be formed in pursuance of the direction.

• (6) In subsection (5) “airport land”, in relation to an airport, means land which is attached to the airport and was on 1st April 1986 administered with the airport as a single unit.

• (7) This section and section 15 (together with section 12(3) and (4)) shall apply to a metropolitan county passenger transport authority an Integrated Transport Authority for an integrated transport area in England as they apply to a principal council.

Airports to which s. 13 applies

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• (1) Section 13 applies to an airport if the annual turnover of the business carried on at the airport by the airport operator exceeded £1 million in the case of at least two of the last three financial years ending before the relevant date.

• (2) In subsection (1)—

• “Annual turnover”, in relation to the business carried on at an airport by the airport operator, means the aggregate, as stated or otherwise shown in the accounts of the business, of all sums received in the course of the business during a financial year, including grants from any public or local authority but excluding—

• (a) capital receipts; and

• (b) loans made by any person;

• “financial year” means a period of twelve months ending with 31st March; and

• “the relevant date”, in relation to an airport, means the date of any direction given by the Secretary of State in respect of the airport under section 13(1).

• (3) The Secretary of State may by order substitute for the sum for the time being specified in subsection (1) such greater sum as may be specified in the order.

• (4) An order under subsection (3) shall not affect the validity of any direction in force under section 13(1) immediately before the coming into operation of the order.

Transfer schemes

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• (1) Where a principal council have formed a company in pursuance of section 13, the council shall, before such date as the Secretary of State may specify in a direction given to the council, submit to the Secretary of State a scheme providing for the transfer to the company of any property, rights or liabilities of the council, or of any subsidiary of theirs, which it appears to the council to be appropriate to transfer to that company.

• (2) In preparing a scheme in pursuance of subsection (1) a council shall take into account any advice given by the Secretary of State as to the provisions he regards as appropriate for inclusion in the scheme (and in particular any advice as to the description of property, rights and liabilities which it is in his view appropriate to transfer to the company).

• (3) A scheme under subsection (1) shall not come into force until it has been approved by the Secretary of State or until such date as the Secretary of State may, in giving his approval, specify; and the Secretary of State may approve a scheme either without modifications or with such modifications as he thinks fit after consulting the council who submitted the scheme.

• (4) If it appears to the Secretary of State that a scheme submitted under subsection (1) does not accord with any advice given by him as mentioned in subsection (2), he may do one or other of the following things, as he thinks fit, namely—

• (a) approve the scheme under subsection (3) with modifications, or

• (b) after consulting the council who submitted the scheme, substitute for it a scheme of his own, to come into force on such date as may be specified in the scheme.

• (5) In the case of a scheme relating to an airport which is jointly controlled by two or more principal councils (“the relevant authorities”) the authority required to submit the scheme under subsection (1) must consult the other relevant authority or authorities before submitting the scheme under that subsection; and the Secretary of State shall not approve the scheme (whether with or without modifications), or substitute a scheme of his own, unless—

• (a) he has given that other authority or (as the case may be) those other authorities an opportunity of making, within such time as he may allow for the purpose, written representations with respect to the scheme; and

• (b) he has considered any such representations made to him within that time.

• (6) In relation to a scheme relating to any such airport, subsection (1) shall be read as if—

• (a) the reference to any property, rights or liabilities of the council submitting the scheme were a reference to any property, rights or liabilities vested in, or in any person on behalf of, the relevant authorities; and

• (b) the reference to any subsidiary of the council submitting the scheme were a reference to any subsidiary of the relevant authorities.

• (7) On the coming into force of a scheme under this section the property, rights and liabilities affected by the scheme shall, subject to section 75(3), be transferred and vest in accordance with the scheme.

• (8) The Secretary of State may, if he thinks fit, give a council a direction specifying a date under subsection (1) above at the same time as he gives the council a direction under section 13(1); and the Secretary of State may revoke any direction given by him under subsection (1) above at any time before any property, rights or liabilities vest in any company by virtue of this section.

• (9) Section 13(7) applies for the purposes of this section.

Public airport companies

Public airport companies and their controlling authorities

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• (1) References in this Part to a public airport company are references to a company (whether formed under section 13 or not) which carries on the business of operating an airport as a commercial undertaking and is for the time being either—

• (a) a subsidiary of a single principal council, or

• (b) a subsidiary of two or more such councils.

• (2) In this Part of this Act—