Source · Select Committees · Environment, Food and Rural Affairs Committee
Recommendation 3
3
Ultimate Controller undertakings protect regulated entities from poor or unscrupulous behaviour by the company owners,...
Conclusion
Ultimate Controller undertakings protect regulated entities from poor or unscrupulous behaviour by the company owners, usually shareholders. This will likely underpin any future powers to block ownership transfers if the government accepts this IWC proposal. However, when a company is at risk of insolvency, creditors—who are not subject to the same due diligence checks as shareholders—may suddenly find themselves in a position of significant control, as is now the case with Thames Water. Yet Ofwat’s interpretation of the Ultimate Controller has left Thames Water’s economic owners free from these undertakings because its shareholders have “abandoned” the company. This is a highly undesirable situation for a regulated water company and a critical resource. (Conclusion, Paragraph 22)