Agenda item

(1)       The report set out the background to Kent On Canvas and Kent Cultural Trading Ltd and the steps taken to re-align the business following recent developments, including the rationale for the proposed dissolution of both companies.

(2)       In late 2006 work was commissioned by the then Chief Executive to look at KCC’s historical and cultural assets, including the potential development of short and long term income generation opportunities. As part of the work, ‘Kent on Canvas’ was launched in 2008 as an ‘art on demand’ service and the project initially met high levels of demand.  Following a series of Freedom of Information requests and legal advice, the service offer was restricted to KCC employees only as ‘Kent on Canvas’ was deemed by Legal Services not to be trading in full accordance with the provisions of the Local Government Act 2003.

(3)                      In order to regularise the situation, a Cabinet Member decision was taken to establish ‘Kent on Canvas’ as a limited company. Over the following years, it was felt that developing opportunities could best benefit from being under an umbrella company, and a business case was presented to the Governance & Audit Trading Activities Sub Group, following which Kent Cultural Trading Ltd (KCT) was established as a wholly-owned subsidiary of KCC.

(4)       In 2012, Internal Audit examined KCT’s activities and subsequently a decision was taken to temporarily cease trading and suspend a member of staff. Following the findings of the investigation, advice was sought from Legal Services to determine what course of action the council needed to consider.  A full assessment of KCT’s trading activities was undertaken in order to consider what viable business opportunities remained, especially in light of the ever more difficult economic climate. If dissolution was to be considered, it was essential that KCT assets and outstanding opportunities should be looked into to ensure that all possible value was extracted from the company.

(5)       The report set out the key trading activities and opportunities that were being pursued by KCT, along with reasons why the activity was eventually discontinued.  Based on those reasons, and with ongoing financial pressures to consider, along with little appetite for further investment, the directors with input from all key stakeholders had recommended the dissolution of Kent Cultural Trading Ltd and its subsidiaries.  Operations had been wound down prior to the companies recommended dissolution. As part of the work, all remaining assets had been transferred to KCC for the sum of £1 in order to compensate KCC for any losses.

(6)       The accounts were presented to the Governance & Audit Trading Activities Sub Group on 1 March 2013. Final accounts showed that KCT for the year ended 31 January 2013 made a loss of £191,815. Kent on Canvas for the year ended 31 August 2012 made a loss of £4,632.  There were no outstanding creditors other than KCC.

(7)       RESOLVED that the Cabinet Member for Community Services be recommended to voluntarily dissolve Kent on Canvas and Kent Cultural Trading Ltd, so Legal Services could take the requisite action to have the companies dissolved, following which they would be removed from the Companies House register.