Mergers, acquisitions and divestments
Partnerships and joint ventures
For the purposes of qualifying for the scheme, the participant group structure will be defined as the one in place at the end of the qualification year. (For the introductory phase, this is 31 December 2008.)
This means that the participant will have to include all organisations it owned on this date when assessing whether it qualifies for the CRC. The participant will need to aggregate all the relevant half-hourly electricity used by these ‘group members’ for the entire year, not just for the period a member was part of the group.
For compliance purposes, once a participant has qualified for the scheme it will generally be responsible from the date of purchase for all the energy use emissions from any sites or subsidiaries it purchases. Similarly, it will only be responsible up to the point of sale for sites or subsidiaries that it sells.
To reduce administrative burdens, the government will generally not require participants to notify the administrators of any purchases or sales of sites or subsidiaries, although participants must retain the necessary evidence in their Evidence Pack and include their emissions in their CRC Annual Reports. The impact of smaller organisational changes on performance during each phase is accounted for by the Growth Metric.
The exception to this approach is where there are any changes to the group structure that involve entire participants or Significant Group Undertakings (SGUs), which are referred to as ‘designated changes’. An SGU is a subsidiary that, if it had no higher parent, would qualify for the CRC Energy Efficiency Scheme in its own right.
Sale, acquisition or merger involving a participant or SGUs would be a 'designated change', deemed to take effect at the start of the compliance year during which the transfer happened. You will need to notify the administrator within three months of the changes occurring. If a designated change occurs involving a disaggregated SGU and it becomes part of another participant, that participant will be able to nominate the SGU to be disaggregated if it so chooses.
Yes, if the merging companies exceed the qualification criteria, the new company will qualify for the CRC Energy Efficiency Scheme during the introductory phase and will be required to register, as per its organisational structure, at the point of registration.
Where a non-participant purchases an existing participant, or a Significant Group Undertaking (SGU) and then qualifies for the CRC scheme in its own right, this leads to the creation of a new participant. In such cases, the new participant must register for the introductory phase of the CRC Energy Efficiency Scheme.
Partnerships and joint ventures
The ownership of JVs will be determined, as with other types of SGU, by Companies Act tests, not equity share. Where the JV has a majority owner (greater than 50 per cent), that owner must treat it like any other subsidiary within the CRC.
Where there is no majority owner the JV will be treated as the highest parent organisation and must assess its potential qualification and participate in the CRC as a separate entity.
The emissions responsibility in the CRC for JVs, will be with the party responsible for a supply of electricity, gas or other fuels. Therefore, if one owning party of a JV arrangement is responsible for a supply of energy, it must take responsibility for that energy supply in the CRC. Where the JV is itself responsible for the energy supply, it should report its CRC emissions, either on its own or via its parent group.
Unincorporated JVs will be treated the same as all other JVs.
This applies to joint ventures, private equity and venture capital investments, Private Finance Initiatives, Public Private Partnership and Build, Design, Finance and Operate agreements.
For further information and examples concerning joint ventures, please refer to Chapter 2 of the Government Response on Consultation October 2009.
This applies to joint ventures, private equity and venture capital investments, Private Finance Initiatives, Public Private Partnerships and Build, Design, Finance and Operate agreements.
For further information and examples concerning joint ventures, please refer to section 2.2 of the CRC User Guide.