b'Chapter 4 Commercial Tradingsection 95 of the 2003 ActIntroduction 4.1 This chapter outlines the powers and restrictions on commercial trading initiatives by local authorities permitted under section 95 of the 2003 Act. The traditional view of trading by local authorities over the years, as endorsed by both regulatory bodies (such as the Audit Commission) and the courts on vires challenge is along the lines that a local authority has a fiduciary duty to look after the funds entrusted to it and to ensure that the taxpayers money is spent appropriately. The main purpose of raising council tax is not to enable a local authority to speculate in market ventures such as trading for profit. For those reasons, a local authority must carefully consider any trading venture that it embarks upon. After more than 150 years of the courts putting the brakes on municipal entrepreneurship (on the very sound grounds that if you want to risk money on trading make sure it is your own and not the publics money), Parliament enacted a specific provision giving the amber light to trading for profit. The restrictions on the choice of trading vehicle though remain a major factor for local authorities to consider before embarking on such ventures. To trade commercially using the section 95 powers, the authority is first required to: identify a function related activity it wishes to exploit commerciallyie the trading activity cannot be something for which the authority does not itself have powers to undertake (but this may be affected by the new Localism Act powers described in Chapter 6; prepare and approve a business casethis is not in itself a major issuea business case and business plan should be the first priority for any such venture whoevers money is at risk; set up (or participate in) a company trading vehiclecompany for these purposes means: (a)a company within the meaning given by section 1(1) of the Companies Act 2006; or (b)a society registered or deemed to be registered under the Co-operative and Community Benefit Societies and Credit Unions Act 1965 (now named the Co-Operative and Community Benefit Societies and Credit Unions Act 2010) or the Industrial and Provident Societies Act (Northern Ireland) 1969.50'