Loan to Wholly Owned Company

I've noticed in some Council reports that

- Companies wholly owned by the council are being set up
- That councils are loaning £Xm to the company at a market rate
- That the councils are borrowing from PWLB to fund this loan to the company

CIPFA's guidance on this suggests that a council [u]can't[/u] borrow to lend on to the company:

[i]The council can invest by providing finance to a company, but a council does not have power to borrow for this kind of investment. It must therefore finance this investment from general fund reserves. Borrowing powers are in Section 1 of the Local Government Act 2003.[/i]

If the council is able to do this through PWLB borrowing is it also the case that the repayment of the loan by the company must be recognised as a capital receipt?

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