Arch, the arms-length development company of Northumberland County Council, is to be dissolved.
The decision was taken by board members on Friday following a ‘complex and comprehensive’ independent strategic review.
In an email to councillors, it was reported that the review had found ‘failings in relation to the operating principles and fundamental purpose of Arch’.
It was also outlined that ‘probity has not been at the level required’ and ‘decisions made did not always follow appropriate procedures’.
The board will now establish a new company that will solely focus on Northumberland-based regeneration, job creation, affordable housing and economic growth.
The new company will still be closely aligned to Northumberland County Council and will still be expected to operate as a commercial organisation and deliver profit-making schemes.
Richard Wearmouth, chairman of Arch, said: “We can confirm that the review into Arch has concluded and that the board agreed a range of actions that secures a bright future of a new organisation.
“Tenants will not be affected adversely by these changes and all current programmes and projects will continue.”