Member Article

CBI welcomes Cable’s warning shots over unscrupulous directors

The Business Secretary has introduced a group of measures designed to combat tax evasion, fraud and curtail reckless directors.

Announced over the weekend the Government tools are intended to clean up the UK’s investment climate and have been welcomed by the CBI.

Legislation is required ahead of two sets of reforms - one aimed at “rogue” directors, and the other at tackling opaque corporate structures used for illicit purposes.

The proposals include the ability for Government to intervene and ask the court to award compensation against a disqualified director; a change in disqualification law so judges now have a duty to take into account a wider range of matters when considering whether to disqualify an individual, such as their previous business failures, the nature of any losses, overseas conduct and breaches of specific laws; and the ability to ban directors in the UK, for oveseas offences.

To tackle hidden company owners and promote corporate transparency an open, publicly available beneficial ownership register is proposed.

This will be coupled with the scrapping of physical ‘bearer shares’ - shares issued by a company which belong to whoever owns it.

Government is to also look at limiting the use of companies being directors of other companies and better educating directors on their duties before they start.

Vince Cable said: “The UK is already one of the best places in the world to start, grow and run a business. However, for consumers, investors and the wider public to really trust a company they need to know who is really in charge.

“This is why I’m making sure we take tough action tackling the darker side of capitalism and the smoke and mirrors which have existed for too long. No longer will UK companies be able to use complex structures and trails of paperwork to hide information and keep the public in the dark.”

Matthew Fell, CBI director for Competitive Markets, said: “These new rules which will help ensure that the UK’s world-leading company law regime continues to underpin its attractiveness as a place to do business.

“Tackling the damaging behaviour of a small minority of individuals will help to reinforce confidence in the majority of directors who run their businesses well and create jobs and growth throughout the UK.”

On the new company beneficial ownership rules, Mr Fell added: “Businesses back the creation of a beneficial ownership register which will support efforts to promote transparency and stamp out illicit financial activity.

“Equity investment is a vital but under-used source of finance for the UK’s growing mid-sized businesses, so we must be careful to distinguish between this legitimate private investment and the illicit financial activity targeted by this new measure.

“The real benefit of the new register is the ability to track company ownership information around the world. Now that the UK has chosen to make this a public register, ensuring that others follow our lead will be critical to its success and to maintaining a level playing field.”

This was posted in Bdaily's Members' News section by Tom Keighley .