Business Secretary - Make directors liable for business failures
15th July 2013 | News
Business Secretary, Vince Cable is set to propose an overhaul of company rules by making the directors of failed companies personally liable for their firm’s debts.
Cable is also expected to suggest that those directors deemed to be reckless in the running of their failed businesses should be disqualified from being able to work at another firm.
His proposals follow recent concerns over the toughness of corporate oversight, after a series of banking scandals – such as Libor and the mis-selling of PPI – and huge state bailouts in the wake of the financial crisis, which have dented public confidence.
Cable is expected to announce the aforementioned proposals in a speech at the London Stock Exchange at an event on ‘Responsible Capitalism’, with a more detailed discussion paper on the proposals due to be published later this week.
The news follows recommendation from the Parliamentary Commission on Banking Standards that directors of banks should have a “primary responsibility” to ensure the safety and stability of their firms.
The Department for Business, Innovation and Skills (BIS) wishes to consult on amending the statutory duties of directors in key sectors such as banking.
The BIS-run Insolvency Service has the power to bar people from working as directors for up to 15 years. However, the BIS will now look at allowing City regulator, the Financial Conduct Authority, to ban directors of failed firms from working at any other company.
Mr Cable is also expected to propose extending the time limit for bringing disqualification proceedings in insolvent company cases from two years to five; as well as preventing individuals banned from running companies outside the UK from becoming a director of a UK-based firm.
Image: The CBI