Measures to help improve corporate transparency and strengthen director disqualification laws have been outlined with the publication of a discussion paper by the Business Secretary Vince Cable.

Speaking at the Responsible Capitalism conference, hosted by the think tank Reform, Dr Cable announced the launch of the Transparency and Trust paper. This sets out a number of proposals aimed at addressing opaque company ownership structures and improving the accountability of company directors. The proposed reforms seek to promote growth by improving confidence in the UK as an open and trusted place to invest and do business. Greater transparency and improved trust will mean honest entrepreneurs and investors can do business more securely in the UK and not be disadvantaged by those who don’t play by the rules.

 

Who owns what?

The first part of the paper looks to inject greater transparency around who really owns and controls companies in the UK. In addition it proposes the abolition of bearer shares and measures to tackle misuse of corporate directors and nominee directors. These reforms would help to tackle tax evasion, money laundering and the financing of terrorism, and improve the investment climate in the UK.

 

Making directors accountable

The second half of the paper sets out ways of making directors more accountable for misconduct or company failure. Key proposals include giving regulators greater powers to disqualify directors in specific sectors and allowing courts to take more account of the social impacts of directors’ actions. The paper also asks whether disqualified directors should directly compensate creditors after a company collapses, be offered education before returning to such a position and whether disqualified foreign directors should be barred from holding a similar position in the UK.

 

Business Secretary Vince Cable said, “A stronger economy depends on investors, employees and the wider public having trust and confidence in companies and those that are running them. The reality is that the vast majority of companies and directors contribute productively to the economy, abide by the rules and make an enormous contribution to society. However, it is also apparent that an errant few operate in the shadows, creating complex ownership structures which only serve to deceive.”

 

“With a strong commitment coming from the G8, we’re now shining a light on who really owns and controls companies in the UK. We’re also proposing tough measures to beef up the system for holding directors to account if they don’t play by the rules or take their responsibilities seriously. This will mean honest, hard-working directors are not disadvantaged and will give the public greater confidence that irresponsible directors will face consequences for their actions.”