Cable to make company directors personally liable

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Business secretary Vince Cable will outline proposals today that will shake up the UK’s corporate landscape, including making company directors personally liable for corporate failures

Cable will also suggest that directors deemed to be reckless should be disqualified from being able to work at another company.

He will begin consulting on reforms that would allow industry regulators to disqualify directors that fail to follow rules, bring in new statutory duties for the heads of banks and a register to identify companies’ ultimate owners.

The business secretary will also suggest that individual regulators will be able to disqualify directors in their particular industries, and that courts should consider factors such as how many previous company failures a director has been involved with. Cable is also to propose extending the time limit for bringing disqualification proceedings in insolvent company cases to five years from two, and to extend any director banned from running companies outside the UK from being a director of a UK company

The overhaul of company rules will be outlined today at the London Stock Exchange in a speech called Responsible Capitalism.

A discussion paper on the proposals will be published by the Department for Business, Innovation and Skills (BIS) this week.

The changes follow the Parliamentary Commission on Banking Standards' report, which recommended that reckless senior bankers could be made to face jail.

The Insolvency Service can already bar people from working as directors for a maximum of 15 years, and the BIS proposals could mean regulator the Financial Conduct Authority would be given the power to ban directors of failed firms from working at any other company.

“These proposals will strengthen the system for tackling the small minority of company directors that don’t follow the rules. This is especially important in the light of the corporate failures during the financial crisis,” said Cable. “We need to build trust in the City and business. Trust is crucial.

"We need to prevent the excesses of the past happening again.”


Helen Roxburgh

 

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  • Comment by Philip Wood

    Why risk unlimited personal liability to be a director? The whole point of Limited Liability Companies is to be just that. The only winners will be the lawyers.