Plans have been published to improve the UK’s corporate governance framework. The tight plans aim to encourage the highest standards of behaviour by those who lead companies approaching, or in, decline.
The proposals seek to strengthen corporate governance, ensuring greater fairness for all stakeholders in insolvencies, including creditors and SMEs in the supply chain. They follow a string of high-profile company collapses including Carillion and British Home Stores, where directors were criticised for dishonourable and unfair behaviour before the companies they were responsible for dissolved.
An earlier government consultation has already been conducted to increase boardroom accountability and transparency of big businesses, which the government will respond to shortly.
Key proposals included in the Insolvency and Corporate Governance consultation include:
- Disqualifying and or holding directors personally liable when found to have sold a struggling company or subsidiary recklessly or knowing it would fail.
- New powers to reverse outcomes and challenge complex transactions that remove value prior to a company’s insolvency to ensure fairer distribution of a company’s assets when it fails.
- Extended powers to investigate directors and former directors who might be avoiding accountability by allowing their companies to dissolve instead of going through the formal insolvency process.
Business minister, Greg Clark, said: “These reforms will give regulatory authorities much stronger powers to come down hard on abuse and to make irresponsible directors bear the consequences of their actions.”