Business Secretary Vince Cable has announced plans for reforms to make sure directors face “the strongest possible consequences” if they act improperly.
Dr Cable said on 16 September that he planned to introduce legislation, before the current Parliament ended, to bring in proposals including:
- strengthening rules to give investors and creditors the confidence that rogue directors will be banned from running companies
- helping creditors to receive compensation where they have suffered loss from a director’s criminal or reckless behaviour
- ensuring that directors banned from running companies abroad cannot run British companies
- extending the investigation time allowed for complex cases of director misconduct introducing corporate behaviour training for banned directors who want to run a company again in the UK.
He said: “For too long, a small rotten core has got away with either a slap on the wrist, a ban from working in their own industry or at the most, a time-limited ban.
“Rogue directors’ decisions affect the lives of the employees they are responsible for and the businesses they deal with. That is why I will beef up the laws to ban rogue directors from running British companies so dodgy directors face the strongest possible consequences for their irresponsible actions.
“Government recognises that taking risks is an important part of business, and the failure of a company does not indicate misconduct on the part of the directors.
“However, at the same time there is a lack of confidence in the regime for dealing with directors’ misconduct through civil law, though where misconduct consists of criminal behaviour then criminal proceedings can be brought.”
The changes would not be retrospective for previous business failures.