It also wants to improve company transparency to make it easier to work out who really owns and controls companies in the UK.
The proposals were put forward by Business Secretary Vince Cable in a discussion paper entitled, Transparency and Trust.
The first section of the paper sets out how the Government will implement its G8 commitment to create a central registry of the beneficial owners of UK companies. It proposes the abolition of bearer shares, and outlines measures to tackle the misuse of corporate directors and nominee directors.
The reforms are designed to prevent tax evasion and money laundering, and to improve the investment climate in the UK.
The second section of the paper outlines ways of making directors more accountable for their company’s miscond
uct or failure – including the directors of banks.
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 a similar position, and whether foreign directors should be barred from holding a similar position in the UK.
Mr Cable said: “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 direct
ors will face consequences for their actions.”
The public consultation on the proposals runs until 16 September. We shall keep clients informed of developments.
Please contact us if you would like more information about the issues raised in this article or any matter relating to company law and directors’ responsibilities.