Trade and Industry Secretary Patricia Hewitt yesterday promised a radical overhaul of company law to cut costs and red tape for UK businesses.
Welcoming the final report of the independent Company Law Review, published today, Ms Hewitt said that once she had examined the recommendations in detail she would consult on draft legislation.
Ms Hewitt said:
“Years of neglect have left us with an archaic, Victorian system that is holding British business back. We want to bring British company law into the 21st Century.
“This review reflects the changes that are needed to get rid of unnecessary burdens and to meet modern expectations about corporate accountability and transparency. A more user-friendly system will boost productivity and make this country a better place to do business.
“Present law fails to recognise the realities of the vast majority of small companies, or to respond to their needs. These proposals will help cut costs and red tape for small businesses. I wholeheartedly endorse the Review’s ‘think small first’ approach including simplifying accounting requirements and other procedures, lightening the burden of audit and avoiding formal AGMs where they are not necessary.
“We also need to ensure that directors know what is expected of them, that high standards of conduct are reinforced, and that behaviour reflects modern needs and expectations.
“These improvements should be backed by better company reporting. Today’s companies rely increasingly on important, but often intangible, assets such as the skills and knowledge of their employees, their business relationships and their reputation. We need high quality, informative and thoughtful company reporting that will give shareholders and others the information they need. Our aim is to create an internationally competitive framework that will make the UK the best place in the world in which to do business.
“I am grateful to all who took part in the Review and will study its recommendations carefully.”
David Irwin, Chief Executive of the Small Business Service, warmly welcomed the proposals. He commented:
“Many small companies find the existing mire of regulations difficult to fathom and costly to implement – and this prevents them from achieving their full potential. These proposals follow the principles of ‘think small first’ and would remove many of the current frustrations and create a positive environment for enterprise and growth.
