Punishing the bad behaviour of directors and recouping creditor funds during corporate insolvencies is the target for the UK government.
A consultation by the Department for Business, Energy & Industrial Strategy (BEIS) sets a direction towards stronger powers to investigate directors of insolvent businesses, disqualify those that sell a struggling company knowing it would fail, and “strengthen” the role and responsibilities of shareholders in stewarding companies.
“Britain has a good reputation internationally for being a dependable place to do business, based on required high standards,” said business secretary Greg Clark (pictured). “This framework has been regularly upgraded and in the light of some recent corporate failures I believe the lessons should be learned and applied.”
Other considerations include reviewing the legal and technical framework in which decisions are made on payment of dividends and how that could be strengthened and made more transparent, and giving the Insolvency Service new powers to investigate directors of dissolved companies.
“Asset stripping” of companies on the verge of insolvency, to the detriment of workers and suppliers, could see funds clawed back.
The Department for Work & Pensions has also released a white paper aimed at introducing tougher rules to protect pension funding from irresponsible directors’ behaviour.
Last August, the government set out what it wants enshrined within the UK’s governance regime, including CEO/worker pay ratios and encouraging an employee representative onto the board. The Financial Reporting Council is currently consulting on updating the Corporate Governance Code.
