PracticeAccounting FirmsDishonest directors face jail time

Dishonest directors face jail time

Directors will for the first time face two years in jail if they fail to provide auditors with 'honest information' about the true state of a company's accounts, competition minister Melanie Johnson announced earlier this week.

The penalty facing the UK’s five million company directors was unveiled in a White Paper on modernising company law. Johnson said: ‘I think it’s a substantial deterrent. It’s an entirely new criminal offence.’

Directors’ duties will be set out in statute with guidance on their obligations. A requirement to prepare a detailed operating and financial review outlining the performance and future direction of a business was also included in the proposals.

This is the first time a government has attempted to update company law since it was created 150 years ago.

For more on the company law review go to our site special.

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