Firms may face tough new DTI powers

Company advisers, including accountants, auditors, actuaries, banker and lawyers may be caught up in investigations under the new regime proposed from within the Companies Investigation Branch.

But the accountants and other professionals concerned may have to be named at the outset of an inquiry to make it clear who may be involved in an investigation.

The drastic shake up follows mounting concern at the length and cost of some investigations – particularly that of Mirror Group Newspapers, which took nearly nine years and cost Pounds 9.6m.

Officials are also concerned that the regime should do more to bolster the government’s campaign against fraudulent conduct and organised crime.

It proposes widening the scope of inquiries to include the businesses and affairs of individuals and partnerships and subsidiaries associated a company subjected to an inquiry. New powers should include a right for inspectors to enter company premises on two days notice to inspect records – with a warrant where entry is resisted; and to impose interim restraining orders during investigations to safeguard creditors, customers and members.

Other powers may include a gagging order for anyone questioned during a confidential investigation to prevent information becoming public.

Another proposed measure is the creation of the power to sack a director against whom there is insufficient evidence for a disqualification.

Officials propose ending the criminal sanction for non compliance – leaving it to the civil courts to enforce co-operation – but keeping criminal sanctions for destroying, mutilating or fabricating evidence.

The DTI is seeking comments by the end of January 2002, with notice where possible by 4 January – suggesting the possibility of legislation in the Queen’s Speech next autumn with enactment during the 2002-3 parliamentary year.’s Company Law Review special report

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