Business - Company Act shake-up

The government is planning to overhaul the UK’s 50-year-old company law following criticism that corporate governance codes fail to protect investors or tackle fraud.

The Department of Trade and Industry confirmed this week that a consultation paper outlining proposals for a new Companies Act was being prepared, but denied ministers had already taken decisions on the way forward.

A consultation paper is rumoured to be published this Spring by the department. The document would be followed up by a Bill that could become law next year.

A DTI spokesman said: ‘Ministers have been considering whether company law should be reformed as part of a range of departmental initiatives to promote UK competitiveness. However, ministers have reached no firms decisions on the way forward.’

Insiders claim that many of the proposals under discussion are attempts to fill gaps in the current corporate governance codes. Margaret Beckett, President of the Board of Trade, is known to be frustrated with the lack of strict rules in the Cadbury and Greenbury codes.

The document will also take into account the recommendations of the Hampel committee, which is due to report at the end of the month.

A senior English ICA official said he was aware ideas were being sought from interested parties, but had not seen official notice from the DTI setting out its intentions.