Company law review under fire

The Department of Trade and Industry’s review of company law is in danger of derailing, a member of the consultative committee advising on the changes has warned.

Scots ICA president Charles Monaghan said it was ‘foolish’ for detail working parties to discuss issues like small company law and financial reporting without establishing core principles to underpin the new company law structure. ‘Unless you do that, the detail groups will toil in wilderness,’ he said.

The review, he said, had to yet to confront the choice facing the government – whether it should require directors to serve a wider community of stakeholders than at present or ‘enlightened’ shareholders.

Monaghan supported the government’s aim to reduce the administrative burden on small businesses, but warned the issues were ‘highly complicated’ and probably more than the parliamentary calendar could accommodate.

‘It is the government’s right to decide its priorities,’ he said, ‘but setting out a logical framework to define the roles and responsibilities of executives, non-execs, company secretaries and auditors is really rather important.’