The Institute of Chartered Accountants of Scotland echoed the Company Law Review Steering Group’s chant of ‘think small first’ in response to its consultation paper intended to update the current law.
Many say the law is too onerous for the majority of companies in light that some 87% of UK companies have an annual turnover of £1m or less. Only 2% of UK companies have a turnover of above £4.8m.
David Wood, deputy director of accounting and auditing, said: ‘A framework that is simple and works effectively should form the first layer of company law for any UK organisation. This will allow companies of all sizes to understand their legal obligations easily and, as part of an integrated company law regime, will provide a smoother transition for smaller companies who wish to grow.’
ICAS also supported the proposal to relieve owner-managed companies of the burden of legislation in regard to shareholder protection. It did, however, emphasise the need to retain appropriate creditor protection.
Wood added: ‘The institute’s business law committee has made its recommendations after careful thought and consideration, balancing shareholder protection against the need to remove unnecessary burdens on such companies. This could be a significant piece of deregulation, affecting a large number of organisations. It is important to make these companies an integral part of modern company law considerations, to help make them more competitive in the economy of the future.’
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