U.K. Announces New Crackdown on Irresponsible Company Directors
(Bloomberg) -- The U.K. government proposed a series of measures to punish directors who behave irresponsibly and protect workers and suppliers from the worst effects of bankruptcies.
The steps will be outlined Tuesday, the government said in an emailed statement that flagged how “a small number of recent corporate governance failures have raised concerns that company directors can unfairly shield themselves from the effects of insolvency and -- in the worst cases -- profit from business failures while workers and small suppliers lose out.”
The announcement comes two months after the collapse of government contractor Carillion Plc, which left ministers grappling with how to salvage tens of thousands of jobs and public-private contracts affecting schools, hospitals, roads and military facilities around the country.
Proposals include fines and disqualification for company directors who sell companies “recklessly,” reversing “inappropriate asset-stripping” in order to return money to creditors such as workers and suppliers, and giving the government’s Insolvency Service the power to investigate directors who dissolve companies to avoid large debts.
Ministers will also examine how to improve decision-making around the payment of dividends in order to make it more transparent. The government will also strengthen the role and responsibilities of shareholders in determining how companies they invest in are run. A new law will be introduced in coming months requiring companies to reveal the pay ratio between bosses and employees.
©2018 Bloomberg L.P.