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Company directors to ‘face tougher regulation’

 

Directors of failed companies could be held personally liable for the firm’s debts under new plans to overhaul company legislation.

 

The Business Secretary Vince Cable has announced a number of measures to crack down on negligent company bosses, amid concerns over corporate responsibility.

 

As well as forcing directors to compensate creditors, the Government also plans to disqualify directors of ‘rogue companies’ or those involved in ‘serial failure’, along with directors who are already banned outside of the UK.

 

Other proposals include extending the time limit for bringing disqualification proceedings in insolvent company cases from two to five years, and imposing a new legal duty on bank directors to ensure the stability of their banks.

 

The measures, which were outlined in a speech to the London Stock Exchange, are designed to boost transparency and trust in British business following a series of high-profile banking scandals.

 

‘I think the public are a little baffled by the current regime,’ Cable told the Daily Telegraph. ‘There is an issue around the people who used to run Lloyds and RBS, and there is a worry about how the system operates.’

 

However, he added that the Government did not want to ‘penalise good business people who take risks but whose business fails for whatever reason’.