'Irresponsible' company directors who profit from their firm's failure face fresh crackdown
“Irresponsible” company directors who profit from their firm’s failure while workers and suppliers lose out face a fresh crackdown under government plans.
Proposals include clawing back money for workers and suppliers by reversing asset sales by struggling firms. And bosses who sell a firm “knowing it would fail” would be held liable.
Ministers said the collapse of firms such as Carillion and BHS had sparked fears directors could shield themselves from the impact of insolvency.
The government said while most companies were run responsibly, the small number of firms which were not risked harming the UK’s attractiveness as a place to invest.
“These reforms will give the regulatory authorities much stronger powers to come down hard on abuse and to make irresponsible directors bear the consequences of their actions,” said business secretary Greg Clark.
The government’s proposals include:
- New sanctions including fines and disqualification for directors selling companies recklessly
- Inappropriate asset stripping could be reversed with the money given back to workers and small suppliers
- Directors dissolving companies to dodge debts and avoid facing accusations of misconduct would face investigation for the first time
Mr Clark said the government’s proposals would also give the Insolvency Service new powers to investigate directors of dissolved companies.
The government’s Insolvency Service currently disqualifies around 1,200 directors a year.
The plans will now be opened for consultation.
Frank Field, chairman of the Work and Pensions Committee, said: “I welcome any move that holds individuals more accountable for their conduct, and strengthens the hand of the little guy as a result.”
But shadow business secretary Rebecca Long-Bailey, said the government had taken too long to act.
“The failure of BHS and Carillion showed how quickly the future of a company and its workforce can be sacrificed for the sake of a quick buck.
“The government should have taken action then, instead of choosing to ignore alarm bell after alarm bell,” she said.