White Paper proposes jail threat for ‘dodgy’ directors

Company
directors and employees could face up to two years in jail and unlimited fines
for giving misleading information to auditors under a government review of
company law.

The
proposal, which is part of a Government White Paper published by competition
minister Melanie Johnson, would give auditors a statutory right to ask for
company information from employees and certain contractors and would force
directors to volunteer information to auditors.

"The
White Paper is a blueprint for a new era in British corporate history,"
said Johnson. "These proposals will help make Britain the best place in
the world to start and grow a business and create an environment that promotes
confidence, opportunity and prosperity for all."

The
White Paper sets out to make increase confidence in business, improve
governance to encourage and support responsible business and to simplify the
law and reduce burdens on small firms.

It
also includes plans to set out directors’ duties clearly in statute for the
first time, with clear guidance provided for all directors on their obligations
under the law.

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Under
the review companies will be able to exploit the internet and e-mail to take
decisions instead of having to hold expensive meetings, and accounts will have
to be filed more quickly – within seven months for private companies (instead
of 10) and within six months for public companies (instead of the current
seven).

By
Ben Willmott