In a keynote speech to the Liberal Democrat party conference later today, business secretary Vince Cable is to announce tougher action to crack down on ‘rogue directors’ to ensure they are banned from running businesses report Harris & Co chartered accountants Northampton, who specialise in innovative accounting services for small and medium sized businesses.
Cable will say the government will target a ‘small rotten core’ of company directors, including bankers, and his speech is likely to reference a number of recent financial scandals including RBS and Farepak.
In his address to the conference in Glasgow Cable will say: ‘We need to see fairness as well as trust in our director disqualification regime. For too long, a small rotten core has got away with either a slap on the wrist, a ban from working in their own industry or, at most, a time-limited ban’.
He will go on to argue that: ‘This neglects the fact that rogue directors" decisions affect the lives of the employees they are responsible for and the businesses they deal with. That is why I will beef up the laws to ban rogue directors from running British companies so dodgy directors face the strongest possible consequences for their irresponsible actions.’
Cable will propose four new measures, which have all been outlined in the BIS discussion paper, Transparency and Trust published in July. These include new regulations to prevent an individual who is disqualified, convicted of a criminal offence or restricted in connection with managing a company overseas from being a director of a UK company.
There are plans for a better compensation scheme for people who have suffered losses from directors guilty of criminal or reckless behaviour. The government will also be looking at whether the time limit for disqualification proceedings in insolvency cases should be extended beyond two years and, if so, whether the period should be five years, some other period or indefinite.
In addition, the government plans to raise standards of behaviour by offering education or training (at the director’s expense) to disqualified directors to help them to run a successful company in the future.
These measures are set to be included in the final Queen"s speech before the 2015 general election which will be unveiled in the spring next year.