VINCE Cable will this morning set out his plans for a national database detailing who ultimately owns every British company, despite business groups warning that he would be adding to the burden of red tape.
The business secretary will also say that directors who act in a “fraudulent or reckless” manner could have to pay creditors from their own pocket, while sector regulators such as Ofcom could gain the power to ban individual directors.
Cable will tell an audience at the London Stock Exchange that the bank executives should be required to prove that ensuring the safety and stability of their firms is their top priority, as opposed to simply making profit on behalf of shareholders.
The policies are designed to increase transparency in business but Matthew Fell of the CBI said the proposals could have inadvertent side effects and would unfairly target certain industries.
“Any changes to switch directors’ primary duty away from the shareholder would be a significant shift in company law, which could erode companies’ investment appeal,” he explained. “We don’t want to end up with a pick-and-mix approach to corporate governance standards for different sectors of the economy.”
Ruth Porter of the Institute for Economic Affairs think tank said the proposals are out of step with the government’s business-friendly rhetoric.
“It’s all very well the government talking about cutting red tape, but in too many areas they are making life tougher for businesses, not easier,” she said. “Making companies jump through additional hoops when it comes to directors is unnecessary meddling that will inevitably make it harder for UK businesses to thrive.”
Cable will also discuss the idea of making the register of company ownership into a public document, potentially revealing the beneficiaries of hundreds of thousands of British business, including those who currently hide behind complex off-shore structures. However, the draft policy document does offer hope for disqualified directors – businesspeople will be able to make up for past transgressions by undertaking education or training.