The UK's biggest private companies and those with large pension schemes should have to abide by the same financial reporting rules as listed firms to ensure the fallout from the collapse of BHS is not repeated, MPs have said.
Any private company with more than 5,000 members of a defined benefit pension scheme, or those defined as large by the government, should come under the Financial Reporting Council Corporate Governance Code in the same way public companies currently are.
"BHS was a private company but the effects of its collapse spanned widely: not least to its thousands of employees and pensioners who have lost out while those who owned BHS took lavish rewards," said the report from the work and pensions committee.
"This measure should improve transparency about governance arrangements, performance and risk in private companies to the benefit of stakeholders including pension scheme members."
The committee is also recommending that official investigations into the collapse of a company, like that of BHS, should be published if it's in the public interest.
"For a company with a big social and economic footprint like BHS it is simply not enough to be accountable to shareholders – particularly when one shareholder owns most of the stock," said committee chair Frank Field.
"The sorry tale of its sale and collapse, putting 11,000 people out of work and leaving a pension fund £571m in the red, with 20,000 pensioners facing an uncertain financial future, was a result of gross failures of corporate governance. Would the story have played out the same way if its directors had to be open about the financial decisions they were making for its future? The finances and leadership of a company with so many people depending on it should be open to scrutiny."
The Insolvency Service told MPs last week that its investigation into BHS is ramping up and gave a timeline of before April 2019 for action to be taken, if needed, against former directors.
The MPs have also piled pressure on ex-BHS boss Sir Philip Green over the pension scheme for his Arcadia Group, which owns Topshop, Miss Selfridge and Burton.
Field, a fierce critic of Green over the BHS collapse, said: "We have been pressing Arcadia’s directors and pension trustees for detailed information on their schemes but very little is published and neither the company nor the trustees – who unlike the BHS schemes do not have an independent chair – will tell us."
The proposals have been put forward as a response to the government's green paper on corporate governance.