The Government is set to launch a consultation seeking to ensure standards are upheld in businesses facing insolvency.
The new measures will look at protecting companies in a supply chain from any fallout arising from insolvency further along the line.
The move comes in the wake of 2017’s corporate governance reforms, which sought to increase transparency and accountability within big businesses.
The Government’s new plans would include:
- Ensuring creditors and suppliers did not lose out by halting ‘inappropriate’ asset stripping
- Giving the Insolvency Service the power to investigate directors of dissolved companies
- Strengthening shareholder responsibility for businesses they have invested in.
The consultation will be published in a report entitled Insolvency and Corporate Governance.
Announcing the launch, Business Secretary, Greg Clark, said: “Britain has a good reputation internationally for being a dependable place to do business, based on required high standards. This framework has been regularly upgraded and in the light of some recent corporate failures I believe the lessons should be learned and applied.
“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.”
The news comes amidst a raft of new measures, set to be introduced in the coming months. These include:
- The requirement of listed companies to report the pay ratio between bosses and employees
- The requirement of businesses of a ‘significant size’ to explain how directors take the interests of employees and stakeholders into account
- The requirement for all businesses of a ‘significant size’ to make public their corporate governance arrangements.
If your business is at risk of insovency, speak to Gibson Hewitt. Contact our Business Insolvency department today.