Tighter Regulations in Store for UK Corporations
The bill, which is expected to become law next year, is designed to improve standards of corporate behavior in the UK to prevent the kinds of accounting scandals that have plagued U.S. companies, The Guardian of Manchester, England reported.
"There is no denying that financial markets around the world have been badly shaken by the corporate failures of the last few years,” said Trade Minister Jacqui Smith. "This bill completes a comprehensive package of measures aimed at restoring investor confidence in corporate governance, company accounting and auditing practices."
Smith said Labor’s new Companies Bill would give company investigators greater powers to uncover wrongdoing while regulation of auditors would get more strict. Corporate whistleblowers would get more protection under the bill by being granted immunity from breach of confidence claims.
- Directors must declare in the annual report that they have not withheld any relevant information from auditors. Directors face unlimited fines if the information was indeed withheld. Deliberately lying to auditors could bring two years of jail time.
- Companies must publish details of non-audit services provided by their auditors.
- Auditors will come under tougher review, as the Financial Reporting Council’s Financial Reporting Review Panel would get new statutory powers to launch investigations.
More comprehensive changes to company law, which have taken more than five years to develop, will be introduced later, Smith said.