HC Deb 22 October 1973 vol 861 cc667-8
2. Mr. Greville Janner

asked the Secretary of State for Trade and Industry if he will seek powers where appropriate to prevent directors of insolvent companies with deficiencies from becoming or remaining directors of other companies carrying on similar businesses.

The Minister for Trade and Consumer Affairs (Sir Geoffrey Howe)

In the next Companies Bill, I propose to extend the grounds for disqualification from acting as a director to include persons who have acted in an improper or reckless manner in relation to the affairs of companies of which they were directors. A general power to prohibit directors of companies which have become insolvent from acting as directors in future would not be justifiable.

Mr. Janner

I greatly welcome that advance, but is it enough to confine the disqualification to those who acted improperly and recklessly? Is it not disgraceful that a man can set up a business, put it into liquidation, rely on limited liability, and then immediately start up another business in exactly the same field and do precisely the same again? When will the Government deal with this squalid practice?

Sir G. Howe

I know that the hon. and learned Member has been interested in this subject for some time. The Government's position is made entirely clear in the White Paper on company law reform published this summer. We are taking powers, as recommended by the Jenkins Committee, to deal with people who have succeeded in steering a series of companies into insolvency. We are also considering whether additional disclosures about directors' backgrounds, qualifications and interests would help meet the point raised by the hon. and learned Member, but it would not be easy, or indeed right, to attach an automatic prohibition to every director of every company. The reasons for that are explained in paragraph 37 of the White Paper.

Mr. Kenneth Lewis

When he considers this matter, will my right hon. and learned Friend take into account the not unusual system by which a director of a company having to come off the board, for whatever reason, becomes an employee of that company and puts a relative on the board, so that the situation is almost as before?

Sir G. Howe

I shall certainly take account of the point raised by my hon. Friend.

Back to