Government rejects solicitors' pleas for regulatory company law commission

SHAKE-UP: Firms welcome modernisation but call for body to oversee developments

The government this week rejected calls from lawyers to create a commission to oversee the development of company law after unveiling what it said will be the biggest shake-up in the field in 150 years.

However, the White Paper Modernising Company Law does include provisions to simplify regulatory burdens on small companies, and codifies directors' duties for the first time.

Under the plans, private companies will not have to appoint company secretaries or hold annual general meetings, and accounts will have to be filed more quickly - seven months for private companies and six months for public companies (compared to ten and seven now).

Other proposals include banning corporate directors, using IT to make decisions in place of general meetings, creating a central register to name those who flout company law, and introducing a requirement on the largest 1,000 companies to publish an operating and financial review.

This is the core of the government's response to the company law review and further tranches of draft regulation will be issued later.

Andrew Davison, chairman of the Law Society's company law committee, said: 'We welcome the fact that the government is taking these matters forward, and is putting resources towards it.'

The White Paper shelves plans to create a regulatory commission to monitor developing company law on an ongoing basis - strongly endorsed by the Law Society and the company law review.

Instead, it paves the way for a new body, adapted from the accounting standards board, to review and refine the law.

Mr Davison said: 'It is unfortunate that they envisage adapting an existing body with another function, rather than creating a new body focused on company law.'

On directors, he said: 'There is a danger that directors will assume that they need only observe what appears in a code, disregarding case law and other regulations.'

Jeremy Fleming