The DTI is considering amendments to the Companies Act, which could
target so-called phoenix companies that abuse a companys limited liability status to jettison creditors and start afresh.


The Steering Group, which was established three years ago to modernise company legislation, has produced a swathe of proposals aimed at modernising company law.
These include giving the liquidator additional access to and distribution powers of a companys assets, and that a director of a failed company should be refused a directorship of a phoenix company with a same or similar name if there has been a transfer of assets within the last year.

The Group has also called for legislation to give the secretary of state the power to apply for interim disqualification orders against delinquent directors.


If the recommendations were accepted without alteration, companies would be required to disclose any convictions for breaches of the Companies Act made by the company or a director during that financial year.
Trade and industry secretary Patricia Hewitt said: Many small companies find the existing mire of regulations difficult to fathom and costly to implement. This prevents them from achieving their full potential.


Accounting procedures would also be simplified along with audit obligations and the small company accounting regime would be extended to include companies that include two of the following three criteria:


l 50 employees or less;

l turnover of less than 4.8m;

l a balance sheet total of less than 2.4m.


A spokeswoman for the DTI said: What the review represents is the biggest overhaul of company law in 150 years. The recommendation will now be subject to a rather lengthy consultation process.


Story by John Davies