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Company Law

Volume 974: debated on Monday 19 November 1979

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10.

asked the Secretary of State for Trade what further proposals he has for reforming company law by strengthening disqualification proceedings against directors of companies going into liquidation, in line with the recommendations of the Jenkins committee.

Provisions extending the grounds on which directors may be disqualified were included in the Companies Act 1976 and the Insolvency Act 1976. Outstanding recommendations of the Jenkins committee, and other possible measures, will be considered in the light of the report of the Insolvency Law Review committee, which is expected next year, and of experience of the operations of the statutory provisions that I have mentioned.

Is the hon. Gentleman aware that many of us receive constant complaints from our constituents who are the creditors of fly-by-night directors who have taken a firm into insolvency and started it up again almost immediately using the same telephone number, the same office but a different company name? Will the hon. Gentleman, along the lines of paragraph 85 of the Jenkins report, undertake to have his Department consider this as a matter of urgency, because many people have lost a great deal of money?

I am concerned about the actions of a small number of fraudulent and delinquent directors who operate in that way to the discredit of the system as a whole. On receipt of the Insolvency Law Review committee report, I shall seriously consider the matter.

Will the Minister bear in mind the building industry when considering these matters? In that industry there are numerous examples where people have suffered unjustly through development and repair work, and pensioners have been particularly affected.

Does my hon. Friend agree that if a director knows that he may lose other people's money without loss to himself that can amount to fraudulence because he does not bother to care? Being a director surely involves caring, and we should introduce the strongest law possible to stop people from engaging in business when they have no experience and no capital and just use other people's savings.

I am glad to say that the overwhelming majority of directors do care, but there are problems that need serious consideration.