Companies Bill Must Be Strengthened - Liberal Democrats

9.40.00am GMT Tue 7th Nov 2006

The Liberal Democrats in the House of Lords will demand reporting standards be included in the Companies Bill today.

Commenting, Liberal Democrat Trade and Industry Spokesperson, Lord (Tim) Razzall said:

"We welcome the new requirement that the business review should contain information about relationships, but to be effective this requirement needs to be supported by clear reporting standards to ensure uniform compliance."

Commenting further David Howarth MP, who led on the Bill for the Liberal Democrats in the House of Commons, said:

"Without clear reporting standards the Business Review risks becoming nothing more than a marketing tool for unscrupulous companies and a source of confusion for others.

"Businesses are complaining that they don't know what to do with the Business Review. This amendment would make it clear - it would provide the guidance that they are demanding.

"There is already a £10bn market for ethical investment in the UK. Introducing reporting standards will give ethical investors and customers the information they need to make informed decisions."

ENDS

Notes to Editors

1. The Bill requires companies to report on the social and environmental effects of their activities in their annual report but as it currently stands, provides no guidance or standards on how this should be done. The Liberal Democrat amendment would introduce these reporting standards to guide companies and allow potential investors and customers to more accurately assess the information provided in the report.

2. The Liberal Democrat Lord Razzall has tabled amendment 245D to Clause 399 to say:

Line 4, at end insert -

"(12) Information under (5) (c) shall be prepared in accordance with statements of standard reporting practice that the Secretary of State shall ensure are issued."

3. The Companies Bill introduces the Business Review as part of the annual report. This replaces the Operating and Financial Review (OFR) which was scrapped by Gordon Brown last year. The OFR was much broader in scope than the Business Review and already included the reporting standards which the Liberal Democrats are pushing for the Business Review.

4. The Financial Times 24 October 2006 reported the industry's displeasure with the supply chains amendment in 'Industry slams new law on disclosure - CBI demands answers on blunderbuss rules'.

5. As the Financial Times reported on August 21st 2006, almost half of large companies have published operating and financial reviews despite the government abandoning the mandatory reporting requirement.

6. David Howarth introduced amendment 75 in the Report Stage of the Companies Bill which would have placed auditors under an obligation to report any anomalies ` between their audit and the information included in the business review. The amendment was defeated by the Government.