Bosses to be called to account

A HUGE shake-up in company law that will broaden the responsibilities of directors is to be unveiled by the Government this month. The new Companies Bill, more than four years in the making, will require directors to face up to broader social responsibilities towards the workforce.

Directors will have to sign an annual 'operating and financial statement', in which they outline the general direction of the company, its strategy and set out how it sees its broader social responsibilities.

It is hoped the new approach will prevent sudden changes in corporate direction - such as that which took place at Marconi, when it moved into telecoms - without the directors keeping shareholders involved in their intention.

Trade Secretary Patricia Hewitt has embarked on the biggest corporate shake-up in recent times after boardroom pay scandals and accounting scams involving companies such as US telco WorldCom.

She is seeking to better define the role of non-executives, clean up the accounting profession and force more democracy on pay with compulsory votes on remuneration at annual meetings. There is a determination that the affairs of Britain's public companies are fully transparent and that directors take full responsibility for all their actions.