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Byers' ideas will cut no ISA; Government detests the rhetoric of shareholder value and will confront it.

This time, if Mr Stephen Byers has his way, there won't just be a name attached meaninglessly to a Government-inspired pension package targeted at people who might be better off with ISAs.

They will be central to a reform of company law in the next Parliament.

Labour will have to win the next election but it would be unwise to bet against that. There is a greater probability that Mr Byers will be replaced at the Department of Trade and Industry.

His removal is not going to stop the new Companies Bill gestating out of sight within a Company Law Review group, which is meant to report next March.

Yesterday Mr Byers, speaking at a TUC gathering, said he did not intend to pre-empt this outfit's conclusions and that 'the current legal framework of directors' duties will have to change'.

As he sees it, existing company law requires directors to define their duties 'based on the short-term interest of shareholders' - to the detriment of - stakeholders.

These range from employees to customers, via creditors, the environment, 'the

community' and ethical issues that pop up.

He argued that change was needed because share ownership is far more widely spread than when the present company law was drafted, directly through the 12 million private shareholders and indirectly through countless members of pension schemes and owners of packaged investments.

These people, he implied, want the companies they own to take 'a wider responsibility', not to foul the planet or grind the faces of the poor, Victorian-style. Yet the law requires companies to be run 'in a narrow interest for short-term motives'.

Such evidence as there is suggests that today's investors and pension scheme members just want their shares to do well with an acceptable degree of risk.

Those whose consciences guide their investment behaviour put their money into ethical or 'green' unit trusts - and sometimes do well.

Wider share ownership is a non-reason for a stakeholder Companies Bill. We have a Government that detests the aggressive rhetoric of shareholder value and intends to confront it.

That the rhetoric is more fearsome than the reality is not going to help. Nor will the fact that Mr Byers himself is a moderate who does not wish to enshrine the Combined Code for corporate governance in his law.

He is wary of putting stakeholders into boardrooms, too. Transparency is his watchword.

What Mr Byers seems to miss is that the central purpose of British company law is to stop the directors robbing the shareholders or running shareholder-owned companies as private fiefdoms.

After two decades when boardroom pay packages have outstripped virtually every other aspect of the economy, it may well be time to look at the law. But you won't improve matters by blurring directors' legal responsibilities.
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Publication:The Birmingham Post (England)
Date:Jun 8, 2000
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