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Dept of Trade and Industry

Answer

Mr. Bellingham: To ask the Secretary of State for Trade and Industry what plans her Department has for new legislation to protect shareholder investors from misrepresentations by company executives. [168900] Jacqui Smith: It is already an offence under existing legislation for directors who, recklessly or knowingly, approve annual accounts which do not comply with the requirements of the Companies Act 1985. Directors can also be guilty of an offence where a directors' report is prepared which does not comply with the Companies Act 1985. Directors may, of course, also be liable to the company if accounts and reports are approved which do not represent a true and fair view. The Companies (Audit, Investigations and Community Enterprise) Bill currently before Parliament also strengthens audit and accounting requirements, including the ability of auditors to acquire information. In addition, the Financial Services Authority (FSA) has the power to issue a private warning, public censure and unlimited fine on companies for breaches of the Listing Rules and on their directors who were knowingly concerned in such breaches. The FSA also has the power to publicly censure or impose an unlimited fine on anyone, whether they are authorised or not, who engages in market abuse as defined under the Financial Services and Markets Act 2000. The FSA can also take action under Section 397 of Financial Services and Markets Act 2000 (Misleading Statements and Practices), which makes it a criminal offence to engage in the following activities: (a) making a statement, promise or forecast which he knows to be misleading, false or deceptive; (b) dishonestly concealing any material facts whether in connection with a statement, promise or forecast made by him or otherwise; or (c) recklessly makes (dishonestly or otherwise) a statement, promise or forecast Which is misleading, false or deceptive.

Secondary information

Type

Written question

Reference

420 c1164W;420 c1165W; 168900

Session

2003-04

Subjects

Disclosure of information Directors Investment Protection Shareholders

Link

View this Written question on www.publications.parliament.uk