§ 8. Mr. Andrew MacKay
To ask the Secretary of State for Trade and Industry if he has received representations on the role of shadow directors as defined in the Companies Act 1989.
§ Mr. MacKay
Is my hon. Friend aware that there is strong circumstantial evidence that a number of companies that are running into financial difficulties are being put into receivership because the banks involved are concerned about putting their own people into those companies because they might be defined as shadow directors under the Companies Act? But for that, those companies might have been saved. Will my hon. Friend assure the banks that they will not be prosecuted, provided that they are not involved in any wrongdoing?
§ Mr. Redwood
I can give that assurance. Under the legislation to date, no banker has been successfully prosecuted for acting as a banker. Only one case has been brought under the legislation and that was withdrawn by the liquidator before being pressed to a conclusion. The 298 reasons for that are evident in the nature of the legislation, which states that the bankers must be doing more than offering advice in a professional capacity. The courts would have to examine the consequences of any action to determine whether it resulted in wrongful trading and whether it made the position worse.
I assure my hon. Friend that it is not the intention of the legislation to frighten bankers who are acting properly, as bankers, in trying to rescue companies. Of course, such matters are subject to test in the court. I shall consider carefully the issues raised by my hon. Friend.
§ Mr. Tim Smith
Is there not another group of shadowy people actively trying to mislead and misrepresent their policies? What representations has my hon. Friend received about recent statements by shadow Ministers? Will he refer them to the appropriate regulatory authority?
§ Mr. Redwood
I wish that there was adequate legislation to deal with that serious threat. It is of great concern that the Opposition make so many misrepresentations. They claim to be the friend of industry and commerce, yet spend all their time here running it down.