My word this is gorgeous idiocy

The FT reports this morning that:

Fund supermarket Hargreaves Lansdown has broken UK company law on dividend payments to shareholders, who include founders Peter Hargreaves and Stephen Lansdown.

The FTSE-100 listed broker admitted on Wednesday that it was “technically” in breach of the Companies Act because it had failed to file accounts justifying its dividend payments.

They’re not alone: other companies including Next have done this recently. No doubt others will follow in their path. And there’s good reason for that. It’s because for all practical purposes no one enforces company law in the UK. It could be argued that the Department for Business, Energy & Industrial Strategy should, but it does not. Partly because that’s because there is almost no one left there. And partly it’s because they pass the buck to Companies House. But Companies House is quite certain it is not a regulator; it says it is only a registrar. And other possible agencies, who do in any event have only very limited scope, such as the FCA, let such matters be swept under the carpet by retrospective action (as will happen here) or a mild wrap on the knuckles.

For:

Ian Gorham, Hargreaves’ chief executive, said it was a case of “not submitting a sheet of paper” to Companies House.

“Effectively, the [Financial Reporting Council] picks accounts at random to review, and it’s quite a substantial review, but they identified a technical issue by [us] not submitting this sheet of paper and we have to go through some bureaucratic hassle to fix it.”

The FRC is enforcing company law, that’s how they got caught.

Ritchie’s position is that we’ve just hung someone for murder therefore we must make murder something we prosecute.

12 comments on “My word this is gorgeous idiocy

  1. Ritchie is in fact making what is a fairly uncontroversial point, at least as far as private companies are concerned, where Companies House is very limp when it comes to enforcement. Listed companies, on the other hand, are subject to more scrutiny.

  2. If it’s just a sheet of paper, just fucking send it and avoid the hassle of frothing Lefties exploiting it to generate maximum bad publicity for you. Be pragmatic.

  3. Noel

    Candidly, late filing was a deliberately ploy to demonstrate weak regulations and to suggest otherwise is libeleral sophistry.

  4. What about the laxity and failure in enforcement of local authorities who make no investigations of people avoiding taxes by running businesses from their sheds and rooms (sometimes filled with – for example – model train sets in an attempt to say they are not used exclusively for business purposes) and not properly paying business rates?

  5. “…It’s because for all practical purposes no one enforces company law in the UK.”

    Company Law is there to protect shareholders and creditors. If a company does something to harm/damage either group, they have recourse to the law. There’s no enforcement body that monitors libel cases and brings cases on behalf of others. Same concept with Company law.

    As ever, Murphy misses the point.

  6. @Andrew C. You are not entirely right. Company law – specifically the Companies Act 2006 – sets out rules, breaches of a fair number of which are criminal offences. These rules are by and large not enforced by anyone (it’s not practical for shareholders or creditors to bring criminal prosecutions, and a bit pointless too). You might say that breaches of these rules ought not to be criminal offences – but they are. And the rules are not enforced by anyone else.

  7. There’s no enforcement body that monitors libel cases and brings cases on behalf of others.

    Don’t start giving people ideas.

  8. It could be argued that the Department for Business, Energy & Industrial Strategy should, but it does not. Partly because that’s because there is almost no one left there.

    So in other words the department that plans strategy for business, energy & industry is just about the right size. Hopefully the scope of their power is similar.

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