U.K. Company Directors Face Bans Under Audit Reform Proposals

(Bloomberg) -- U.K. company directors face potential fines and bans under proposals to overhaul corporate governance set to be published as soon as next week, a person familiar with the matter said.

Individual directors will be held personally responsible for the accuracy of a company's financial reports under the plans, which will be put to consultation, according to the person who spoke anonymously discussing unpublished proposals. Major failures could lead to fines and bans, they said.

The plans, which were reported first by the Financial Times, will also include major changes to the audit industry, the person said.

The proposals come after accounting scandals at Carillion Plc and the Patisserie Valerie bakery chain in 2018 and 2019. Ministers are set to accept the principal recommendations made by three independent reviews into the audit industry the U.K. has held in recent years.

Other proposals include a system of rules similar to the Sarbanes-Oxley regulation in the U.S., according to the person. The Sarbanes-Oxley Act was passed in 2002, setting up new rules for boards and auditors in the wake of the collapse of Enron.

The government is also considering legislating to bring in new environmental and social reporting rules for companies, according to the person.

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