Helping Small Companies
| Published date | 01 September 1981 |
| Date | 01 September 1981 |
| Pages | 24-25 |
| DOI | https://doi.org/10.1108/eb057214 |
| Author | Reginald Eyre |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
Helping Small
Companies
by Reginald Eyre,
MP
An important
but
relatively unsung feature
of the
previous Parliamentary session
was the
Companies
Bill,
which
has now
completed
its
Committee Stage
and
should conclude
its
remaining stages
in the
Commons
by
the
end of
October.
In the
following article, Reginald Eyre
MP, the
Department
of
Trade Minister responsible
for
the
Bill,
examines some
of the
Bill's implications
for
individual companies
and the
commercial world
as a
whole
- and
particularly
its
significance
for
small companies.
One
of
my major responsibilities
as a
minister during
the
last Parliamentary session
was the
Companies Bill,
which
has now
completed
its
Committee Stage
and
should conclude
its
remaining stages
in the
Commons
by
the end of
October.
1
don't pretend
it set the
Thames
on fire
in
terms
of
public interest.
It's a
technical
measure
in a
fairly esoteric subject area.
But if the
Companies Bill
itself, and
particularly
the
amendments
made
to it
during
the
Committee Stage have gone rela-
tively unpublicised,
I
suspect that this
has
less
to do
with
the
Bill's real significance
-
since
it
undoubtedly
has considerable practical implications
for
both indi-
vidual companies
and the
commercial world
as a
whole
- than with
the
complexity
of its
subject matter.
And
although
of
course many
of
the provisions
in the
Bill will
affect
all
companies regardless
of
size,
it is
particularly
their significance
for
small companies that
I
want
to
look
at in
this article.
A range
of
economic measures
aimed
at
improving
the
financial
position
of
small companies
has
been announced
by the
Chancellor
It's
no
secret that
one of the
main planks
of the
pres-
ent Government's strategy
for
restoring
a
more com-
petitive market economy rests
on the
attempt
to
reverse
the steady post-war contraction
of
the small firms sector
in this country
so
starkly
set out by the
Bolton Commit-
tee
a
decade
ago, and to
encourage
a
healthy growth-
rate
of new
companies responding
to
changes
in
tech-
nology
and new
market opportunities.
To
this
end, a
whole range
of
economic measures aimed directly
at
improving
the
financial position
of
small companies
has
been announced
by the
Chancellor
-
notably cuts
in
corporation
tax,
increases
in the VAT
registration
limits,
as
well
as
radical
new
measures
to
channel more
funds towards small firms like
the
recently announced
Loan Guarantee
and
Business Start-up Schemes. More-
over these economic incentives have been backed
up by
a number
of
other complementary changes specifically
designed
to aid
small companies,
for
example through
exemptions
to
employment legislation, extended coun-
selling services,
and a
relaxation
of
planning controls.
But returning
to
what
I
said
at the
outset,
my own
particular responsibilities
are
more concerned with
the
perhaps less eye-catching
but no
less important pro-
visions which form
the
other half
of the
Government's
strategy
for
improving
the
climate
for
existing com-
panies
and new
businesses
-
changes
to the
existing
framework
of
company
law itself.
There
is of
course more than
one
aspect
to
this,
including
the
Green Paper published
at the
start
of the
year
on the
scope
for a new
form
of
incorporation
for
small firms, aimed
at
lifting some
of the
burdens
imposed
by
incorporation under
the
Companies Acts,
on which
I
have asked
for
comments
by the end of
October.
But I
want
to
concentrate
on the
provisions
of
the
new
Companies Bill,
and
particularly three major
aspects
of the
Bill that
are of
especial interest
to
small
companies.
First
in
what
is
perhaps
the
most radical innovation
in
company
law
since
the 1948 Act, it
will enable com-
panies
to
purchase their
own
shares. This
has
been gen-
erally welcomed
as
helping
to
overcome
the
kind
of
problems which arise, particularly
in
family businesses,
in accomplishing
the
disposal
of a
shareholding perhaps
on
the
death
of a
shareholder without
a
disruptive
change
in the
control
of the
company.
The
relaxation
should also encourage those
who
might otherwise
be
reluctant
to
seek fresh equity finance
for
expansion,
while reducing prospective investors' worries about
finding their capital "locked
in" by the
narrowness
of
the market
for the
shares.
It
will also assist
the
spread
of ownership
of
shares
by
employees
in the
companies
for which they work.
Second
by
implementing
the EC
Fourth Directive
on
company accounts
the
Bill considerably reduces
the
information small companies have been required
to
file
since
the
abolition
of the
exempt private company
in the
1960s. Small companies
- and of
course
a
great many
companies will
be
"small"
as
defined
in the
Bill
-
only
have
to
file
an
abridged balance-sheet
and
notes, with
no requirements
for a
profit
and
loss account
or a
direc-
tors'
report.
In
this respect
we
have taken
the
maximum
advantage
of the
provisions
of the
Directive. Small
companies will,
if
they wish,
be
able
to
maintain
the
24 INDUSTRIAL MANAGEMENT
+
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