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RIBA embraces government pledge to reduce red tape

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The RIBA has welcomed a government undertaking to overhaul company law, after a damning report said red tape caused needless extra work and costs to small firms such as architects.

Speaking at the launch of the 525-page report, Modern Company Law, trade and industry secretary Patricia Hewitt said years of neglect had left firms with an 'archaic and Victorian' system that held business back.

Hewitt promised to take the report's recommendations seriously with a view to embarking on a 'radical' overhaul of business law. She said draft legislation would be introduced after she had studied the proposals in detail.

RIBA director of practice Keith Snook said: 'Any alleviation of business administration that is not entirely satisfactory has to be welcomed.'

New laws would reduce administration requirements, make for easier accounting and auditing, and provide a clearer picture of how regulations apply to small firms, Hewitt promised.

'The present law fails to recognise the vast majority of small companies, or respond to their needs, ' she said. 'These proposals will help to cut costs and red tape for small business.'

The study called for a statutory statement of directors' duties, to ensure they had a better idea of what is expected of them. It also called for rules to make directors take more account of their employees, suppliers and customers, as well as their shareholders.

Hewitt added: 'Present law fails to recognise the realities for the vast majority of small firms or respond to their needs. I endorse the review's 'think small first' approach, including avoiding formal AGMs where they are not necessary.'

A DTI spokeswoman said a draft bill would be drawn up later this year for consultation, and she expected a new Companies Act towards the end of this parliament. 'This is the first fundamental review for the past 40 years, and arguably in the law's 150-year history, ' she said.

The report's recommendations include: relieving firms of the obligation to appoint a company secretary; reducing the burden of financial reporting and audit; encouraging mediation and arbitration as alternatives to litigation; the creation of a new, simpler, model company constitution; and codifying the responsibilities of directors.

Modern Company Law: For a Competitive Economy, Final Report is available free, tel 0870 1502 500, or contact www.dti.gov.uk/cld/review.htm

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