Lack of awareness of the Enterprise Act undermines UK business rescue culture The Enterprise Act was introduced in September 2003 and aims to encourage the development of a new rescue culture in the UK, making the overriding priority of administrators to rescue a company as a going concern, rather than selling its assets. The legislation is designed to give company management greater involvement in how their businesses are restructured, however almost 90 percent of UK businesses are unaware of its existence. In medium and larger organisations with an annual turnover of £500,000 or more, awareness is higher with one in five companies citing some knowledge of the legislation. This figure falls to less than one in ten for the smallest companies, with an annual turnover of £50,000-£100,000. Interestingly, of those companies who are aware of the Enterprise Act, there is a mixed view of the impact it is having on the UK business community. Overall, 17 percent of respondents felt that the new legislation was helping companies in distress to overcome their problems, whereas around a quarter disagreed, viewing the Act as offering no value. Colin Haig, partner in the Business Recovery Services team at PricewaterhouseCoopers, commented: “These findings are disappointing. Too few companies are aware of the UK’s business rescue legislation and the opportunity it can provide to restructure a business. As a result we think managers are missing a trick. “The Enterprise Act is one of the most radical reforms of corporate governance legislation in the UK to date and is designed to give troubled companies breathing space and time to rehabilitate. Our advice to companies suffering financial stress is always consult your stakeholders and advisers early and make sure you know about all of the options available.”
•Date: 16th September 2005 • Region: UK • Type:
Article •Topic: BC general |
