{"id":13585,"date":"2012-01-11T10:29:37","date_gmt":"2012-01-11T10:29:37","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=13585"},"modified":"2012-01-11T10:29:37","modified_gmt":"2012-01-11T10:29:37","slug":"remove-limited-liability-from-those-companies-who-act-anti-socially","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2012\/01\/11\/remove-limited-liability-from-those-companies-who-act-anti-socially\/","title":{"rendered":"Remove limited liability from those companies who act anti-socially"},"content":{"rendered":"

I'd love to say the\u00a0following\u00a0idea was mine, but it wasn't, so I'm going to give credit for where it came from, in a letter to the Guardian today<\/a>:<\/p>\n

Shareholders in a limited company that goes bad are liable for no more than the money they have already paid for their shares \u2014 the company's creditors stand the loss, not the owners of the company, the shareholders or the directors. This is not a right, but a privilege we grant so that people will be ready to invest in new enterprises without fear of taking on unlimited liabilities.<\/p>\n

We don't have to privilege all companies, directors and shareholders over their creditors in this way \u2014 there's no human right to it. We could instead say that liability is only limited if the highest-paid executive's remuneration does not exceed, say, 30 times the median employee's salary. It would be a brave shareholder, individual or institutional, that permitted any executive's remuneration package to approach the point where they, the shareholders and directors, might be found personally liable if things go wrong.
\nDavid Harington<\/strong>
\nWorcester<\/em><\/p><\/blockquote>\n

I have long argued that the right to limited\u00a0liability\u00a0is a\u00a0privilege\u00a0that carries obligations,\u00a0including\u00a0the duty to pay tax and to file accounts. I haven't argued often, and certainly not in the case of public companies, that the\u00a0privilege\u00a0of liability should be withdrawn as a sanction.<\/p>\n

I think that's been an omission on my part. We should be much more\u00a0straightforward\u00a0in saying that limited liability is a\u00a0privilege\u00a0to be used for the benefit of society, and with care, and that if obligations to society are not\u00a0respect\u00a0then it should simply be withdrawn\u00a0with\u00a0the shareholders and not\u00a0society\u00a0at large then having the duty to remedy the defect. When\u00a0should\u00a0that happen? Let me suggest the following\u00a0occasions for a start:<\/p>\n

1) When excess pay is allowed, as noted above.<\/p>\n

2) When accounts are not filed on time, for any reason.<\/p>\n

3) When\u00a0corporation\u00a0tax returns are not filed, for any reason. Of course these are not public documents now: they soon would be if this was the case.<\/p>\n

4) Three months after any set of accounts is filed showing the company to be insolvent unless action to remedy the defect has been taken in the meantime.<\/p>\n

That will concentrate minds I think.<\/p>\n

Now which MP would like to propose it as a private member's bill?<\/p>\n","protected":false},"excerpt":{"rendered":"

I’d love to say the\u00a0following\u00a0idea was mine, but it wasn’t, so I’m going to give credit for where it came from, in a letter to
 Read the full article…<\/em><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[26,64,24],"tags":[],"class_list":["post-13585","post","type-post","status-publish","format-standard","hentry","category-accounting","category-corporation-tax","category-csr"],"_links":{"self":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/13585","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/comments?post=13585"}],"version-history":[{"count":0,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/13585\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/media?parent=13585"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/categories?post=13585"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/tags?post=13585"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}