The work and pensions committee is calling for corporate governance and reporting requirements for public companies to be extended to private companies following the collapse of BHS.
In response to the government’s consultation on corporate reform, the committee said private firms should be held to account and company directors should have a duty to fund pension trustees to prevent another company collapsing “in the manner of BHS”.
The committee said its three-month inquiry into the collapse of BHS found a “near-complete absence” of good corporate governance.
The work and pensions committee is recommending that private companies with more than 5,000 pension scheme members should be made to uphold the corporate governance code. Arcadia, John Lewis, River Island and Clarks would all fall into this bracket.
Frank Field, chair of the committee, said: “For a company with a big social and economic footprint like BHS it is simply not enough to be accountable to shareholders – particularly when one shareholder owns most of the stock. The sorry tale of its sale and collapse was a result of gross failures of corporate governance.
“We have already expressed our grave concerns about corporate governance in the Green empire [Arcadia boss and former BHS owner Sir Philip Green], and we know the Arcadia pension fund is also now in substantial deficit. It can’t be right that basic information like the schedule of employer contributions and the length of the recovery plan is not in the public domain. If it goes under then levy-payers and pensioners foot the bill.”