Out-Law News 1 min. read
British businesses ignorant of Enterprise Act, says PwC
19 Sep 2005, 2:39 pm
Two years after its introduction, 88% of UK businesses are unaware of the Enterprise Act and how it can benefit businesses in difficulty, according to research published on Friday by PwC which suggests that managers are missing a trick.
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. But only 12% of UK businesses are aware of its existence in PricewaterhouseCoopers' survey of 501 managing directors, financial directors and other senior managers of businesses with an annual turnover of over £50,000.
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 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% 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, described the findings as disappointing.
“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," he said. "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.”
