Ministers have outlined changes to company law in the aftermath of financial scandals at Enron and WorldCom.

The draft Company Law Reform Bill encompasses the recommendations of the independent Company Law Review, and would lead to a clarification of directors' responsibilities through a clear statement of the duties. 

Rules governing directors' conflicts of interest would also be reformed.

Company financial and narrative reporting would be changed to ensure that shareholders are given information more quickly, while the role of indirect investors would be enhanced with an increase in the rights of proxies.  The bill would also aim to make it easier to reform company law in future.

For smaller businesses, the rules on provision of financial assistance for the purchase of the company's own shares would be abolished, along with the requirement for private companies to have a company secretary. 

A separate default constitution would be provided for private companies with the aim to provide a better model for most smaller firms.

The requirement for annual general meetings would also be removed through the simplification of decision-making procedures by making it easier to hold votes through written resolution.

For larger companies, the Bill would deregulate the rules on the register of past and present members that are currently required, and would clarify the rules on when assets can be transferred at book value between companies in the same group.

Ministers have pledged to deliver significant savings to both small and larger firms through all these measures.

"A modern flexible and accessible system of company law is vital to our economy," said the Department of Trade and Industry.

"The government wants to make it easier to set up and run a company as well as delivering better regulation for companies, and 'thinking small first'.  This bill would also help promote shareholder engagement and a longer-term investment culture."