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.”
