UK MPs Call For Venture Capitalists To Be More Accountable

by Robin Pilgrim, LawAndTax-News.com, London

01 February 2005

MPs in the United Kingdom have called for venture capital firms to be more accountable and transparent, it emerged at the weekend.

Currently, VC groups are not required to publish profit and loss accounts, make reports on their investment performance, file financial returns, or disclose directors' pay.

According to the Observer, politicians have been alerted to the potential risks of such secretive practices by the possibility of a venture capital firm taking control of the Allders department store chain. MPs are reportedly concerned that should such a situation occur, the rights of Allders' pension fund members will be protected.

Speaking on Saturday, the chairman of the Treasury select committee, John McFall observed that "transparency in financial dealings of private equity is essential".

Martin O'Neill, chairman of the trade and industry select committee agreed, suggesting that:

"Greater disclosure and transparency by these firms would be helpful to stakeholders."

However, he went on to argue that the initiative must come from the VC industry's trade bodies, rather than being imposed from above in the form of "heavy-handed" laws.

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