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Foreign firms that are listed in the UK but do not do any business in the country won't be subject to the requirements of the country's new Bribery Act, according to a UK Government report published on Wednesday.
“The Government anticipates that applying a common sense approach would mean that organisations that do not have a demonstrable presence in the United Kingdom would not be caught,” says much anticipated guidance on Section 7 of the UK Bribery Act 2010, which deals with responsibilities of companies to prevent bribery.
“The Government would not expect, for example, the mere fact that a company's securities have been admitted to the UK Listing Authority's Official List and therefore admitted to trading on the London Stock Exchange, in itself, to qualify that company as carrying on a business or part of a business in the UK,” it continues. The exemption could also apply to parent firms with subsidiaries in the UK.
“A subsidiary may act independently of its parent or other group companies,” the report notes. It will be up to the courts to decide if there is a dispute about a company's business presence.
The exemption was swiftly condemned by anti-corruption campaign groups.
The exemption “will disadvantage all honest companies and perversely turn on its head the Government's stated aim of creating a level playing field through the Act's extra-territorial reach,” said Mr Chandrashekhar Krishnan, Executive Director of Transparency International UK, who described the guidance as ‘deplorable' and warned that there was a significant risk that bribery could go unpunished.
The exemption has also been criticised by the investment community, which believes it will not only disadvantage UK firms that are subject to the regulations, but also send the wrong signal to other countries.
“What message does this send to India and other jurisdictions about Britain as a place to do business,” Mr George Dallas, Director of Corporate Government at investment firm F & C Investments, told Business Line .
The firm has been one of the leading critics of the exemptions for foreign firms, arguing that being listed in the UK is tantamount to doing business in the country, and therefore listed firms should be included in the legislation.
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