Umunna criticises bonuses given for corporate takeovers

Chuka Umunna, Shadow Business Secretary has said the we need “greater transparency” when it comes to the bonuses given to bankers involved in corporate takeovers.

The Times (£) have reported that he was critical of this practice, saying that “We need to look at whether it is appropriate to have huge success payments for takeovers that incentivise advisers to complete a deal even if it might not be in a company’s best interests.”

In line with this, Umunna said the Labour leadership are thinking about creating rules that would stop companies being forced into accepting takeover bids.

Umunna explained “We need to change the law so directors are not bound to accept the highest price and are allowed to take into account longer-term interests. More broadly, there are a number of things we need to do to put more grit in the machine of takeovers. At the moment, there is a takeover bus that once it has started is very hard to stop and that builds behind transactions without thought for the impact on the company. This is one reason we will restrict voting rights of shareholders who appear on a register after a takeover is announced to stop carpet-baggers and speculators”

Umunna also said Labour would also consider blocking deals intended to help companies avoid tax, and he advocated “a new category to protect research and development and Britain’s scientific base”.