BRITAIN'S "archaic" company laws are set for an overhaul following the publication of a Government-backed review of current legislation.

The report, by an independent steering committee of industry figures and experts, was first commissioned by the Department of Trade and Industry in 1998.

The group has been looking at ways of overhauling the 150-year-old laws that govern the behaviour of companies.

The main recommendations of the report centre on a need for more transparency and accountability in business.

Trade and Industry secretary Patricia Hewitt said the proposals would form the basis of a draft Bill, which she hoped would become legislation by the end of this parliament.

She said: "Years of neglect have left us with an archaic, Victorian system that is holding British business back.

"This review reflects the changes that are needed to get rid of unnecessary burdens and to meet modern expectations about corporate accountability and transparency."

The review also looked at ways of simplifying legislation for smaller companies.

Recommendations for small businesses include dispensing with annual meetings, not having to appoint a company secretary and an arbitration scheme for shareholder disputes to save on legal costs.

For larger companies, proposals include a statutory statement of directors' duties, more detailed company reports and disclosing which financial institutions companies have major relationships with.

TUC general secretary John Monks said: "The proposals are a direct response to public concern about how companies make decisions and will create an opportunity for unions, pension funds and others to scrutinise corporate behaviour and challenge bad practice."