Start preparing now for the company law bill version 2.0. That would seem to be the government’s message, even though the original version – 1.0 – has yet to be debugged thoroughly.

In true Bill Gates style, industry minister Margaret Hodge made known at the recent Labour Party conference in Manchester that the company law bill was just a starting point on to which other applications would be bolted. This, despite the fact that the original bill has yet to be enacted, is rather like announcing upgrades to Windows XP while saying the future lies with Vista.

Hodge indicated this widening of scope would allow the company law bill to embrace private as well as public companies. There were also indications of further environmental legislation in the pipeline.

Even though the current version has been eight years in development, suggesting it may take some time before v2.0 reaches the beta testing stage, the news has left some business leaders feeling alarmed. They warn that the bill could increase the regulatory burden on directors and expose them to further risk of litigation.

Hodge said she and the government had taken on board the lobbying from environmental pressure groups to impose tougher green standards on businesses – a suggestion that was backed by prime minister Tony Blair during his farewell speech at the party conference.

Director general of the Institute of Directors Miles Templeman said: ‘By the time the bill becomes law, we will have spent more than eight years putting in place reform that will balance stability with future efficiency. Hodge seems willing to discard that stability before the new law is on the statute book.’

Templeman points out that this current move goes against previous actions from the government. Although there was concern over the timing of the announcement, businesses were broadly supportive of scrapping the operating and financial review last November. The signal at the time was that the UK government would follow, not gold-plate, European Union requirements.

So it would seem the new battleground on corporate governance is going to be fought over the environment. There is little dispute that action is required, but the question remains on how this action can be enforced.

Richard Lambert, director general of the Confederation of British Industry, said: ‘Business has a role to play and responsibilities in the area of sustainability and climate change,’ but added that it would be a challenge for the whole of society, individuals and businesses.

The British Chamber of Commerce has urged caution, arguing that the government should ensure the UK remains competitive in the global market.

This would suggest that the answer to ensuring businesses play their part in tackling environmental issues lies at an international level. Environment minister David Milliband picked up on this thread, saying he believes the European Union will play a greater role in such moves.

However, a number of businesses are not waiting for regulations to emerge before taking action. Sir Richard Branson has committed to ploughing £3bn in profits from his airline and train businesses into alternative energy over the next 10 years. Such a move of entrepreneurial benevolence mirrors those of Bill Gates, though the Microsoft leader is using his own fortune, rather than that of his business, to fund charitable work.

But returning to the original upgrading of the company law bill, is it wise to create uncertainty when businesses are calling for stability? A Federation of Small Businesses survey found that more than half its members were dissatisfied with the complexity and volume of business legislation. A similar proportion were concerned about the costs of complying with such legislation.

Perhaps any upgrades to the company law bill should remain a developmental project, while businesses come to terms with the applications in version 1.0.

Other legislation

The first day of October introduced a raft of business legislation, including the new law on age discrimination and a higher minimum wage. But are you and your clients prepared for the impact of these changes to existing regulation?

Much has been written about the impact of the new age discrimination law. For accountancy firms, this means being ultra-careful over recruitment procedures and having a close look at retirement policies. No longer will they be able to see off partners when they reach 55, and the hunt for 'young, dynamic' talent in job ads will be a no-no. Even the term ‘recent graduate’ will fall foul of the new laws.

Increases in the minimum wage have been giving smaller employers a headache, as have the increase in paid maternity leave and flexible working arrangements for carers. The Federation of Small Businesses (FSB) has warned all three main political parties about the danger of such policies.

Carol Undy, FSB national chairman, said: ‘Small businesses are often in the vanguard of new family-friendly policies. The staff and their bosses can find suitable ways to address the work/life balance more easily than in a large business. However, when the government gets involved it can create antagonism. What was once a good-natured compromise becomes a confrontation.’

Other changes introduced on 1 October include new fire safety laws and a simplification of patent registration rules.