LONDON, United Kingdom, (Reuters):

Leading British busi-ness groups have failed to secure a last-minute change to a far-reaching new companies' bill requiring more disclosure about key suppliers.

The setback means a debate this week in the House of Lords, the highest court in England, will become the latest backdrop in a row between business and government over regulatory burden.

The bill, the biggest overhaul of United Kingdom company law in decades with nearly 1,000 clauses and several hundred amendments, has upset business groups with a recent amendment requiring disclosure of information about supply chains and contracts.

Leaders of the Confederation of British Industry, (CBI) the Institute of Directors and the Quoted Companies Alliance met Industry Minister Margaret Hodge on Monday to seek a change.

"It is clear that the government will not withdraw this amendment," said the Confed-eration of British Industry's Deputy Director General John Cridland on Tuesday.

He added that an "appreciable risk" now remains for business, so companies would have to call on lawyers to chart their way through the reform of British company law.

After the meeting, the govern-ment pledged to clarify its position through statements from Britain's Lord Sainsbury, the minister in charge of the bill in the House of Lords, when law lords debate the bill on Thursday.

Once passed by the law lords, the bill needs only a royal ascent before becoming law, sometime in 2008.

Clause 423 of the bill requires directors in their business review to include information on people with whom the company has a contractual or other arrangement essential to its business.

The wording has been inter-preted by business groups as requiring listed firms to name businesses in their supply chains and detail the nature of their contractual relations.

The government has said it will remain up to businesses to decide what they reveal.

"On the issue of the business review we took into account the views of organisations such as the CBI and many other interested parties," said a spokeswoman for the Department of Trade (DTI) and Industry yesterday.

"On balance, we decided that it was right to include the require-ment for contractual and other arrangements," she added.

Environmentally and socially

Groups that lobby for companies to be environmentally and socially responsible had pushed for the amendment as a way to force companies to account for business connections that may touch on issues such as child labour and pollution.

But groups like the CBI and IoD say the bill's wording could compel companies to reveal commercially and legally sensitive information and open them to litigation by pressure groups.

"We don't see the need for suppliers to be identified," said John Pierce, chief executive of the Quoted Companies Alliance, which represents smaller listed businesses.

The DTI commissioned a fundamental review of Britain's company law in 1998, leading to the bill which overhauls case law governing how companies are created, run and wound down. It also brings in many new duties for directors.

Patricia Peters, the IoD's head of corporate governance, said those at the meeting with Hodge made clear that government might have got a better solution had it consulted earlier.

Jonathan Djanogly, a trade and industry spokesman for the opposition Conservative Party, said: "The problem we have here is the sheer lack of consultation and late timing of an amendment that has severely undermined our own ability to consult," he said.