House of Commons Amendments

Session 2012 - 13
Internet Publications
Other Bills before Parliament

Public Bill Committee: 10 July 2012
145

Enterprise and Regulatory Reform Bill, continued

(4)
After that section insert—

“439A
Quoted companies: members’ approval of directors’ remuneration

policy

(1)
A quoted company must give notice of the intention to move, as an

ordinary resolution, a resolution approving the relevant directors’

remuneration policy—

(a)
at the accounts meeting held in the first financial year which

begins after the coming into force of section (Payments to

directors: members’ approval of directors’ remuneration policy)

of the Enterprise and Regulatory Reform Act 2012 or at an

earlier general meeting, and

(b)
at an accounts or other general meeting held no later than the end

of the period of three financial years beginning with the first

financial year after the last accounts or other general meeting in

relation to which notice is given under this subsection.

(2)
A quoted company must give notice of the intention to move at an

accounts meeting, as an ordinary resolution, a resolution approving the

relevant directors’ remuneration policy if—

(a)
a resolution required to be put to the vote under section 439 was

not passed at the last accounts meeting of the company, and

(b)
no notice under this section was given in relation to that meeting

or any other general meeting held before the next accounts

meeting.

(3)
A notice given under subsection (2) is to be treated as given under

subsection (1) for the purpose of determining the period within which the

next notice under subsection (1) must be given.

(4)
Notice of the intention to move a resolution to which this section applies

must be given, prior to the meeting in question, to the members of the

company entitled to be sent notice of the meeting.

(5)
Subsections (2) to (4) of section 439 apply for the purposes of a

resolution to which this section applies as they apply for the purposes of

a resolution to which section 439 applies, with the modification that, for

the purposes of a resolution relating to a general meeting other than an

accounts meeting, subsection (3) applies as if for “accounts meeting”

there were substituted “general meeting”.

(6)
For the purposes of this section, the relevant directors’ remuneration

policy is—

(a)
in a case where notice is given in relation to an accounts meeting,

the remuneration policy contained in the directors’ remuneration

report in respect of which a resolution under section 439 is

required to be put to the vote at that accounts meeting;

(b)
in a case where notice is given in relation to a general meeting

other than an accounts meeting—

(i)
the remuneration policy contained in the directors’

remuneration report in respect of which such a

resolution was required to be put to the vote at the last

accounts meeting to be held before that other general

meeting, or

(ii)
where that policy has been revised in accordance with

section 422A, the policy as so revised.

Public Bill Committee: 10 July 2012
146

Enterprise and Regulatory Reform Bill, continued

(7)
In this section—

(a)
“accounts meeting” means a general meeting of the company

before which the company’s annual accounts for a financial year

are to be laid;

(b)
“directors’ remuneration policy” means the policy of the

company with respect to the matters mentioned in section

421(2A).”.’.

Payments to directors of quoted companies

Norman Lamb

NC6

To move the following Clause:—

‘After section 226 of the Companies Act 2006 insert—

“Chapter 4A

directors of quoted companies: special provision

Interpretation

226A
Key definitions

(1)
In this Chapter—

“directors’ remuneration policy” means the policy of a quoted company

with respect to the making of remuneration payments and payments for

loss of office;

“remuneration payment” means any form of payment or other benefit made

to or otherwise conferred on a person as consideration for the person

being, or agreeing to become, a director of a company, other than a

payment for loss of office;

“payment for loss of office” has the same meaning as in Chapter 4 of this

Part.

(2)
Subsection (3) applies where, in connection with a relevant transfer, a

director of a quoted company is—

(a)
to cease to hold office as director, or

(b)
to cease to be the holder of—

(i)
any other office or employment in connection with the

management of the affairs of the company, or

(ii)
any office (as director or otherwise) or employment in

connection with the management of the affairs of any

subsidiary undertaking of the company.

(3)
If in connection with the transfer—

(a)
the price to be paid to the director for any shares in the company

held by the director is in excess of the price which could at the

time have been obtained by other holders of like shares, or

(b)
any valuable consideration is given to the director by a person

other than the company,

Public Bill Committee: 10 July 2012
147

Enterprise and Regulatory Reform Bill, continued


the excess or, as the case may be, the money value of the consideration is

taken for the purposes of section 226C to have been a payment for loss of

office.

(4)
In subsection (2), “relevant transfer” means—

(a)
a transfer of the whole or any part of the undertaking or property

of the company or a subsidiary of the company;

(b)
a transfer of shares in the company, or in a subsidiary of the

company, resulting from a takeover bid.

(5)
References in this Chapter to the making of a remuneration payment or

to the making of a payment for loss of office are to be read in accordance

with this section.

(6)
References in this Chapter to a payment by a company include a payment

by another person at the direction of, or on behalf of, the company.

(7)
References in this Chapter to a payment to a person (“B”) who is, has

been or is to be a director of a company include—

(a)
a payment to a person connected with B, or

(b)
a payment to a person at the direction of, or for the benefit of, B

or a person connected with B.

(8)
Section 252 applies for the purposes of determining whether a person is

connected with a person who has been, or is to be, a director of a

company as it applies for the purposes of determining whether a person

is connected with a director.

(9)
References in this Chapter to a director include a shadow director but

references to loss of office as a director do not include loss of a person’s

status as a shadow director.

Restrictions relating to remuneration or loss of office payments

226B
Remuneration payments

(1)
A quoted company may not make a remuneration payment to a person

who is, or is to be, a director of the company unless—

(a)
the payment is consistent with the approved directors’

remuneration policy, or

(b)
the payment is approved by resolution of the members of the

company.

(2)
The approved directors’ remuneration policy is the most recent

remuneration policy to have been approved by a resolution passed by the

members of the company in general meeting.

226C
Loss of office payments

(1)
No payment for loss of office may be made by any person to a person

who is, or has been, a director of a quoted company unless—

(a)
the payment is consistent with the approved directors’

remuneration policy, or

(b)
the payment is approved by resolution of the members of the

company.

Public Bill Committee: 10 July 2012
148

Enterprise and Regulatory Reform Bill, continued

(2)
The approved directors’ remuneration policy is the most recent

remuneration policy to have been approved by a resolution passed by the

members of the company in general meeting.

226D
Sections 226B and 226C: supplementary

(1)
A resolution approving a payment for the purposes of section 226B(1)(b)

or 226C(1)(b) must not be passed unless a memorandum setting out

particulars of the proposed payment (including its amount) is made

available for inspection by the members of the company—

(a)
at the company’s registered office for not less than 15 days

ending with the date of the meeting at which the resolution is to

be considered, and

(b)
at that meeting itself.

(2)
The memorandum must explain the ways in which the payment is

inconsistent with the approved directors’ remuneration policy (within the

meaning of the section in question).

(3)
The company must ensure that the memorandum is made available on the

company’s website from the first day on which the memorandum is made

available for inspection under subsection (1) until its next accounts

meeting.

(4)
Failure to comply with subsection (3) does not affect the validity of the

meeting at which a resolution is passed approving a payment to which the

memorandum relates or the validity of anything done at the meeting.

(5)
Nothing in section 226B or 226C authorises the making of a

remuneration payment or payment for loss of office in contravention of

the articles of the company concerned.

(6)
In this section the “company’s website” is the website on which the

company makes material available under section 430.

226E
Payments made without approval: civil consequences

(1)
An obligation (however arising) to make a payment which would be in

contravention of section 226B or 226C has no effect.

(2)
Subject to subsections (3) and (4), if a payment is made in contravention

of section 226B or 226C—

(a)
it is held by the recipient on trust for the company or other person

making the payment, and

(b)
in the case of a payment by a company, any director who

authorised the payment is jointly and severally liable to

indemnify the company that made the payment for any loss

resulting from it.

(3)
If a payment for loss of office is made in contravention of section 226C

to a director of a quoted company in connection with the transfer of the

whole or any part of the undertaking or property of the company or a

subsidiary of the company, it is held by the recipient on trust for the

company whose undertaking or property is or is proposed to be

transferred.

(4)
If a payment for loss of office is made in contravention of section 226C

to a director of a quoted company in connection with a transfer of shares

Public Bill Committee: 10 July 2012
149

Enterprise and Regulatory Reform Bill, continued

in the company, or in a subsidiary of the company, resulting from a

takeover bid—

(a)
it is held by the recipient on trust for persons who have sold their

shares as a result of the offer made, and

(b)
the expenses incurred by the recipient in distributing that sum

amongst those persons shall be borne by the recipient and not

retained out of that sum.

226F
Relationship with requirements under Chapter 4

(1)
This Chapter does not affect any requirement for approval by a resolution

of the members of a company which applies in relation to the company

under Chapter 4.

(2)
Where the making of a payment to which section 226B or 226C applies

requires approval by a resolution of the members of the company

concerned under Chapter 4, approval obtained for the purposes of that

Chapter is to be treated as satisfying the requirements of section

226B(1)(b) or (as the case may be) 226C(1)(b).”.’.

Payments to directors: minor and consequential amendments

Norman Lamb

NC7

To move the following Clause:—

‘(1)
The Companies Act 2006 is amended as follows.

(2)
In section 180 (consent, approval or authorisation by members)—

(a)
in subsection (2), in the words before paragraph (a)—

(i)
after “Chapter 4” insert “or 4A”, and

(ii)
for “that Chapter” substitute “either of those Chapters”,

(b)
in that subsection, in paragraph (a), for “that Chapter” substitute “the

Chapter concerned”, and

(c)
in subsection (3), after “Chapter 4” insert “or 4A”.

(3)
In section 190 (substantial property transactions: requirement of members’

approval), in subsection (6)(b), for the words in brackets substitute “(payments to

which the requirements of Chapter 4 or 4A apply)”.

(4)
In section 215 (payments for loss of office), after subsection (4) insert—

“(5)
Nothing in this section or sections 216 to 222 applies in relation to a

payment for loss of office to a director of a quoted company.”

(5)
Section 430 (quoted companies: annual accounts and reports to be made available

on website) is amended as follows.

(6)
After subsection (2) insert—

“(2A)
If the directors’ remuneration policy of a quoted company is revised in

accordance with section 422A, the company must ensure that the revised

policy is made available on the website on which its annual accounts and

reports are made available.

Public Bill Committee: 10 July 2012
150

Enterprise and Regulatory Reform Bill, continued

(2B)
If a person ceases to be a director of a quoted company, the company

must ensure that the following information is made available on the

website on which its annual accounts and reports are made available—

(a)
the name of the person concerned, and

(b)
particulars of any payment for loss of office (within the meaning

of Chapter 4A of Part 10) made to the person, including its

amount and how it was calculated.”

(7)
In subsection (3) —

(a)
for “the annual accounts and reports on the website” substitute “the

material made available on the website under subsections (1) to (2B)”,

and

(b)
for “the annual accounts and reports from” substitute “such material

from”.

(8)
After subsection (4) insert—

“(4A)
Where subsection (2A) or (2B) applies, the material in question—

(a)
must be made available as soon as reasonably practicable, and

(b)
must be kept available until the next directors’ remuneration

report of the company is made available on the website.”

(9)
In subsection (5)—

(a)
in the words before paragraph (a), for the words from “the annual

accounts and reports” to “that period” substitute “material available on a

website throughout the period mentioned in subsection (4) or (as the case

may be) (4A)”, and

(b)
in paragraph (a) for “the annual accounts and reports are” substitute “the

material is”.

(10)
In section 440 (quoted companies: offences in connection with procedure for

approval)—

(a)
in subsection (1) —

(i)
after “section 439(1)” insert “or 439A(1) or (2)”, and

(ii)
in the words in brackets, after “report” insert “or policy”,

(b)
in subsection (2), for “the accounts meeting” substitute “the meeting to

which it relates”, and

(c)
in subsection (5), omit the definition of “the accounts meeting”.

(11)
In Schedule 8 (in the index of defined expressions), at the appropriate places

insert—

“directors’
section 226A(1)”

remuneration policy

(in Chapter 4A of

Part 10)

“payment for loss of
section 226A(1)”

office (in Chapter 4A

of Part 10)

Public Bill Committee: 10 July 2012
151

Enterprise and Regulatory Reform Bill, continued

“remuneration
section 226A(1)”.’.

payment (in Chapter

4A of Part 10)

Directors’ remuneration reports and payments to directors: transitional provision

Norman Lamb

NC8

To move the following Clause:—

‘(1)
Subsection (2) of section 439A of the Companies Act 2006 (as inserted by section

(Payments to directors: members’ approval of directors’ remuneration policy)(4)

of this Act) does not apply in relation to a company prior to the holding of the

meeting mentioned in subsection (1)(a) of that section of that Act of 2006.

(2)
Chapter 4A of Part 10 of the Companies Act 2006 (as inserted by section

(Payments to directors of quoted companies)) does not apply in relation to

remuneration payments or payments for loss of office made by a company before

the earlier of—

(a)
the end of the first financial year of the company to begin after the

coming into force of that section of this Act, and

(b)
the date from which the first directors’ remuneration policy to be

approved under section 439A of the Companies Act 2006 (as inserted by

section (Payments to directors: members’ approval of directors’

remuneration policy)(4) of this Act) takes effect.

(3)
Chapter 4A of Part 10 of the Companies Act 2006 does not apply in relation to

remuneration payments or payments for loss of office that are required to be made

under an agreement entered into before 27 June 2012 or in consequence of any

other obligation arising before that date.

(4)
An agreement entered into, or any other obligation arising, before 27 June 2012

that is modified or renewed on or after that date is to be treated for the purposes

of subsection (3) as having been entered into or (as the case may be) as having

arisen on the date on which it was modified or renewed.

(5)
The amendment made by section (Payments to directors: minor and

consequential amendments)(4) does not apply in relation to a payment for loss of

office to which subsection (2) or (3) of this section applies.’.

Power to reduce duration of copyright in transitional cases

Norman Lamb

NC11

To move the following Clause:—

‘(1)
Section 170 of the Copyright, Designs and Patents Act 1988 (transitional

provisions and savings) is amended as follows.

(2)
At the beginning insert “(1)”.



© Parliamentary copyright	Revised 10 July 2012