Enterprise and Regulatory Reform Bill

Session 2012 - 13
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Enterprise and Regulatory Reform Bill

Enterprise and Regulatory Reform Bill
Part 6 — Miscellaneous and general
67

Payments to directors of quoted companies
71
Members’ approval of directors’ remuneration policy
(1)
In section 421 of the Companies Act 2006 (contents of directors’ remuneration
report) after subsection (2) insert—
“(2A)
The regulations must provide that any information required to
5
be included in the report as to the policy of the company with
respect to the making of remuneration payments and payments
for loss of office (within the meaning of Chapter 4A of Part 10)
is to be set out in a separate part of the report.”
(2)
After section 422 of that Act (approval and signing of directors’ remuneration
10
report) insert—
“422A
Revisions to directors’ remuneration policy
(1)
The directors’ remuneration policy contained in a company’s directors’
remuneration report may be revised.
(2)
Any such revision must be approved by the board of directors.
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(3)
The policy as so revised must be set out in a document signed on behalf
of the board by a director or the secretary of the company.
(4)
Regulations under section 421(1) may make provision as to—
(a)
the information that must be contained in a document setting
out a revised directors’ remuneration policy, and
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(b)
how information is to be set out in the document.
(5)
Sections 422(2) and (3), 454, 456 and 463 apply in relation to such a
document as they apply in relation to a directors’ remuneration report.
(6)
In this section, “directors’ remuneration policy” means the policy of a
company with respect to the matters mentioned in section 421(2A).”
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(3)
In section 439 of that Act (quoted companies: members’ approval of directors’
remuneration report), in subsection (1), at the end insert “other than the part
containing the directors’ remuneration policy (as to which see section 439A).”
(4)
After that section insert—
“439A
Quoted companies: members’ approval of directors’ remuneration
30
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
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begins on or after the day on which section 71 of the Enterprise
and Regulatory Reform Act 2013 comes into force 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
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first financial year after the last accounts or other general
meeting in relation to which notice is given under this
subsection.

Enterprise and Regulatory Reform Bill
Part 6 — Miscellaneous and general
68

(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
5
(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
10
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
15
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”.
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(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
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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’
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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
35
section 422A, the policy as so revised.
(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;
40
(b)
“directors’ remuneration policy” means the policy of the
company with respect to the matters mentioned in section
421(2A).”

Enterprise and Regulatory Reform Bill
Part 6 — Miscellaneous and general
69

72
Restrictions on payments to directors
After section 226 of the Companies Act 2006 insert—
“Chapter 4A
Directors of quoted companies: special provision
Interpretation
5
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;
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“quoted company” has the same meaning as in Part 15 of this Act;
“remuneration payment” means any form of payment or other
benefit made to or otherwise conferred on a person as
consideration for the person—
(a)
holding, agreeing to hold or having held office as
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director of a company, or
(b)
holding, agreeing to hold or having held, during a
period when the person is or was such a director—
(i)
any other office or employment in connection
with the management of the affairs of the
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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,
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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—
30
(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
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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
40
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,

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
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loss of office.

Enterprise and Regulatory Reform Bill
Part 6 — Miscellaneous and general
70

(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
(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
10
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
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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.
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(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
25
(1)
A quoted company may not make a remuneration payment to a person
who is, or is to be or has been, 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
30
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
35
(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
40
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.