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A
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Bill
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To
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Amend
the law in relation to payment of a company director by way of
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compensation for loss of office so as
to require boards to take the respective
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director’s performance into account
in setting the amount of any such
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payment, notwithstanding anything contained
in his service contract; to
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require the board to disclose the amount
of any such payment upon request
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by any shareholder; to require the insertion
into the company’s annual report
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of an explanation for the amount of
any such payment, should it exceed the
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equivalent of the basic salary payable
by contract to the respective employee
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in the previous 12 months; and for connected
purposes.
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Be
it enacted by the Queen’s most Excellent Majesty, by and
with the advice and
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consent of the Lords Spiritual and
Temporal, and Commons, in this present
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Parliament assembled, and by the authority
of the same, as follows:—
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1 Directors’
performance and compensation for loss of office or employment
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(1) The
Companies Act 1985 (c. 6) is amended as follows.
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(2) After
section 316, there is inserted—
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“316A Directors’
performance and compensation or payment for loss of
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office
or of employment
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(1) Notwithstanding
anything contained in a company's articles, or in any
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contract,
or in any resolution of a company or a company's directors,
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the
amount of any compensation or payment paid or payable to a
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director
of a company by reason of the termination of his office or of his
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employment
or of both shall be such amount as is, at the time of the
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termination
of the director’s office or employment or both, fair and
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reasonable
having regard to any failure by the director in the
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performance
of his duties either in his office as director or as an
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employee
or both.
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(2) Any
member of a company may require to be disclosed the amount of
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any
compensation or payment paid or agreed to be paid by that
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company
or any subsidiary or holding company of that company to a
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(2) director
by reason of the termination of his office or of his employment
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or
of both.
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(3) Where
a request is received by a company from a member in pursuance
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of
subsection (2), the company shall within 10 days beginning the day
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after
that on which the request is received by it disclose such amount
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either—
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(a) by
sending it to the member requesting it; or
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(b) by
publishing it on a web site for a period of at least 10 days and
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notifying
the member requesting it of the fact of its publication
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and
of the address of the web site concerned.
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(4) Where
any compensation or payment is made to a director in breach of
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subsection
(1), the total amount of the compensation or payment
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received
by him is deemed to be received by him in trust for the
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company.
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(5) In
this section “compensation” shall have the meaning attributed
to it
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in
paragraph 8(3) of Part I of Schedule 6 to this Act.”
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2 Explanation
for certain compensation to directors for loss of office or
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employment
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(1) The
Companies Act 1985 (c. 6) is amended as follows.
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(2) In
Part 3 of Schedule 7A of the 1985 Act, after paragraph 6(4), there is
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inserted—
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“(5) Where
the amount referred to in subparagraph (1)(d) exceeds the
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amount
referred to in subparagraph (1)(a), the directors’
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remuneration
report for the relevant financial year shall also include
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an
explanation as to why the directors consider the amount referred
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to
in sub-paragraph (1)(d) to be fair and reasonable for the purposes
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of
section 316A of this Act.”
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3 Short
title
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This Act may be cited as the Company Directors'Performance
and
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Compensation Act 2003.
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