The Enterprise and Regulatory Reform Bill received Royal Assent on 25 April 2013. As a result of this, changes will be implemented relating to the remuneration of directors of quoted companies. It is expected that these changes will take effect on 1 October 2013. The key changes are as follows:
Shareholders of a quoted company must approve, by ordinary resolution, the company’s remuneration policy at least every three years;
Any payments, with regard to remuneration or loss of office, made outside the terms of the policy, must be approved by the company’s shareholders;
If a payment is made, that is not authorised pursuant to points 1 and 2 above, any directors who authorise such payment will be jointly and severally liable to indemnify the company for any resulting loss, unless they can show that they acted honestly and reasonably;
If a payment is made that is not authorised pursuant to points 1 and 2 above, the money will be deemed to be held in trust and is recoverable by the company or by an action by the company’s shareholders.