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.

If you would like further information on the implications of this, please do not hesitate to contact Toby Stroh, head of Druces LLP’s Corporate and Commercial team, or Caroline Cropley, Associate.

This note is not intended as legal advice, it is for general guidance only. It represents the position as at 8 July 2013.

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