Directors Remuneration: Enterprise and Regulatory Reform Act 2013 Published


On May 2, the Enterprise and Regulatory Reform Act 2013 (ERRA) was published. The ERRA amends the Companies Act 2006 and introduces the following key changes to the legal framework for directors’ remuneration in quoted companies: the directors’ remuneration report must include a separate forward-looking policy part, the policy part must be approved by ordinary resolution at least every three years, the policy section must be approved before the expiry of the three-year period if the company wishes to change the policy or the shareholders did not approve the advisory vote on the non-policy section of the directors’ remuneration report at the company’s previous AGM, the company is prohibited from making a remuneration or loss of office payment, unless it is consistent with the most recently approved remuneration policy, any payment which is inconsistent with an approved policy will be held by the recipient in trust and can be recovered by way of a derivative action. Directors who authorised the payment will be liable for any loss to the company unless they can demonstrate that they acted honestly and reasonably.

These provisions are expected to come into force on October 1, with the provisions applying to quoted companies with financial years beginning on or after that date.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Orrick - Structured Finance Group | Attorney Advertising

Written by:


Orrick - Structured Finance Group on:

Popular Topics
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.