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.