French legislative overview
Legalization of cannabis is a recurrent topic in France, which has reached a new milestone under the pressure of the changes underway in other European countries.
Following consultation on draft regulations concerning the reporting of executive remuneration which were set out in a consultation paper published by the Department for Business Innovation and Skills (BIS) last June, BIS has recently published a revised draft of those regulations.
The regulations set out the content requirements of the new form of directors’ remuneration report that the directors of UK incorporated companies on the Official List (and the directors of UK incorporated companies on an official list in an EEA State or whose securities are admitted to dealing on the New York Stock Exchange or Nasdaq) will need to produce. That remuneration report will comprise two distinct parts - the directors’ remuneration policy and the annual implementation report.
While the revised regulations are still in draft and are subject to change, this briefing considers the new provisions included within them. For further background information, see our earlier briefings “Executive remuneration: Reforms announced by the Government” and “Executive remuneration: Draft legislation published”.
The revised regulations include a transitional provision. This makes it clear that the new reporting requirements will apply to the directors’ remuneration report of a quoted company which is put to its AGM held in the first financial year of the company which begins on or after 1 October 2013. As a result, for a company with a 31 December year end, the remuneration report put to its AGM held in 2014 will need to comply with these regulations.
It also appears from the current drafting of the revised regulations that the implementation of the regulations could be accelerated in the case of a company which has voluntarily decided to put its remuneration policy to shareholders for approval prior to 1 October 2013. The second part of the transitional provision provides that where a quoted company has an approved remuneration policy in place prior to 1 October 2013 which the directors decide to revise, and that revised remuneration policy is put to a shareholder vote at a general meeting held after 1 October 2013 but before the company’s next AGM, then that revised remuneration policy will also need to comply with all the content requirements for a remuneration policy specified by the regulations. However, it is not clear how this will operate in practice.
The regulations require the directors’ remuneration report to contain a statement by the chair of the company’s remuneration committee. It is now made clear that the purpose of that statement is to set out the company’s key messages on remuneration, the context in which decisions have been taken and the major changes during the year.
A number of changes have been made to the regulations specifying the content of the annual implementation report that directors will need to prepare. These changes include the following:
As with the draft regulations relating to the content of the annual implementation report, a number of changes have been made to the regulations specifying the content requirements for the directors’ remuneration policy. These include the following:
While a number of the changes to the draft regulations are likely to be welcomed as they provide greater clarity as to what the directors’ remuneration report must include, companies are still likely to have a number of questions as to how they should implement certain of the requirements. Comments on the draft regulations are requested by BIS by 25 March 2013 and these comments will be considered before the final regulations are laid before Parliament. BIS suggests that this will be during the spring of 2013 but after the Enterprise and Regulatory Reform Bill (Bill) has received Royal Assent. BIS has also confirmed that the regulations will come into force on 1 October 2013 as was previously reported.
The Bill is in the process of being amended in a number of respects, including limiting the liability of directors who make a payment outside the approved remuneration policy, having acted honestly and reasonably and believing it to be a legitimate payment.
The GC100 is also currently working on the best practice guidance that will address the practical implications of implementing the regulations. The aim is to develop clear guidance on the level of detail and type of information that should be reported by companies under the regulations and on the engagement between companies and investors in respect of matters arising from the application of the new statutory framework. This guidance should help companies develop a better understanding of the content requirements for their directors’ remuneration report and ensure some consistency between different remuneration reports.
Welcome to the 20th Issue of Norton Rose Fulbright’s flagship journal for the food and agribusiness sector, Cultivate.