The Directors' Remuneration Report Regulations 2002

UK Statutory Instrument 2002 No. 1986 — creates 4 criminal offences.

Made

25 July 2002

In force from

1 August 2002

Extent

Not stated

Subject

Corporate, financial services, company law, employment, charity, electoral and tax

Made under

Companies Act 1985

Explanatory note

(This note is not part of the Regulations) — published with the instrument by the department that made it. © Crown copyright, reused under the Open Government Licence v3.0.

Schedule 6 of the Companies Act 1985 requires a company to produce certain information concerning directors' remuneration by way of notes to the company’s accounts. These regulations exempt a quoted company from most of the requirements contained in Part I of Schedule 6 and instead require such a company to set out a large part of the information concerning directors' remuneration in the directors' remuneration report. Part I of Schedule 6 will continue to apply to companies which are not quoted and Parts II and III of that Schedule will apply to both quoted and unquoted companies. A quoted company is defined in regulation 10 as a company whose equity share capital has been included in the official list in accordance with the provisions of Part VI of the Financial Services and Markets Act 2000, is officially listed in an EEA State or is admitted to dealing on either the New York Stock Exchange or the exchange known as Nasdaq. The directors of a quoted company are required to produce for each financial year a directors' remuneration report which shall be approved by the board of directors and signed on behalf of the directors by a director or the secretary of the company. The company’s auditors are to report to the company as to whether that part of the directors' remuneration report which contains the information required by Part 3 of Schedule 7A has been properly prepared in accordance with the Companies Act 1985. To the extent that the requirements of Schedule 6 or Part 3 of Schedule 7A are not complied with the auditors shall include in their report, so far as they are reasonably able to do so, a statement giving the required particulars. A copy of the directors' remuneration report is to be sent to each member of the company, every holder of the company’s debentures and every person who is entitled to receive notice of general meetings. If the quoted company is also a listed company, to which section 251 Companies Act 1985 applies, then it may send to those persons a summary financial statement instead of the accounts, directors' report and directors' remuneration report. The content of the summary financial statement is set out in the Companies (Summary Financial Statement) Regulations 1995 (SI 1995/2092) and it is proposed to amend those regulations to set out those elements of the directors' remuneration report which are to be summarised in the summary financial statement. Regulation 7 inserts a new section 241A into the Companies Act 1985 which requires that a resolution approving the directors' remuneration report for the financial year is moved as an ordinary resolution at the general meeting of the company before which the company’s annual accounts for the financial year are laid. A quoted company is, in addition, required to deliver a copy of the directors' remuneration report to the Registrar of Companies. Part 2 of Schedule 7A requires information concerning four areas. First, circumstances surrounding the consideration by the directors of matters pertaining to directors' remuneration. Second, a statement of the company’s policy on directors' remuneration for the following financial year. Third, a performance graph which sets out the total shareholder return of the company on the class of equity share capital, if any, which caused the company to fall within the definition of “quoted company”. Finally, Part 2 requires certain information to be set out concerning each director’s contract of service or contract for services. Part 3 of Schedule 7A requires detailed information to be set out concerning the emoluments, share options, long term incentive plans, pensions, compensation and excess retirement benefits of each director and, in some cases, of past directors as well. A Regulatory Impact Assessment has been prepared. Copies can be obtained from David Styles, Company Law and Investigations Directorate, DTI, 1 Victoria St, London SW1H 0ET, telephone 020 7215 0211. Copies of which have been placed in the libraries of both Houses of Parliament.

Offences created by this instrument

• Quoted companies: directors' remuneration report regulation 234B(3) · Status not determined · Strict liability
• Quoted companies: directors' remuneration report regulation 234B(6) · Status not determined · Strict liability
• Approval and signing of directors' remuneration report regulation 234C(4) · Status not determined · Strict liability
• Members' approval of directors' remuneration report regulation 241A(10) · Status not determined · Strict liability

What Parliament said about it

Contributions, debates and written statements mentioning this instrument by name. Parliamentary material is reused under the Open Parliament Licence v3.0.

• Directors' Remuneration Report Regulations 2002 Lords · Lords Chamber · 24 July 2002
• Company Directors Commons · Written Statements · 3 June 2003 · The Secretary of State for Trade and Industry (Ms Patricia Hewitt)

  I have today placed in the Libraries of the House copies of a consultation document entitled "Rewards for Failure: Directors' Remuneration—Contracts, Performance and Severance".The Directors' Remuneration Report Regulations 2002, which I introduced last year, improved disclosure and shareholder accountability in relation to directors' remuneration in quoted companies. As a result, we have seen a welcome increase in the level of shareholder activism on this issue: it is for the shareholders, as the owners of companies, to ensure that remuneration levels and structures provide the appropriate…

• Directors' Remuneration Lords · Lords Chamber · 10 July 2003 · Lord Sainsbury of Turville

  My Lords, we have not only been consulting, we have taken action. As I said in my Answer, we have produced the Directors' Remuneration Report Regulations 2002. We need to see what effect those will have. We are now consulting on a new set of proposals. There is no point in consulting unless one waits to the end of the consultation before taking action.

• Directors' Remuneration Lords · Lords Chamber · 25 February 2004 · Lord Triesman

  My Lords, my right honourable friend the Secretary of State for Trade and Industry made a Written Statement to Parliament about directors' remuneration, performance, contracts and severance earlier today. For the benefit of the House, I heave repeated this and copies have been placed in the Library and in the Printed Paper Office. My right honourable friend announced that the Department of Trade and Industry will be commissioning an assessment of compliance with the Directors' Remuneration Report Regulations 2002 and changes in remuneration practices during the course of this year's AGM…

• Directors' Remuneration Report Regulations 2002 Commons · Written Statements · 25 January 2005 · The Secretary of State for Trade and Industry (Patricia Hewitt)

  As announced in my written parliamentary statement on 25 February 2004, Official Report, column 51–52WS, my Department commissioned a report on compliance with the Directors' Remuneration Report Regulations 2002 ("the Regulations") during the course of this year's AGM season, including an assessment of changes in remuneration practices. Deloitte and Touche LLP were appointed to carry out the work following a competitive tender process. Their report is today being placed on the DTI website at: http://www.dti.gov.uk/cld/Deloitte–Rep–DRRR–2004.pdf and in the Libraries of both Houses. The report…

• Directors' Remuneration Report Regulations 2002 Lords · Written Statements · 25 January 2005

  Official Report, Commons, cols. 51–52WS), my department commissioned a report on compliance with the Directors' Remuneration Report Regulations 2002 ("the regulations") during the course of this year's AGM season, including an assessment of changes in remuneration practices. Deloitte and Touche LLP was appointed to carry out the work following a competitive tender process. Its report is today being placed on the DTI website at www.dti.gov.uk/cld/Deloitte_Rep_DRRR_2004.pdf and in the Libraries of the House.

• Royal Commission on the Distribution of Income and Wealth Lords · Lords Chamber · 1 November 2005 · Lord McKenzie of Luton

  My Lords, the Government cannot regulate pay in the private sector for executives or directors. Perhaps I did not deal with the point raised earlier by my noble friend on directors' pay. Under this Government the Directors' Remuneration Report Regulations 2002 have come into force since August 2002, which has improved transparency and accountability and the reporting of performance linkage. A report in 2005 by Deloitte & Touche underlined the effectiveness of those actions so far as directors' pay is concerned, which showed that there had been a significant increase in the levels of…

• Globalisation Lords · Lords Chamber · 27 February 2006 · Lord McKenzie of Luton

  My Lords, I start by thanking all noble Lords who have contributed to today's debate. It is a matter we could have discussed all week and still have had things left to say. I would particularly like to thank my noble friend Lord Lea for tabling the Question. The House will readily recognise that for him these matters are not just of passing academic interest, and that he has given distinguished service in the cause of greater equality over many years. It has been a wide-ranging debate; we have covered cricket, football and bank robberies, as well as more fundamental economic matters. There…

How Parliament handled it

Parliament's Statutory Instruments service records procedure from May 2017 onwards, and this instrument predates it. That is a limit of the source, not a statement that nothing happened.

Check the source

• This instrument on legislation.gov.uk The authoritative text, including amendments made since
• Other instruments from 2002