§ Mr. Gordon PrenticeTo ask the President of the Board of Trade (1) what statutory provisions govern challenges by shareholders to a termination settlement for a board member of a publicly quoted company; [20897]
(2) if he will introduce legislation to require that the terms of termination agreements for board members of publicly quoted companies are made available to (a) all board members and (b) all shareholders; [20900]
(3) what statutory provisions govern the termination agreements of board members of publicly quoted companies and the rights of all members of the board to be aware of the terms of such agreements. [20896]
108W
§ Mr. OppenheimSections 312 to 316 of the Companies Act 1985 make various provisions in respect of compensation payments to directors for loss of office. They apply only in cases where the director does not have a contract with the company; they do not cover bona fide payments by way of damages for breach of contract or by way of pension in respect of past service. Under section 312 of the Act it is unlawful for a company to make a compensation payment without particulars of the proposed payment, including the amount, being disclosed to members of the company and approved by the company. Section 313 makes such payments unlawful when made in connection with the transfer of the whole or part of the undertaking or property of a company and when made by third parties, unless particulars have been disclosed to shareholders and approved by the company. Section 314 provides that where such a payment is to be made to a director of a company in connection with the transfer of all or any shares of the company resulting from an offer to shareholders, it is the duty of the director to take all reasonable steps to include particulars of the proposed payment with any notice of the offer given to shareholders.
Under section 318 of the Companies Act 1985, where a director has a written contract of service the company must make available a copy of the contract for inspection by any member of the company without charge. Where the contract is not in writing, the company must make available for inspection a written memorandum setting out the terms of the contract. However, these requirements do not apply where the unexpired portion of the term for which the contract is to be in force is less than 12 months, or where the contract can, within the next ensuing 12 months, be terminated by the company without payment of compensation.
I have no plans to introduce further legislation on these subjects.