Explanatory Note

(This note is not part of the Regulations)

Part 2 of these Regulations amends the Companies Act 2006 (c. 46) and the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (S.I. 2008/410) to revoke, or revoke and replace, changes made by regulations 1 to 23 and 25 to 33 of the Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019 (S.I. 2019/970) which relate to company directors’ remuneration. The provisions being amended by Part 2 of these Regulations are secondary retained EU law within the meaning of section 11(2) of the Retained EU Law (Revocation and Reform) Act 2023 (c. 28).

Part 2 makes changes to the requirements for companies to produce directors’ remuneration reports and directors’ remuneration policies.

Regulation 4(3) to (7) alters the process for shareholders approving payments to directors that do not comply with the remuneration policy.

Regulation 5 removes the requirement for unquoted traded companies to produce a directors’ remuneration report and policy, and other provisions including regulations 7 to 11 make further amendments to give effect to that change.

Regulation 6(3)(e) removes the requirement for a company to put certain additional information about a shareholder vote on the remuneration policy on its website.

Regulation 6(3)(h) removes the requirement for the company to make the remuneration report available on a website for 10 years.

Regulation 12 removes the requirements to include certain information in the remuneration report and remuneration policy.

Part 3 of these Regulations introduces minor changes to audit requirements and includes corrections to legislation to address issues that have come to light since amendments were made in preparation to the UK’s exit from the European Union.

Regulation 13 makes minor amendments to the Statutory Auditors and Third Country Auditors Regulations 2013 (S.I. 2013/1672), including a new provision to enable a third country auditor to be removed from the register where they have provided written notification that they no longer wish to be included.

Regulation 15 amends Regulation 537/2014 (Regulation (EU) No. 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities and repealing Commission Decision 2005/909/EC). The amendments to this Regulation correct outdated references within the EU legislation.

A full impact assessment of the effect that this instrument will have on the costs of businesses, voluntary bodies and community bodies is available from www.legislation.gov.uk and from the Department for Business and Trade at Old Admiralty Building, Admiralty Place, London, SW1A 2DY.