Directors’ remuneration
Directors’ remuneration

The following Corporate practice note provides comprehensive and up to date legal information covering:

  • Directors’ remuneration
  • Entitlement to remuneration under the articles
  • Fixing the remuneration
  • Payment
  • Expenses
  • Service contracts
  • Service contracts—CA 2006 requirements
  • Inspection of service contracts
  • Compensation for termination of appointment
  • Disclosure in the accounts
  • More...

Company directors are not, by virtue only of their office as director, automatically entitled under company law to remuneration for services as a director or to reimbursement of expenses incurred in rendering such services. Power to pay directors remuneration for their services will need to be conferred by the constitution of the company. A director may also be contractually entitled to remuneration by virtue of an agreement or arrangement with the company.

When considering the position in relation to the remuneration of a director under the Companies Act 2006 (CA 2006) and a company's articles of association, and how this relates to the remuneration provisions in directors’ service contracts and other contractual arrangements, it is important to note the distinction between:

  1. a director's entitlement to remuneration (usually referred to as directors' fees) and reimbursement of expenses under the articles of association of the company, and

  2. a director's contractual entitlement to remuneration by virtue of an agreement or arrangement with the company, most commonly a service contract (ie a contract of employment), a contract for services or a letter of appointment

Entitlement to remuneration under the articles

Directors are not automatically entitled under the CA 2006 or otherwise to remuneration, or to reimbursement of expenses incurred, by virtue only of their office as director. However, a company's articles of association will usually provide for payment of directors'

Popular documents