Overview

This bill mandates the establishment of a Shareholders' Committee within all UK public companies. The committee will act as a communication channel between the company's directors and its shareholders, aiming to improve transparency and shareholder engagement.

Description

The Protection of Shareholders Bill amends the Companies Act 2006. It requires every public company to create a Shareholders' Committee (SC) of 3-6 members elected solely by private shareholders (those who beneficially own their shares). This committee's role is to foster communication and consultation between directors and shareholders, covering matters of concern. The SC will have access to company information and resources to facilitate this communication, including a company secretary. Directors will be required to attend SC meetings (but not vote), and the SC's reports will be passed to the board. Auditors, accountants, secretaries, and solicitors are also required to report any potential legal or ethical breaches to the SC. The directors' report must include details regarding the SC's activity.

Committee Operation

The SC will meet at least quarterly, with members able to call additional meetings. A majority of members present can act, and they will elect a chair. Members can resign or be removed for various reasons (bankruptcy, repeated absences). Vacancies will be filled promptly.

Government Spending

The bill is expected to increase government spending due to the increased compliance burden on companies which will potentially result in increased government resources for monitoring and enforcement. The exact figures are unavailable from the provided text.

Groups Affected

• Public Companies: Required to establish and fund a Shareholders' Committee, potentially incurring administrative costs and impacting governance structures.
• Private Shareholders: Given a greater voice in company affairs through election and participation in the Shareholders' Committee.
• Company Directors: Will be required to engage with and report to the Shareholders' Committee, potentially altering their decision-making processes.
• Company Auditors, Accountants, Secretaries, and Solicitors: Have a mandatory reporting role to the Shareholders' Committee.
• Government: Responsible for providing guidance and potentially overseeing the implementation and enforcement of the legislation.

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