The Enterprise and Regulatory Reform Bill (ERRB), which has now received Royal Assent, will introduce a regime giving shareholders more say on directors' pay by requiring a binding vote on the remuneration policy every three years.

The new rules will apply to executive and non-executive directors, new directors (including payments to buy out an individual's remuneration arrangements at another company) and payments to former directors.

The exact implementation timetable is due to be confirmed by the Department for Business, Innovation and Skills (BIS), but the provisions are currently scheduled to come into force on 1 October 2013 and will apply to the first financial year beginning on or after that date.

Under the new rules, the directors' remuneration report of quoted companies will need to include a statement of the company's policy on directors' remuneration ('remuneration policy), and information on the implementation of the previous remuneration policy ('implementation report').

Quoted companies will need to propose a binding shareholder vote, requiring a simple majority to pass, on the remuneration policy at least every three years and an annual advisory (non-binding) vote on the implementation report.

If the binding vote on the remuneration policy fails, the company has the choice of either falling back on the last approved remuneration policy until the next AGM or calling a general meeting to put forward a revised policy. A company can always seek separate shareholder approval for any specific remuneration/loss of office payments outside the scope of the approved remuneration policy.

Any payments which are made which are then found to fall outside the agreed policies will be held on trust for the benefit of the company, and the directors who authorised the payment can be held liable to indemnify the company for any loss resulting from it.