GIBRALTAR Law and Practice Contributed by: Adrian Pilcher, Stuart Dalmedo and Louise Anne Turnock, ISOLAS LLP
Listed companies may derogate from the remunera - tion policy only in exceptional circumstances, and provided always that the policy includes procedural conditions by which such a derogation can take place and specifies the elements of the policy from which a derogation is possible. The directors’ remuneration policy is a binding policy and must be approved by the shareholders at least once every four years. The Companies Act does not require the public dis - closure of director remuneration. Listed companies are required under the Listed Com - panies (Members’ Rights) Regulations to prepare a remuneration report providing a comprehensive over - view of the remuneration, including all benefits, in whatever form, awarded or due during the most recent financial year to individual directors (including to newly recruited and to former directors) and to make this report publicly available on the company’s website, free of charge, for a period of ten years, beginning on the date it is first made public. Shareholders provide some or all of the financial back - ing for a company. In exchange for investing in the company, a shareholder may receive a dividend and may also benefit from capital appreciation of the value of their shares. The money produced by the sale of shares enables the company to commence and con - tinue its business. Under Gibraltar law, a company has its own legal personality, which is separate from that of its share - holders. Shareholders will therefore only be liable for losses incurred by the company up to the value (if any) unpaid on their respective shares. It must be noted, however, that the concept of “piercing the corporate veil” is recognised in Gibraltar, and there may be cer - tain instances whereby the company’s separate legal identity will be set aside by the courts and the share - holders may become personally liable for the debts and liabilities of the company. For instance, courts will look behind the veil in cases of fraud or deliberate breaches of trust. In these cases, the courts ensure 4. Shareholders 4.1 Companies and Shareholders
that an appropriate remedy is available against the individuals who have committed a wrong using a com - pany they control. The Companies Act establishes that the provisions of a company’s constitution bind the company and its members to the same extent as if there were cove - nants on the part of the company and of each member to observe those provisions. Therefore, the sharehold - ers’ relationship with the company is contractual. The rights of each shareholder will depend on the rights attached to their respective shares, and this will be set out in the company’s articles of association. In addition, shareholders may also elect to enter into a private shareholders’ agreement to govern the terms on how they will behave in relation to the company. However, a shareholders’ agreement is not compul - sory. In addition, shareholders cannot be compelled to enter into a shareholders’ agreement, and they may choose to do so only if it is in their interests. Therefore, while the articles bind all of the shareholders and the company, a shareholders’ agreement would only bind the shareholders that are party to the agreement, and the usual remedies for breach of contract will be avail - able if any of the parties commits a breach of its terms. Shareholders’ agreements may take many forms, and the need for them can arise in very different circum - stances. The key benefit offered by a shareholders’ agreement is that it is a private document which, in most cases, does not need to be made publicly avail - able. A shareholders’ agreement can therefore deal with private and personal matters which the share - holders prefer to keep off the public record. The arti - cles of association, however, must be filed at Compa - nies House and made available for public inspection. It must be noted, however, that shareholders’ agree - ments must not include anything that fetters the com - pany’s powers to exercise its statutory duties. Shareholders’ agreements can also be useful to pro - tect minority shareholders, as general contractual principles establish that all shareholders would need to approve a change to the agreement; whereas under the Companies Act, shareholder power is determined by a proportion of voting rights in the company.
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