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Directors' service contracts

The main issues to be considered in the preparation of directors’ service contracts is that contracts are written in simple language without jargon, that the provisions are easy to understand and operate, and that the notice period and termination arrangements, in particular, are clear. Care should be taken to ensure that the text reflects what has been agreed during negotiations and legal advice on the drafting should be obtained. The review and agreement of the terms of service contracts should be delegated by the board to the remuneration committee and this responsibility should be included in their terms of reference.

Since publication in 2008 new regulations and recommendations have been put in place, and a new edition of the Guidance Note is expected towards the end of 2013.

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