Removing a company director: ordinary resolution and special notice
Maya holds 60% of the shares in Fernhill Joinery Ltd, a private company limited by shares that has adopted the model articles without amendment. She wants to remove Tom, one of the company's three directors. Tom has a written service contract with the company that still has two years to run. Maya would prefer to avoid a meeting and asks whether she can simply circulate a written resolution to the shareholders.
Which of the following best describes how Tom can be removed as a director?
Choose one answer to see the reasoning.
Worked answer
Correct answer C: By an ordinary resolution at a general meeting, special notice of it having been given to the company at least 28 days beforehand.
THE RULE TO REMEMBER
A director can be removed by ordinary resolution at a general meeting on special notice (28 days to the company), and never by written resolution.
Removing a company director: ordinary resolution and special notice
Under s.168(1) Companies Act 2006 a company may remove a director by ordinary resolution at a meeting, notwithstanding anything in any agreement with the director. Special notice is required (s.168(2)), which means notice of the intention to move the resolution must be given to the company at least 28 days before the meeting (s.312(1)). A written resolution cannot be used for a s.168 removal (s.288(2)(a)), so a meeting is unavoidable.
Why A is wrong: s.288(2)(a) prohibits removing a director under s.168 by written resolution, and in any case only an ordinary (simple majority) resolution is needed.
Why B is wrong: an ordinary resolution suffices; a special resolution is not required.
Why D is wrong: the statutory power of removal belongs to the members; the model articles give the board no power to remove a fellow director.
Why E is wrong: s.168(1) applies notwithstanding any agreement; Tom's contract only preserves any claim to compensation or damages (s.168(5)).
That's today's practice done. Another featured question tomorrow.
Related questions
Substantial property transactions with a director: members' approval (CA 2006 ss.190-191)
Which of the following best describes what the Companies Act 2006 requires before Kestrel Joinery Ltd buys the van?
Director's service contract over two years without members' approval (CA 2006 ss.188-189)
What is the effect of the failure to obtain the members' approval?
Ratifying a director's negligence: votes of the director and connected persons (CA 2006 s.239)
Is the ratification resolution passed?
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