7.6 Directors’ Appointment And Removal Flashcards
Every private company must have at least X directors
One director
A public company must have a minimum of X directors
2
A director must be
Aged over 16
A director cannot be
Disqualified from being a director by the court
When the court finds a director is unfit to be involved in the company they must
Make an order for disqualification under the Company’s Directors Disqualification Act 1986
This order is mandatory
Special notice of
28 days must be given to the director they want to remove
Three key requirements for the removal of a director
Special notice of 28 days
General meeting to discuss resolution to remove
Passing of an ordinary resolution for removal
Three key requirements for the removal of a director
Special notice of 28 days
General meeting to discuss resolution to remove
Passing of an ordinary resolution for removal
The period considered by the court for an order for a directors removal is
When a company becomes insolvent whilst or after the person was a director
The disqualification period following an order by the court is
Minimum 2 years and maximum 15 years
If a director breaches their disqualification order they could be liable to
Face personal liability for debts incurred by the company while they are involved in its management
Director who is being removed from the company is entitled to
Attend the general meeting
Speak to the resolution on their removal
Provide written representations
When appointing a new director, who decided on their remuneration (salary)
The board
Shareholder approval is required when appointing a new director
If the contract gives security of tenure for longer than two years to a director
How many votes are needed to remove a director following a special resolution
A majority over 50% of shareholder votes
What happens when a majority of shareholder votes is not reached in removing a director
They remain in office
Shareholders have the power to remove a director by passing a
Ordinary resolution
Can a shareholders right to remove a director be excluded in a director’s service contract?
No
Once an ordinary resolution has been passed what must the shareholder do
Must provide formal notice to the company at its registered office at least 28 days before the general meeting
If the threshold to remove a director is not reached (over 50%)
The director remains in office
Shareholders can force the directors to call a general meeting and have the removal resolution considered if they have
5% or more of the voting shares
This is called a s303 notice
How many days after a s 303 notice (where shareholders force the removal of a director) do directors have to call a meeting
21 days
Director (who is being removed) has a right to
Receive a notice immediately of their removal
Make written representations to the company and general meeting
To speak at the general meeting and make their case
Before giving a special notice, shareholders should check
Articles to see voting rights
Employment law position
Shareholders agreement
The court has discretionary powers to disqualify a director under the
CDD act - Company Directors Disqualification
For a director who is disqualified the court ignorance will not be
A defence
A director is expected to have a businesspersons sense of reality
Factors which determine an unfit director are found in
Sch 1 of the CDD Act
A disqualified director may not without the court’s permission or a grant of a licence by the government be a
A director
Involved with the promotion, formation or management of the company
Directors may cease to be a director through
Provisions of the company’s articles
By shareholders using a special notice / ordinary resolution
