7.6 Directors’ Appointment And Removal

Question 1

Every private company must have at least X directors

Answer 1

One director

Question 2

A public company must have a minimum of X directors

Answer 2

2

Question 3

A director must be

Answer 3

Aged over 16

Question 4

A director cannot be

Answer 4

Disqualified from being a director by the court

Question 5

When the court finds a director is unfit to be involved in the company they must

Answer 5

Make an order for disqualification under the Company’s Directors Disqualification Act 1986
This order is mandatory

Question 6

Special notice of

Answer 6

28 days must be given to the director they want to remove

Question 7

Three key requirements for the removal of a director

Answer 7

Special notice of 28 days
General meeting to discuss resolution to remove
Passing of an ordinary resolution for removal

Question 8

Three key requirements for the removal of a director

Answer 8

Special notice of 28 days
General meeting to discuss resolution to remove
Passing of an ordinary resolution for removal

Question 9

The period considered by the court for an order for a directors removal is

Answer 9

When a company becomes insolvent whilst or after the person was a director

Question 10

The disqualification period following an order by the court is

Answer 10

Minimum 2 years and maximum 15 years

Question 11

If a director breaches their disqualification order they could be liable to

Answer 11

Face personal liability for debts incurred by the company while they are involved in its management

Question 12

Director who is being removed from the company is entitled to

Answer 12

Attend the general meeting
Speak to the resolution on their removal
Provide written representations

Question 13

When appointing a new director, who decided on their remuneration (salary)

Answer 13

The board

Question 14

Shareholder approval is required when appointing a new director

Answer 14

If the contract gives security of tenure for longer than two years to a director

Question 15

How many votes are needed to remove a director following a special resolution

Answer 15

A majority over 50% of shareholder votes

Question 16

What happens when a majority of shareholder votes is not reached in removing a director

Answer 16

They remain in office

Question 17

Shareholders have the power to remove a director by passing a

Answer 17

Ordinary resolution

Question 18

Can a shareholders right to remove a director be excluded in a director’s service contract?

Answer 18

No

Question 19

Once an ordinary resolution has been passed what must the shareholder do

Answer 19

Must provide formal notice to the company at its registered office at least 28 days before the general meeting

Question 20

If the threshold to remove a director is not reached (over 50%)

Answer 20

The director remains in office

Question 21

Shareholders can force the directors to call a general meeting and have the removal resolution considered if they have

Answer 21

5% or more of the voting shares
This is called a s303 notice

Question 22

How many days after a s 303 notice (where shareholders force the removal of a director) do directors have to call a meeting

Answer 22

21 days

Question 23

Director (who is being removed) has a right to

Answer 23

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

Question 24

Before giving a special notice, shareholders should check

Answer 24

Articles to see voting rights
Employment law position
Shareholders agreement

Question 25

The court has discretionary powers to disqualify a director under the

Answer 25

CDD act - Company Directors Disqualification

Question 26

For a director who is disqualified the court ignorance will not be

Answer 26

A defence
A director is expected to have a businesspersons sense of reality

Question 27

Factors which determine an unfit director are found in

Answer 27

Sch 1 of the CDD Act

Question 28

A disqualified director may not without the court’s permission or a grant of a licence by the government be a

Answer 28

A director
Involved with the promotion, formation or management of the company

Question 29

Directors may cease to be a director through

Answer 29

Provisions of the company’s articles
By shareholders using a special notice / ordinary resolution