Appointment and removal of directors Flashcards
How are directors appointed?
CA 2006 does not stipulate a procedure for the appointment of directors, so this will need to be dealt with by the Articles.
The MA states a director may be appointed by ordinary resolution of the shareholders or by a decision of the directors.
The latter is normally the option used because it is easier to put into effect.
What is a service contract and why is it needed?
An executive director will be an employee of the company as well as a director, therefore, they need a service contract.
The service contract will set out the terms and conditions of employment including duties, remuneration package, notice provisions etc.
Are directors entitled to be remunerated?
No automatic entitlement, this is something for the board to determine subject to the provisions of the Articles.
Does the company have an obligation to keep the service contracts?
Yes, at the registered office for inspection by members.
What is the general rule around the resolution required for service contracts?
The general rule is it will only require approval by BR, however, SR is needed for long-term service contracts.
Is the identity of directors disclosed?
Yes, every company must maintain a register of its directors. This should be kept at the reg office and must be open for inspection by any member of the company without charge and by any other person on payment of a fee.
Additionally, each company must notify the Registrar of Companies about any changes to directors or secretary. This information is made available to the public.
What must a register of directors include?
Name and former name
Service address
The country or state in which he is usually resident
Nationality
DOB
Business occupation
Individuals will have to provide their residential address but this information will be kept on a separate secure register not available to public inspection.
What must the register of secretaries contain?
Name and any former name
Address - could be residential or service.
What needs to be included in the notes to a company’s annual accounts?
Directors salaries, bonus payments and pension entitlements; and
Compensation paid to directors and past directors for loss of office.
Details to be disclosed of any payments made to or received by a person connected to a director or a body corporate controlled by a director.
Disclosure of information on advances and credits given by a company to its directors and guarantees entered into by a company on behalf of its directors.
How can directors be removed?
They can be removed by ordinary shareholder resolution.
Must special notice be provided for a removal resolution?
Yes, 28 days.
Is it possible for a Board to remove a director?
No, unless Articles specifically provide for this.
Can directors vote in their capacity as shareholders to remove a director?
Yes, they can vote on the OR to remove them.
Can a director vacate from the office?
Yes: resignation by notice or automatic termination.
How is resignation effected?
The director can resign from the board by tendering a letter of resignation. This procedure is provided for in the MA.
It is usual but not obligatory for the board to pass a BR accepting the letter of resignation.
