Procedures Flashcards
Removal of a director
What are the key provisions for removal of a director by shareholders?
- Shareholders can remove a director by ordinary resolution
- special notice of 28 days is required of a removal resolution
- it is not possible for the board to remove a director (unless Articles provide for this)
- Directors who are shareholders can vote in their capacity as shareholder on the ordinary resolution to remove them
- a company cannot use written resolution
What is the special notice (s312 request) procedure for removal of a director?
Shareholders must give the board at least 28 clear days notice of the proposed removal
What are the board’s options when it receives proposed removal resolution?
1) the board can place the removal resolution on the agenda for the GM
2) the board can decide not to place it on the agenda
Option 1: board places removal resolution on the agenda
*The board must give the shareholders notice of the resolution to remove the director at the same time and in the same manner as it gives notice of the general meeting
*The board needs to give shareholders at least 14 clear days’ notice of the removal resolution
What percentage of voting rights is required of shareholders to call a GM in accordance with s303?
Shareholders with more than 5% of paid up voting share capital can call a general meeting under a s303 request
What must directors do when they receive a s303 request?
- Within 21 days from the date on which they become subject to the s303 request, they must call a GM (board has 21 days to decide whether to call GM)
- If board does call a GM: the GM must be held not more than 28 days after the date of calling the GM
- this means day 50 at latest if they call a GM
What happens if directors fail to call a GM following a s303 request?
- Following the 21 days which the board has to decide whether to call a GM…
(From Day 23) The shareholders can call the GM themselves, it must be called on normal notice (14 clear days). The GM must be held within 3 months of the date that directors received s303 request
When must a resolution to change a company’s name be passed?
The resolution must be passed before the end of 28 days beginning on the circulation date
When must special resolutions be filed at Companies House (Registrar of Companies) by?
within 15 days of them having been passed
- if this is not complied with, the company and every officer in default may be liable to pay a fine
What is the lapse date for a written resolution to be passed?
28 days beginning with the circulation date
- Shareholders have 28 days to respond to the written resolution and if the company does not receive a sufficient number of responses in time, it will lapse
What is the usual notice of a general meeting?
14 clear days notice
- clear days excludes both the day on which the notice is given and the day of the meeting itself
E.g.,
If notice is given on 1 July, the earliest date on which a meeting can be held is 16th July (14 clear days)
How are decisions at Board Meetings taken?
Decisions are taken by the directors. The general rule is that decisions are taken either by the majority of directors participating or unanimously. Directors can also may decisions by written resolutions.
Simple majority
What is the director’s ability to bind the company?
A director can bind a company with a third party in their role as an agent of the company. They can act with either actual or apparent authority
In what other ways can a director be removed?
- Resignation by notice (board usually passes BR to approve it)
- Automatic termination (disqualification, IVA, bankruptcy, incapable of acting for more than 3 months)
- Disqualification order
- Retirement by rotation
To whom are directors’ duties owed to?
- General duties of directors are owed by a director to the company (and not shareholders directly)
- Any breach of duty by a director is a wrong done to the company - company who would be the claimant in proceedings
