The Removal of Directors Flashcards
Under s168 CA 2006, how can shareholders remove a director from office?
A. By passing an ordinary resolution
B. By a court application
C. With board consent
D. By unanimous shareholder agreement
A. By passing an ordinary resolution
Explanation: An ordinary resolution by a simple majority of shareholders is all that is required to remove a director under s168.
If the board ignores a valid s303 notice, what can shareholders do after 21 days?
A. Bring a claim for unfair prejudice
B. Call the general meeting themselves
C. Re-submit the notice
D. Vote via written resolution
B. Call the general meeting themselves
Explanation: If directors fail to act on a s303 request, shareholders can step in and call the GM themselves under s305 CA 2006.
What type of notice must shareholders give under s168 CA 2006 to propose a removal resolution?
A. Special notice of 28 clear days
B. Short notice
C. No notice is required
D. A notice with board approval
A. Special notice of 28 clear days
Explanation: A special notice of 28 clear days is required to propose a resolution to remove a director.
A director has received notice of a proposed removal. What right do they have under s169 CA 2006?
A. The right to veto the resolution
B. The right to make written representations
C. The right to demand board approval
D. The right to resign before the vote
B. The right to make written representations
Explanation: The director has the right to send a written response explaining why they should not be removed.
What happens if a removal resolution is passed in breach of a shareholders’ agreement requiring unanimous consent?
A. The resolution stands but there may be a breach of contract
B. The resolution is invalid
C. The director must be reinstated
D. The court automatically reverses the resolution
A. The resolution stands but there may be a breach of contract
Explanation: The statutory right to remove prevails, but breach of the shareholders’ agreement may give rise to a contract claim.
Which of the following best describes a Bushell v Faith clause?
A. A clause that grants veto power to directors
B. A clause that prevents removal by statute
C. A clause giving directors weighted voting rights
D. A clause requiring board approval for removal
C. A clause giving directors weighted voting rights
Explanation: Bushell v Faith clauses increase the voting power of director-shareholders during removal votes.
When must a shareholder-convened general meeting under s305 CA 2006 be held after a failed s303 request?
A. Within 14 days of the s303 request
B. Within 21 days of the GM notice
C. Within 2 months of the s303 request
D. Within 3 months of the s303 request
D. Within 3 months of the s303 request
Explanation: If shareholders convene a general meeting themselves (under s305), it must be held within 3 months of the date the directors received the s303 request.
A company removes a director and pays compensation for loss of office. What must happen first under s217 CA 2006?
A. File a special resolution with Companies House
B. Obtain shareholder approval
C. Notify HMRC
D. Obtain board consent
B. Obtain shareholder approval
Explanation: Any payment for loss of office must be approved by shareholders unless an exemption applies.
A director is removed from office by an ordinary resolution in breach of a shareholders’ agreement requiring unanimous consent. What remedy is available to the director?
A. Apply to reverse the resolution
B. Challenge the vote under CA 2006
C. Force reinstatement
D. Claim for breach of contract
D. Claim for breach of contract
Explanation: The statutory removal still stands, but the director can sue for breach of the shareholders’ agreement under contract law.
Which of the following payments made in connection with a director’s loss of office requires shareholder approval under CA 2006?
A. A performance-related bonus
B. A redundancy package paid by a third party
C. A discretionary pension contribution
D. A payment connected to a takeover bid
D. A payment connected to a takeover bid
Explanation: Under s219 CA 2006, any payment for loss of office made in connection with a share transfer resulting from a takeover requires shareholder approval.
