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Removal Of A Director And Employee Notes

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Work Shop 10

Removal of a Director Directors are officers and may also be employees (Bottrill) - so you may need to get rid of them twice. Resignation?

D can give notice to the company at any time (MA18(f) / TA81(d)) Subject to their employment contracts and notice periods

If using amended Articles, there may be a power to remove a fellow DIf so, Ds must act in the best interests of the company (s.172)There is no default provision for this in the MA or TAIf D becomes ill or bankrupt, they are prohibited from being a D (MA18 / TA81)If D is absent from meetings without permission for 6 consecutive months, the other directors can resolve to remove him by majority (TA81(e) / none in MA) The court has discretion to disqualify a D for between 2 and 15 years under CDDA '86:Conviction of an indictable offence (s.2)Persistent breaches of company legislation (s.3)Fraud during a winding-up (s.4)Summary conviction for default in filing a notice (s.5)Unfit D of an insolvent company (s.6)Disqualify following an investigation period (s.8)Fraudulent or wrongful trading (s.10)Breach of competition law (s.9A)Removal by Board

Disqualification under Articles

Disqualification by the Court

Automatic by Rotation under Table A

Re Sevenoaks Stationers Ltd outlines the tariffs: (also see ch 6.10.6 for more case law) 2 - 5 years: not a particularly serious offence 6 - 10 years: a serious offence but not meriting the top bracket 11 - 15 years: for very serious offences

1. Ds must retire by rotation (TA73 / none in MA)

2. 1st AGM: all Ds retire

3. They are then automatically reappointed unless a contrary SR is passed

4. subsequent AGMs: 1/3 of Ds must retire and be subject to reelection Note: executive directors are exempt from this requirement (TA84)

Work Shop 10 Members' Rights:Members have the right to remove a D at any time at a GM by OR (s.168(1)) and this right cannot be removed by amending the articlesCannot use WR procedure (s.288(2)(a))Members must give company "special notice" (s.168(2)) and s.312(1) it must be: o Given 28 clear days before GM ("clear" defined in s.360 as not day of) o Show formal notice of intention o At the RO o [if intend to appoint a replacement, include this in the notice]

Removal by Shareholders (see flowchart)

Protection from Removal

Directors' Rights:D under threat must be immediately given a copy of special notice (s.169(1))D then has the right to make written representation to the members (s.169(3))The D may also speak at the GM irrespective of whether he's a member (s.169(2)) Procedure: Co-Operative Board:This will only happen if a majority of the board votes in favourThey will respond to the s.168 by calling a GM in the usual way (s.312(2))14 clear days' notice of the GM is requiredTo remove, the resolution must be passed by ORHas a GM already been called? If so, Ds may agree by majority to consider the special notice if there are still 14 clear days until the GM (s.312(3)) Procedure: Unco-operative Board :Members owning at least 5% of the voting shares can force Ds to hold a GM (s.303)Ds have 21 days to call the GM (s.304(1)(a))The GM must be held within 28 days of being called (s.304(1)(b))Example: Ds receive s.303 notice on June 1st. Last day on which they may call a GM is Jun 22nd. If called on that day, then July 20th is the last day on which GM may be held.Ds still refuse to call GM: members call it themselves under s.305 by giving 14 clear days' notice under s.305(4). It must be held within 3 months from when the directors first received the s.303 notice to call

1. Bushell v Faith Clause: gives threatened D weighted voting rights if resolution put forward to either remove him or remove the clause that gives him weighted voting

2. Fixed-term service contract: if it's of long duration without a break clause

3. Shareholders' Agreement: whereby parties can agree not to vote against specific Ds

4. Outstanding loan: if D lent the company money, it is expressed to be immediately repayable if the D is dismissed (this will

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