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Removing A Director & Service Contracts Crib Sheet Notes

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Removing a director

1. Is there a contractual method for terminating the directorship?
a. APPLY TO FACTS a.i. 168(5) Members should check the director's service contract to ascertain any compensation or damages which may be due under it for termination

2. 168(1) Members always have the right to remove a director a. Articles cannot contradict or remove this right b. 168(2) Members must give 'special notice' to the company if proposing to remove a director b.i. 312(1) Special Notice is a formal notice left at the company's registered office setting out the request, at least 28 clear days before the general meeting b.i.1. 360 Clear days' notice does not include the day of the notice, and the day of the meeting itself b.ii. 288(2)(a) Written resolution is not permitted c. Board resolution to call GM on preferably 28 clear days' notice c.i. 312(3) where it is not practicable to give special notice to members, the company can give at least 14 days' clear notice before the GM by advertising in a newspaper with appropriate circulation or by any other manner allowed in the company's articles c.i.1. Board resolution can agree to add the resolution to remove the director to an agenda of a GM already convened, but only if 14 clear days' notice of this can be given c.ii. 312(4) Where 14 days' clear notice are given it will be construed as 28 days' notice rule being complied with d. 169(1) Copy of the notice must be sent to the director concerned d.i. 169(2) Director concerned has the right to make oral representations at the general meeting d.ii. 169(3) Director concerned has the right to make written representations & can request that they will be circulated to members with the notice of the general meeting d.iii. 169(4) If written representations from the director are received after the notice of the GM have been sent out, they can be read out at the GM

3. Is the Board hostile?
a. 303 shareholders can force the directors to hold a GM a.i. 303(2) Members who represent at least 5% of paid-up share capital with voting rights can request directors to call GM on special notice for the removal of a director by giving formal notice to the company a.i.1. 303(4) notice must be signed by the members a.i.2. 1147 notice posted or served electronically take 48 hours to be received a.ii. 304(1)(a) Directors have 21 days to call GM after receipt of the notice a.ii.1. 304(1)(b) GM should be held within 28 clear days of calling GM a.iii. 305(1) Failure for directors to call meeting means shareholder can call GM themselves if they have at least more than 50% voting rights a.iii.1. Members can reclaim expenses for calling the meeting a.iv. 305(4) Members must give 14 clear days' notice for the GM a.v. 305(3) Meeting must be held within 3 months after date on which directors were required to call GM

4. How to actually remove director?
a. 168(1) ORDINARY RESOLUTION of shareholders a.i. 282(2) More than 50% of those who vote b. In order for the meeting to go ahead it must be quorate b.i. 318(2) there must be 2 qualifying persons present c. MA 42 vote will initially be passed on a show of hands

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