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LPC Law Notes Business Law and Practice Notes

Removing A Director & Service Contracts Crib Sheet Notes

Updated Removing A Director & Service Contracts Crib Sheet Notes

Business Law and Practice Notes

Business Law and Practice

Approximately 649 pages

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Removing a director

  1. Is there a contractual method for terminating the directorship?


      1. 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

    1. Articles cannot contradict or remove this right

    2. 168(2) Members must give ‘special notice’ to the company if proposing to remove a director

      1. 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

        1. 360 Clear days’ notice does not include the day of the notice, and the day of the meeting itself

      2. 288(2)(a) Written resolution is not permitted

    3. Board resolution to call GM on preferably 28 clear days’ notice

      1. 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

        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

      2. 312(4) Where 14 days’ clear notice are given it will be construed as 28 days’ notice rule being complied with

    4. 169(1) Copy of the notice must be sent to the director concerned

      1. 169(2) Director concerned has the right to make oral representations at the general meeting

      2. 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

      3. 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?

    1. 303 shareholders can force the directors to hold a GM

      1. 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

        1. 303(4) notice must be signed by the members

        2. 1147 notice posted or served electronically take 48 hours to be received

      2. 304(1)(a) Directors have 21 days to call GM after receipt of the notice

        1. 304(1)(b) GM should be held within 28 clear days of calling GM

      3. 305(1) Failure for directors to call meeting means shareholder can call GM themselves if they have at least more than 50% voting rights

        1. Members can reclaim expenses for calling the meeting

      4. 305(4) Members must give 14 clear days’ notice for the GM

      5. 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?

    1. 168(1) ORDINARY RESOLUTION of shareholders

      1. 282(2) More than 50% of those who vote

    2. In order for the meeting to go ahead it must be quorate

      1. 318(2) there must be 2 qualifying persons present

    3. MA 42 vote will initially be passed on a show of hands

      1. 284(2) every shareholder has one vote

    4. Poll vote may be demanded by

      1. MA 44(2)(a) chairman

      2. MA 44(2)(b) directors

      3. MA 44(2)(c) two or more shareholders

      4. MA 44(2)(d) any person(s) representing not less than 10% total voting rights of shareholders

      5. 284(3)(a) poll vote each shareholder has one vote per share held

    5. Is there a Bushell v Faith clause?

      1. Weighted voting rights but only applies on a poll vote not on a show of hands

      2. May be able to remove clause by special resolution to alter company’s articles 21

        1. Check if director who is also a shareholder has weighted voting rights for this too?

      3. 22 Articles can only be entrenched if

        1. 22(2)(a) in the company’s articles on formation

        2. 22(2)(b) amendment agreed to by ALL members of the company

      4. Entrenched articles can only be altered by either

        1. 22(3)(a) agreement of ALL members of the company

        2. 22(3)(b) court order

      5. 23 Notice of entrenchment or its removal must be notified to the Registrar

        1. 24(2) & (3) If entrenchment amended then statement of compliance also sent to Registrar

  5. Automatic Removal of a Director

    1. MA 18 director ceases to hold office if

      1. Bankrupt

      2. Mentally ill

      3. Doctor’s written opinion is given to company that director physically or mentally incapable of holding the office & may remain so for more than 3 months

    2. MA 21 PUBLIC COMPANIES retirement by rotation

      1. ...

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