Introduction to this document

Special notice for
the removal of a director

If you lose confidence in one of your directors and need to replace them, use our quick guide to the procedure.

It sometimes happens that members of a company lose confidence in a director. A quiet word in their ear may be enough to persuade them to resign. But what if they refuse? How do you go about getting rid of them?

Removal by who?

Unless the company’s articles say otherwise, it’s the company’s shareholders who have the power to remove a director and not, contrary to popular belief, the directors themselves.

1. Canvass the views of your fellow members to ensure that you have the necessary 51% support to pass the resolution in a meeting.

2. Send your supporters copies of the following documents (see following pages), for them to sign and return to you:

 (i) Special notice for removal of director.

(ii) Requisition by shareholder for a general meeting (GM).

 (iii) GM agreement to short notice.

3. The members of a company cannot vote on a resolution to remove a director until they have given the company “special notice”. This means the shareholder must write to the company at least 28 days before any proposed meeting tabling the resolution for discussion. So send the first two documents to the company and ask for a GM to be arranged as soon as possible after the 28 days have expired.

Note. There is no obligation on the company to either include your resolution for discussion at the next GM, nor even to call a GM at all. But the directors will have no choice if they receive the completed form of requisition by shareholder for a GM. This can only be done by a shareholder or shareholders who own 5% of the voting rights.

Be careful

Before pursuing this course of action, check the director’s employment contract (if they have one). This process may give them the right to substantial compensation and damages. Also check that the articles do not give the director weighted voting rights for such a process, otherwise they may be able to defeat the resolution. If the company tries to delay matters, you may consider convening the meeting yourself which you can do with the support of at least one or more shareholder.

Note. As soon as the company receives special notice, it must be sent to the director the members are looking to remove. Be aware that upon receipt of the special notice, the director who is in the firing line has the right to make written representations to the company and insist that the company send this to all the shareholders. Furthermore, the director is also entitled to attend and speak at the shareholders’ meeting which has been set up to get rid of them.