NEWS & VIEWS - 31.01.2007

Q&A - voting off a director

Q. One of our directors is really not pulling his weight any more and we want him off the board as soon as possible. Can the other directors simply agree to vote him off?

A. Although it’s common for directors to fall out or for individuals to suffer with performance issues, it’s not that straightforward to dispense with a director’s services. The simple truth is that unless there’s a specific provision in the Articles which allows the directors to vote a colleague from office, it can’t be done - there’s no express provision in the Companies Act. But if there is no such provision, the usual company law rules apply. This means that the director can only be removed by a vote of the shareholders at an AGM or EGM. But don’t forget that even if removed from office as a director, there’s a strong chance this person will remain an employee - meaning employment law procedures have to be followed. Tip. First check your Articles to see what you can and can’t do - such a provision is often included in the Articles of listed companies.

Unless your Articles contain an express provision that enables directors to vote a colleague out of office, you’ll need to rely on a shareholders’ vote at an AGM or EGM.

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