Remove a director
Removing a director from a company can be a complex process, and the specific steps will depend on your location and company structure. Here’s a general overview of the procedure:
Grounds for Removal:
Directors can be removed for various reasons, some requiring a specific cause and others for more general reasons. Common reasons include:
- Breach of Fiduciary Duty: This could involve acting in self-interest, misusing company funds, or conflicts of interest.
- Poor Performance: Consistently failing to meet performance expectations.
- Insolvency or Bankruptcy: If the company faces financial difficulties.
- Deadlock or Inability to Act: If the director becomes incapacitated or there’s a disagreement preventing them from fulfilling their duties.
Who Can Remove a Director:
- Board of Directors: In some cases, the board can directly remove a director through a resolution, especially if they were appointed by the board itself.
- Shareholders: Shareholders can vote to remove a director during a general meeting, typically requiring a majority vote.
General Removal Process:
- Call a Meeting: Depending on who initiates the removal, a board meeting or a general shareholder meeting needs to be convened. Proper notice with details about the proposed removal must be given to all directors and shareholders, often with a specific time frame (e.g., 14-21 days).
- Special Notice to Director: The director being removed should receive a specific notification outlining the reasons for removal and be given an opportunity to respond or defend themselves.
- Vote on Resolution: During the meeting, a resolution proposing the director’s removal is presented for voting. The outcome depends on whether it’s a board or shareholder vote and the required majority in your jurisdiction.
- Inform the Director: Once the resolution is passed, the director must be officially informed of their removal.
- Filing Requirements: There might be specific forms requiring filing with relevant government agencies to register the change in company directors.