Hi, I recently set up a plumbing repairs company with four friends, we are all directors in the company. One of the directors has not been performing to a satisfactory standard and we now want to remove him from his position as a director. Could you please advise me on how we can remove a director from our company?
The Answer from Solicitors Online
A director of a private limited company in the UK can be removed from their position as a director in one of the following ways.
Removing a director by ordinary resolution
A company may by ordinary resolution (50% vote) at a general meeting (a meeting of all the company’s shareholders and directors) remove a director before the expiration of his period of office, notwithstanding anything in any agreement between it and him in accordance with section 168(1) of the Companies Act 2006.
Directors to be given 28 days notice
A director must be given at least 28 days notice before the meeting takes place in order for the decision to remove the director to be valid in accordance with section 168(2) of the Companies Act 2006.
Where notice is given of an intended resolution to remove a director, the company must send a copy to the director concerned. The director may require the company to circulate written representations to the shareholders and the director is also entitled to address the meeting at which the resolution to remove his from his position is being considered in accordance with section 169 of the Companies Act 2006.
The directors voting rights
The shares held by a director may carry additional voting rights when his removal is being sought. It may therefore be possible for the director to use such additional voting rights to defeat the wishes of a general meeting to vote him out.
Compensation for removed directors
However the removal of a director through a vote at a director’s meeting does not cancel the right which the director may have to compensation for early termination of their contract in accordance with section 168(5) of the Companies Act 2006.
A companies articles of association may also state additional grounds for retirement or removal of a director.
Furthermore a company may not make a payment for loss of office to a director unless the payment has been approved by a resolution of the shareholders in accordance with section 217 of the Companies Act 2006.
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