▲Removal of directors:
a director may be removed from office by ordinary resolution at a meeting of which special notice to the company has been given by the person proposing it: s 168.
On receipt of the special notice the company must spend a copy to the director who may require that a memorandum of reasonable shall be issued to members: they also have the right to address the meeting at which the resolution is considered.
The articles and the services contract of the director cannot override the statutory power. However, the articles can permit dismissal without the statutory formalities being observed, for example dismissal by a resolution of the board of directors.
The power to remove a director is limited in its effect in four ways:
Restrictions on power to remove directors
(1) Shareholding qualification to call a meeting: In order to propose a resolution to remove a director, the shareholders involved must call a general meeting.
(2) Shareholding to request a resolution: Where a meeting is already convened, 100 members holding an average £100 of share capital each may request a resolution to remove a director: s338.
(3) Weighted voting rights: A director may have weight voting rights given to them under the constitution for such an eventuality, so that they can automatically defeat any motion to remove them as a director: Bushell v Faith 1970
(4) Class right agreement: It is possible to draft a shareholder agreement stating that a member holding each class of share must be present at a general meeting to constitute quorum. If so, a member holding shares of a certain class could prevent a director being removed by not attending the meeting.
▲Memorandum of association
The memorandum is a simple document which states that the subscribers whish to form a company and become members of it.
▲Company Constitution
- The constitution of a company consists of: the article of association & resolutions and agreements
- Resolutions directly affect the constitution of a company as they are used to introduce new provisions, or amend or remove existing ones
- Agreements made are also deemed as amending the constitution
▲What is Bonus issues?
A bonus issue is the capitalisation of the reserves of a company by the issue of additional shares to existing shareholders, in proportion to their holdings. Such shares are normally fully paid-up with no cash called for from the shareholders.
▲Minority protection: S 994
S 994 offers a statutory remedy to a minority if unfairly prejudicial conduct has occurred.Unfairly prejudicial conduct generally involves discrimination against a minority or exclusion of a director from a quasi-partnership company.