Removing a director- terminating service contract
Removal of director and auditor:
Director S.168(1) CA permits shareholders to remove director by passing an ordinary
s.168(1) CA 2006 resolution of over 50% at GM regardless of prior agreements.
Auditor S.510(1) SH have the power to remove company auditor OR at GM.
s.510(1) CA 2006
Directors service contracts:
Removal by s.168(1) OR passed and this right cannot be excluded-
shareholders under CA special notice is required when SH want to remove director under
2006 s.168(2)-
special notice means the notice must be given 28 days prior to GM
312(1)
copy of the notice must be sent to the director concerned immediately
s.169(1)
check Bushell v Faith clause in the articles- gives directors who are also
shareholders weighted voting rights on a resolution for their removal.
Employment rights are only relevant when the director has an
employment contract- so a NED will not have any employment issues
arising as they will not be an employee of the company.
Bushell v Faith Clause
Protecting a director Fixed-term service contract for a long time with no break clause= thus,
from dismissal the director may have to be paid a large amount of compensation.
Shareholder’s agreement- if D was also a shareholder could agree not to
vote against specified directors on a motion to dismiss them.
If D gave a loan to the company- have condition which states the loan
will be fully repayable upon their dismissal- acting as a deterrent.
MA 18(F) no automatic removal of director by termination of service
contract
Executive directors- employment issues
Claim Basis Awards
Dismissed either: Damages- net pay
Wrongful dismissal- breach of Without due notice: or For notice period:
contract before guaranteed term For rest of term
ends.
- Fixed term- cannot be Employer defence: repudiatory What they would receive if not
terminated with notice breach dismissed so pay and benefits for
Removal of director and auditor:
Director S.168(1) CA permits shareholders to remove director by passing an ordinary
s.168(1) CA 2006 resolution of over 50% at GM regardless of prior agreements.
Auditor S.510(1) SH have the power to remove company auditor OR at GM.
s.510(1) CA 2006
Directors service contracts:
Removal by s.168(1) OR passed and this right cannot be excluded-
shareholders under CA special notice is required when SH want to remove director under
2006 s.168(2)-
special notice means the notice must be given 28 days prior to GM
312(1)
copy of the notice must be sent to the director concerned immediately
s.169(1)
check Bushell v Faith clause in the articles- gives directors who are also
shareholders weighted voting rights on a resolution for their removal.
Employment rights are only relevant when the director has an
employment contract- so a NED will not have any employment issues
arising as they will not be an employee of the company.
Bushell v Faith Clause
Protecting a director Fixed-term service contract for a long time with no break clause= thus,
from dismissal the director may have to be paid a large amount of compensation.
Shareholder’s agreement- if D was also a shareholder could agree not to
vote against specified directors on a motion to dismiss them.
If D gave a loan to the company- have condition which states the loan
will be fully repayable upon their dismissal- acting as a deterrent.
MA 18(F) no automatic removal of director by termination of service
contract
Executive directors- employment issues
Claim Basis Awards
Dismissed either: Damages- net pay
Wrongful dismissal- breach of Without due notice: or For notice period:
contract before guaranteed term For rest of term
ends.
- Fixed term- cannot be Employer defence: repudiatory What they would receive if not
terminated with notice breach dismissed so pay and benefits for
