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Appoint or Remove Directors FAQ

Directors’ Resolution to Appoint or Remove Directors is a resolution passed by the directors of a company to appoint a new director, typically to fill a casual vacancy on the board.

Generally, a new director must be appointed by the shareholders of a company. However, a new director may also be appointed by the board of directors using a Directors’ Resolution to Appoint Director(s) and/or acknowledge the Resignation of Director(s), subject to re-appointment by shareholders at the next general meeting.

Who can be a company director?

Almost anyone can be a director. The appointment has a few limitations, making company formation an available option for many people. An individual can be appointed if they are:

  • At least 16 years old
  • Not disqualified to be a director
  • Not subject to an undischarged bankruptcy

Who cannot be a company director?

A person with an undischarged bankruptcy cannot be a company director unless allowed by the court until a court discharges the person from bankruptcy.

Who appoints directors?

Generally, the directors are appointed by the shareholders of a company at the Annual General Meeting (AGM) or rarely at an Extraordinary General Meeting (EGM).

The decision for the appointment is made through a vote and passed if a majority of shareholders vote in favour.

According to the articles of association, the number of directors may be limited. If so a new director may be appointed only if a vacancy arises. Once a new director is appointed, the company must announce it to the Companies House within 14 days.

Who can remove directors?

As the shareholders have the authority to appoint a director, they can remove one.

A director can be removed by 50% at a meeting of the shareholders for any reason. This right cannot be taken from them by anything in the director’s service contract or the Articles of Association.

However, if a removal violates the director’s service contract or the terms of a shareholder’s agreement, the director will have the right to fight for it if he chooses to go to court.

Common reasons for the removal of a director are:

  • Mental disorder under the Mental Health Act 1983
  • Bankruptcy
  • Elimination under the law
  • Violation of his service contract
  • Self-resignation from office
  • Absence from a board meeting for six months in a row

Conclusion

The company directors may pass a Directors’ Resolution to Appoint or Remove Directors to appoint a new director. 

While appointing and removing directors from a company, procedures must be followed to ensure the appointment or removal is legal.

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