When directors disagree: What to do
In response to recent posts on AccountingWEB where company directors were in dispute, Jennifer Adams offers advice on the procedures and principles that apply in such situations.
In the Any Answers question Directors withholding statutory records, an accountant was caught in a situation where a clause in the shareholders’ agreement added to the company’s articles stated that board meetings were inquorate without the director who was refusing to give up its accounting records. (For details on the creation and use of such documents see Shareholders Agreements - Get the Details Right).
Removal of Directors
The original query made it clear that the other directors/shareholders wanted rid of the offending director. The removal of a director is usually achieved quite easily by ordinary resolution with special notice (CA 2006 s168): just a simple majority of shareholder votes is needed.
Here the Companies Act has made a useful procedural change in the allowing of written resolutions. CA 2006 s296(4) permits a written resolution to be passed “when the required majority of eligible members have signified their agreement to it”, so there is no need for a quorum at a general meeting.
Log in to AccountingWEB for the full article, which covers:
- Bushell v Faith provisions
- Other ways to get rid of a director
- Removed directors’ recourse
Jennifer Adams FCIS TEP ATT is a freelance writer and author specialising in tax and company secretarial issues, and can be contacted at Abacus Business Solutions.