How to remove a director

Removal of one of two directors in a company.

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I am dealing with a situation with a company with two directors and equal shareholding.  One of the directors has been 'naughty' - police involved etc and the other director would like to remove him from his role in the company.  Whilst there is enough there to remove him as an employee - can the company remove his directorship too - bearing in mind that no one party has a majority?  Share situation can be sorted - the shareholder agreement will cover this through the good leaver/bad leaver clause, but this may take a bit of time.

Replies (6)

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paddle steamer
16th Apr 2024 17:44

What does Shareholder agreement say about director conduct, if anything?

Rock and hard place, I suspect.

Still, lawyers will get their winter skiing holiday as the fees roll in.

Thanks (1)
By carnmores
16th Apr 2024 18:19

i would be surprised if they could invoke the good / bad leaver clause with a casting vote

Thanks (0)
By FactChecker
16th Apr 2024 21:01

Seems to be an assumption that 'naughty' director won't want to relinquish post - but has this been tested?
Also, depending on the nature of the business and very much depending on the nature of the crime (alleged or proven?), will the business be in terminal jeopardy or merely embarrassed?

I'm not suggesting those should be answered here, but may prove fruit for thought (or even possible pre-lawyer negotiation/compromise).
But otherwise it's a question for the lawyers - who will of course want to see any SHA and/or Articles etc.

Thanks (2)
David Winch
By David Winch
16th Apr 2024 21:03

Statement of the blindingly obvious - you need to submit a Suspicious Activity Report if you have not yet done so.
See what (if anything) the Articles of Association say about removing the director (and the company should take legal advice)

Thanks (0)
Replying to davidwinch:
By Matrix
16th Apr 2024 21:12

I know I have asked this before but why do you have to report something which the authorities already know about?

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Replying to Matrix:
David Winch
By David Winch
16th Apr 2024 21:29

Well you can pick one or more of the following answers to suit yourself -
1. Because those are the requirements of s330 PoCA 2002
2. Because you want to cover yourself in case anyone says you should have reported and you did not
3. Because you are reporting to the NCA not the police and so your report goes on a database widely available to e.g. SFO, NCA, DWP, HMRC who might not otherwise have that info available.

Thanks (3)