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When does a Director cease to hold office?

Director's period of office has exceeded the period specified in the Articles.

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Dealing with a Private Limited Company. The Company's Articles state 'After 2 consecutive periods of 3 years Directors of the Company will be disqualified from further election for a period of 3 years'. The Director in question completed a 6 year stint in January 2021. The board have voted for him to continue as a Director and will propose an amendment of the Articles at the AGM in March 2021. A number of shareholders are unhappy with this and intend to vote against re-appointment. Until the AGM is held can the Director in question continue to act as a Director of the Company or did his appointment automatically cease with his completion of the 6 year period?

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Psycho
By Wilson Philips
07th Feb 2021 19:29

Legal question.

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Out of my mind
By runningmate
07th Feb 2021 19:32

This is about Donald Trump isn't it!

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Replying to runningmate:
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By frankfx
07th Feb 2021 22:19

runningmate wrote:

This is about Donald Trump isn't it!

Vladimir Putin. IMHO.

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By johnhemming
07th Feb 2021 20:14

It is a legal question. The issue you have to look at is really whether it is worth bothering about two months. If, for example, you could ensure that this director is not paid for two months the board could simply increase any pay after that point. If there is a question of balance of power on the board then potentially decisions are ultra vires.

It sounds to me a bit like a social club or something like that.

I really don't think, however, it is worth fighting over 2 months of a person being a director or not. If the amendment to the articles is passed then the director comes off failing that otherwise.

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By Justin Bryant
08th Feb 2021 09:00

There are 3 different types of directors legally speaking. It sounds like he's a de facto director even if he's not a de jure director, so he's a director at least until he ceases being a de facto director.

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By Paul Crowley
08th Feb 2021 09:08

What kind of company is it?
Daft articles for a trading or service charge company
Sounds like the stupid antics of clubs or other voluntary unpaid or unremunerated organisation

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Replying to Paul Crowley:
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By Tax Dragon
08th Feb 2021 09:48

Whilst few clubs or other voluntary unpaid or unremunerated organisations have the international importance or financial weight of the USA or Russia, there is (as has already been alluded to above) a point of principle. It may, in your opinion, be a "stupid antic", but in my opinion
a) the world would have been a better place had China and Russia not found ways to let Xi and Putin be (in effect) presidents for life [and you just know that Trump, had he been re-elected, would have tried to do the same in the US]
and b) you are more likely to be able to protect things on the large scale by looking after them on the small scale.

But (also IMHO) this forum is for discussing points of accountancy and tax principle, not swapping diverse political opinion. Let's agree to keep it that way.

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Replying to Tax Dragon:
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By Paul Crowley
08th Feb 2021 09:59

The other directors want him
Need I say more, the directors usually know more about operations and the valid contributions of the director than a random group of shareholders

This has zero to do with international politics

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Replying to Paul Crowley:
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By Tax Dragon
08th Feb 2021 10:51

National politics, Paul.

What about FIFA? They brought in a limit on terms - because they didn't have one (and not having one gave a bad outcome). Even football, hardly renowned for its intelligence, has seen the light.

And it's that principle I'm talking about. You have to guard it at a small level to protect it at a big level. (My Mum used to say "look after your pennies and your pounds will look after themselves.")

But this isn't a conversation I want to have - I was just looking to balance your "stupid" comment. You might see it as stupid. You are allowed. We don't all have to agree with you.

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RLI
By lionofludesch
08th Feb 2021 10:13

Are there any other candidates ?

There's nowhere near enough information here. Firstly, it's clearly a legal matter and, secondly, it's even more clearly not your run of the mill trading company.

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Hallerud at Easter
By DJKL
08th Feb 2021 11:06

Do the directors have a right to coopt directors within the Articles to then be ratified at the next General Meeting?

"After 2 consecutive periods of 3 years Directors of the Company will be disqualified from further election for a period of 3 years" does not of itself disqualify someone being a director it disqualifies someone being elected a director which may be a slightly different thing. I would read all the Articles to see if there are permitted other ways to be a director.

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By 356B
08th Feb 2021 12:05

The Articles disqualify him from further election. He's still a director until the AGM.
Can you post the Articles?

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By julianansell.hotmail
09th Feb 2021 10:22

Many thanks for all of the replies. I did like the references to Trump and Putin, there are similarities.
It is a Club rather than a trading company and as ever there is quite a lot of acrimony. Not making payments to the Director is an option but there are of course the other duties of a Director (they still have cheques!) which can be worked around. I wouldn't permit the Director signing the accounts off in these circumstances. I was hoping to find a case reference but I have not yet succeeded. Company Law (I can just about remember studying it) permits an appointment to replace a Director prior to an AGM but given that as the Articles stand he is no longer permitted to stand for office I have now taken the view that he ceased to be a Director on the 6th anniversary of his appointment. As pointed out at the start of the replies it is a legal question so they can follow it up at their expense should they wish to!

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