Removing Company Directors
Removing directors is not a particularly difficult task if all the members of the company want the director to go. And, if you were to prepare a step by step guide on how to remove a director, it would look something like this:-
- Get a copy of the current Constitution;
- Get a copy of the current Shareholder’s Agreement (if any);
- Read the parts in the Constitution and the Shareholder’s Agreement about removing directors;
- As the removal of a director cannot generally be done by the directors, call a director’s meeting to call a shareholder’s (member’s) meeting;
- Work out the timing and documents required;
- Prepare the necessary notice/s of members meeting. Consider if a meeting can be called at short notice;
- Hold the member’s meeting;
- Once the member’s have passed a resolution at their meeting, if there is to be a change in directorship, notify ASIC using the on-line form 484; and finally
- Adjust the company registers.
As a director does not always want to go, even where a majority of shareholders wish to remove a person, be aware that is not always possible. In all such cases you will need to get legal advice.
- The directors can usually appoint a person to fill a “casual vacancy” without going to the members. That appointment will be effective until the next annual general meeting;
- The constitution of most company’s will allow for resolutions to be passed by a circulating resolution. Although this saves people coming together in the same room, it may not shortcut the process;
- If the conduct of the company’s affairs or a resolution, or a proposed resolution, is either contrary to the interests of the members as a whole; or oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity; then a member may approach the court to protect their rights. The court if approached has wide powers including the power to order that the company be wound up, a receiver be appointed, shares be bought, the constitution changed etc. (See section 232 and 232 of the Corporations Act 2001).