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:-

  1. Get a copy of the current Constitution;
  2. Get a copy of the current Shareholder’s Agreement (if any);
  3. Read the parts in the Constitution and the Shareholder’s Agreement about removing directors;
  4. 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;
  5. Work out the timing and documents required;
  6. Prepare the necessary notice/s of members meeting.  Consider if a meeting can be called at short notice;
  7. Hold the member’s meeting;
  8. 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
  9. 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.

Note:-

  1. 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;
  2. 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;
  3. 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).

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