Shareholders have a right to remove a director from office at any time, subject to certain procedural requirements being met to ensure the removal is valid.

The procedure for removal of a director by shareholders is set out in the Companies Act 2006. Provided the procedure is followed the removal will be valid. A resolution to remove a director can be proposed by the Board or requisitioned by any shareholder(s) holding at least 5% of the total paid up share capital which carries voting rights in the company.

For a director to be removed, an ordinary resolution needs to be passed at a meeting of the shareholders. As special notice of the meeting at which the resolution is to be proposed is required to be given, the procedure can take around 4 weeks to finalise. The company should consider whether, whilst waiting for the meeting, the director concerned should be suspended or placed on restrictive duties. Any steps to restrict the director in their role should be considered carefully; especially in light of relevant employment rights the director may have, as well as the director’s duties to the company pursuant to the Companies Act 2006.

The director affected by the proposed removal is entitled to be given notice of the proposal and meeting at which the resolution is to be considered, and may make representations (of a reasonable length and in writing) to the company in relation to their proposed removal from office. If received in time, a copy of these representations should be sent to the shareholders along with the notice for the meeting. If not received in time the director may require the representations to be read out to the shareholders at the meeting. The director concerned may also attend and speak at the shareholders’ meeting. If the director is also a shareholder of the company they are also entitled to vote on the resolution.

In order to remove the director an ordinary resolution must be passed (this requires a simple majority to vote in favour). If the resolution is passed, the director’s removal will be effective from the date of the passing of the resolution. Notice of the termination of the director’s appointment should be submitted to Companies House on form TM01.

Any removal of a director should be undertaken carefully and with regard to any other rights the director may have in relation to their employment, termination for loss of office or rights as a shareholder of the company.

If you require any assistance please contact Leilah Ashurst on or at LAA@nexussolicitors.co.uk.