Directors are integral to every business, appointed to oversee its running and long-term strategy.
Responsible for making legal and financial decisions about the company and carrying out the duty of care towards stakeholders, company directors must act in the best interest of the company and according to directors’ duties and the company’s articles of association.
When this stops happening, the other directors and shareholders may seek to remove the director from their position.
A director may be removed from a company for any number of reasons, with some of the most common including:
This is different to when a director decides to leave of their own accord, which does not require the forcible removal of a shareholder.
Removing a director from the business
Directors occupy a legal position, meaning there is a process which must be followed when a company with two or more directors/shareholders seeks to remove one.
While the process will be different for each company, it generally follows this process:
If the director is an employee of the company, you will also need to follow relevant dismissal criteria if you wish them to leave the company altogether. Be sure to act in accordance with employment legislation to avoid unfair dismissal claims.
Any other business
It can be a difficult decision to remove a director from a company, particularly if they were integral to the running of the business.
Moving forward, you’ll need to make sure that any essential duties are fulfilled and that the business is not negatively impacted by the removal of the director.
It is prudent to seek legal advice when removing a company director. You may experience backlash from the director, and you’ll need to accurately navigate your articles of association to ensure you act legally, so you obtain early advice from a commercial law expert.
We can advise you on how to proceed to protect yourself, your fellow directors and your company.
Contact us today for further guidance.
