How can a managing director be removed?
A Company has the authority to remove a Director by passing an Ordinary Resolution, given the Director was not appointed by the Central Government or the Tribunal. A Board Meeting will be called by giving seven days’ notice to all the directors.
ADVERTISEMENTS: However, the shareholders cannot remove the following directors: (i) A director appointed by the Central Government under section 408 for the prevention of oppression and mismanagement. (ii) A director holding office for life on the 1st day of April 1952, in the case of private company.
The Statutory Procedure
A shareholder wishing to propose a resolution to remove a director must give special notice of his intention to the company. … The resolution to remove the director is passed by a simple majority (i.e. anything over 50%) of those shareholders who are entitled to vote, voting in favour.
Generally, a majority of shareholders can remove a director by passing an ordinary resolution after giving special notice. … The director will however continue to own the shares and be entitled to their portion of any dividends declared.
What are the powers of managing director?
Managing Director is entrusted with substantial powers of company management subject to the superintendence, control and direction of the Board of Directors. (v) To direct registration of transfer of any share. (ii) Executing such policies and objectives.
The shareholders can vote to remove directors from the board before their terms expire, with or without cause, unless the corporation has a staggered board. The shareholders can then vote to replace the directors they removed.
The Companies Act does not prescribe any grounds for the removal of a director by shareholders. The shareholders are not required to have any particular reason to remove a director – it is the right of the majority of them to do so.
Shareholders can remove any director before the expiry of his tenure, except any director appointed by Tribunal for prevention of oppression and mismanagement u/s 242 and a director appointed under principle of proportional representation u/s 163. … The same should be signed by the concerned shareholder/s.
Section 303 of the California Corporations Code generally permits removal of any or all of the directors without cause if the removal is “approved by the outstanding shares” (defined in Section 152). … Shareholders holding at least 10% of the outstanding shares of any class are authorized to bring suit under the statute.
Can the shareholders overrule the board of directors? … Shareholders can take legal action if they feel the directors are acting improperly. Minority shareholders can take legal action if they feel their rights are being unfairly prejudiced.
If the shareholders of a public company want to remove a director, they must first give notice of their intention. Shareholders must make this notice to move a resolution for a director’s removal at least two months before the shareholders meeting. Shareholders must also give the director notice as soon as practicable.
Can the majority shareholder be removed? According to Lankford Law Firm, although it may be somewhat difficult, removing a majority shareholder is possible – for instance, if they have violated the original terms of the shareholders’ agreement of the company’s bylaws.