ExpertMedium2 marksMultiple Choice
Management, administration and the regulation of companiesManagement, administration and the regulation of companiesDirectors
ACCA · Question 16 · Management, administration and the regulation of companies
Section A
Under the Companies Act 2006, what is the statutory procedure for shareholders to remove a director before the expiration of their period of office?
Section A
Under the Companies Act 2006, what is the statutory procedure for shareholders to remove a director before the expiration of their period of office?
Answer options:
A.
By passing a special resolution at a general meeting.
B.
By passing an ordinary resolution at a general meeting, requiring special notice.
C.
By a unanimous written resolution of all shareholders.
D.
By a majority vote of the board of directors.
How to approach this question
Recall the specific statutory provision (s.168) that gives shareholders the ultimate power to remove directors, and the procedural safeguards attached to it.
Full Answer
B.By passing an ordinary resolution at a general meeting, requiring special notice.✓ Correct
Section 168 of the Companies Act 2006 allows shareholders to remove a director by an ordinary resolution (simple majority) at a general meeting. However, 'special notice' of 28 days must be given to the company before the meeting, and the director has the right to be heard at the meeting.
Common mistakes
Thinking a special resolution is required, or that directors can vote to remove a fellow director.
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