This is a question we are frequently asked, and the answer will differ depending on the circumstances. A director is appointed as such by the company pursuant to the Companies Act and/or the company’s articles of association, and that appointment is then registered in the company’s register of directors, and at Companies House. That director then remains as a director of the company unless and until they either resign, die, retire by rotation, or is removed. The company itself can not simply file the termination form at Companies House and add the resignation date to the registers – it must follow a process to properly effect the termination.

Resignation

If the director resigns and serves his resignation letter on the company, the remaining officers of the company can then update the register of directors. If the director of the company is also an employee of the company and resigns as an employee, this does not automatically mean he has resigned as a director and therefore the resignation letter should cover both his employment status and his directorship.

Death

If a director passes away the company should, upon receipt of notice of his death, terminate the director’s appointment at Companies House, update the registers to reflect the termination and minute the termination at its next board meeting. If there are no other directors of the Company when the director passes away and the articles do not provide an automatic solution, then the shareholders will need to appoint a new director – we will cover this scenario in a future article.

Retiring by rotation

Some articles of association and shareholder agreements provide that directors retire by rotation at the end of a set period of time. This provision is not as common in articles as it used to be and is not often found in articles of smaller companies. If the provision is present the articles normally state how the retirement should be effected, but it would normally come into force at an annual general meeting of the shareholders of the company when new directors are appointed. If this was the case, the retirement would be minuted and the company could then terminate the director’s appointment at Companies House and within the registers.

Removal of a director

This is the most complex of the situations above and legal advice should be sought before taking any action to remove a director from office. There may be provisions within the company’s articles or shareholders agreement which provide a process and, if so, the process should be followed exactly, assuming the process does not contravene the Companies Act 2006. If no such provisions exist then, the provisions of the Companies Act 2006 (section 168) should be utilised whereby shareholders of the Company can request (by service of “special” notice on the company) that they want the company to hold a meeting of shareholders/members for the purpose of removing a director from the company. Any such notice served must be given by shareholders/members of the Company holding at least 5% of the voting rights. There are timeframes to abide by, as set out within the Companies Act and the director who is the subject of removal does have the right to make representations at the meeting. It is also important to note that the written resolution process can not be utilised for a director removal.

If you would like further information on how to remove or indeed appoint a director or other officer to a company then contact michelle.lamberth@herrington-carmichael.com in our corporate governance team or call 0118 989 9706.

This reflects the law and market position at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought in relation to a specific matter.