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Q: What remedies are available to a UK Director removed by the other Director? ( Answered 5 out of 5 stars,   0 Comments )
Subject: What remedies are available to a UK Director removed by the other Director?
Category: Business and Money > Small Businesses
Asked by: probonopublico-ga
List Price: $5.00
Posted: 05 Mar 2003 10:49 PST
Expires: 04 Apr 2003 10:49 PST
Question ID: 172198
In an English-registered Limited Company, one director has removed the
other (his half-brother) without his consent or approval. He has
appointed his cleaner (a Polish woman) in his place.

The company (arguably) belonged to their late father's estate although
its shares were nominally held offshore (by two Dublin-based
shareholders). The beneficial owner was their late father. The two
sons were executors of their late father's last Will (which was
validly executed).

During their periods of directorships (which preceded their father's
death), the directors have consistently certified in the Accounts that
they held no beneficial interest in the shares of the Company.

No contact has yet been made with the Dublin-based shareholders who
may or may not play ball.

Has any Googler out of the erudite 500 got any OTHER amazing insights?

A tip will be forthcoming for a tip-worthy answer.

Request for Question Clarification by jumpingjoe-ga on 11 Mar 2003 15:14 PST
I'm rushed for time, so won't attempt a full answer. It seems strange
that nobody has answered your question, so let me know if a more
thorough discussion of the issues below would qualify as an answer.

2 points-

- I'm pretty sure that directors of private limited companies can ONLY
be removed by the shareholders, in accordance with the procedure in
section 303 of the Companies Act 1985. This assumes he was validly
appointed as a director, registered as such with Companies House. Be
aware that some job descriptions contain the word director, but this
does not make the person a director within the meaning of the
Companies Act.

- Directors MUST declare any shares he holds with the company.

Clarification of Question by probonopublico-ga on 12 Mar 2003 04:01 PST
Hi, Joe

Thanks for your interest.

The man in question and his half-brother were appointed by the
retiring directors in 1996 and their appointments were duly recorded
at Companies House.

Neither of these directors had any beneficial interest in the shares
of the Company and they certified to this effect in the Company's

It is certainly a private limited company and, if s303 of the CA is as
you say, then there could be a remedy.

Please post an answer when you are ready.

Kindest regards


Clarification of Question by probonopublico-ga on 12 Mar 2003 07:06 PST
Hi, Again, Joe

I've checked the Companies Act and you are, of course, absolutely correct.

Many thanks for the suggestion.

Any other bright ideas?

Whether or not, please post an asnwer and collect your reward.

Are you an expert on English Company Law?

Kindest regards

Subject: Re: What remedies are available to a UK Director removed by the other Director?
Answered By: jumpingjoe-ga on 12 Mar 2003 15:50 PST
Rated:5 out of 5 stars
Hi there Bryan

First up, I’ll confess that I’m no Company Law expert, not yet, but my
head’s recently full of the stuff. I have however quoted the relevant
law wherever applicable. Remember as always that Google Answers is no
substitute for professional legal advice and responsibility is
disclaimed for what follows.

As I’ve mentioned, the main statutory method for a company to remove
one of its directors is as provided by section 303 of the Companies
Act 1985. Under this procedure the shareholders remove the director by
an Ordinary Resolution (i.e. with the agreement of more than 50% of
them). This must be done at an Extraordinary General Meeting of the
company, and the director to be removed must be given a chance to
circulate written representations amongst the shareholders regarding
his removal, as well as be given the chance to appear at the meeting
and state the reasons why he should not be removed (s.304). It seems
clear on the facts you have given that this procedure has not been

The question therefore is, does another director have the power to
remove another director? This depends on the company’s Articles of
Association, which are agreed by the shareholders upon its
incorporation, and are lodged with Companies House. They can vary from
company to company, but almost all companies use the default articles,
and most small companies will not even amend them at all. The default
articles are provided by government regulations, the Companies (Tables
A to F) Regulations 1985 (SI 1985/805). Table A contains the default
company articles.

Article 81 of Table A deals with this area, and provides the
circumstances under which a director is removed from office. These are
if he:

a) becomes bankrupt;
b) is or may be suffering from mental disorder and is admitted to
hospital under the Mental Health Act or a court order is made against
him on matters concerning mental disorder;
c) is absent from directors’ meetings (without the board’s permission)
for at least six months and the directors resolve that the office be

Article 81 also enables a director to give written resignation.

Do remember that another article could have been inserted upon
incorporation, or subsequently by the shareholders, enabling a
majority of directors to remove one of their number. I think this is
unlikely, and is also unlikely to operate in the situation you
describe since there are only two directors anyway. There is also a
requirement (given by the case of Samuel Tak Lee v Chou Wen Hsien
[1984] 1 WLR 1202) that when exercising this power, directors have a
‘fiduciary duty’ to the company. This simply means that they could
only remove a director in the best interests of the company, and in
good faith. As I’ve said, I think it unlikely that this procedure was

The other possibility of course, is that a director is disqualified by
a court, usually for gross breaches of the Companies Act.

Which leaves us with the most likely solution as to what happened.
Once any of the above procedures has been followed, Companies House
must be notified. This is done on Form 288(b). You can have a look at
this (click on Forms):

I’ve had a look at the form, and it simply needs to be signed by a
serving director. I would imagine, on the facts you give, that the
‘bad guy’ director noticed the form existed, and filled it in. He
probably thought that this would be enough to validly remove a

Of course, all it means is that Companies House will have deregistered
the director named on the form, since they will assume a valid
procedure has been followed. Here it hasn’t, and the director who has
been removed could apply to the Registrar of Companies to be
reinstated, and/or could take legal action against the company or most
probably the other director personally.

Section 303 removal explicity preserves any remedies existing under
employment law, such as unfair dismissal, etc.

I will also mention, to follow up what we’ve already discussed, that
the shareholders who can pass resolutions or exercise the power of
shareholders are those listed on the company’s members’ register.
Also, section 324(2) of the Companies Act states:

“a director is under obligation to notify the company in writing of
the occurrence … of any event in consequence of whose occurrence he
becomes … interested in shares … of the company”

Read it. Especially good reading is s.324(7), which cheerfully informs
us that failure to make this disclosure is a criminal offence, leading
to a fine, or imprisonment, or both.

We’ve reached the current limits of my knowledge, and the question,
but if you would like me to do any further research on this area do
please ask. Clearly, there are a number of legal avenues open to this
shoddily treated director, and expert legal advice should be sought.

I hope this answer has been useful, and has met your needs. Thank you
for posing the question, since I’ve enjoyed answering it.


Search strategy –
Personal knowledge 
Business Law , S. Slorach & J. Ellis, Oxford University Press
Quoted legislation
probonopublico-ga rated this answer:5 out of 5 stars and gave an additional tip of: $5.00
Great stuff, Joe.

However, I am at a loss to understand why you have failed to comment
on ID 161982 ... Please re-consider your position!

There are no comments at this time.

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