Vacation of office under the Companies Act 2014 arises if a director becomes bankrupt, is disqualified from office by virtue of a court order, fails to take a share qualification that is required under the company’s constitution or the appointment of a director exceeds the maximum number of permitted directorships. The Constitution of the company may also include other circumstances under which the office must be vacated.
However a director may also be removed by ordinary resolution before the expiration of his term of office. The resolution must be proposed by a member under “extended notice”, i.e. at least 28 days prior to the holding of the meeting where the resolution is to be moved.
Removal of a director in this manner does not affect his or hers right to compensation under the terms of appointment and care must be taken that any action is in line with employment legislation. If the director is also a shareholder he or she may also have remedy for oppression under Section 212 if the Companies Act 2014.
For this reason we would always advise taking the requisite legal advice prior to removing a director in this manner.