REMOVAL OF COMPANY DIRECTORS Iyke Ozemena Attorney,
Corporate Consultant,Author: Appointment of a person as director for
life is allowed by s.255 Companies Act provided that he is removable
under s.262 which prescribes the procedure for the removal of
directors. But if a director claims to be appointed for an indefinite
period such appointment must be clear and definite according to the
decision in ODULANA V. GLIBE FISHING IND. LTD FHC/L/55/60. The
protection of s.260 does not apply to a director who has actual
knowledge of the defect at the time he acted. The case which supported
this principle is ONWUKA V. TAYMANI (1965) L.L.R. 62, POOL HOUSE GROUP
V. A.C.B. LTD (1969) NLR 347. To remove a director of a company
requires an elaborate procedure. If the removal comes before the
expiration of his period of office, then an ordinary resolution would be
sufficient. However, every resolution that purports to remove a
director requires a special notice given to all members entitled to
attend the meeting in which the proposed resolution is to be passed.
When the company receive a notice to the effect that a director was
proposed to be removed, it shall send a copy of the proposed resolution
to the director concerned to enable him/her have knowledge of the
proposed removal. This is in line with the principle of audi alteram
patem, otherwise known as the principle of fair hearing. The director
concerned is required to make his representation in writing. In the
special notice sent to members about the proposed removal of a director,
further information shall be added to the effect that representation
has been made by the director, provided the director holds no objection
to that. Copies of such written representation shall be sent to those
members who have been sent to those members who have been sent notices.
But if for circumstances on the part of the company there is a delay in
sending the representations to members or none was sent at all, the
director may be allowed to give an oral representation, or if a copy of
his written representation is available could be read at the meeting to
the hearing of all members. The privilege to read the representation at
the meeting shall not be abused by making unnecessary publicity or
defamatory statements. An ordinary resolution is passed by a simple
majority voting in favor of the proposal. Once this is properly
carried, from then onwards the concerned director would be deemed to
have been removed in accordance with the provisions of s.262. The
simplicity of this provision is said to check the managing powers of the
directors against shareholders to ensure the latter's ultimate
control. Care must be taken to ensure that the removal of any director
is legally conducted. The resolution for such removal must comply with
the provisions of the Act otherwise such removal would be void and of no
effect and therefore be set aside. This was confirmed in AWOYEMI V.
SOLOMON (1976) FRCR 165. But the unlawful removal could be rectified to
give effect to the resolution. A.R.E.C. LTD AMAYE (1986) NWLR 653.
Although directors are not employees and should not be treated as such,
if there is a successful removal/termination of director's appointment
he/she is entitled to damages in accordance with s.262(6). Also ODULANA
V. GLOBE FISHING IND. LTD. However, in the case of a Managing Director
whose appointment is ultra vires the company, he/she should be
remunerated on the basis of quantum meriut after the appointment has
been finally avoided. The position found support in the case of CRAVEN
ELLIS V. CANONS LTD (1936) 2 K.B. 403 C.A. <P> Iyke Ozemena
Attorney, Corporate Consultant, Author: DIRECTORS: Duties &
Enforcement | http://www.amazon.com/dp/B005783S6S <P> GUIDE TO FINAN$IAL $ECURITY | http://www.amazon.com/dp/B005EFTHNC <P> IDEAWORKSHOP MANUAL: ENTREPRENEURS | http://www.amazon.com/dp/B005FEHCDE <P> <P> <P> <P>
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