Q. How do shareholders of an IOM Company remove directors?

Although there are sometimes provisions in the Articles and service contracts protecting Directors – all that is generally required for shareholders to remove a Director is a members’ resolution. In the 1931 Act the relevant part is contained in Section 141a – which essentially provides that a director can be removed by a Special Resolution of the members. If you do this then, depending upon the terms on which the Company engaged them, they may have some claim against the company for loss but nothing in the Articles or contractually can prevent the removal as the provisions of the Act will override any other agreement.

For a 2006 Company Section 96 is the relevant part – and it says much the same thing – except it’s probably slightly easier with an 2006 Act company as a resolution in writing can be passed by a majority of the members and doesn’t have to be unanimous – as is the case with the 1931 Company.

photo credit: Horia Varlan via photopin cc

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