It seems worth setting out the basics of Director/s removal under s203D of the
Corporations Act 2001 for those not familiar with it.
It is simple enough to do, but time consuming and requires 5% of holders to set in motion, followed by a vote by shareholders. Following S203D avoids unfair dismissal claims - well, it avoids successful claims.
Section 203D operates despite anything within the company’s constitution, or any agreements that have been made between the director and the company or the company’s members. Further, no misconduct or other justification is required to remove the director.
Section 203D prescribes the following steps:
- Shareholders must give the company at least 2 months’ notice before the meeting of their intention to move the resolution to remove the director
- The director must be given notice of the resolution as soon as practicable.
- The director must be given the opportunity to address the resolution at the meeting and they may issue a statement before the meeting to be circulated to the members.
- The company must issue notice of the meeting to members. This must be a minimum of 21 days before the meeting for a public company and 28 days for a listed company.
Directors cannot simply refuse to call a meeting to pass a removal resolution. If shareholders holding at least 5% of the votes in the company request a meeting to consider a removal resolution, then the directors are obligated to call and arrange to hold it at the company’s expense.
Alternatively, shareholders holding at least 5% of the votes in the company may call and arrange to hold a meeting at their own expense without making a request to the directors.
The process is relatively straightforward, but the disruption and time involved is an aggravation most holders are reluctant to voluntarily suffer.
Getting enough votes to spill the board would obviously require detailing what OBJ would do instead of what the BOD has proposed.
(20min delay)