LEGAL PRINCIPLE: COMPANY LAW – Removal of Directors – Requirement for Ordinary Resolution and Special Notice under Companies Act 1968
PRINCIPLE STATEMENT
The only means of removing a director pursuant to section 175(1) of the Companies Act requires special notice and an ordinary resolution of the company passed at a general meeting.
RATIO DECIDENDI (SOURCE)
"The only means of removing the appellant therefore was pursuant to section 175(1) of the Act. No special notice was given and an ordinary resolution of the 2nd respondent company was not also passed before the appellant was removed from office."
EXPLANATION / SCOPE
Section 175(1) prescribes specific procedural requirements for director removal: (1) Special notice—extended notice period (typically 28 days) giving the director time to prepare and possibly attend the meeting; (2) Ordinary resolution—simple majority vote of shareholders at properly convened general meeting. Both requirements are mandatory, not directory. Failure to give special notice or pass a proper resolution renders the removal invalid. “Special notice” alerts the director to the proposed removal, enabling them to make representations to shareholders or challenge the grounds. The ordinary resolution requirement ensures shareholders (not just management or majority shareholder) approve removal. This protects directors from arbitrary removal while allowing shareholders to remove directors they’ve lost confidence in through proper democratic procedures.