Hong Kong Company
Corporate Services
Removal of Director(s)
Question 1: In the case of voluntary resignation, can a company remove a director before the end of his term of office?
Answer: Yes, a company may, by ordinary resolution in a general meeting, remove a director before the end of his term of office, notwithstanding any provision in the company’s articles of association or any agreement with the director. However, this does not authorize the removal of a director who has held office for life since 31 August 1984.
Question 2: Is special notice required if a director refuses to resign voluntarily? What is the requirement for special notice regarding the removal of a director or the appointment of a replacement?
Answer: Yes, if a director refuses to resign voluntarily, special notice is required for the company to proceed with their removal. According to the Companies Ordinance Section 462(4), any member proposing the removal of a director must give a “special notice” to the company at least 28 days before the general meeting where the resolution will be voted on. This special notice is necessary to ensure that all members are adequately informed about the proposed resolution and can prepare for the meeting accordingly.
Question 3: What situations can prevent an ordinary or special resolution from being passed during a meeting?
Answer: Several situations can prevent an ordinary or special resolution from being passed during a meeting:
Procedural Non-compliance: Resolutions must comply with any procedural requirements outlined in the company’s articles of association or relevant laws. Failure to follow these procedures correctly may invalidate the resolution.
Lack of Quorum: If the required quorum is not present, neither an ordinary nor a special resolution can be passed. A quorum is the minimum number of members that must be present for the meeting to be valid.
Failure to Provide Special Notice: For certain resolutions, such as the removal of a director or the appointment of an auditor, special notice must be given at least 28 days prior to the meeting. If this notice is not provided, the resolution cannot be passed.
Insufficient Votes: An ordinary resolution requires more than 50% of votes cast to pass, while a special resolution typically requires at least 75% approval. If these thresholds are not met during voting, the respective resolution will fail.
Question 4: Does the special notice need to be sent to the director being removed?
Answer: Yes, once the company receives the special notice of a resolution to remove a director, it must send a copy of that notice to the relevant director without delay. The director is entitled to make representations regarding their removal and can request that these representations be circulated to the members of the company or read out at the general meeting where the resolution is voted on. This ensures that the director has the opportunity to present their case before any decision is made regarding their removal.
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