SECTION 3: NOMINATION AND APPOINTMENT PROCESS

Section 3: Nomination and Appointment Process | 61 recourse is for the Board to communicate with the shareholders to pass a resolution at a general meeting to remove the director. In the case of an ED, the terms of the employment contract may allow the company to require the ED to step down from a Board without needing to go through a general meeting of shareholders. 3.10.4 The constitution of a company should generally provide shareholders with the right to remove directors by ordinary resolution. In the case of public companies, this right is given the force of law 46 notwithstanding any contrary provision in the company’s constitution. Shareholders who wish to remove directors must follow the procedures under section 152 of the Companies Act. The ordinary resolution to be passed at a general meeting requires more than 50 per cent of shareholder support. However, an extraordinary general meeting can be called by two or more shareholders holding not less than 10 per cent of the total number of issued shares of the company (excluding treasury shares). The Companies Act contains procedural requirements 47 that provide some protection for the director: • Special notice 48 must be given for any resolution to remove a director. • When that notice is received by the company, the director must be informed immediately. • The director has the right to be heard on the resolution at the meeting. 46 Section 152 of the Companies Act. 47 Section 152 of the Companies Act. 48 That is, notice of the resolution to remove the director must be given to the company not less than 28 days before the meeting at which the resolution is to be moved: Section 185 of the Companies Act. 3A-17 3B-7