The sections, word for word
Every section on this subject, exactly as printed in the Official Gazette (Act No. 3 of 2020). The explanation follows beneath.
Section 284. Vacation of office of director
(1) The office of director shall be vacated if the director—
(a) ceases to be a director by virtue of section 277 of this Act ;
(b) becomes bankrupt or makes any arrangement or composition with his creditors ;
(c) becomes prohibited from being a director by reason of any order made under sections 280-281 of this Act ;
(d) becomes of unsound mind ; or
(e) resigns his office by notice in writing to the company.
(2) Where a director presents himself for re-election, a record of his attendance at the meetings of the board during the preceding one year shall be made available to members at the general meeting where he is to be re-elected.
Section 285. Rotation of directors
(1) Unless the articles provide, at the first annual general meeting of the company all the directors shall retire from office, and at the annual general meeting in every subsequent year one third of the directors or if their number is not three or a multiple of three, then the number nearest one-third shall retire from office.
(2) The directors to retire in every year are those who have been longest in office since their last election, but as between persons who became directors on the same day those to retire are (unless they agree among themselves) determined by lot.
(3) The company at the meeting at which a director retires in the manner mentioned in subsections (1) and (2), may fill the vacated office by electing a person to that office and in default, the retiring director is, if offering himself for re-election, deemed to have been re-elected, unless at such meeting it is expressly resolved not to fill such vacated office or unless a resolution for the re-election of such director have been put to the meeting and lost.
(4) No person other than a director retiring at the meeting is, unless recommended by the directors, eligible for election to the office of director at any general meeting unless not less than three nor more than 21 days before the date appointed for the meeting there shall have been left at the registered office or head office of the company notice in writing, signed by a member duly qualified to attend and vote at the meeting for which such notice is given, of his intention to propose such person for election, and also notice in writing signed by that person of his willingness to be elected.
Section 286. Validity of acts of directors
The acts of a director, manager, or secretary are valid notwithstanding any defect that may afterwards be discovered in his appointment or qualification.
Section 287. Mode of voting on appointment of directors
(1) At a general meeting of a company other than a private company, a motion for the appointment of two or more persons as directors of the company by a single resolution shall not be made, unless resolution that it shall be made has first been agreed to by the meeting without any vote being given against it.
(2) A resolution moved in contravention of this section is void, whether or not its being so moved was objected to at the time : Provided that—
(a) this subsection shall not be taken as excluding the operation of section 286 of this Act ; and
(b) where a resolution so moved is passed, no provision for automatic re-appointment of retiring directors in default of another appointment applies.
(3) For the purposes of this section, a motion for approving a person’s appointment or for nominating a person for appointment is treated as a motion for his appointment.
(4) Nothing in this section applies to a resolution altering the company’s articles.
Section 288. Removal of directors
(1) A company may by ordinary resolution remove a director before the expiration of his period of office, notwithstanding anything in its articles or in any agreement between the company and him.
(2) A special notice is required of any resolution to remove a director under this section, or to appoint some other person instead of a director so removed, at the meeting at which he is removed, and on receipt of notice of an intended resolution to remove a director under this section, the company shall immediately send a copy of the notice to the director concerned and (whether or not he is a member of the company) and is entitled to be heard on the resolution at the meeting.
(3) Where notice is given of an intended resolution to remove a director under this section and the director concerned makes, with respect to it, representations in writing to the company (not exceeding a reasonable length) and requests their notification to members of the company, the company shall, unless the representations are received by it too late for it to do so—
(a) in any notice of the resolution given to members of the company, state the fact of the representations having been made ; and
(b) send a copy of the representations to every member of the company to whom notice of the meeting is sent (whether before or after receipt of the representations by the company), and if a copy of the representations is not sent as required in this section because it is received too late or because of the company’s default, the director may (without prejudice to his right to be heard orally) require that the representations are read out at the meeting : Provided that copies of the representations need not be sent out and the representations need not be read out at the meeting if, on the application either of the company or any other person who claims to be aggrieved, the court is satisfied that the rights conferred by this section are being abused to secure needless publicity for defamatory matter and the court may order the company’s costs on an application under this section to be paid in whole or in part by the director, notwithstanding that he is not a party to the application.
(4) A vacancy created by the removal of a director under this section, if not filled at the meeting at which he is removed, may be filled as a casual vacancy.
(5) A person appointed director in place of a person removed under this section is treated, for the purpose of determining the time at which he or any other director is to retire, as if he had become director on the day on which the person in whose place he is appointed was last appointed a director.
(6) Nothing in this section is taken as depriving a person removed under it of compensation or damages payable to him in respect of the termination of his appointment as a director or of any appointment terminating with that as director, or as derogating from any power to remove a director which may exist apart from this section.
What this means
Short answer
A company can remove a director before his term ends by ordinary resolution, whatever the articles or his contract say (section 288(1)). The resolution needs special notice, and the director has the right to be heard. He may still claim compensation or damages for losing the post (section 288(6)).
When the office is vacated
Under section 284(1), a director’s office is vacated if he loses his share qualification under section 277, becomes bankrupt or makes an arrangement or composition with his creditors, becomes prohibited by an order under sections 280 and 281, becomes of unsound mind, or resigns by written notice to the company. When a director offers himself for re-election, his board attendance record for the previous year must be made available to the members at the meeting (section 284(2)).
Retirement by rotation
Unless the articles say otherwise, all directors retire at the first annual general meeting. At every later annual general meeting, one-third of the directors retire, or the number nearest one-third if the number is not a multiple of three (section 285(1)). Those who have served longest since their last election retire first, and ties are settled by lot unless the directors agree (section 285(2)).
The company may fill the vacated seat at that meeting. A retiring director who offers himself is treated as re-elected unless the meeting resolves not to fill the seat, or a re-election resolution is put and lost (section 285(3)). Anyone else needs notice in writing from a member, and the nominee’s written willingness to serve, left at the registered or head office not less than three and not more than 21 days before the meeting, unless the directors recommend him (section 285(4)).
Acts done by a director with a defect in appointment
The acts of a director, manager or secretary remain valid even if a defect in his appointment or qualification is found later (section 286). In a company other than a private company, appointing two or more directors by a single resolution is not allowed unless the meeting first agrees, without any vote against, that it may be done. A resolution moved in breach of this is void (section 287).
Removing a director
- Resolution. An ordinary resolution is enough, even if the articles or an agreement give the director a longer term (section 288(1)).
- Notice. Special notice is required, both for the removal and for appointing someone in his place at the same meeting. Under section 261 the company needs notice of the intention at least 28 days before the meeting.
- Hearing. The company must send the director a copy of the notice immediately, and he is entitled to be heard at the meeting (section 288(2)).
- Representations. If the director sends written representations, the company must tell the members and send them out, or the director can require them to be read at the meeting. The court can excuse this if the right is being abused to publicise defamatory matter (section 288(3)).
- Vacancy. If the seat is not filled at the meeting, it can be filled as a casual vacancy (section 288(4)).
- Compensation. Removal does not take away any compensation or damages the director may be owed (section 288(6)).
Questions and answers
How is a director removed?
By ordinary resolution at a meeting, with special notice, and the director has the right to be heard (section 288).
Can a director be removed even if his contract or the articles give a longer term?
Yes. Section 288(1) applies notwithstanding anything in the articles or in any agreement with him, but section 288(6) preserves any compensation or damages he may be owed.
How much notice is needed to remove a director?
Special notice. Under section 261 the company must receive notice of the intention to move the resolution at least 28 days before the meeting.
How many directors retire by rotation each year?
Unless the articles say otherwise, one-third, or the number nearest one-third (section 285(1)).
Spotted a mistake? Tell us and we will check it.