Removal of Directors
Resolution to remove director
(1) A company may by an ordinary resolution passed at a general meeting remove a director before the end of the director’s term of office, despite anything in its articles or in any agreement between it and the director.
(4) Special notice is required of a resolution to remove a director.
Requirements Regarding Special Notice
Resolution requiring special notice
(1) If special notice is required to be given of a resolution, the resolution is not effective unless notice of the intention to move it has been given to the company at least 28 days before the meeting at which it is moved.
(2) The company must, if practicable, give its members notice of the resolution at the same time and in the same manner as it gives notice of the meeting.
(3) If that is not practicable, the company must give its members notice of the resolution at least 14 days before the meeting—
(a) by advertisement in a newspaper circulating generally in Hong Kong; or
(b) in any other manner allowed by the company’s articles.
Director’s Right to Protest Against Removal
(1) On receipt of notice of a resolution to remove a director, the company must forthwith send a copy of the notice to the director concerned.
(2) The director (whether or not a member of the company) is entitled to be heard on the resolution at the meeting at which the resolution is voted on.
(3) If notice is given of a resolution to remove a director, the director—
(a) may make with respect to the resolution representations in writing to the company (not exceeding a reasonable length); and
(b) may request the company to comply with the requirement specified in section (4) in relation to the representations.
(4) The requirement is—
(a) if the company receives the representations on a date that is more than 2 days before the last day on which notice may be given to call the meeting, the requirement—
(i) to state, in every notice of the meeting given to the members, that the representations have been made; and
(ii) to send a copy of the representations to every member to whom a notice of the meeting is or has been given; or
(b) if the company has not sent a copy of the representations to every member to whom a notice of the meeting is or has been given, the requirement to ensure that the representations are read out at the meeting.
(6) On application by the company or by anyone who claims to be aggrieved, the Court may order that the company is exempted from complying with the request, if it is satisfied that the person who has made representations and made a requirement—
(a) has abused the right to do so; or
(b) has used such a right to secure needless publicity for defamatory matter.
Sample Ordinary Resolution to Remove a Director
[Company Name]
ORDINARY RESOLUTION
RESOLVED that [Director's Name], a director of the Company, be removed from office with immediate effect.
Note:
This is a simple example of an ordinary resolution to remove a director.
The specific wording may vary depending on the company's articles of association and the circumstances of the removal.
Additional Considerations:
Special Notice: As mentioned earlier, a special notice must be given to the company at least 28 days before the general meeting.
Director's Right to Be Heard: The director being removed has the right to make written representations and be heard at the meeting.
Company's Articles of Association: The company's articles may contain specific provisions regarding the removal of directors, which should be considered.
Remember to seek professional legal advice to ensure the process is carried out correctly and to protect the company's interests.
Sample Special Notice of Resolution to Remove a Director
[Company Name]
SPECIAL NOTICE OF RESOLUTION TO REMOVE A DIRECTOR
To: [Company Secretary] [Company Name] [Company Address]
Dear [Company Secretary],
Please be advised that, pursuant to Section [Section Number] of the Companies Ordinance (Cap. 622), Laws of Hong Kong, I/We, the undersigned, a member/members of [Company Name], hereby give special notice of the following ordinary resolution to be proposed at a general meeting of the Company:
ORDINARY RESOLUTION
RESOLVED that [Director's Name], a director of the Company, be removed from office with immediate effect.
I/We request that this resolution be included in the notice of the next general meeting of the Company.
Yours faithfully,
[Name(s) of Member(s)]
[Signature(s)]
[Date]
Note:
Timing: This special notice must be given to the company at least 28 days before the general meeting.
Director's Right to Be Heard: The director being removed has the right to make written representations and be heard at the meeting.
Company's Articles of Association: The company's articles may contain specific provisions regarding the removal of directors, which should be considered.
Sample Notice of General Meeting
[Company Name]
NOTICE OF GENERAL MEETING
Notice is hereby given that a General Meeting of [Company Name] will be held on [Date] at [Time] at [Venue] to consider and, if thought fit, pass the following resolution:
ORDINARY RESOLUTION
RESOLVED that [Director's Name], a director of the Company, be removed from office with immediate effect.
Notes:
Director's Right to Be Heard: [Director's Name] has the right to make written representations to the Company and request that these representations be circulated to all shareholders or read out at the General Meeting. [Director's Name] also has the right to be heard at the General Meeting.
Proxy Voting: A member entitled to attend and vote at the General Meeting may appoint a proxy to attend and vote instead of him/her. A proxy form is enclosed herewith.
Registration: Members attending the General Meeting are requested to register at least [Time] before the commencement of the meeting.
By Order of the Board [Company Name] [Date]
[Enclosure: Proxy Form]
Please note:
This is a sample notice and the specific wording may vary depending on the company's articles of association and the circumstances of the removal.
Sample Representations from a Director Facing Removal
Note: These are just sample representations. The specific content and tone should be tailored to the individual circumstances. It's advisable to consult with a legal professional to ensure the representations are effective and legally sound.
Representation 1: Challenging the Reason for Removal
If the reason for removal is unclear or unjustified:
"I am surprised and disappointed by the proposed resolution to remove me from the board. I have always acted in the best interests of the company. I believe the reasons for my removal are unclear and unjustified. I request the opportunity to address the shareholders and clarify any misunderstandings."
Representation 2: Highlighting Contributions to the Company
If the director believes their contributions are undervalued:
"I have dedicated [number] years to this company and have made significant contributions to its success. I have [specific examples of contributions, e.g., increased revenue, improved efficiency, or innovative strategies]. I believe my continued presence on the board is essential for the company's future growth."
Representation 3: Requesting a Fair Hearing
If the director feels their rights are being infringed upon:
"I respectfully request a fair hearing at the general meeting. I believe that a proper discussion and debate will allow all shareholders to make an informed decision. I am confident that, if given the opportunity, I can demonstrate my value to the company and persuade the shareholders to retain me as a director."
Representation 4: Seeking Mediation or Alternative Resolution
If the director believes a more amicable solution is possible:
"I propose that we explore alternative dispute resolution methods, such as mediation or arbitration, to resolve any issues and find a mutually agreeable solution. I believe that this approach would be in the best interests of all parties involved."
Remember:
Be concise and clear: Keep your representations focused and easy to understand.
Be respectful: Maintain a professional tone, even if you disagree with the proposed removal.
Highlight positive contributions: Emphasize your achievements and the value you bring to the company.
Request a fair hearing: Ensure that you have the opportunity to address the shareholders and present your case.
How do you Remove a Director from a Company in Hong Kong
In Hong Kong, a director can be removed from a company by a shareholders' ordinary resolution at a general meeting:
Notice
A shareholder must give the company a "special notice" of the proposed resolution at least 28 days before the meeting.
Meeting
The board must call a general meeting.
Resolution
A simple majority of shareholders present at the meeting must pass the resolution.
Hearing
The director being removed has the right to be heard and make written representations that can be circulated to shareholders or read at the meeting.
A director can also be removed by a court-issued disqualification order, or when a liquidator is appointed.
A director can be removed for a number of reasons, including incompetence, misconduct, or their relationship with other colleagues. Shareholders don't need to provide a reason for removing a director.
463. On receipt of notice of a resolution under section 462(4) to remove a director, the company must forthwith send a copy of the notice to the director concerned. The director (whether or not a member of the company) is entitled to be heard on the resolution at the meeting at which the resolution is voted on.
Removing a Director in Hong Kong
Removing a director from a company in Hong Kong requires a formal process outlined in the Companies Ordinance. Here's a breakdown of the steps involved:
1. Special Notice:
Any member (shareholder) intending to remove a director must give a special notice to the company at least 28 days before the general meeting where the resolution will be proposed.
This notice must specify the intention to remove the director and the resolution to be proposed.
2. General Meeting:
The company's board must call a general meeting to consider the resolution to remove the director.
Shareholders are given notice of the meeting.
3. Director's Right to Be Heard:
The director facing removal has the right to:
Make written representations to the company.
Request that these representations be circulated to all shareholders or read out at the general meeting.
Be heard at the general meeting.
4. Ordinary Resolution:
At the general meeting, an ordinary resolution is required to remove the director.
This means the resolution must be passed by a simple majority of the votes cast by shareholders present at the meeting.
5. Filing with the Companies Registry:
Once the director is removed, the company must file a Notification of Change of Director (Form ND2A) with the Companies Registry within 15 days of the removal.
Additional Considerations:
Director's Contract: If the director has a service contract, the terms of the contract should be reviewed to determine any specific procedures or compensation requirements related to termination.
Company Constitution: The company's articles of association may contain specific provisions regarding the removal of directors, which should be considered in addition to the Companies Ordinance.
By following these steps and seeking professional advice, you can effectively remove a director from your Hong Kong company while adhering to legal and regulatory frameworks.
Sources
Cap. 622 Companies Ordinance - Hong Kong e-Legislation
462. Resolution to remove director. (1) A company may by an ordinary resolution passed at a general meeting remove a director befo...
Hong Kong e-Legislation
How is a director removed from office? | Legal guide for company directors and CEOs in Hong Kong Bestar Asia
Must reasons be given for removing a director: Hong Kong www.bestar-hk.com
Removing directors by Companies Ordinance rules in Hong Kong - Bestar www.bestar-hk.com
How Bestar can Help Removal of Directors
Bestar can provide invaluable assistance in the removal of a director in Hong Kong. Here's how we can help:
1. Understanding Legal Requirements:
Companies Ordinance: Bestar is well-versed in the Companies Ordinance, the primary legislation governing company law in Hong Kong. We can ensure that all procedures are followed correctly, minimizing the risk of legal complications.
Company's Articles of Association: We can review the company's articles of association to identify any specific provisions related to director removal, ensuring compliance with internal regulations.
2. Drafting Legal Documents:
Special Notice: Bestar can draft a clear and concise special notice that complies with the Companies Ordinance, outlining the intention to remove the director and the proposed resolution.
Ordinary Resolution: We can help draft the ordinary resolution to be proposed at the general meeting, ensuring it's legally sound and accurately reflects the shareholders' intent.
Notice of Meeting: Bestar can assist in preparing the notice of the general meeting, including the agenda, time, venue, and other relevant details.
3. Advising on Procedural Matters:
Timing and Deadlines: Bestar can ensure that all deadlines are met, including the 28-day notice period for the special notice and the 14-day notice period for the general meeting.
Director's Rights: We can advise on the director's rights to be heard and make representations, ensuring a fair process.
Proxy Voting: Bestar can help with proxy voting procedures, ensuring that shareholders can exercise their voting rights effectively.
4. Representing Your Interests:
Negotiations: If necessary, Bestar can negotiate with the director to reach an amicable resolution, potentially avoiding the need for a formal removal process.
Legal Proceedings: In case of disputes or legal challenges, our partnered lawyers can represent your interests in court or other legal proceedings.
5. Post-Removal Procedures:
Filing with the Companies Registry: Bestar can assist in filing the necessary forms with the Companies Registry to officially record the director's removal.
Updating Company Records: We can help update the company's records, including the register of directors and the articles of association.
By engaging the services of Bestar, you can ensure that the director removal process is conducted smoothly, legally, and in the best interests of the company.
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