Delaware Unanimous Written Action of Shareholders of Corporation Removing Director
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FAQ
A director can also be removed for cause by a court order, but the court will require at least 10% of the outstanding shares to petition for removal, and a showing of fraudulent or dishonest acts or gross abuse of authority by the director to be removed.
Call a special meeting when you want to change the board of directors before the term has ended. Give all shareholders notice of the meeting. The notice must include the place at which the meeting will be held, the time and date of the meeting, and the purpose for which you called the meeting.
(a) Subject to subdivisions (b) and (f), any or all directors may be removed without cause if: (1) In a corporation with fewer than 50 members, the removal is approved by a majority of all members (Section 5033). (2) In a corporation with 50 or more members, the removal is approved by the members (Section 5034).
The shareholders can vote to remove directors from the board before their terms expire, with or without cause, unless the corporation has a staggered board. The shareholders can then vote to replace the directors they removed.
The DGCL requires that a change in directors be made only by obtaining a vote, or by the consent of shareholders holding more than fifty percent of the outstanding stock and entitled to vote on the matter under the Certificate of Incorporation.
Specifically, Section 141(k) of the Delaware General Corporation Law (Section 141(k)) provides that any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors, subject to exceptions that only apply
Reasons to Remove a Director Some common reasons for director removal include: Frequently missed board meetings or committee meetings. Causing problems with the CEO or other executive officers by micromanaging or otherwise. Disclosing confidential or sensitive information about the corporation to unauthorized persons.
If a majority shareholder is elected to the board of directors of a company it may be quite difficult to remove this individual, since they would likely vote against their own removal. However, if this board member violated a corporate bylaw or other legal or regulatory statute it may be possible to remove them.
Section 168(1) of the Act states that the shareholders can remove a director by passing an ordinary resolution at a meeting of the company.