Shareholder rights30 Nov 2020 14:00
As a shareholder, what right do I have to choose the company's directors?
This depends on the company's articles. Often new directors may be appointed by the board. Alternatively they may be appointed at a shareholders' (general) meeting.
If directors are appointed at a shareholders' meeting, they must usually be nominated either by the board of directors or by a shareholder. Shareholders who wish to nominate a director must give notice of their intention to make the nomination, within strict time limits.
The directors may refuse to call a shareholders' general meeting to consider a shareholder's nomination. However, shareholders with at least 5% of the voting rights can require that a general meeting be held.
Alternatively, more specific rights to choose directors may be included in the articles of association.
A majority vote of the shareholders is always effective to remove a director from office, (though, if they have a service agreement, the director may be entitled to damages for wrongful or unfair dismissal). Shareholders must follow a special procedure to remove a director or their decision is not legally valid, so legal advice is strongly advised