How to remove a Board Director: A guide to company law and legal procedures under Ghana's Act 992
In corporate governance and company law, the removal of a director is a crucial decision that requires strict adherence to legal frameworks. Whether due to mismanagement, conflicts of interest, or loss of confidence, removing a director is not as straightforward as simply terminating an employee. It must be done in compliance with company law, shareholder rights, and employment obligations.
This article explores how directors can be removed under company law, key legal provisions, and potential challenges.
Who Can Remove a Director?
The removal of a director depends on their method of appointment and the type of company in question. Under common law principles, and in Ghana, directors may be removed through the following means:
• By Shareholders – Typically, shareholders can remove a director by passing an ordinary resolution, which requires a simple majority vote (more than 50%) of those present and voting at a general meeting.
• By the Board of Directors – If permitted by the company’s constitution or governing documents, the board may have the authority to remove a director, particularly in cases involving executive roles.
• Automatic Disqualification – Certain statutory conditions can lead to immediate removal, including fraud, dishonesty, criminal convictions, or if the director is associated with an insolvent company.
The specific process and legal requirements for director removal vary depending on the company’s structure, articles of association, and applicable company law. As a best practice, we always recommend first reviewing the company’s constitution, as it outlines the governing framework and any restrictions related to director removal.
The Legal Framework for Director Removal
Removal by Shareholders
Under most company laws, including Ghana’s Companies Act, 2019 (Act 992) and the UK’s Companies Act 2006, shareholders have the power to remove a director by passing an ordinary resolution at a general meeting. However, this process must follow specific legal requirements:
• Special Notice Requirement – Shareholders must provide at least 28 days’ notice before proposing a resolution to remove a director (Section 177 of Ghana’s Act 992; and also Section 168 of the UK Companies Act).
• Voting Threshold – The resolution must pass with a simple majority (more than 50%) of the votes cast at the meeting.
• Director’s Right to Defend – The director has the right to make representations and respond before the vote takes place.
• Registrar Notification – Once the resolution is passed, the company must file the necessary documentation with the Registrar of Companies to officially update its records.
This structured approach ensures fairness, transparency, and compliance with corporate governance principles.
Removal by the Board of Directors
In some cases, the company’s constitution (Articles of Association) or shareholder agreement may allow the Board to remove a director without involving shareholders.
Typically, this applies to executive directors (Managing Directors or CEOs) who are also company employees. However, non-executive directors (NEDs) usually cannot be removed by the board alone. Employment law considerations may also apply if the director is also a company employee.
Automatic Disqualification and Removal
A director may also be removed automatically if they:
Become bankrupt or insolvent
Are convicted of a criminal offense involving dishonesty
Are declared legally incompetent
Fail to meet statutory compliance obligations (e.g., missing board meetings for a specific period)
In such cases, the company must formally notify the Registrar of Companies of the vacancy.
Legal Challenges & Risks in Director Removal
Even when legal steps are followed, removing a director can still trigger disputes. Minority shareholders may challenge the decision as unfair or oppressive under laws protecting their rights, such as Section 216 of Ghana’s Act 992. If the director is also an employee, termination must comply with employment laws to avoid wrongful dismissal lawsuits. Additionally, a controversial removal can damage investor confidence and public perception, making it essential for companies to handle the process professionally and transparently.
Best Practices for Removing a Director
To minimize legal disputes and governance challenges, companies should work closely with a skilled company secretary or board advisor to ensure proper procedures are followed. This includes reviewing the company’s constitution and shareholder agreements to confirm compliance with internal governance rules, adhering to legal requirements for issuing special notices and conducting voting procedures, and seeking legal counsel early to proactively address potential risks.
Additionally, companies should maintain thorough documentation of board meetings, resolutions, and communications to ensure transparency and accountability. If the director also holds an employment role, it is essential to handle their termination separately and in compliance with labour laws to avoid wrongful dismissal claims. By taking these steps, companies can effectively manage director removals while maintaining strong governance practices.
The removal of a director is a significant corporate decision that must be handled carefully. Whether through shareholder resolution, board decision, or automatic disqualification, companies must ensure compliance with corporate laws, governance best practices, and employment regulations.
By following proper legal and corporate governance procedures, businesses can minimize risks, avoid legal disputes, and maintain stakeholder confidence.
At Scribe Advisory & Consulting, we offer professional guidance tailored to support directors and companies in running their Boards effectively. Our services are designed to help directors fulfill their legal duties, from preparing and maintaining accurate financial records to advising on how to remove a Board Director. With Scribe’s expertise, directors can confidently uphold their responsibilities, protect the company’s interests, and foster a culture of good governance—minimizing risk and enhancing organizational success.