If, as a result of the resignation of a director, there are no more directors, any person who has the right to vote on a matter relating to the appointment of directors may vote in favour of the appointment of a new director. Directors of South African companies may resign voluntarily (i.e. resign) or be dismissed without their cooperation/consent. If the resigning director is the only single director, a replacement is required under the Companies Act 2006 – otherwise the company may be removed from Companies House. PLCs must have at least two directors at all times. For more information on appointing a new director, see Appointment and removal of directors. This article deals specifically with the dismissal of directors without cooperation/consent (i.e. by force) and the correct procedures to be followed in such circumstances. If these procedures are not followed, the expulsion is illegal and can be challenged by the injured director.

Business leaders can continue to be held accountable for problems that have arisen during their tenure. If a corporation becomes insolvent, liquidators, directors and directors of insolvency must prepare a report on the conduct of all directors of the corporation over the past three years (whether or not they have resigned in the meantime). This may result in a court disqualification order from the Director. For more information, see Misconduct and insolvency. Shareholders of a company can dismiss a managing director at a general meeting with an ordinary resolution (more than 50%). Record the resignation in writing in the minutes of the next meeting of the Board of Directors The fiduciary duties of a Chief Executive Officer may be waived if he or she decides to resign or is removed from office. Updating the register of shareholders (where the managing director was a shareholder and sold his shares in the company) Directors who continue to exert influence on the board of directors after their resignation can be considered „de facto directors” – in which case they will be treated by law as current directors and can therefore continue to be held liable. Shareholders have the power to hold directors accountable for their actions and, where appropriate, remove them from the board of directors.

Under subsection 71(1) of the Act, a director may be removed from the board of directors by a resolution of the shareholders passed at a general meeting. Assuming that the correct procedures have been followed, this can be done despite the contrary provisions of the incorporation agreement, rules or agreement between the company, its shareholders and a director. A director may resign at any time, but may still be held liable if he or she acted negligently during his or her term of office. The resignation of a director must be noted by the board of directors and the company must submit the notice of resignation to the CPTC. In summary, the responsibility remains with the Director to perform his or her fiduciary duties. A director may be dismissed by decision of the shareholders or by the court if he does not exercise these functions. Alternatively, a director may resign, but may continue to be held liable if he or she does not perform his or her fiduciary duties during his or her term. In any case, a change of director in South African law requires incoming/outgoing directors to be registered with the Companies and Intellectual Property Commission („CIPC”). The Companies Act 71 of 2008 (the „Act”) imposes a fiduciary duty on all directors of a corporation. Directors have a duty to act in good faith, to exercise due diligence, skill and diligence, and to act in the best interests of the Company. The termination of a director of the Corporation without his consent or participation must be effected in accordance with the provisions of the Companies Act, 2008 („the Act”). After resigning, a director may be allowed to take steps to create a competing company.

However, it does not have the right to divert business opportunities to itself and to participate in illegal competitive behaviour. This would include the spin-off of the company`s activities. Updating the Register of Directors` Residential Addresses All loans from the administrator – whether from the director to the company or vice versa – must be paid before departure. If you have a business or start a business, you should have a shareholders` agreement. Procedurally, a meeting of shareholders must be called and the director concerned must be invited to attend the meeting. The convening of the meeting should include the reasons for the proposed removal of the Director. At the meeting, the Director shall have a reasonable opportunity to speak in person or through a representative at the meeting before the decision is put to the vote. If a majority of the shareholders agree, the Company may apply to the Companies and Intellectual Property Commission („CPIC”) for the removal of the director. These provisions apply to any person who holds a position of „director” in a corporation, whether that position is exercised formally or informally. As mentioned above, the law supersedes any provision of an ME; any agreement between the Company and a director and even an agreement between shareholders, shareholders and a director.

When a company reduces or restructures, in some cases, it must remove inactive members (for CCs) and directors (for ptys). In other cases, the member/director would like to resign since he or she is no longer part of the company. Changing a company`s board of directors requires a „director change” process at CPIC. This will result in a change of director in the company`s registration documentation with CIPC. We offer this change service. Alternatively, a director may be dismissed by a court order if the court is satisfied that he or she is not entitled or disqualified, incapable or negligent or forfeited. Although the reasons for the revocation may be similar, the removal by resolution of the shareholders does not require justification, but only a majority vote in favor of impeachment. Limited liability companies are required to inform Companies House (Companies House in Cardiff for companies registered in England and Wales and Companies House in Edinburgh for companies registered in Scotland) of the resignation of directors or new appointments. This must be done within 14 days of the date the Director left the office – either using Form TM01 or online. The company should also: If a director resigns, they will complete certain documents, including a CR2 form. Administrators should first review the terms of their service contract/senior employment contract to find out if there is a specific contractual procedure and set a notice period for termination.

In the absence of a contractual provision, requirements may be included in the articles of association. As a general rule, termination must be made in writing – and in the event of a dispute, it may be useful to send it by registered mail to the company`s registered office to prove the withdrawal. What happens if a director breaches his or her fiduciary duty and there is a risk that the same director will damage the company`s reputation? Directors may be removed from the board of directors of a corporation either by a shareholders` resolution or by a court order. If a director of the company also holds shares in the company, he may be obliged to sell his shares in accordance with the rules contained in the articles. If this is the case, there may be special provisions in the articles or a shareholders` agreement on how they can offer their shares for sale. Use iLawyer.co.za to create a shareholders` agreement document today. iLawyer.co.za is an online automatic legal document generator that allows you to create high-quality legal documents at affordable prices in minutes. If a director is removed from office, he or she no longer has a personal responsibility under the Companies Act 2008 to be involved in the administration of the company. Once this process is complete, the former administrator will NOT be able to become a signatory on behalf of the company at the bank or for contracts. If a director does not have a specific function in the company that is useful for the growth of the company, it is better to remove him from the company. A buyout may be necessary in existing companies. WARNING: THERE ARE MORE CONSIDERATIONS THAN WE CAN COVER IN THIS ARTICLE, SO USE THIS INFORMATION ONLY AS A GUIDE.

THIS INFORMATION DOES NOT CONSTITUTE LEGAL ADVICE. IT IS ALWAYS BEST TO DISCUSS YOUR SITUATION WITH A LAWYER. CONTACT US ON 0861 88 88 35; helpdesk@gcm-legal.com AND VIA THE CONTACT FORM ON THIS PAGE. .