How to remove a director from a company

Thinking about how to remove a director from a company? Whether you’re dealing with a clash at the top, a shift in leadership needs, or it’s just time for a change, removing a director isn’t as simple as unfollowing them on LinkedIn. 

It’s a legal process that comes with specific steps, formal paperwork, and potential complications, especially if the director is also a shareholder or employee. 

Here’s what you need to know.👇

Why might a director be removed?

There are a few common reasons that trigger the removal of a director, and they’re rarely straightforward:

Whatever the reason, removing a director from a company must be based on a valid legal basis.

First things first

Before you dive into the legal paperwork, take a good look at your company’s articles of association (aka your rulebook).

Some companies have their own rules on how to remove a director from a company, which may override the standard legal process. You might find things like:

If your company has adopted the standard model articles, you’ll likely need to follow the process set out in the Companies Act. But if not? Your articles could outline a different process entirely, so be sure to check before making any moves. 

Voluntary resignation (the simplest option)

If the director agrees to resign, this is by far the simplest option – no votes, no awkward meetings, just a clean exit. Here’s what you’ll need to do:

• Get their resignation in writing 📝
• File a TM01 form with Companies House
• Update your statutory registers and inform any third parties (banks, insurers, etc.)

It’s one of the simplest ways to remove a director from a company – no boardroom battles required.

Formal removal by shareholder vote

When things aren’t quite so amicable, you can go down the formal route – the main statutory process under the Companies Act 2006.

Here’s how it works:

• Call a general meeting and give special notice (at least 28 days) 📅
• The director must be given a chance to respond or speak at the meeting
• Shareholders vote, and you’ll need a simple majority (more than 50%) to pass the resolution 🙋
• Once approved, file a TM01 form with Companies House

It’s not the quickest option, but if you need to remove a director from a company and they’re not stepping down voluntarily, this is the process to follow.

Court-ordered removal (rare but serious)

This one’s a last resort. You can go through the courts to force the removal of a director from a company, but it’s usually reserved for more serious situations, like:

• Fraud or criminal activity
• Severe mismanagement
• Legal disputes between directors or shareholders

Taking court action to remove a director from a company is costly and time-consuming, and should only be considered when all other options are off the table. 🧑‍⚖️

Other ways a director’s role might end

Not all director departures involve boardroom showdowns. Sometimes, the role ends automatically due to certain events, like:

• Bankruptcy
• Disqualification by the courts 🚫
• Being unable to carry out their duties for health reasons

It’s also worth checking your shareholder agreements, as some include clauses that trigger automatic removal under specific conditions.

So, remember that shareholders can initiate a removal even if no misconduct has occurred, as long as the process outlined in the Companies Act or the articles of association is followed.

What if the director is also an employee?

Things get legally fuzzy here. If you’re removing a director from a company and they also have an employment contract, you can’t just revoke it and move on – employment laws still apply. 

They may have rights to:

So if you’re removing a director from a company and they’re also an employee, it’s wise to get legal advice and stay compliant. 

Resigning as a sole or co-director

If you’re the sole director, resigning isn’t as simple as sending a goodbye email. 💌 You’ll usually need to appoint a replacement before stepping down; otherwise, your company can’t legally operate. 

If you’re a co-director (one of several), resigning is a bit more straightforward. Just make sure someone else is holding the reins before you walk out the door.

Your removal roadmap

Whether it’s voluntary, shareholder-voted, or court-ordered, there’s more than one way to remove a director from a company. 

The key is to approach it properly. Start by checking your company’s articles of association. Then, follow the steps outlined in the Companies Act, and don’t overlook any employment rights or legal risks along the way.

Oh, and the paperwork? TM01 waits for no one. File it fast, keep it clean, and stick to the rulebook.