Removing a director from their position is not that uncommon. However, the board of directors should remove a director from the position only if it’s unavoidable. We’ve composed a list of some of the main factors that should lead to a director’s removal and shouldn’t be neglected.
A company’s board of directors can carry out this procedure for removal in two primary ways. We’ll tackle both of them in great detail too. Further in the article, you’ll also find some of the main beneficial traits a good director should have and take action if a director lacks them.
Main factors for removing a director from a company
It’s common for disagreements to arise in the board of directors of a particular company. Like everything else in the world, no director is perfect. However, the factors for removing a director from a company should be solid and well-founded.
If a director shows a couple of the following actions, a removal should take place:
- Constantly misses committee meetings or board meetings;
- Creates an unhealthy atmosphere or shows inappropriate behaviour in the workplace;
- Causes problems to the company’s CEO by using micromanaging skills;
- Violates the ethics of the company or the signed agreements upon the job application;
- Shares sensitive or confidential information about the employees;
- Takes part in any form of illegal activities that could breach the security of the company;
- Becomes involved with another corporation that is a competitor;
- Uses the benefits and perks of the corporation for any form of personal gain;
- Violets any policy of his company to serve a board of directors from another company.
If a company director shows any of the actions mentioned above, the board of directors should remove them from the director’s position. Naturally, there can be other factors for a director’s removal, but these nine are the main and most important ones.
How to remove a director from a company
When it comes to the actual removal of the director from a company, the action usually falls in the hands of the board of directors. Most of them will have to write a notice stating that the director in question should face removal from their position.
If a company doesn’t have articles of association that give it the power to remove a director this way, an agreement of shareholders is needed for the director’s removal. The Companies Act enabled that procedure from 2006 onwards.
Whichever the case, the removal of the director in question can be subject to all protections and rights that the director has written in their service agreement for employment. It would be wrong to think that removing a director from a company will come without any costs.
The three primary skills of a good director
As we’ve covered some of the main reasons for deeming a director worthy of resignation, let’s take a look at what makes a director of a company worthy of remaining the person in charge for an extended period. The three primary skills of a good director are:
Skills in government
Naturally, a good director of a company should govern finances, fulfil the board’s expectations and govern it, and understand all the potential risks that may arise in the company. All of these instances require a director who can manage them.
A company director should be a lifelong learner who is always open to enlarging the set of skills they have at hand. The skills should be visible inside the company’s walls and in the external environment since companies always collaborate with other parties.
Being emotionally intelligent
Directors are always a part of a larger collective board. You’ll rarely find lone wolves in this line of work. That’s why the emotional intelligence of a director plays a very fundamental role. Being able to listen to others and decipher what motivates them is the key to a thriving company.
A director of any successful company should be inquisitive. The director’s job requires constant processing of large chunks of information, often technical, which means they must be curious beyond the borders of their comfort zone.
Removing a director from a company is a common but complex process. As we’ve mentioned, there are two main ways for a director’s removal. In both cases, the board has to respect all the rights and protections the director has.
When hiring a new director, a company should always look for an emotionally intelligent, curious, and skilful person capable of performing as a leader. Whenever a director shows a couple of factors for removal from our list above, it’s time to replace them.
The director is like the heart of the company. If they are not doing their job well, everything else will fail. Changing directors can therefore be seen as heart transplant surgery. The analogy works well because heart surgery is a complex endeavour, just like changing directors.
We hope that this text helped clarify this issue. Please be sure to continue your online research.
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