As a general rule, company constitutions and/or shareholder agreements cover resignations and the appointment/removal of directors, as well as procedures for filling casual vacancies when a director leaves the company. Where these documents aren’t used by a company, replaceable rules in the Corporations Act come into play.
The replaceable rules allow the board to appoint a director by passing an ordinary resolution (50% majority vote). A director of a company can also resign by providing the company with written notice.
Public vs private companies
The rules companies are required to follow depend on whether they are a private or public company.
The replaceable rules enable a private company to remove a director by a resolution. However, if the company constitution has replaced this rule, then a director can be removed by other means; for example, by a majority vote of the board of directors.
A public company can remove a director from office only by passing an ordinary resolution of shareholders, regardless of the company’s constitution or any agreement between the company, the director and its members. However, directors of a public company cannot remove a fellow director – only the shareholders can.
