Changes to the structure of a Limited Company are almost inevitable, especially if it has been in operation for many years. The legislation allows you to remove a director or shareholder of a Limited Company. However, you must remember to comply with the formalities involved. Otherwise, the action taken may either be ineffective or result in fines.
When is the removal of a director or shareholder of a Limited Company possible?
The legislation allows for both the removal of a director and a shareholder of an LTD company, but each of these procedures involves different rules and formalities to be followed.
Removing a Director from an LTD Company
You can remove a director from the company if:
- has committed an act disqualifying him or her from acting as a director under the regulations,
- has failed to attend a board meeting for more than 12 months,
- has been disqualified by a court,
- enters into contracts contrary to the provisions of Article 184,
- has been sentenced to imprisonment for at least 6 months.
Depending on the reason for removing a director from the Limited Company, this whole procedure will follow slightly different rules. This is important because failure to comply with the requirements imposed by the regulations will render the removal of a director ineffective. And this, of course, will not be without impact on the continued operation of your company.
Voluntary Resignation of a Director from a Limited Company
A director may also resign from his/her position. In such circumstances, it will be necessary to call a meeting of the Board of Directors and give at least 7 days’ notice.
The director will be heard at the meeting. The board will then decide whether to accept or reject the resignation and adopt a resolution. Acceptance of the resignation also requires the Director to complete form DIR-11 and attach the Board resolution and a copy of the letter of resignation.
Removing a Shareholder from an LTD Company
Changes to the structure of your LTD company can also affect the shareholders themselves. They have the right to leave the company at any time and for any reason.
In contrast, the legislation does not provide for cases where a shareholder is removed without his or her consent (as is the case with a director of an LTD company). Forcing a company member to surrender or sell his or her shares may prove difficult, especially if he or she is not a minority shareholder.
However, whatever the reason for a shareholder leaving the company, you need to take care of issues such as:
- the transfer or sale of their shares to another person (a new shareholder or one of the existing company members),
- updating the register of members,
- notifying Companies House of the changes.
Get Our Help – We’ll Handle Everything for You!
Removing a director or shareholder from a Limited Company may seem stressful and complicated. Understandably so, as mistakes in this area can be costly.
Instead of reading through regulations, filling out forms, and constantly wondering if you’ve covered everything, you can rely on our assistance. We’ve been helping LTD companies for years. We’ll take care of every step, allowing you to save time and ensuring that the entire process is carried out correctly.
