How to Remove a Director of a Company
Who is a director of a company?
Directors are persons duly appointed by the company to direct and manage its business. This article outlines the steps and procedure provided under the law for the removal of a director of a company in Nigeria.
A contested removal is the most expensive and legally risky way to get someone off a board. Before starting, consider whether one of the simpler routes applies:
- Resignation. Often achievable, and — as explained at the end of this article — frequently better for the director too.
- Expiry of tenure, where the articles fix a term.
- Vacation of office, where the director has become disqualified under CAMA.
If none applies, the removal procedure below is what governs.
How CAMA and the Articles interact
This is the most misunderstood point in this area, and it is worth getting right before anything else.
Under section 288(1) of CAMA 2020, the members of a company may remove a director by ordinary resolution before the expiration of his period of office, notwithstanding anything in the articles or in any agreement between the company and the director. This statutory right cannot be excluded. A company’s articles cannot take it away, and neither can a director’s service contract.
What the articles can do is add to it. Section 288(6) preserves any power to remove a director that exists otherwise than under section 288 — so the articles or a service contract may create additional removal mechanisms, and the power may even be vested in a named individual rather than the general meeting. The Supreme Court recognised this in Iwuchukwu v Nwizu. But those are alternatives sitting alongside the statutory route, not replacements for it.
So there are three routes to removal:
- By ordinary resolution of the members in general meeting, under section 288(1).
- By special resolution at a members’ meeting of which special notice has been given.
- Under any power of removal existing outside section 288 — typically in the articles or a service contract.
Removals may also be effected by regulatory agencies. The Central Bank of Nigeria, for example, may order the removal of a bank director.
The statutory procedure under section 288
Where the members are removing a director by ordinary resolution, the steps are:
Step 1 — Special notice. A special notice of the resolution — not less than 28 days before the meeting — must be given to the company, naming the director to be removed and, if applicable, naming any person proposed to be appointed in his place. Note that CAMA does not require the notice to set out the reasons for the removal. Giving reasons is often sensible for the record, but it is not a legal requirement, and a notice is not defective for omitting them.
Step 2 — Notify the director. The company must promptly send a copy of the notice to the director concerned.
Step 3 — The director’s right to respond. The director may make written representations and require that they be circulated to the members. Unless the representations arrive too late for circulation, the company must circulate them. The director is also entitled to be heard on the resolution at the meeting itself. These are not formalities — failure to circulate written representations is one of the most common grounds on which removals are successfully challenged.
Step 4 — The vote. The resolution is carried by an ordinary resolution, meaning a simple majority of the votes cast at the general meeting.
One procedural question that comes up often: does the notice convening the meeting have to state that a director’s removal is on the agenda? At an annual general meeting, no. Section 242(2) provides that a statement that the meeting is to transact the ordinary business of an AGM is sufficient specification, and the Supreme Court confirmed in U.O.O. (Nig.) Ltd v Okafor (2020) 11 NWLR (Pt. 1736) 409 that the removal, election and appointment of directors are ordinary business of an AGM.
Note also that a private company may hold its general meeting electronically, provided the meeting is conducted in accordance with the company’s articles.
Step 5 — File with the CAC, within 14 days. After the resolution is passed, the prescribed forms must be filed with the Corporate Affairs Commission to update the register of directors. The deadline is 14 days from the change. Filing is done through the CAC portal.
What removal does not do
Three things worth being clear about, because they cause a great deal of confusion:
- It does not cancel a shareholding. A director who is also a shareholder remains a shareholder after removal, with all the rights that carries.
- It does not automatically terminate an employment contract. An executive director removed from the board may still have contractual claims, and the removal does not by itself end the employment relationship.
- It does not extinguish claims for damages. Removal under section 288 is without prejudice to a director’s right to claim compensation or damages for breach of any contract.
Get the procedure wrong and it will be undone
The procedure for removing a director is statutory and must be followed. Non-compliance entitles the aggrieved director to compensation or damages — and because the office of a director is a statutorily protected office, a director removed without due process may obtain a court order reinstating him to the board. The consequence is not merely that the removal is void on paper; it is that the person you removed can be put back.
If the removal is contested or the director holds a service contract, take advice before you serve the notice rather than after the resolution.
Need Legal Support?
We hope you have found this information helpful. Please note that this information is provided for general informational purposes only and is not intended to be legal advice. No lawyer-client relationship is formed nor should any such relationship be implied. It is not intended to substitute for the advice of a qualified lawyer. If you require legal advice, please consult with a qualified lawyer.