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BUSINESS ORGANISATIONS AND AGENCY 430 COMPANY DIRECTORS 24.6 QUALIFICATION OF DIRECTORS Under the CA 2006, there is no specific qualification set out for persons to be appointed directors, except that they should not be minors. However, under the UK Corporate Governance Code, public companies are required to appoint as directors persons who possess the necessary skills, knowledge and experience to run the particular company. A person may or may not be a shareholder in the company in which he is a director. Under s 157 CA 2006, a natural person must be at least 16 years old before he could be appointed a director or before his appointment could take effect. Any appointment contrary to this provision would be void, unless it would take effect when the appointee attains the right age. Where an existing company has a director under the age of 16, that person ceases to be a director from the commencement of this provision. The secretary of State may, however make regulations allowing persons under 16 to be directors in certain circumstances – s. 158 CA 2006. However, a defective appointment or disqualification of directors does not affect the validity of acts done by them on behalf of their companies – s. 161 CA 2006. If an underage person acts as or exercises the powers of a director (as a de facto or shadow director, for instance), that person would be liable for those acts – s. 157 (5) CA 2006. 24.7 TERMINATION OF DIRECTORSHIP A director’s appointment may be ended by resignation, retirement, removal or disqualification. A director may also resign his position at any time by giving notice to the company or at the expiration of his term under his contract of service. The first directors of a company must retire at the first AGM of the company. During subsequent AGM, one-third of the directors shall retire. Retiring directors may be (and are usually) re-elected. Retirement is done in order of seniority of appointment, provided that where many directors were appointed at the same time, the retirees would be determined by lot ( see the Model Articles of PLC, article 21). The process of annual retirement gives the shareholders the power to exercise control over the board of directors. Download free eBooks at bookboon.com
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BUSINESS ORGANISATIONS AND AGENCY 431 COMPANY DIRECTORS The members of a company have the power to remove or dismiss a director from office at any time. They may do this even before the end of the directors’ contracts, and notwithstanding anything in the articles. An ordinary resolution is required to carry out the removal.
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