Management and control of companies 295resolution and the members have been given 14 days’ notice. A director whose removal
is proposed in this way has a right to speak at the meeting at which his or her removal is
proposed. For this reason a written resolution cannot be used to remove a director by means
of s. 168.
On a resolution to remove a director the shares of the director whose removal is pro-
posed might have enhanced voting power.
Remuneration of directors
The powers of the directors will be contained in the articles of association. In the previous
chapter we saw that companies can adopt model articles. Article 3 of the Model Articles for
Private Companies provides that:
3 Directors’ general authority
Subject to the articles, the directors are responsible for the management of the company’s
business, for which purpose they may exercise all the powers of the company.
The board of directors then are usually given very wide powers to manage the company.
They might exercise these powers to employ people to work for the company and might
delegate some powers of management to these employees. The Model Articles for both
Public and Private Companies allow the members to pass a special resolution requiring the
directors to do or not to do something. However, as long as the directors stay within their
powers, they need not obey ordinary resolutions (see pp. 307–9) passed by the members.
Bushell vFaith (1970) (House of Lords)The 300 shares in a company were owned equally by a brother and two sisters. All three
shareholders were also directors. The articles provided that on any resolution to remove a
director that director’s shares should carry three votes per share. The two sisters proposed
a resolution to remove their brother as a director. At a general meeting the sisters voted for
removal, the brother voted against. The sisters claimed that the resolution had been passed
by 200 votes to 100. The brother claimed that it had been defeated by 200 votes to 300.
HeldThe article giving the enhanced voting rights was perfectly valid. Therefore the
resolution to remove the brother from the board of directors had been defeated by 200
votes to 300.Automatic Self-Cleaning Filter Syndicate Co Ltd vCunninghame (1906)
(Court of Appeal)One of the company’s articles gave the directors the power to sell the company property
on whatever terms they thought fit. At a general meeting of the company an ordinary resolu-
tion was passed, ordering the directors to sell company property to a new company. The
directors did not approve of the terms of the contract and refused to sell.
HeldThe directors were within their rights. Whether or not to sell was a question for them
and not for the shareholders.