removed from position as company director

[aircadet]

About a year ago i set up a company with a friend. we both agreed to be the only two directors and to share the company 50-50ie. 1 share each.
This year i have been seriously ill and have been away from the business. when i recently returned, my co director said because of the lack of effort on my behalf I had been removed as a co director. Is this possible and can he now just issue more shares ie so that my share holding diminishes ie if he issues 1000 shares i will only have the existing 1 share?
The business really does have some potential as various efforts have come to fruition recently.

Your help would be greatly appreciated

[carmalee]

I would have thought not - you have just as much rights as your partner so what's to stop you removing him/her? Suggest you check all paperwork carefully. Not sure of the legality of one director deciding to get rid of another just like that- sounds very dodgey to me. Why not contact Companies House where you business should be registered. Otherwise get a half hour session with a solicitor specialising in company law - lots of them give you a free session. You need to get a legal answer - your partner appears to be acting in a very underhand way so better not risk losing all. Good luck and hope your feeling better. Carmalee

[joggerjayne]

The way in which shares can be issued

and the way in which Directors are appointed or removed

is determined by a document called the Articles of Association

This is the company's internal rulebook.

If the company does not have its own Articles of Association, then the company is regulated by a set of standard Articles set out in the Companies Act, and called Table A.

Generally, and under Table A, all new shares issued have to be offered to the existing shareholders pro rata - meaning, in the same proportion as their existing shareholding.

If your co-Director has not followed the Articles of Association, or Table A, then he has acted unlawfully.

[Skyline D]

Two separate questions here. Neither is quite as straightforward as it may seem though the second one is probably easier.

Can he issue himself a majority shareholding without your approval? Depends what the Articles of Association say but on the whole probably not. The Articles may give the company directors the right to sell whatever shares they wish to whoever they wish but they wouldn't normally be allowed to prejudice the shares of exisiting shareholders by doing so. It doesn't seem from the question that you have any actual reason to believe he has done this though.

Can he resign you as a director without your knowledge? Well physically he can. Anyone with the correct access code for a company can resign a person as a director of a company online with Companies House without them ever knowing about it (I resigned somebody as a director of one of our clients last week who will have no idea I did it, if only because he thinks it was done six months ago!).

Legally, if no resignation was actually submitted then no, he can't. He'd need to get approval from a majority of shareholders at General Meeting to sack a director against his wishes. Clearly he hasn't done that as you say you are the only two shareholders 50/50. I've never come across such a case before but if he really has resigned you as a director (and you can check free of charge at Companies House website to see if he has) then I would contact Companies House immediately and ask for advice. The other director as acted 'ultra vires' in submitting a resignation on your behalf. Possibly best to see a solicitor too, preferably one who specialises in corporate law.