Removal of Company Directors

The Removal of Directors is stipulated under the Companies Act 2015, In this article we shall outline the key provisions and proper steps to follow when removing a Director from office.
 1.     Review the Company’s
Constitution
The first step is to review the company's Articles of Association which outline the rules and regulations. These rules may include specific procedures for the removal of a director. If the Articles are unclear, the Companies Act will apply.

2.    Provide Special Notice of Removal
Provided the Articles of Association don't specify the procedure, The Companies Act Section 287 requires a 28 days given to all shareholders and directors of the intention to propose removal. It is essential that this notice also reaches the outgoing director, even if they are not a shareholders this is for the purpose of transparency. This ensures director is informed of the resolution and can respond or protest.

3.Director’s Right to Protest
Section 141 of the Companies Act allows outgoing directors to challenge their removal. Upon receiving a removal notice, the director can:
a) Attend the General Meeting to present their case or;
b) Submit written representations within 21 days of receiving the notice and request their submissions be circulated to all the shareholders.
If the company fails to circulate the submissions, the director can request their defence be read aloud at the meeting.
The director must then submit an affidavit and a letter of resignation to the Company.

4.Convene a General Meeting
The next step in removing a director from office involves convening a general meeting with the company’s shareholders to deliberate on the resolution for the director's removal. According to Section 139 of the Companies Act, a director may be removed from office by an ordinary resolution. This resolution may be passed even if the director has a contractual agreement that suggests otherwise. An ordinary resolution will pass if a simple majority is received. Should the resolution for removal pass, the director will be removed. The vacancy created by the removal, if not filled immediately at the general meeting, can be treated as a casual vacancy, which can be addressed later by the company. A special resolution will be required where there is an appointment of another director replacing the resigning Director. In circumstances where the outgoing director holds shares, the company shall require a Board Resolution for Transfer of Shares if their shares are being transferred to another person. Where the shares are being voluntarily surrendered the director must submit an Affidavit for Surrender of Shares.

5. Notify the Registrar of Companies
The company is then required to inform the Registrar of Companies of this resignation within 14 days as per Section 138 of the Companies Act. This notification ensures that the removal of the director is reflected in the official company records. The company will be required to provide documentation to that effect to demonstrate the process was done compliantly, in accordance with the Articles and Companies Act. The application is made in the business registration service portal on e-citizen.

In conclusion the removal of a director in Kenya follows a structured legal process designed to balance the rights of the company with those of the director.
Companies must ensure that the procedural requirements, such as the notices and opportunities for directors to respond, are adhered to.

For more information on this subject contact: info@mathekaoketch.co.ke