Removal of Directors of Public Companies by Shareholders: When Do Companies Contract Out of the Corporations Act?

Abstract

When are shareholders empowered to remove directors from office? This is an important governance issue and is related to the balance of power between shareholders and directors. The Corporations Act 2001 (Cth) (Corporations Act) draws a distinction between private companies and public companies. In a private company, shareholders do not have the power to remove a director unless they are granted this power under the company’s constitution or the replaceable rules apply to the company, in which case s 203C provides that the shareholders may by ordinary resolution remove a director from office.