Company directors Research Essay

Company directors and shareholder interests

Company directors are responsible for managing a company’s daily operations and, most importantly, for making wise choices with the interests of shareholders in mind. (Mortimore, 2017). But occasionally, the executives may be unable to decide, forcing the shareholders to take action. (Behar, 2016). This applies to the aforementioned company run by four pals. Each of the two directors has a firm opinion about their investments, and neither is ready to budge. This results in a dreadlock. The shareholders should call a meeting to discuss the best investment choice and oust the director who held the alternative option since neither of the directors is ready to change their positions. As the shareholders, Charles and Diana have the right to call for a general meeting to deliberate on the issue. General meetings are meant to cover matters that are outside the scope of daily management, among them removal or election of directors, deliberations on directors remuneration, change of business name among others issues. In this case, a general meeting should be called to deliberate on removing one of the directors and retain the other, whom they feel has a better investment option.

Shareholders’ powers to call for a general meeting

The directors of a company are tasked with calling for the general meetings of a company (Miller & Jentz, 2008). However, section 249D of the Corporations Act of Australia, gives shareholders the powers to petition the directors to call for a general meeting. The section empowers shareholders with more than five per-cent shareholding to call for general meetings. Thus, Charles and Diana, assuming they own more than five—percent of the shares, should petition the directors to call for a general meeting. After receiving the request to call for the meeting to remove the director, section 249H obligates directors to give a 21-day notice of the impending meeting to all the shareholders, directors and auditors. Section 249J allows the notice to be given in person, by fax or through electronic means. According to section 249L, the notice should include vital elements such as the place, date and time of the general meeting, the nature or the agendum for the meeting among others. The details should be presented in a clear, concise and effective manner to ensure comprehension by all members involved (Australian Institute of Company Directors, 2017).

Holding the general meeting

Section 259 R dictates that the meeting should be held at a reasonable place and time; during normal business hours and at a place convenient for the majority (Federal register of Legislation, 2017). Section 249 T, obligates that a quorum of two people must be present before a meeting is called in to order; otherwise, the meeting should be adjourned if no quorum is reached after thirty minutes into the time of the meeting. If there is a quorum, the directors should elect a chairperson (section 249U), who should help drive the agenda of the day. The minutes of the meeting should be kept (section 251 A), and voting done by a show of hand (section 250E) to determine the direction that the company should take, including the director that should be removed (Australian Institute of Company Directors, 2017).

Following the procedures for removal of a director

These processes will allow the company to fire one director and retain the other whom they feel has a better investment option. It is vital that the company follows all these laid-down procedures as they will be apt in avoiding any legal liabilities that may arise after firing a director. Hopefully, the shareholders will choose an investment option that brings forth a better reward.

References

Australian Institute of Company Directors (2017). General meetings of members. Accessed on 28 Sept. 2017 from http://aicd.companydirectors.com.au/resources/all-sectors/board-meetings/general-meetings-of-members

Behar, A. (2016). The Shareholder Action Guide: Unleash Your Hidden Powers to Hold Corporations Accountable. Oakland, UNITED STATES: Berrett-Koehler Publishers.

Bruno, S., & Ruggiero, E. (2011). Public companies and the role of shareholders: National models towards global integration. Alphen aan den Rijn, The Netherlands: Kluwer Law International.

Federal register of Legislation, (2017). Corporations Act 2001. Accessed on 28 Sept. 2017 from https://www.legislation.gov.au/Details/C2017C00312

Miller, R. L. R., & Jentz, G. A. (2008). Business law today: The essentials: text & summarized cases--e-commerce, legal, ethical, and international environment. Australia: Thomson/South-Western West.

Mortimore, Q. C. S. (2017). Company directors: Duties, liabilities, and remedies. Oxford University Press.