People move on – and, where they do, and if they're a board director for your business, you'll need to officially remove them from your register of directors.
Under UK law, directors do not normally have the power to remove another director without that director's agreement. There are a few exceptions that you'd expect to find listed in your articles of association – such as where a director goes bankrupt, commits a criminal offense, or where they've been dismissed under your disciplinary policy.
Shareholders DO have a far wider power to remove a director without their consent, under some relatively technical provisions of the UK Companies Act 2006, (Section 168), which have specific time frames and procedures attached to them.
If you want to remove a director without their consent, then unless your articles of association permit you to do so, you'd be well advised to take expert advice.
What do you need to remove a director?
Assuming that the director has consented to stand down/be removed from your board...
1. The director's resignation letter
You should insist on the resignation being in writing and you should request that the director state in this letter that they confirm they have no past or present claims against your company.
If they do not do so, please ask them to confirm this fact in writing immediately when you receive their resignation. Email confirmation is fine – provided that you keep this correspondence safe.
If the confirmation is provided by email, take a PDF of it and upload it to your Farillio account for safe keeping.
2. A cross-check on your articles of association
To ensure that the board is not under any bespoke requirements regarding the handling of any particular director's resignation.
3. A cross-check on the director's service contract
To ensure that the resignation has been properly given.
Recording the status, decision and any relevant details involved in organising that director's departure from the business.
5. Form TM01
Officially recording the removal of the director from the register of directors at Companies House.
How do you remove a director?
Step 1: Ensure the resignation is straightforward.
Make sure you've received the resignation letter – with appropriate confirmation by the resigning director that they have no claims against the business.
Check your articles of association and the director's service contract that everything is in order and the resignation can be treated as a straightforward one.
And also check that the director's next intended role/employer does not conflict with the director's restrictive covenants to you, which should be set out in their director's service contract.
If there's a problem with these covenants, you'll need to discuss this with the director before you continue any further.
Guidance notes on restrictive covenants are set out in our template director's service contract.
If you used this template to engage your director, then you should be relatively familiar with restrictive covenants, as you'll have decided which ones to apply to this director, and for how long they should apply, when you drafted and negotiated this document.
For more background on restrictive covenants and how they work and are enforced, see our guide to restrictive covenants.
Step 2: Inform the other directors of the position...
- circulate a draft resolution to file a form TM01 to remove the director from the official register relating to your business at Companies House; then finalise it with your fellow directors... Farillio's (and most other articles of association) require that the board must agree to the removal unanimously
- hold a board meeting to discuss and (likely unanimously) confirm this action
Then complete and file the Form TM01, recording the removal, either via the Companies House online filing service or on paper if you prefer.
You shouldn't file Form TM01 until the outgoing director's notice period has come to an end. Companies House imposes a 2-week deadline of the termination date to make the filing. (If you send the form before the notice period has expired, Companies House will reject it.)
Most people file online these days. There's no fee.
Step 3: Update the register of directors.
You'll also need to update your register of directors to record the director's resignation date.
Step 4: Remind the resigning director that they are obliged to:
- serve out their relevant notice – including, if relevant, any garden leave provisions
- comply at all times with their restrictive covenants – both now and following their termination date
- otherwise conduct themselves in a manner appropriate to someone who remains a senior officer of the company until close of business on the final day of their service contract with your business
Step 5: Make appropriate arrangements for their exit and final day.
This includes collecting in all company equipment, ensuring all documents and other materials have been handed over, and that proper handovers to other members of staff have taken place.
You should also ensure that access to all company systems, documentation, (including Google Sheets and other shared drives) is disabled on or immediately after close of business on the last day that the director is employed by you.
Usernames and passwords should be reset. Email and other online accounts should be diverted to another member of staff.
The director should be encouraged to write an appropriate 'out of office' message to anyone who will not be aware that they're leaving your company.
And, of course, any bank mandate in favour of the outgoing director must be updated so that their rights are cancelled.
You'll need to contact your bank in order to action this update, so don't leave it until the last minute.
Your bank will be able to tell you what steps you need to take.
Want to access this guide?
Already have a Farillio account? SIGN IN
Get unlimited access to 100s of legal resources by signing up to Farillio today.
- Manage your legal documents online
- Well written legal templates by our partners
- Guides to help you understand law
- Legal help available every step of the way