Company Law Reform Bill [HL]

Clause 152 provides an important protection against a director being removed without an opportunity to present his case. However, I understand that its predecessor, Section 304 of the 1985 Act, is rarely used. The removal of a director of a public company is rarely a matter for a resolution in general meeting. While in private companies members are no doubt fully apprised of the arguments without resort to the prescribed formalities, it is nevertheless important that there be sufficient safeguards for a director against his removal. I consider that Clause 153 already provides sufficient safeguards. First and foremost, it provides a director with the right to be heard orally at the meeting at which the resolution to remove him or her is considered. This is in addition to the right to insist on any written representation he has made being circulated beforehand or, in default of that, being read out at the meeting. Amendment No. 148 would provide him with the additional right to require that the meeting be adjourned for at least 14 days after the company circulates his representations if his written representations have not been circulated beforehand. This could, of course, be used as a delaying tactic when timing might be important to the company. As I have mentioned, where the representations have not been circulated, the director can already insist that his representations are read out at the meeting and be heard orally at the meeting. In the light of these safeguards, I am not convinced of the need for an additional safeguard and consider that it would be more than can be justified.