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Chapter 9

Illustration 1 – Directors

BUSHELL v FAITH (1970)

Facts:

A provision in the articles tripled the number of votes of shares held by directors
on a resolution to remove them. Statute only required an ordinary resolution and
made no provision as to how it could be obtained or defeated.

Held:

The weighted voting rights provided in the articles were valid.

Note that the removal of a director may result in the breach of his service contract
and may entitle him to sue for compensation.

Disqualification

Under the Company Directors Disqualification Act 1986, a disqualified director cannot
be concerned in the management of a company, directly or indirectly, or act as a
liquidator, receiver or promoter.

Grounds for disqualification:

 Persistent breaches of the Companies Act e.g. failure to file returns (maximum
5 years’ disqualification). Three convictions for default in five years is conclusive
evidence of persistent breach.

 Conviction of a serious offence in connection with the management of a
company (max. 15 years’ disqualification).

 Fraudulent or wrongful trading (max. 15 years’ disqualification).

 An investigation by the Department for Business, Innovation and Skills (formerly
the Department for Business, Enterprise and Regulatory Reform) finds the
director to be unfit to be concerned in the management of a company (max. 15
years’ disqualification).

 Liquidator’s report finds the director to be unfit to be concerned in the
management of a company (min. 2 years’ and max. 15 years’ disqualification).

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