Boardrooms are rarely quiet. They’re arenas of strategy, power, and — when necessary — decisive legal action. When governance breaks down or a director crosses the line, shareholders and boards often face one critical question:

How do you remove a director legally, strategically, and fast — without your efforts collapsing under court challenge?

This is where precision, timing, and experienced legal strategy make all the difference. At June Stacey Marks Attorneys, we don’t just “process” removals — we design the strategy, secure the procedural ground, and fight when necessary. In high-stakes governance battles, that edge can determine who controls the boardroom.

South Africa’s Companies Act 71 of 2008 provides the legal backbone for director removal. But in reality, success depends just as much on your MOI, shareholders’ agreements, employment contracts, and whether the appointment itself was even valid to begin with.

This blog unpacks the legal mechanisms, strategic considerations, and common pitfalls involved in removing directors — with the sharpness and courtroom insight that sets our firm apart.

1. SHAREHOLDER REMOVAL – THE CLASSIC POWER MOVE

Section 71(1) of the Companies Act empowers shareholders to remove a director by ordinary resolution, even if the MOI or a shareholders’ agreement says otherwise.

It’s a potent statutory right — but it only works if procedure is followed to the letter.

Key Steps:

• Proper notice must be given in accordance with both the Companies Act and the MOI.

• The director must receive reasonable notice of the proposed resolution.

• The director must be given a fair opportunity to make representations before the vote.

• The resolution must pass by a simple majority.

Warning: One defective notice or rushed meeting, and the removal can be attacked in court through urgent proceedings.

June Stacey Marks Attorneys ensures every procedural step is bulletproof — because one technical error can undo your entire strategy.

MOI & SHAREHOLDERS’ AGREEMENTS: WHERE THE REAL POWER LIES

While the Act gives the removal power, the MOI and shareholders’ agreements shape the battleground. These instruments often decide how, when, and by whom removal happens.

(a) Procedural Landmines The MOI may require longer notice periods, special quorum rules, or other formalities. Overlooking these can render an otherwise valid resolution defective.

(b) Voting Dynamics Shareholders’ agreements often contain voting pools, reserved matters, or consortium arrangements that determine who effectively controls the vote. Understanding these dynamics before you act is essential.

(c) Shareholder Appointment Rights Some agreements give shareholders the right to appoint their own directors. The statutory removal power still applies — but removing a director appointed under such a right may have contractual consequences, such as damages for breach of the agreement.

(d) Invalid Appointments vs Lawful Removals Not all directors were validly appointed. This distinction is crucial:

• Invalid appointments occur when proper procedures weren’t followed or the appointing party lacked authority. In these cases, removal isn’t needed — a court declaratory order can confirm the person was never lawfully a director. It’s clean, strategic, and avoids unnecessary resolutions.

• Lawful removals apply to validly appointed directors who must be removed through proper statutory procedure.

Our firm specialises in identifying the difference early, so you don’t waste time (or litigation budget) fighting the wrong battle.

BOARD-INITIATED REMOVAL

Where the board has three or more directors, it can remove a director on specific statutory grounds — like ineligibility, disqualification, incapacity, or dereliction of duty.

The director must receive notice and a fair chance to respond. “Loss of confidence” alone isn’t enough.

Strategic timing and framing are key here — something June Stacey Marks Attorneys handles with precision to prevent procedural ambushes

COURT-ORDERED REMOVAL – THE NUCLEAR OPTION

If shareholder factions are deadlocked or board factions block action, any interested person can apply to court to remove a director.

It’s decisive, public, and strategic — often used in governance crises or misconduct scenarios.

These applications require carefully crafted affidavits and strategic positioning. Our firm has extensive experience in urgent applications and governance litigation, ensuring you go to court from a position of strength.

THE EMPLOYMENT LAYER – TWO HATS, TWO PROCESSES

Many directors hold dual roles:

1. Director – a statutory office governed by the Companies Act.

2. Employee – under a contract, often covered by the Labour Relations Act.

Removing someone as a director does not automatically terminate their employment, and vice versa. Each process must be handled separately and lawfully.

(a) Contractual Traps Executive contracts often contain notice clauses, severance triggers, bonus entitlements, and restraints. These govern the fallout, not the validity of the removal.

(b) Labour Law Considerations If the person qualifies as an “employee” under the LRA, the termination of employment must follow substantive and procedural fairness rules. Removal from the board alone is not a dismissal.

Our team coordinates both processes seamlessly to avoid giving the outgoing director any ammunition for contractual or labour claims.

UNLAWFUL OR UNFAIR DISMISSAL: THE BOOMERANG RISK

You might get the removal right but mishandle the employment side — and face a backlash.

(a) Unlawful Dismissal Failure to comply with contractual notice periods or procedures can result in damages claims for breach of contract (e.g., unpaid notice, bonuses, or benefits).

(b) Unfair Dismissal If they qualify as employees and you skip LRA procedure, they may bring an unfair dismissal claim at the CCMA or Labour Court. Remedies can include compensation or even reinstatement.

COMMON MISTAKES TO AVOID

❌ Defective shareholder notices

❌ Ignoring MOI or shareholders’ agreement requirements

❌ Treating removal and dismissal as the same thing

❌ Failing to distinguish between invalid appointments and lawful removals

❌ Overlooking appointment rights

❌ Neglecting employment law compliance

❌ Walking into urgent litigation unprepared

We’ve seen these mistakes sink removal strategies — and we make sure our clients don’t make them.

THE STRATEGIC CHECKLIST

✅ Review the MOI and shareholders’ agreements in detail

✅ Identify whether you’re facing removal or invalid appointment

✅ Choose the correct statutory mechanism

✅ Follow procedure to the letter

✅ Coordinate employment termination properly

✅ Anticipate litigation and prepare your documents early

✅ Keep meticulous records of every step

CONCLUSION: THIS IS ABOUT POWER, NOT PAPERWORK

Director removal is not a tick-box exercise. It’s a multi-layered legal and strategic manoeuvre that decides who controls the boardroom.

• The Companies Act gives you the framework.

• The MOI and shareholders’ agreements shape the battleground.

• Invalid appointments need declaratory orders, not messy removals.

• Employment law governs the aftermath.

Get it right, and you stabilise governance and secure control. Get it wrong, and you give your opponent the legal ammunition to fight back.

At June Stacey Marks Attorneys, we specialise in high-stakes boardroom disputes — combining sharp legal drafting, courtroom skill, and strategic foresight to secure outcomes that last. Need Strategic Guidance on Director Removals or Invalid Appointments?

Let’s position you for control — not crisis.

Contact June Stacey Marks Attorneys for decisive, courtroom-ready strategy in boardroom power shifts.