FLK1 · Multiple-choice practice
FLK1 Business Law — Question 50
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AlphaTech Ltd. is a private company with a board of directors that has recently come under criticism from a group of shareholders who are dissatisfied with the company’s performance. The shareholders believe that the directors are not acting in the best interests of the company and should be removed. They decide to call for a general meeting (GM) to vote on a resolution to remove two of the directors. The company’s articles of association do not contain any special provisions regarding the removal of directors, so the shareholders plan to proceed under the standard rules of the Companies Act 2006. What percentage of the votes cast at the general meeting is required to pass the resolution to remove the directors under the Companies Act 2006?
Answer and explanation
Correct answer: A. 50% of the votes cast
Under section 168 of the Companies Act 2006, a resolution to remove a director requires a simple majority, meaning that more than 50% of the votes cast at the general meeting must be in favour of the resolution. This straightforward majority ensures that shareholders can exercise their right to remove directors when they believe that the directors are not acting in the best interests of the company. The other percentages mentioned (75%, 100%, 80%) are not applicable in this context, as they relate to special resolutions or other voting requirements not pertinent to the removal of directors under the Companies Act 2006. Also, the requirement for majorities is relevant to the votes cast, not the total number of shares with the right to vote.
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