I would like to acquire a 35% shares in a private limited company and be appointed as one of the directors. How can I secure my position as a director?

Home Forums Business Law Forum I would like to acquire a 35% shares in a private limited company and be appointed as one of the directors. How can I secure my position as a director?

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    lisaslaw@web
    Keymaster

    Generally speaking, shareholders may remove a director by ordinary resolution (with procedure in place) However, there are some measures can be taken to provide some level of security. You may insist to add a Bushell V Faith clause in the Articles of Association, it gives you enhanced voting rights as a shareholder when deciding a resolution to remove you and to amend or remove this provision.

     

    Other options include adding an entrenchment provision in the Articles of Association; amending certain clauses in the Model Articles of Association, ensuring similar clauses are inserted in your shareholders agreement for members to vote against your removal and lastly, you may want to negotiate a service contract longer than 2 years.

     

    The last option will not technically prevent your removal but may provide for employment compensation which may discourage other members from removing you.

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