Director Removal in Zambia: What Every Shareholder Should Know
By Adrian, Compliance and Governance Officer at Corpus Globe Corporate Solutions (CGCSo)
The Companies Act No. 10 of 2017 (the “Act”) affirms that while the day-to-day affairs of a company are managed under the supervision of its board of directors, ultimate authority rests with the shareholders, the true owners of the business.
This principle is especially important when considering the removal of a director from office.
Beyond the usual circumstances in which a director may vacate office, such as death, retirement, or voluntary resignation, Section 98 of the Act empowers shareholders to remove a director before the end of their term, provided there are valid reasons to do so. This provision ensures that shareholders retain control over the strategic direction and leadership of the company, even between annual general meetings.
Importantly, the removal of a director does not extinguish any rights or entitlements they may have arising from their loss of office. These could include contractual benefits, severance arrangements, or other legal claims, depending on the terms of engagement.
Statutory Process for Removal
To ensure fairness and transparency, the Act outlines a clear procedure for removing a director. This process includes:
- Notice of Intention
A shareholder must give formal notice of their intention to propose the removal of a director.
- Circulation of Notice
The notice must be circulated to all persons entitled to receive it, including the director in question.
- Right to Respond
The director has a statutory right to make written representations and to speak at the meeting where the resolution for removal will be considered.
- General Meeting and Resolution
A general meeting must be convened, during which shareholders vote on the proposed removal. A simple majority is typically required to pass the resolution.
- Filing with PACRA
Once the resolution is passed, the company must file the necessary documentation with the Patents and Companies Registration Agency (PACRA) to formalize the change.
Why the Process Matters
The Act strikes a careful balance between shareholder authority and director protection. By following the prescribed steps, companies not only ensure compliance with the law but also reduce the risk of internal disputes, reputational damage, and potential litigation. Adhering to this process also reinforces principles of good corporate governance, transparency, accountability, and fairness.
Need Support? We are Here to Help
Removing a director is a sensitive and often complex matter. Whether you are navigating internal disagreements, restructuring leadership, or responding to governance concerns, Corpus Globe Corporate Solutions is here to guide you through the process with professionalism and discretion.
Contact us today for expert support in managing director removals and safeguarding your company’s legal standing.
Contact Us:
Phone: +260 211 296011 / 12 / 13 | +260 960 628385 | +260 770 628385 | +260 953 083688
Email: cgcso@cgcso.co.zm