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December 30, 2019
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Removal of Director from Cyprus Company

In accordance with section 178 of the Cyprus Companies Law Cap. 113 as amended (“Companies Law”), inter alia, a company may by ordinary resolution remove a director before the expiration of her term, notwithstanding anything in its articles or in any agreement between it and her.

To be in a position to proceed as such, the Companies Law further provides that a special notice will be required for any resolution to remove a director as aforesaid or to appoint somebody instead of a director removed as aforesaid at the meeting during which she is removed. Upon receipt of a proposed resolution to remove a director under section 178 of the Companies Law, the company should immediately send a copy thereof to the director concerned, and the director – whether or not a member of the company – will be entitled to be heard at the meeting about the resolution.

Where such notice of a proposed resolution to remove a director is given under section 178 and the director concerned makes written representations of reasonable length to the company which she requests to be notified to the members of the company, the company should – unless the representations are received by it too late for it to act so:

(a) In any notice of the resolution provided to the members of the company state the fact of the representations having been made; and
(b) Send a copy of the representations to each member of the company to whom notice of the meeting is sent (before or after receipt of the representations by the company), and if a copy of the representations is not sent as aforesaid because of late receipt or the company’s omission, the director may – without prejudice to his right to be heard orally – require that the representations be read at the meeting.
Further, a vacancy created by the removal of a director under section 178 but not filled at the meeting during which she is removed, may be filled as a casual vacancy.

Moreover, a person appointed as director in the position of a person removed on the basis of section 178 will be treated, for the purpose of determining the time at which she or any other director is to retire, as if she had become director on the day on which the person in whose place she is appointed was last appointed a director.

Importantly, nothing in section 178 of the Companies Law can be taken as depriving a person removed thereunder of compensation or damages payable to her as regards termination of her appointment.

With that said, it is further noteworthy that certain relevant provisions of Table ‘A’ of the First Schedule of the Companies Law are normally adopted in the articles of association (“Articles”) of a company, or explicitly excluded except to the extent that the same are repeated or contained in the Articles.

For instance, the Articles may provide that the office of a director should be vacated if such director, inter alia, becomes bankrupt or prohibited from being a director under section 180 or of unsound mind or resigns his office by notice in writing to the company. Moreover, the Articles may stipulate that the company may by ordinary resolution with special notice remove any director before the expiration of her term, notwithstanding anything in the Articles or in any agreement between the company and the director, and that such removal will be without prejudice to any claim such director may have for damages for breach of any contract of service between her and the company.

In summary, further to section 178 of the Companies Law and subject to the specific regulations in the Articles of a company, a director can be removed from the Board of a Cyprus company accordingly.

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