Directors are elected by the stockholders, and they may also be removed by the stockholders. A director may be removed, with or without cause, by a vote of the stockholders holding at least two-thirds of the outstanding capital stock, in a meeting called for that purpose — except that removal without cause may not be used to deprive minority stockholders of the representation they are entitled to through cumulative voting. Vacancies on the board are filled depending on the cause: if the vacancy results from the removal of a director, the expiration of term, or an increase in the number of directors, it is filled by the stockholders; but if the vacancy results from other causes (such as death or resignation) and a quorum still remains, the remaining directors may fill the vacancy for the unexpired term. Where the vacancy leaves no quorum, the stockholders must fill it. The SEC and the Revised Corporation Code also provide for emergency-vacancy filling in certain urgent situations. These rules keep the board functioning while protecting the stockholders' right to choose their directors.
Removal by Stockholders
A director may be removed, with or without cause, by stockholders holding at least two-thirds of the outstanding capital stock, in a meeting called for that purpose — but removal without cause cannot deprive the minority of cumulative-voting representation.
Filling Vacancies
- From removal, expiration of term, or an increase in directors → filled by the stockholders; and
- From other causes (death, resignation) with a quorum remaining → the remaining directors may fill it for the unexpired term.
No Quorum / Emergency
Where the vacancy leaves no quorum, the stockholders fill it. The Code also allows emergency filling in urgent situations.
Practical Takeaways
- Directors are removed by a two-thirds stockholder vote, protecting minority representation;
- Vacancies from removal/expiration/increase go to stockholders;
- Vacancies from death/resignation (with quorum) can be filled by the remaining directors.
Frequently Asked Questions
How is a director removed? By a vote of the stockholders holding at least two-thirds of the outstanding capital stock, with or without cause, in a meeting called for that purpose, subject to protecting minority representation.
Can a director be removed without cause? Yes, by the required two-thirds vote, except that removal without cause may not be used to deprive minority stockholders of the representation they are entitled to through cumulative voting.
Who fills a vacancy on the board? If the vacancy results from removal, expiration of term, or an increase in directors, the stockholders fill it. If from other causes like death or resignation and a quorum remains, the remaining directors may fill it for the unexpired term.
What if the board has no quorum? Where the vacancy leaves no quorum, the stockholders must fill it, and the Code provides for emergency filling in certain urgent situations.
This commentary is for general informational purposes only and does not constitute legal advice. For guidance specific to your situation, please consult a licensed attorney.
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