Bylaws control the composition, terms, practice and procedure of a corporation's board of directors. With a set of bylaws that conforms to standard best practices in corporate governance, removing board members from office or from the board entirely is a simple matter of establishing cause and achieving a majority vote of the board in favor of the action. Trouble arises when a corporation fails to put bylaws in place or when the bylaws are silent about how to remove directors. In these cases, the default provisions of the corporations statute in the state where the company is registered control.
Refer to the corporation's bylaws for the specific procedure to remove a board member. If the corporation is operating without bylaws, consider adopting a set before taking any drastic action. Otherwise, note the meeting procedure and the percentage vote in favor needed to remove a director.
Call a meeting of the board. Raise the issue of removing the chairman for discussion. Decide if you want to remove him from the chairman's office or from the board entirely. Negotiate a resignation to avoid acrimony, if possible.
Vote to remove the chairman in accordance with the corporation's bylaws. Properly drafted bylaws will typically enable the removal of a board member from office or from the board entirely by a majority or super-majority vote of the remaining members. Record the vote in the meeting minutes and add the minutes to the corporate records book. Notify the chairman of the decision. He is relieved of duty as of the time the vote is recorded, unless made effective at a future date.
Call a general meeting of shareholders if the corporation does not have bylaws that address the removal of board members. Every state has a corporations statute with default provisions for board of director operations that control in the absence of bylaws. The model provisions require a majority vote of the shareholders to remove a board member, with or without cause. Check the law where your corporation is registered for any deviation from the model.
Vote among the shareholders to remove the chairman. Record the vote in the meeting minutes. Add the minutes to the corporate records. The decision is effective immediately unless otherwise specified.
Terry Masters has been writing for law firms, corporations and nonprofit organizations since 1995. Her online articles specialize in legal, business and finance topics. She holds a Juris Doctor and a Bachelor of Science in business administration with a minor in finance.