7.2.2.1 Companies’ act and model articles of association

The previous subsection explains that the Companies’ Act 2006 makes no distinction between executive directors and NEDs. The appointment of these two kinds of directors is thus the same, as they are both considered to be a director. Section 160 CA 2006 determines that the appointment of a director should be voted on individually. A motion for the appointment of more than one director must not be made, unless a resolution that it should be so must be passed by the full general meeting. If this requirement in section 160 is violated, the resolution is void. Since section 160 CA 2006 does not provide any specification about what kind of resolution is required, section 281(3) CA 2006 determines that it is an ordinary resolution. An ordinary resolution is passed by a simple majority of the members, according to section 282(1) CA 2006 (Davies et al. 2008: 15.25). Therefore, directors can be appointed by an ordinary resolution, for which a simple majority is required. However, section 281(3) states that the company’s articles of association may require a higher majority or unanimity, if no further specifications are made. The articles of association often contain provisions that make it difficult for the general meeting to put forward its own candidates instead of the nominees of the board (Davies et al. 2008: 14.11).

The Companies’ Act 2006 does not say much more on the appointment of directors, besides mentioning in section 157 CA 2006 an age requirement that prohibits appointment of directors younger than 16 years (Davies et al. 2008: 14.10, 14.12). The model articles of association provide in article 20 that a director may be appointed by an ordinary resolution or by a decision of the directors. This offers flexibility to the board of directors to fill vacancies that have risen unexpectedly. Directors who are appointed by the directors must retire from office at the first general meeting after their appointment and may offer themselves for reappointment, according to article 21(2) of the model articles of association.