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How do I get a director off my company's board?

GovernanceDirectorsDelaware

A director leaves the board one of two ways: they resign, or the stockholders remove them. A resignation is a written notice to the company, effective when it says or when it is received. Removal is a stockholder decision. Section 141(k) of Delaware's corporation law lets the holders of a majority of the shares entitled to vote at an election of directors remove any director, or the entire board, with or without cause, unless the board is classified into staggered terms, in which case removal is only for cause unless the charter says otherwise. The board cannot vote one of its own members off.

Doing it on paper

A resignation is a signed letter or email to the company. A removal is a written consent signed by stockholders holding the required majority and delivered to the company. The same consent usually elects a replacement, or the remaining directors fill the vacancy themselves. Where investors hold preferred stock, the charter and voting agreement usually assign seats to particular holders, and a director elected by one class can generally be removed only by that class. Read those documents before drafting anything.

After the vote

Delaware's annual report lists every director by name and address, so the change goes on the next one. If the director could sign on the bank account, the bank needs a new resolution. Any indemnification agreement continues to cover acts taken while in office.

Shares are not the board seat

A founder who is also a director does not lose a single share by leaving the board, and removing a founder as a director does not stop their vesting. Shares are governed by the stock purchase agreement, which usually ties vesting to continued service as an employee or consultant, not to the directorship. If the aim is for a departing founder to keep less, that is a separation and a repurchase, papered separately from the board change.

There is no director removal consent in Arabella's library today. Ask Arabella can lay out what it needs to say once you know who holds the votes.

Written by the lawyers who built Arabella. This is legal information, not legal advice for your situation, and reading it does not make us your lawyers. For a real dispute or a high-stakes decision, talk to a licensed attorney. More questions.