Can a statutory director simply be dismissed?

Powers of ava

If a statutory director of a PLC is dismissed by the general meeting of shareholders, the question sometimes arises as to how strong the shareholders' motivation should be. There are different views on this. For example, should a director under the articles of association be dismissed merely because he has bad taste in clothing, such a resolution to dismiss would quickly be in violation of the reasonableness and fairness of article 2:8 BW, and therefore voidable. It becomes more difficult if the general meeting of shareholders were to dismiss a statutory director who performs well in itself, but simply because the shareholders believe there is a better candidate. Since the general meeting of shareholders is normally empowered to dismiss a director at any time, I would believe that in such a case the shareholders are indeed empowered to dismiss the director. A resolution to that effect should not be subject to annulment by the courts.

Judge's standard of review

Yet this is not entirely certain because the legislature has not made it entirely clear how courts should review such decisions. For example, when it comes to contracts, a judge may only intervene if a particular contract provision is unacceptable by the standards of reasonableness and fairness. The word "unacceptable" is intended to express the fact that the judge must exercise restraint. However, this word is missing when it comes to resolutions of the general meeting of shareholders. It is therefore not excluded that the court has a broader test here .

In principle, the judge should exercise restraint

Still, I would think that the general meeting of shareholders has great freedom as to the motivation of a resolution to dismiss, and the court should therefore review with restraint. One should also not lose sight of the fact that shareholders may hold different views. The motivation of one shareholder may therefore be different from that of another. This is all the more reason for the court to exercise restraint, and depending on the specific circumstances of the case (there is, for example, arbitrariness or considerations of shareholders that are contrary to the interests of the company), the court will have to intervene if there is an abuse of voting rights by shareholders.