Ancient Ltd was set up under articles which provided for the appointment of a director to serve for five years. In 1986, when the company stated operations, Maina was appointed Director; In 1989, the company amended the articles relating to the appointment of a director and subsequently. Maina was removed as Director. He has now come to you to seek legal advice. Advice him as to his legal remedy under the law.

A director appointed to office in accordance with the articles remains in office as long as the article remain uncharged. If altered by the company in exercise of its statutory power, in such a way in which a director loses office, he has no actionable claim against the company.

In Shuttleworth V. Cox Brothers & Co. Ltd. The article of the defendant company incorporated in 1926 provided that the plaintiff and four others would be appointed directors of the company and hold office permanently unless removed on certain specified grounds. The plaintiff had on several occasions (22) refused to account to the company monies received on its behalf. Members in general meeting resolved to ad to the articles another ground for disqualification of the director. A director had to resign office if a written request requiring him to do so was served upon him by board members. 10 – 11 months later, a written request was served upon the plaintiff who filed an action challenging the validity of the new article. He sought a declaration that he was still a director of the company. It was held that the alteration was valid and the plaintiff had ceased to hold office as director of the company.

In the words of Atkin L. J., “ It is a contract made upon the terms of an alterable article, and therefore neither of the contracting articles can complain if the article is altered. Consequently, I cannot find that there has been any breach of contract making the alteration”. Therefore, Maina has no actionable claim against the company.

Leave a Reply

Your email address will not be published. Required fields are marked *