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ACCA Applied Skills · Corporate and Business Law (Global) · Company directors

Beta Co's articles allow the board to appoint a person to fill a casual vacancy, but the appointee must stand for re-election at the next annual general meeting. The board appoints Ms Chen to fill a vacancy created by a resignation. At the next AGM the members vote against her re-election. What is the legal position?

Ms Chen ceases to be a director. The articles made her board appointment conditional on re-election at the next AGM, so when the members voted against her, the condition failed and her office ended. The members' vote is binding, not advisory.

  1. AMs Chen ceases to be a director because she was not confirmed by the membersCorrect
  2. BMs Chen remains a director until the board decides to remove her
  3. CMs Chen remains a director for a further year because the vote is only advisory
  4. DMs Chen remains a director until the company's auditor approves her removal

Explanation

Her appointment by the board was valid but subject to the articles, which require confirmation at the next AGM. When the members refuse to re-elect her, the condition fails and her office ends. The vote is binding, not advisory.

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