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

Borealis Corp's articles allow the board to appoint any person as a director to fill a casual vacancy, provided the appointee then retires at the next annual general meeting and may stand for re-election. The board appoints Lars to fill a vacancy. Which statement is correct?

Lars's appointment is valid, but he must retire at the next AGM and may stand for re-election. The articles delegate a power to the board to fill casual vacancies, and they make that appointment subject to member approval at the next annual general meeting.

  1. ALars's appointment is valid, but he must retire at the next AGM and may offer himself for re-electionCorrect
  2. BLars's appointment is invalid because only members may ever appoint directors
  3. CLars may remain a director permanently without any need for member approval
  4. DLars's appointment is valid only if all existing directors are unanimous and the auditor consents

Explanation

Articles may delegate power of appointment to the board. Here the articles expressly permit it, subject to retirement at the next AGM, so Lars is validly appointed but must face the members. The suggestion that only members may appoint is wrong because the articles confer this power on the board.

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