The General Corporation Law's "25th Amendment"

Allen Matkins
Contact

Generally, a board of directors of a California corporation may not remove one of its members.  Removal of a director is in most cases the province of the shareholders.  Thus, Section 303 of the Corporations Code allows the shareholders to remove any or all of the directors without cause by approval of the outstanding shares (Section 152).  This right of removal is subject to several conditions intended to protect the cumulative voting rights of shareholders.  Section 304 empowers the Superior Court to remove a director for specified causes at the suit of shareholders holding at least 10 percent of the number of outstanding shares of any class.

Section 302 is the one provision within the GCL permitting a board to remove a director but then only in limited circumstances"

"The board may declare vacant the office of a director who has been declared of unsound mind by an order of court or convicted of a felony."

Note that the statute provides directors greater protection from removal than the 25th Amendment provides the President of the United States.  In the case of Section 302, there must be a judicial finding of incompetency while Section 4 of the 25th Amendment initially provides for a written declaration by the principal officers of the executive department or such other body as Congress may provide.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Allen Matkins | Attorney Advertising

Written by:

Allen Matkins
Contact
more
less

Allen Matkins on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide