How are members of the governing body appointed and removed from service?

Corporate Governance

Austria Small Flag Austria

The shareholders‘ meeting appoints the members of the supervisory board for a term of up to five years. The shareholders vote with simple majority for the appointment, 75% majority, but no reasoning is required for revoking the appointment of a member. The articles of association may provide for a higher or lower threshold with respect to the resolution on revocation. The employees (workers’ council) may also send representatives to the supervisory board of a JST: one workers’ representative for each two board members elected.

Brazil Small Flag Brazil

The members of the board of directors are elected by the shareholders, who can dismiss them at any time. The shareholders representing at least one-tenth of the voting capital may request that a multiple voting procedure be adopted to entitle each share to as many votes as there are board members and to give each shareholder the right to vote cumulatively for only one candidate or to distribute his or her votes among several candidates.

The term of office of the directors must be defined in the by-laws, but it cannot exceed three years, although re-election is permitted. In the case of companies listed in the Novo Mercado, Level 2, Level 1 and BOVESPA MAIS listing segments, the term of office cannot exceed two years, although again re-election is permitted.

France Small Flag France

Members of the board of directors or the supervisory board of an SA (other than directors representing employees) are chosen and removed by shareholders, except that vacancies caused by resignation or death of a board member can be filled by co-optation by remaining board members (if at least three are then in office), subject to ratification at the next shareholder meeting. The board of directors of an SA names and removes the DG. When there is a supervisory board, it selects members of the management board and names its chair (or names the DGU); members of the management board (or the DGU) are removed by the shareholders or, if the bylaws so provide, the supervisory board.

In an SCA, supervisory board members are named and removed by the limited-liability shareholders (commanditaires), with vacant positions filled by co-optation, subject to ratification by the limited-liability shareholders. Rules for naming and removing managers of an SCA are as set out in the bylaws, and usually give control to the unlimited-liability partners, sometimes with a veto right of limited-liability shareholders.

Germany Small Flag Germany

Management Board members are appointed for a maximum period of five years by the Supervisory Board and reappointment is possible. The Supervisory Board may remove Management Board members only for good cause (aus wichtigem Grund). The Supervisory Board is also responsible for negotiating and entering into service contracts with the Management Board members.

Supervisory Board members are elected by the shareholder meeting (or appointed by a court as an interim solution until the next shareholder meeting). Up to a third of Supervisory Board members can be nominated by specific shareholders, if the Articles so provide. Such appointments are limited to a maximum period which in practice leads to a five year term (or not more than three years according to a newly proposed GCGC recommendation) and a repeated appointment is possible.

Greece Small Flag Greece

The election of the board of directors may be effected by the following ways: a) by the articles of incorporation, b) by a shareholder, c) by the general meeting of the shareholders, d) on the basis of directories, e) by a civil Court and f) by the board of directors, as provided in detail below:

a) By the articles of incorporation: The company's first board of directors is defined in the articles of incorporation. If the first board is not provided in the articles of incorporation then it is elected by the general meeting of the shareholders, unles specified otherwise in the law or the articles.

b) By a shareholder: The articles of incorporation may provide that a shareholder or shareholders are entitled to directly appoint directors but not more than two-fifths of the total number of the board of directors. The exercise of this right shall be exercised prior to the election of the board of directors by the general meeting, which in that event, shall be limited to the election of the rest members of the board of directors. The shareholder or shareholders exercising the above right shall announce the appointment of the members of the board of directors to the company three (3) full days prior to the meeting of the general meeting and shall not participate in the election of the remaining board of directors.

c) By the general meeting of the shareholders: The Law provides that unless otherwise specified by law, the board of directors is elected by the general meeting of the shareholders.

d) On the basis of directories The articles of incorporation may provide that candidate members of the board may be nominated on the basis of directories (lists) and that they are elected according to the proportion of votes each list receives. This way of election of the board is not applicable if the board has been elected as provided under (b) above.

e) By a civil Court: The Greek Civil Code provides that in the absence of the persons required for exercising the management of a company, then by a Court order, the president of the Court of Peace shall appoint a provisional board of directors at the request of any person having a lawful interest thereof.

f) By the board of directors: In the event of resignation or death or any other loss of membership or board members, the board of directors may elect its members in replacement of the remaining members. The election by the board of directors shall be according to a board resolution of the remaining members, if at least three (3), and is valid for the remainder of the term of office of the member being replaced.

The service of a Director of the board is ended either by resignation of the member of the board, expiration of its service term, by death of a member of the board, or election of a new board of directors as described above.

Hong Kong Small Flag Hong Kong

The appointment and removal of directors is pursuant to the Companies Ordinance and the articles of association of a company. For listed companies, rules in relation to disclosure and announcement should also be complied with.

  • Appointment of the Directors: The selection and appointment process of directors is not provided by the Companies Ordinance, but subject to the provisions of the articles of association. Table A in Schedule 1 to the predecessor Companies Ordinance (then Chapter 32 of the laws of Hong Kong) stipulates the appointment of first directors by at least a majority of founding shareholders (Clause 77), and thereafter, as provided by the Model Articles of Association prescribed in Schedule 2 to the Companies (Model Articles) Notice (Chapter 622H of the laws of Hong Kong) (“Model Articles”), by an ordinary resolution, or by a decision of the board if such appointment is only made to fill a casual vacancy or to reach the minimum number of directors (Article 22). The right to appoint directors may also be given contractually. In some share subscription transactions, a shareholders’ agreement may be entered into by the parties as one of the transaction documents to give the share subscriber right to nominate directors by giving notice to the share issuance company.
  • Removal of the Directors: A director may be removed by an ordinary resolution at a general meeting, but not in writing, before the end of his term of office (sections 462(1), 548(6) of the Companies Ordinance), with a special notice given by the shareholder proposing this resolution to the company and the other shareholders at least 28 days before the general meeting (“Special Notice”), and if not practicable, to the other shareholders at least 14 days before the general meeting (sections 462(4), 578 of the Companies Ordinance).

If the company is a listed company, it shall, pursuant to the Corporate Governance Code, adopt a formal and transparent procedure for the appointment of new directors. For instance, non-executive directors should be appointed for a specific term, subject to re-election (paragraph A.4.1 of the Corporate Governance Code), and every director, including those appointed for a specific term, should be subject to retirement by rotation at least once every three years (paragraph A.4.2 of the Corporate Governance Code). If an independent non-executive director has served on the board for more than 9 years, justification of further appointment should be given by the board to the shareholders (paragraph A.4.3 of the Corporate Governance Code).

A listed company is also subject to disclosure requirements for any appointment and removal of directors. According to rule 13.51 of the Main Board Listing Rules and rule 17.50 of the GEM Listing Rules, the company shall, as soon as practicable, publish an announcement regarding any changes in its directorate and according to rule 2.07C of the Main Board Listing Rules, submit to the Hong Kong Stock Exchange through the HKEx-EPS a ready-to-publish electronic copy of the document for publication on the Hong Kong Stock Exchange’s website. Moreover, when appointing a new director, the company shall procure him/her to sign and lodge with the Hong Kong Stock Exchange as soon as practicable after his/her appointment a declaration and undertaking in the form set out in the Listing Rules, with his/her details, including, but not limited to, his/her full name, positions held with the company or other members of the company’s group and experience as directors of public companies in the last three years and other major appointments and professional qualifies, in the announcement; and when removing a director, the company must disclose in the announcement the reason(s) of removal such as his/her disagreement with the board (rule 13.51(2) of the Main Board Listing Rules; rule 17.50(2) of the GEM Listing Rules).

Japan Small Flag Japan

Directors are elected by an ordinary resolution (see question 20) at a shareholders' meeting. Generally, the board of directors nominates director candidates, but in the case of companies with three committees, this must be done by the nominating committee.

Directors (other than directors who are members of the audit and supervisory committee) can be dismissed at any time by an ordinary resolution at a shareholders' meeting, unless a higher threshold is provided for in the articles of incorporation. Directors who are members of an audit and supervisory committee can be dismissed by an extraordinary resolution (see question 20) at a shareholders' meeting. Directors can seek damages for dismissal from the company if they are dismissed without justifiable grounds.

Portugal Small Flag Portugal

In limited companies, in principle, the management is elected and removed by shareholders.

In stock companies with classic or Anglo-Saxon models, the members of the board of directors and of the fiscal board, the audit committee and the statutory auditor, as applicable, are elected and removed by the shareholders. In the two-tier model, the members of the supervisory board and the statutory auditor are elected and removed by shareholders, whilst the members of executive board are appointed and removed by the supervisory board (unless the by-laws grant such powers to shareholders). In any case, the removal of said members of the supervisory bodies is only permitted with just cause. Portuguese laws also accommodate the possibility of co-optation to fill vacancies, in certain cases and subject to ratification by shareholders.

Members of governing bodies may also terminate office for example due to the expiration of its term or resignation.

South Korea Small Flag South Korea

At the time of incorporation of a Company, the directors are elected by the promoters or at the inaugural general meeting of promoters, and after the incorporation of a Company, the directors are elected by an ordinary resolution (a resolution adopted by a majority of the votes of the shareholders present representing at least one-fourth of the total number of the issued and outstanding shares) at the GMS. Since outside directors of a listed Company have different qualifications from those of internal directors and their appointment procedures are different, in practice, they are elected separately at the GMS and separately described in the notice of convening the GMS. The directors must be elected by an ordinary resolution based on one-person one-vote principle, unless a cumulative voting system is adopted. Since the GMS has exclusive authority to elect the directors, such authority cannot be delegated by the AOI or via a resolution of the GMS.

The directors can be dismissed at any time by a special resolution of the GMS (a resolution adopted by at least two-thirds of the votes of the shareholders present representing at least one-third of the total number of the issued and outstanding shares), and such special resolution is the only method of dismissing directors. Due to this requirement, the AOI cannot establish the method of dismissal of the directors in such a way that the directors can be dismissed by a resolution of the BOD or the decision of the representative director. If a director is dismissed before the expiration of his or her term of office without justifiable reason, the director may demand compensation from the Company for damages arising from such dismissal based on grounds of lost expected remuneration that he or she would have been entitled to during term of office.

In the case of a Company which adopts the executive officer system, the BOD has the authority to elect and dismiss an executive officer. Such BOD resolution requires the presence of a majority of the directors in office and affirmative vote of a majority of the directors present.

Switzerland Small Flag Switzerland

Members of the board are appointed and removed by the general meeting of shareholders, usually upon recommendation of the board of directors. For listed companies, the OaEC requires that board members of listed companies be elected individually and on an annual basis, while for non-listed companies the articles of association may contain different terms. It is not possible for the board to fill vacancies by themselves.

Members of the executive management are appointed and removed by the board of directors.

United States Small Flag United States

For corporations, a slate of directors is nominated by the current directors (and, under certain special circumstances, the shareholders) and then elected by shareholder vote. The terms for removal of a director vary by corporation and are governed by state law and the corporation’s Charter Documents. Typically, directors can be removed by a vote of a majority (or supermajority) of shareholders. Most corporations allow for directors to be removed without cause so long as the requisite vote threshold is met, but some corporations, if state law allows, restrict removal to cause. In Delaware, a board must be elected to staggered terms in order to restrict removal of directors to cause.

The terms for appointing and removing managers of a LLC are determined by the company’s operating agreement but tend to be similar to those of corporations.

United Kingdom Small Flag United Kingdom

The appointment and removal of directors is governed by the Companies Act 2006 and the company's constitution, which typically provides for appointment and removal by the board of directors or shareholders. Directors of premium listed companies appointed by the board are typically required to have their appointment confirmed by shareholders at the next annual general meeting, and are subject to annual re-election by shareholders.

Canada Small Flag Canada

Directors are elected by the shareholders, typically at an annual meeting. In the event of a vacancy between shareholder meetings, a limited number of directors may also be appointed by the board of directors unless in certain situations such authority has been withheld by the shareholders. The board of directors cannot unilaterally remove a director. Shareholders may remove a director with the approval of a majority of the shareholders who cast their votes at a special meeting of shareholders called for such purpose.

Italy Small Flag Italy

Pursuant to Art. 2383 ICC, the members of the board of directors shall be appointed by the ordinary shareholders’ meeting, which is also exclusively competent in removing them. The removal may be discretionarily resolved upon by the meeting, provided that in the event that there is no just cause for removal, the removed directors shall have the right to sue a claim for damages. Ordinary quorums and majorities apply to appointment and removal of directors (see point 20 below).

The term in office shall be of maximum 3 financial years.

It is worth noting that, inter alia: (i) special classes of shares may be granted with certain rights in relation to the appointment of directors, such as veto rights or the right to appoint (autonomously) a certain number of directors, (ii) each holder of a participating financial instrument (strumento finanziario partecipativo or SFP) may be granted with the right to appoint an independent director under Art. 2346, par. 6, ICC, provided that the majority of the board shall be appointed by the ordinary shareholders’ meeting.

Moreover, listed companies shall mandatorily apply list-voting mechanisms aimed at granting the appointment of at least 1 minority director.

Turkey Small Flag Turkey

Except appointment of first board members which is done through issuance of the AoA during the establishment of the company, shareholders have the exclusive authority to appoint and remove the board members (except for resignation and death). According to article 408 of TCC, this authority is one of the non-assignable authorities of the shareholders forming the GA. However, if a BoD member in JSCs is discharged from its membership, BoD will be authorized to appoint a new member temporarily (for the term of the discharged member) and this temporary appointment must be approved by the first meeting of GA to be held (TCC, article 363).

For removing or appointment of the board member, the needed meeting quorum for the GA is shareholders or their representatives equaling to at least one-quarter of the capital and a simple majority of votes will be necessary unless provided otherwise in any other law or in AoA. In case the meeting quorum is not reached in the first meeting, then for the second meeting no quorum will be sought (TCC, article 418).

Luxembourg Small Flag Luxembourg

The managers of a SàRL are appointed by the shareholders for a term or for an indefinite term and may be removed for cause only except if the articles of association provide otherwise.

The directors of a SA are appointed by the shareholders for a limited term of up to six years, renewable, and may be removed at any time without cause.

With respect to qualifying listed companies, the LSE Principles indicate that the company shall establish a formal procedure for the appointment of members of the board of directors.

Ukraine Small Flag Ukraine

In JSCs, the GM appoints members of the supervisory board for a term of up to three years and is entitled to remove them. Shareholders in public and state-owned companies elect board members by cumulative voting through ballot. Private JSCs may elect board members by ordinary non-cumulative voting if their charter so provides.

If the JSC`s supervisory board was elected by cumulative voting, the GM may remove a member of such board only together with all other board members. However, a shareholder may at any time substitute a board member elected as this shareholder’s representative (see question 7).

Australia Small Flag Australia

Directors are first appointed on incorporation and, thereafter, pursuant to the terms of the company's constitution or the applicable provisions of the Corporations Act. The Corporations Act (and usually the constitution) provides for appointment by a majority vote of the shareholders or a decision of the existing directors (which must be subsequently confirmed by majority shareholder vote).

Excluding retirements and resignations, directors may only be removed by a majority vote of the shareholders; they cannot be removed by the board. Constitutions will generally also provide for circumstances in which a directorship automatically terminates (such as the bankruptcy or ill health of the director).

Unless required in the company's constitution, there is no limit on the period of office for directors of proprietary and unlisted public companies. For companies listed on the ASX, the Listing Rules require that each director (other than the managing director/CEO) must stand for re-election every three years, although there is no limit to the number of terms that they can serve. However the ASX Governance Principles suggests as guidance that the independence of a non-executive director should be considered where such director has been on the board for longer than 10 years.

Updated: May 20, 2019