Directors appointed under a company’s articles of association have a special status, given that their relationship with the company is governed by both company law and employment law. Another special feature of this type of company director is that their appointment and dismissal also involves certain aspects of the law on employee participation. In short, the role of a company director appointed under the articles of association is a special one.
The special status of a company director comes into play even before he or she is appointed. For example, the general meeting of shareholders has to decide on his or her appointment. The resolution passed to this effect must be recorded in writing. Also, the terms of a company director’s contract of employment must reflect his or her special status.
Another point to bear in mind is that the procedure for dismissing a company director appointed under the articles of association is complex, as various conditions relating both to employment law and the law of procedure need to be satisfied. If the employer fails to observe these statutory regulations, either the dismissal may be declared null and void or the company may be ordered to pay the director a larger severance package than would otherwise be the case. In other words, both parties need to be alerted to their respective rights and obligations. Doing so at an early stage may prevent disputes from going to court.
What can we do for you?
We can advise both employers and directors about the complex regulations in this field of law, whether this is at the start of the employment relationship, by drafting an employment contract, or at the end, by assisting the employer or the director during negotiations on the termination of the latter’s employment contract or during the dismissal procedure.