The Removal of Public Company Directors in Australia: Time for Change?

An ongoing debate among those involved in the management and regulation of Australian public companies is whether there should be methods for removing directors from office that do not require a general meeting of shareholders or resort to the courts. One method to have received some consideration has been the signing of prenuptial agreements by prospective company directors. This article reviews the law applicable to the removal of company directors from office in Australia and critically examines the Australian Security and Investments Commission's stated position that prenuptial agreements for directors of public companies are unenforceable under existing law. The article then investigates whether there are other options available to remove directors within the bounds of the current law that do not require resort to court action or a resolution of shareholders. The prohibition on the removal of directors by other board members presently contained in s 203E of the Corporations Act 2001 (Cth) is criticised as being superfluous and not in shareholders' best interests. The Australian position is then compared to a number of other common law jurisdictions. Finally, it is considered whether further legislative change is required in order to achieve a better balance between the interests of company management, directors and shareholders.