Hi,
I need to understand the implications of the following potential issues.

1) I am one of two directors of a private limited company.
2) The company was setup to manage a group of flats. There are 35 shareholders.
3) We have an AGM very soon and the turnout is normally very poor, which could be a problem.
4) I need to understand what is the due process regarding “directors retiring by rotation” – how it works in reality when there are only two directors.
5) One of two directors may not be able to attend – What impact will that have?
6) What happens if by the end of the AGM no director is appointed? I understand the company will be in default, but what does that mean in reality?
7) Are my assumptions right about directors retiring by rotation?

I have read Table A – Appointment and Retirement of Directors – points 73 -80. We are still using the 1985 regulations. We have not passed any resolution to incorporate the latest 2006 resolutions, but the table does not mention what happens if a director is not appointed at the end of the meeting. Point 80 comes close to explaining what happens but it falls short of telling you what happens AFTER the meeting closes.

80 “Subject as aforesaid, a director who retires at an annual general meeting may, if willing to act, be reappointed. If he is not reappointed, he shall retain office until the meeting appoints someone in his place, or if it does not do so, until the end of the meeting”.


The reason I need to know is to be prepared for any surprises, especially as there is normally a low turnout. I am concerned that unless we follow the correct process for the election of directors, we may end up without a director and therefore the company could be in default, whatever that means in reality!

I understand that all directors must resign at the first AGM. This is not the first AGM. What I am reading suggests that from the second and subsequent AGM’s only “one third” of all directors must resign, not “all” directors like we appear to do at our AGM’s. I have never had to question this point before but I think it maybe necessary to question it for this and subsequent AGMs to ensure we are following the correct process and avoid defaulting.

As one of the director’s, I need to be clear on how the election of directors should be managed at all AGM’s. There is nothing in our Articles of Association that covers this possibility. For example, I keep coming across the term, all directors must resign at the “first” AGM but at subsequent AGM’s “one third of all directors must resign”, or that the closest number to “one third” must resign. I interpret this to mean that myself and the second director are the closest to one third, being “one half”. If it’s between two directors, the director who has been in service the longest, from the last day of appointment, is the one who must step down leaving the other director in office. I was reappointed on the same “day” the second director was appointed which means we have been in office the same length of time. Who remains in office is either agreed “between the directors” or by “lots”, if we cannot agree. One hitch is the other director, will probably not be able to attend the AGM, so what happens if he is not there. Who decides which one of the two directors remains in office using the “retiring by rotation rule”??? I could not find anything that covers how this process works if one of the two directors is not present at the AGM. I really need to understand this.

How I read this is that if there are a minimum of two directors in office at any AGM’s then at least one director will always remain in office and one will always have to step down. Obviously whichever director stays in office this AGM will then have to resign at the subsequent AGM because they will by default be the longest serving Director.

If anyone has an insight into the points I have raised I would be very grateful for your opinion.
Kind regards
Digger