Sections 131 to 133 of the Companies Act 1997 govern how people come onto the board.
Section 131 — first and subsequent directors
(1) A person named as a director in an application for registration or in an amalgamation proposal holds office from the date of registration or the date the amalgamation proposal is effective, until that person ceases to hold office in accordance with this Act.
(2) All subsequent directors shall, unless the constitution otherwise provides, be appointed by ordinary resolution.
An ordinary resolution under section 87(2) is a simple majority of the votes of shareholders entitled to vote and voting. So control of the board follows control of the votes.
The words “unless the constitution otherwise provides” allow other mechanisms — a right for a class or a named shareholder to appoint a director, board power to fill a casual vacancy, or rotation. These are common in joint venture and investor constitutions. Note that a constitution reserving board powers to shareholders can make those shareholders deemed directors under section 107(3) and (4).
Whatever the mechanism, section 130 applies: a person shall not be appointed unless they have consented in writing in the prescribed form and certified that they are not disqualified.
Section 133 — one director, one resolution
(a) the resolution is for the appointment of one director; or
(b) the resolution is a single resolution for the appointment of two or more persons and a separate resolution that it be so voted on has first been passed without a vote being cast against it.
A resolution moved in contravention of subsection (1) is void even though the moving of it was not objected to at the time. Silence at the meeting does not cure it.
Under subsection (4), no provision for the automatic reappointment of retiring directors in default of another appointment applies on the passing of a resolution in contravention. So a bundled slate does not merely fail — it also disables the fallback that would otherwise reinstate the retiring directors.
A single resolution appointing an entire slate forces shareholders to accept an unwanted candidate to get an acceptable one. Section 133 requires each appointment to stand or fall on its own — unless the meeting first agrees unanimously (no vote against) to a combined resolution.
Subsection (3) preserves section 136, under which the acts of a person as a director are valid despite a defective appointment. Subsection (5) confirms that nothing prevents the election of two or more directors by ballot or poll — a ballot is not a bundled resolution.
Section 132 — the Court may appoint
(a) there are no directors, or the number is less than the quorum required for a meeting of the board; and
(b) it is not possible or practicable to appoint directors in accordance with the constitution,
a shareholder or creditor may apply to the Court to appoint one or more persons as directors, and the Court may make an appointment where it considers that it is in the interests of the company to do so.
Section 132(2) allows the appointment to be made on such terms and conditions as the Court thinks fit.
| Situation | Why the constitution cannot solve it |
|---|---|
| The sole director dies and was also the sole shareholder | Nobody can vote the shares until the estate is administered |
| All directors resign at once | No board to fill casual vacancies; shareholders deadlocked or absent |
| Numbers fall below the board quorum | Under section 108 the remaining directors are not a “board” and cannot act |
| A director becomes disqualified under section 129 | Office is vacated under s 135(1)(c); no mechanism to replace |
| Shareholders are deadlocked on the appointment | No ordinary resolution can be passed |
| A creditor needs someone able to act for the company | No board to receive demands, respond, or resolve on a restructuring |
As with section 104 — the Court’s power to order a meeting of shareholders — a creditor may apply under section 132. The two provisions are often used together where a company has ceased to function: an order appointing directors, and an order for a meeting to be held and conducted as the Court directs.
Taking office, and telling the Registrar
- Check disqualification under section 129(2), including any constitutional qualification.
- Sign the section 130 consent and certification in the prescribed form.
- Ensure the company keeps it at the registered office — sections 13A(1) and 137(2A).
- Confirm the appointment is properly made — individually voted under section 133, or by whatever mechanism the constitution provides.
- File the notice. Under section 137, the board shall ensure notice of the change is submitted to the Registrar within one month of the change occurring. Under section 19(1)(b) that notice is what outsiders rely on.
- Check the residence requirement is still satisfied — section 128(2) requires at least one director ordinarily resident in the country.
- File a general notice of interests under section 118(2), and set up the interests register entries.
Under section 136, the acts of a person as a director are valid even though the appointment was defective or the person is not qualified. And under section 129(4), a disqualified person who acts as a director is a director for every provision imposing a duty or obligation. The Act protects the transaction and holds the individual to account.
Sources
- Companies Act 1997 — ss 13A, 19, 87, 104, 107, 108, 118, 128–137
Before relying on anything here, read the current text of the Companies Act 1997 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.