How do I remove a director from my Ontario corporation?

Who can remove a director?

The shareholders. Section 109 of the CBCA lets shareholders remove any director by ordinary resolution at a special meeting, and section 122 of Ontario’s Business Corporations Act allows it at an annual or special meeting. Other directors can’t remove a fellow director, though the board can remove someone as an officer.

There are exceptions. A director elected by a particular class or series of shares can generally be removed only by that class, and companies with cumulative voting have their own rules.

How does the process work?

1. Check the agreements. A shareholder agreement, voting agreement or unanimous shareholder agreement may give a founder or investor the right to nominate a director and require the others to vote for them. Removing that director in breach of the agreement can lead to a claim.
2. Call a meeting (a special meeting for a federal corporation) with proper notice under the by-laws, stating that removal will be voted on.
3. Let the director respond. A director is entitled to notice of and to attend shareholder meetings, and to submit a written statement opposing their removal, which the corporation must circulate (section 110 of the CBCA; section 123 of the OBCA).
4. Vote. An ordinary resolution needs a majority of votes cast.
5. Fill the vacancy at the same meeting or later, as the by-laws and agreements allow.
6. File a notice of change within 15 days through the Ontario Business Registry, or with Corporations Canada for a federal corporation, and update the minute book.

Can we do it by written resolution instead?

Sometimes. For a federal corporation, section 142 of the CBCA requires every voting shareholder to sign, so a director who is also a shareholder can simply decline. Ontario is more flexible: under section 104(1)(c) of the OBCA, a corporation that isn’t an offering corporation can pass an ordinary resolution in writing signed by the holders of a majority of the voting shares, and must notify the shareholders who didn’t sign within 10 business days (section 104(3)). Your articles or a unanimous shareholder agreement may require more.

Under both statutes, the written route isn’t available if the director submits a written statement opposing the removal (section 110(2) of the CBCA; section 123(2) of the OBCA). In practice, a contested removal needs a meeting.

Situation	Route
Director agrees to step down	Written resignation, effective when delivered
Enough shareholders sign (all for a federal corporation; a majority for most private Ontario corporations) and the director doesn’t submit a statement	Written shareholder resolution
Contested	Special meeting, ordinary resolution
Shareholder agreement gives a nomination right	Follow the agreement, or negotiate

What happens to their shares and job?

Nothing automatically. Removal as a director doesn’t take away their shares or end any employment. Shares stay unless a vesting or buyback term applies, and terminating employment follows employment law. See what happens if a cofounder leaves without vesting? and directors vs officers.

Should we try to negotiate first?

Usually. A negotiated resignation, with an agreement covering shares, IP and releases, is faster and avoids an oppression claim. Disputes between founders are easier to resolve before positions harden.

This guide is general information about Ontario and Canadian law, not legal advice for your situation. If you’re dealing with a board dispute, book a free 15-minute consult.