Removal of Directors

According to North Carolina Governing Statute 55A-8-08: Removal of directors elected by members or directors.

  1. Members may remove one or more directors elected by the members with or without cause.
  2. A director elected by members may be removed by the members only at a meeting called for the purpose of removing the director and the meeting notice shall state the purpose, or one of the purposes, of the meeting is removal of the director.
  3. An entire board of directors may be removed under 55A-8-08 (a)-(c).

NC GS 55A-8-9: Removal of designated or appointed directors.

A designated director may be removed by an appointed director with or without cause by the person who appointed them in the first place

  1. The person removing the director shall do so by giving written notice of the removal to the director to be removed and the association.
  2. Removal will be effective when the notice is effective unless the notice specifies a future effective date.

NC GS 55A-8-10: Removal of directors by judicial proceeding.

  1. The Superior Court  of the county where the corporation’s principle office (Burke County) is located may remove any director of the corporation from office in a proceeding commenced either by the corporation or by its members holding at least 10% of the votes entitled to be cast.  Causes:
    1. The director engaged in fraudulent or dishonest conduct, or gross abuse of authority or discretion, with respect to the corporation, or a final judgment has been entered finding that the director has violated a duty set forth in GS 55A-8-30 through GS 55A-8-33 [see below] and
    2. Removal is in the best interest of the corporation.
  2. The court that removes a director may bar the director from serving on the board of directors for a period of prescribed by the court.
  3. If members commence a proceeding under NC 55A-8-10 (a) [#1 above] the corporation shall be made a party defendant.

As reference above GS 55A-8-30 through GS 55A-8-33:

  1. GS 55A-8-30:  General standards for directors
  2. GS 55A-8-31:  Director conflict of interest
  3. GS 55A-8-32:  Loans to or guaranties for directors and officers
  4. GS 55A-8-33:  Liability for unlawful loans or distributions

The above information has been paraphrased [condensed] to save space.  A full PDF copy of NC GS-55A, pages 25-27.

Note:  Sections of NC GS 55A-8-08 was used twice in 2017 to remove a complete board of directors by the members.  No lawyer was involved nor was any payment required – until a member of the removed board took the members to court to win back their seat – they won by court, but the members removed the board again, using the same process again.