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[rpd] [Community-Discuss] Removal of a director
Boubakar Barry
boubakarbarry at gmail.com
Mon Dec 18 01:58:16 UTC 2017
I know that the AfriNIC community is very generous, with many volunteers.
Can someone summarize this for us? I anticipate that it will be very much
appreciated.
Boubakar
On Sun, Dec 17, 2017 at 10:10 PM, Andrew Alston <
Andrew.Alston at liquidtelecom.com> wrote:
> Ok,
>
>
>
> Because what I have to say in here is extremely long – let me start with
> the summary – because what I had said before hand was not entirely accurate
> – and the for that I apoligse (and I explain below where I believe I erred
> and how what I said can still be made to occur even in the event of that
> error). I have also copied in the community list on this – since I believe
> this discussion is best moved there – and the only reason I am still
> sending it to the RPD is that the original questions were asked there. If
> I can please request that further discussion of this issue go either to the
> members list or the community list – thanks.
>
>
>
> One final point before I get into this – I am no lawyer – I know this –
> and what I write below is my own interpretation of the companies act and
> the company’s bylaws – which I have spent substantial time studying. If
> what I say has any factual inaccuracies – I welcome dissenting opinions
> that I can further learn from – so long as they are backed by citation of
> relevant material – objection with no substantiation is meaningless.
>
>
>
> The summary though is as follows:
>
>
>
> – YES the members can remove a director – the process would be as follows:
>
>
>
> 1. Utilizing clause 7.6.viii of the bylaws invoke an SGMM – for the
> purposes of passing a special resolution to amend the bylaws to allow the
> community to remove a director – and please note – that special resolution
> could set the required voting percentage to remove said director at
> whatever they liked – there is now low watermark – it is subject to
> whatever is in the constitution (as per section 138.2 of the companies act)
> 2. Once (a) was completed – call a second SGMM – for the express
> purpose of the removal of one or more directors – send out the notice of
> said meeting with the required 14 day notice period - and then pass a
> resolution as permitted by the process performed in (a)
>
>
>
> Now – for those who want all the gruesome details – keep reading.
>
>
>
> So I’ve had some time – and some of what I said was inaccurate – though
> not all of it – so let me explain my view point and we can then take it
> from there:
>
>
>
> Firstly – the company has no shareholders – it has members (the registered
> directors being the ones with the legal liability and the fiduciary
> responsibility)
>
>
>
> What this means is that effectively the Afrinic members are powerless –
> unless you follow the idea that as non-registered members we hold the same
> rights as shareholders would. This has been the line from the board many
> times before this community – though I have occasionally found this to be
> pretty selective – choosing what suits them as a need for registered
> members vs standard members.
>
>
>
> But – if we are to assume that members have the rights of shareholders –
> for arguments sake – then we have to refer to two points – one being the
> companies act and the other being the bylaws.
>
>
>
> AfriNIC is a private company – it has 9 members – therefore – we have to
> discount the following:
>
>
>
> Section 138 of the companies act:
>
>
>
> (1) *Notwithstanding anything in its constitution* or in any agreement
> between it and a director, a director of a *public* company may be
> removed from office by an ordinary resolution passed at a meeting called
> for the purpose that include the removal of a director.
>
>
>
> What this means is – in a public company – the shareholders can remove a
> director – and it doesn’t matter what the bylaws or constitution say – they
> have the right via a 50% majority at an SGMM to revoke a director.
>
>
>
> So – and this is where I err’ed:
>
>
>
> (2) *Subject to the constitution of a company*, a director of a private
> company may be removed from office by *special resolution* passed at a
> meeting called for the purpose that include the removal of the director.
>
>
>
> (3) The notice of meeting shall state that the purpose of the meeting is
> the removal of the director.
>
>
>
> What this says is – if the bylaws allowed it – we could remove a director
> via special resolution at an SGMM – now – it could be argued that the
> bylaws do not PREVENT this – however – they do offer an alternative – so my
> guess is – those who say that only directors can remove a director could be
> technically correct – and it would come down to legal interpretation – it
> would be interesting to see what happened if someone chose to attempt to
> invoke this if the board would see fit to fight it or realize that anyone
> who has managed to get the SGMM together probably has sufficient backing
> that they have lost the faith of this community – would they let the vote
> go ahead? Who knows – only the board can answer that.
>
>
>
> However – if you add an extra step to what I have said in the past – then
> it can still be done:
>
>
>
> If the SGMM was invoked (as per section 7.6 / section 116 of the companies
> act referred to below in this email) – then a bylaw amendment could be
> passed to allow for such a removal – followed by a second SGMM to remove
> the director. Since notice of a meeting has to be given in specific time
> frames and the removal of a director requires a dedicated meeting for that
> purpose – this may require a short time frame between these meetings – but
> none the less – if you have the votes to remove a director by special
> resolution – you have the votes to change the bylaws to allow you to do it.
>
>
>
> Now – where did the SGMM parts come from – this comes from both the bylaws
> and section 116 of the act:
>
>
>
> The bylaws state in section 7.6:
>
>
>
> 7.6 The Registered Members and Resource Members shall, at Annual General
> Members' Meetings or by way of written resolutions, in addition to the
> rights conferred by Articles 7.1 and 7.2, have the right to:
>
> (i) consider and adopt by Ordinary Resolution the financial statements of
> the Company;
>
> (ii) receive any auditor's report;
>
> (iii) consider the annual report;
>
> (iv) determine, by Ordinary Resolution, the general policies for
> fulfilling the objects of the Company;
>
> (v) approve, in accordance with Section 130 of the Act, a major
> transaction;
>
> (vi) consider and approve by Special Resolution, if appropriate, proposals
> for the revocation, amendment or replacement of this Constitution;
>
> (vii) appoint by Ordinary Resolution at each Annual General Members'
> Meeting the auditor of the Company to hold office until the conclusion of
> the next Annual General Members' Meeting;
>
> *(viii) request the Board, by way of a notice signed by not less than five
> (5) per cent of the Registered Members and Resource Members, to call a
> Special General Members' Meeting to vote on one or more resolutions; and*
>
> (ix) resolve, by Special Resolution, to put the Company into liquidation.
>
>
>
> This is backed by section 116 of the companies act:
>
>
>
> 116. Special meeting of shareholders A special meeting of shareholders
> entitled to vote on an issue –
>
> (a) may be called at any time by –
>
> (i) the Board of directors; or
>
> (ii) a person who is authorised by the constitution to call the meeting;
>
> *(b) shall be called by the Board on the written request of shareholders
> holding shares carrying together not less than 5 per cent of the voting
> rights entitled to be exercised on the issue.*
>
>
>
> This is however interesting – because once again it lends weight to the
> fact that the company treats the members as shareholders – even though I
> have serious doubts as to the legal validity of this – I would be
> interested in hear *independent* legal council on this point – do the
> members of AfriNIC actually have any real power – or is the power all in
> the hands of the registered members alone – I have a feeling that the
> latter is the case.
>
>
>
> That being said – since the directors are the members – in the event of a
> vote of no confidence in the entire board – if you assume that once a
> director leaves office he ceases to be a member – the company would in
> effect cease to exist – however – because of SR3 referred to below – this
> now gets even more murky – remove all the directors and you have 9
> registered members who have the power to simply either ignore the vote or
> reappoint themselves in the absence of the community. However – it **IS**
> possible for the members – under the bylaws – to force an SGMM through 5%
> of the vote and then vote to put liquidate the company. Therefore – if you
> wanted to get rid of the entire board – you have the option of calling for
> an SGMM – gathering the votes – liquidating the company – and being sure
> that there is an agreed vehicle ready to take over. Though – I actually
> have no idea what would happen in the event of the members of this
> community liquidating afrinic – I don’t think IANA ever really contemplated
> this situation – and it would be **VERY** interesting to know the
> thoughts of someone on that side as to what the likely outcome would be.
>
>
>
> Now – let me refer to the votes that the community voted against.
>
>
>
> First – it is inaccurate that I proposed a resolution to allow for the
> removal of a director by the members – the proposal to do this came from
> the collective board in 2016 and were tabled at the Mauritian meeting –
> this was SR16 – the community voted against taking this power for
> themselves for whatever reason. Secondly – that is not the resolution I
> had referred to in my last few emails – the resolution that I found
> completely bizarre in the context of the community was in fact SR3 – which
> would have changed section 6.3 to read as follows:
>
>
>
> 6.3 Registered Member - An individual who shall be elected as
>
> Director in accordance with Article 13 below. The Chief Executive
>
> Officer shall automatically also be appointed as a Registered Member,
>
> provided that the said individual shall sign such forms as may be
>
> prescribed by the laws of Mauritius and to contribute Rs 500 (Five
>
> hundred Mauritian rupees only) in the event of the company being wound
>
> up according to Article 22.
>
> (a) For the avoidance of doubt, Registered Members shall be the only
>
> legal entities entitled to have their names entered on the list of
>
> members of AFRINIC filed or to be filed with the Registrar of
>
> Companies in compliance with the Act.
>
> (b) A Director whose tenure of office comes to an end, shall de facto
>
> cease to be a Registered Member and shall complete all the
>
> required formalities in compliance with the Act and/or the bylaws
>
> to this effect.
>
>
>
> This section 6.3.(b) was the section I was referring to when I said the
> community did something incredibly stupid – because it means a director who
> is not re-elected may effectively choose to never relinquish his registered
> member status – and that could create a major problem. Just for the record
> – that vote failed 54 to 22 – or 71.05% - and I personally cast 15 votes in
> favour from the various places I hold voting rights for – meaning the vote
> would have failed with a mere 63.93% in favour if I were to remove the
> votes cast by myself. I find this complete bizarre.
>
>
>
> But – while we are on the subject of special resolutions the community
> voted against – at the same meeting was SR4 – which stated that directors –
> irrespective of their regional affiliation – must always act in the best
> interests of AfriNIC – was voted down by the community – it would have
> inserted the following into the bylaws:
>
>
>
> 13.6 [new article to be inserted] Notwithstanding the regional
>
> criterion of elections of Directors for seats 1 to 6 (both inclusive) as
>
> specified in Article 13.4(i) and 13.5, all Directors so elected, shall
> exercise
>
> their powers in accordance with the Act and always act in good faith and
>
> solely in the best interests of the company.
>
>
>
> This failed getting less than 48% of the vote (37 for, 41 against) –
> interestingly enough though – I note in my own tally documents – I voted
> against this resolution (not that it would have made a difference, it would
> have changed the voting numbers to 52 for vs 26 against or 66.67% in
> favour. I have always been curious though as to other people’s reasons for
> voting against this – though I will explain my own. I believe that If
> AfriNIC must maintain regionalization of directors – then the
> regionalization should be total. Either we state that there shall be a
> western representative nominated by the west and voted by the west, an
> eastern representative nominated by the east and voted by the east etc – or
> we say – directors are directors and they serve the best interests of the
> continent collectively. In my mind however – we are sititng half way in
> between – where a director from the south or the east – can be elected by
> majority vote from another region where the region he is meant to be
> representing ends up having very little say. This is particularly
> prominent with a seat like indian ocean – where because of the relatively
> low number of voting members – the indian ocean representative is
> effectively chosen by the rest of the continent. That being said – and I
> distinctly remember raising this point – had the items around acting in
> good faith and solely in the best interests of the organisation been split
> out some how – THOSE I would have voted for – but I would not and could not
> vote for continued regionalization is continues to drive factionalism
>
>
>
> (And I know there are people who are likely to scream at me about secret
> ballots – because it’s happened before – so to avoid that happening – let
> me state here and now – a ballot is secret – but by choice – there is
> nothing in the act or the bylaws that require me to keep how I voted – or
> why I voted that way a secret – and in the interests of transparency – I
> will always declare openly how I voted on an issue concerning Afrinic)
>
>
>
> Andrew
>
>
>
>
>
> *From: *Komi Elitcha <kmw.elitcha at gmail.com>
> *Date: *Sunday, 17 December 2017 at 10:57
> *To: *Andrew Alston <Andrew.Alston at liquidtelecom.com>
> *Cc: *Arsène Tungali <arsenebaguma at gmail.com>, "Marcus K. G. Adomey" <
> madomey at hotmail.com>, rpd <rpd at afrinic.net>
>
> *Subject: *Re: [rpd] Removal of a director
>
>
>
> Hi,
>
> I don’t know where Andrew is getting his information from and I too would
> like him to find his computer and verify his claims.
>
> As far as I can see, they are erroneous and misleading. The facts from
> AfRINIC docs and lists
>
> - only board members (registered members) can recall themselves.
> - resource members and the wider community have no powers.
> - There was no special resolutions on the matter by Andrew as claimed
> - A previous attempt to address this was in the Bylaws review 2016
>
> Current bylaws
> {
> https://www.afrinic.net/en/about/bylaws/2001-afrinic-bylaws-2016?start=13
>
> 14 REMOVAL OF DIRECTORS
> 14.1 A Director shall hold office until:
> (i) his term of office expires, without prejudice to Article 13;
> (ii) he/she signs a written notice of resignation and delivers it to the
> address for service on the Company, which notice shall be effective when it
> is received at that address or at such later time as may be specified in
> the notice;
> (iii) he/she is removed by the affirmative vote of two-thirds of all other
> Directors;
> (iv) he/she otherwise ceases to be a Director pursuant to Section 139 of
> the Act; or
> (v) the Director being the Chief Executive Officer, on the Board
> terminating his employment as Chief Executive Officer.
> }
> Bylaws Revision
> {
>
> https://www.afrinic.net/images/2.0-Special_Resolutions_SR1_to_SR20.pdf
>
> Special Resolution 16 (SR16)
> Give the Members the power to recall a Director.
>
> Insert a new sub-article 14.1(iv) after the existing 14.1(iii), and
> re-number the subsequent sub-articles as appropriate; Add a new article
> 14.2 as follows.
> 14.1 A Director shall hold office until:
> . (i) [no change from previous text]
>
> . (ii) [no change from previous text]
>
> . (iii) [no change from previous text]
>
> . (iv) [new sub-article] he/she is removed in terms of Article
> 14.2;
>
> . (v) [previous part (iv) re-numbered to (v)]
>
> . (vi) [previous part (v) re-numbered to (vi)]
>
> 14.2 [new article] A Director other than the Chief Executive Officer may
> be removed by a special resolution of Registered Members and Resource
> Members passed at an Annual General Member Meeting, provided:
> (i) At least 10% of all Registered Members and Resource Members petition
> for the special resolution to be included in the agenda of the meeting
>
> . (ii) The Director who is the subject of the special resolution
> is given the opportunity to be heard at the meeting;
>
> . (iii) The special resolution is passed with a supermajority of
> no less than 75% of all votes cast.
> }
>
> The votes results
> {
>
> https://www.afrinic.net/en/news/1957-results-of-voting-
> on-special-resolutions
>
> SR 16: Give the Members the power to recall a Director.
> 58 YES, 21 NO, 0 Abstain
> FAILED with 73% YES votes
> }
> Origin and discussions on what became SR16
> {
>
> https://lists.afrinic.net/pipermail/community-discuss/
> 2016-June/000350.html
> }
> Andrew's proposed special resolutions to amend bylaws 2015
> {
> https://afrinic.net/images/doc/special_resolution_proposed_by_member.pdf
> }
>
>
> Thanks
>
>
>
> 2017-12-15 14:35 GMT+00:00 Andrew Alston <Andrew.Alston at liquidtelecom.com
> >:
>
> Dear Marcus,
>
>
>
> Right now - I am on holiday with my family - sitting 9 hours behind my
> normal time zone - and wandering around Disney Land most of the time.
>
>
>
> I will clarify and send the documents when I get time to access them - and
> I remind you - and Arsene - I have zero obligations to give you any
> information - in any time frame - and how long it takes - that’s up to me -
> when I have the chance to look up specifics - you will get them - until
> then - you are quite free to do what I will do to find them - go and read
> the bylaws and the companies act.
>
>
>
> Shrug - btw - I have asked you a couple of things about a year or two ago
> - I believe the answer I got was something about enjoying a black label and
> getting back to me - care to go and answer those? I believe someone who has
> the time to sit and demand answers of others should not need a year to
> answer other emails
>
>
>
>
>
> Andrew
>
>
>
> Get Outlook for iOS <https://aka.ms/o0ukef>
>
> _____________________________
> From: Arsène Tungali <arsenebaguma at gmail.com>
> Sent: Friday, December 15, 2017 05:37
> Subject: Re: [rpd] Removal of a director
> To: Marcus K. G. Adomey <madomey at hotmail.com>
> Cc: Andrew Alston <andrew.alston at liquidtelecom.com>, rpd <rpd at afrinic.net>
>
>
>
>
>
>
>
>
>
>
> 2017-12-15 12:21 GMT+02:00 Marcus K. G. Adomey <madomey at hotmail.com>:
>
> I think providing an answer to my request should not take so long for an
> immediate past board member, even if his computer is missing.
>
>
>
> Been wondering the same thing.
>
>
>
> I hope Andrew comes back soon with details :)
>
>
>
> Arsene
>
>
>
> Marcus
>
>
> ------------------------------
>
> *From:* Marcus K. G. Adomey <madomey at hotmail.com>
> *Sent:* Tuesday, December 12, 2017 9:03:50 PM
> *To:* Andrew Alston; rpd
> *Subject:* Re: Removal of a director
>
>
>
> Hi Andrew,
>
>
>
> Could you point to the bylaws section or the corporate document where 5%
> of members (registered and resources) can recall a director and vote by
> super majority?
>
>
>
> Warm regards
>
>
>
>
>
>
>
> Marcus
>
>
> ------------------------------
>
> *From:* Andrew Alston <Andrew.Alston at liquidtelecom.com>
> *Sent:* Tuesday, December 12, 2017 2:30 PM
> *To:* rpd
> *Subject:* [rpd] Removal of a director
>
>
>
> Hi,
>
>
>
> There are those that have said on this list that there is no procedure to
> recall a sitting board member.
>
>
>
> This is fundamentally inaccurate - there is. It requires the signatures of
> 5% of the membership base to call for it - and following that a vote by
> super majority.
>
>
>
> If I recall there was a resolution proposed to make this easier - first by
> myself - it was voted down - and second proposed by the board in Mauritius
> - again it was voted down - so the procedure exists and is as difficult as
> it is because that is what this community wanted.
>
>
>
> This community has a habit of voting against things based on who proposed
> them then coming and asking for them again later. I really wonder what will
> happen when a director finishes his term and refuses to hand back his legal
> membership - and as a result cannot be removed as a member of the company -
> and as a result no new directors can be appointed. Since that is the
> status quo that this community voted for and legitimized in Mauritius when
> they voted against the need for a director to relinquish his status at the
> end of his term.
>
>
>
> Fascinating how this community acts against their own interests and then
> wants a revisit once the idea becomes “invented here”
>
>
>
> Just like it will be curious if that audit policy ever passes and audits
> are demanded of the authors - some of whom to this day only utilize 25% of
> their allocated space that they have sat on for close to a decade.
>
>
>
> Andrew
>
>
>
> GetOutlook for iOS <https://aka.ms/o0ukef>
>
>
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>
>
>
>
>
>
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>
>
>
>
> --
>
> --KE
>
>
>
> _______________________________________________
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> Community-Discuss at afrinic.net
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>
>
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