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What is the best way to kick out a board member?

Talking about a board member that is also an investor with over 10% equity stake in the business. This board member is adding no value and holding other board members back.

11 Replies

Selvan Rajan
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Selvan Rajan Entrepreneur • Advisor
Mobile & middle-tier architect
You can't. You need to wait until the next shareholders' meeting and in that meeting, you need to elect a new person. The best approach will be by persuading him/her to give up the position for someone more valuable. If he/she is concerned about the money invested, you may get a good support.
Spencer Jones
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Spencer Jones Entrepreneur
Rental Manager
It would depend on the bylaws if any and/or any written agreements which would outline options for a fair buyout. If it doesn't, you may want to speak with an attorney; again, depending on your setup.
Dave Shepherdson
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Dave Shepherdson Entrepreneur
Enterprise Architect -Turning Strategy into Reality
Carefully, depends how the articles are written. If u have a controlling interest it is easy but you need to have the full support of the rest of the board. The soft issues are much harder and needs to be carefully considered. The mechanics are easy. I support the approach Selvan suggested.
Johnathan Proffer
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Johnathan Proffer Entrepreneur • Advisor
Software Engineer, Visionary, Entrepreneur
You should check with your company's bylaws. There's a few ways you can remove the member - by intervention (talk with them directly and ask them to leave), leave of absence, allow term limits to expire, or impeachment. This will not change their equity stake, unless it is somehow tied into their member status
Peter Weiss
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Peter Weiss Entrepreneur
President at American Outlook, Inc.
this is as much a people issue as a legal or formal governance issue.

Talk to your other Board members and significant investors, carefully, and see if they share your view of the problem person. If they don't you should consider your conclusions and think about whether you need to find a way to create a more productive relationship. More important, if they don't you may not have the votes to remove him and you could find your position compromised. Be careful of direct attacks or confrontation, at least until you're sure you have the backing of the other major players.

If they share your perspective they are potential allies who may be able to help approach the Board member and help work through the situation, minimizing disruption and finding a way to persuade him to leave the Board.

Don Rector
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Don Rector Entrepreneur
Managing ground travel for the Business Traveler
Talk to your attorney. He needs to review the investment documents. He can then explain what your options are and what is your exposure. Don Rector Pls excuse my typos this was tapped one character a a time on my iPhone
Arthur Lipper
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Arthur Lipper Entrepreneur
Chairman of British Far East Holdings Ltd.
Board of Director terms should be two years, not for an indefinite period. Let's be clear, it is the shareholders who vote annuallyfor either a slate or individual Board members. A single Director cannot hold anyone or anything back unless a majority of the other Board members agree with him. Arthur
Andrea Raimondi
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Andrea Raimondi Entrepreneur
Computer Software Consultant and Contractor
What's the problem with just talking to him?
Why don't you go to him and say "Look, I have concerns because it seems to me that you are trying to hold us back, What is your fear?"

Or something like that.

There may be things you don't know.

A
Neil Gordon
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Neil Gordon Advisor
Board Member, Corporate Finance Advisor and Strategy Consultant
If you're not talking to individual board members in between meetings, you should. Inform then and lobby them, including the contrary investor, so that there won't be any surprises at the board meeting and members will have had time to think through points they might make in discussions.

You also need to put on your investor relations hat. Kicking a 10% owner off your board will likely create a 10% enemy. Good luck getting any needed cooperation and/or consents going forward.
Janet McGinty
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0
Janet McGinty Entrepreneur
Research, Analysis, Strategy
Your investors and board members are aligned with you with respect to a desire for the company to succeed. The view of the path to success - the plan and execution may differ. Your board member may have some different views and perspectives on risk that you might try to understand.
You took this person's money so you have to be accountable to this person. It is very immature and egotistical to think that the way to deal with people that disagree with you is by eliminating them. I suggest that if you can't come to terms with this person then you buy them out personally. If you can't do this than you better rethink your strategy and attitude because boards can remove founders as well.
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