Corporate Director Removal and Board-Vacancy Requirements in Nebraska

At a glance

Requirements one by one

Neb. Rev. Stat. §§ 21-201 and 21-214 identify the Nebraska Model Business Corporation Act and its ordinary domestic for-profit corporation.

Removal is meeting-only and ordinarily does not require cause

Neb. Rev. Stat. § 21-291(a) allows shareholders to remove one or more directors with or without cause unless the articles make removal cause-only. Nebraska does not add a cause requirement merely because terms are staggered under § 21-289.

Section 21-291 does not state a separate affirmative threshold. The ordinary non-election rule in Neb. Rev. Stat. § 21-267(c) therefore approves removal when votes cast favoring it exceed votes cast opposing it, unless the articles require a greater number under § 21-269.

Only the voting group that elected a director may vote to remove that director. Nebraska makes cumulative voting mandatory in every director election under § 21-270(b), and § 21-291(c) blocks removal when election-sufficient votes are cast against it.

Notice must identify removal

Neb. Rev. Stat. § 21-291(d) permits shareholder removal only at a meeting called for that purpose whose notice states removal. The specific meeting-only rule leaves no ordinary written-consent removal route under § 21-256.

Neb. Rev. Stat. §§ 21-254 and 21-257 allow the board or an articles- or bylaw- authorized caller to call the special meeting and require ten-to-sixty-day purpose-stated notice. Holders of ten percent of votes on the proposed issue also may demand the meeting by default; the articles may lower that percentage or raise it no higher than twenty-five percent. Section 21-255 supplies a court- ordered meeting route if timely notice or the noticed meeting does not follow a valid demand.

The ordinary removal provisions state no director statement or hearing right and no separate delayed-effective rule.

A qualifying shareholder agreement can change the manner

Neb. Rev. Stat. § 21-274 recognizes a qualifying agreement that may establish directors, their terms, and their manner of selection or removal even when inconsistent with the Act. It must be placed in the articles or bylaws and approved by all then-shareholders, or signed by all then-shareholders in a writing made known to the corporation. It ceases when the corporation becomes public.

Judicial removal requires conduct and remedy findings

Under Neb. Rev. Stat. § 21-292, the corporation or a shareholder proceeding in its right may seek removal. The court must find fraudulent conduct toward the corporation or shareholders, gross abuse of the director position, or intentional harm to the corporation. It must also consider the director's course of conduct and inadequacy of other remedies and find removal in the corporation's best interest.

The court may bar reelection for a prescribed period, and § 21-292 preserves its power to order other equitable relief. The Act states no ordinary board- removal or automatic-disqualification route.

Resignation may use a later date or event

Neb. Rev. Stat. § 21-290 requires a written resignation delivered to the board, its chair, or the corporate secretary. It is effective on delivery unless it specifies a later date or an event-based date. A resignation conditioned on failing to receive a specified election vote may state that it is irrevocable. The section states no acceptance requirement or general withdrawal rule.

Shareholders and directors may fill the vacancy

Unless the articles provide otherwise, Neb. Rev. Stat. § 21-293 authorizes the shareholders or board to fill a vacancy, including a newly created seat. If the remaining directors are below quorum, an affirmative majority of all remaining directors may fill it.

For a voting-group seat, only that group's shareholders or directors may fill the vacancy. A vacancy occurring at a specific later date may be filled early, but the successor does not take office until the vacancy occurs.

If no directors remain, shareholders are still an express filler. The special- meeting demand and court-order provisions in §§ 21-254 and 21-255 remain available subject to their thresholds and conditions.

Every vacancy filler receives a next-election term

Neb. Rev. Stat. § 21-288(d) ends the term of a director elected to fill any vacancy at the next shareholder meeting at which directors are elected. The predecessor's unexpired term is not the default. Unless the articles provide otherwise, the director then holds over until a successor is elected and qualifies or the board size decreases.

What trips people up

Removal and vacancy filling use different vote rules. Removal compares votes cast for and against the director, subject to Nebraska's mandatory cumulative- vote protection. A below-quorum board vacancy fill instead requires an affirmative majority of all directors remaining in office.

The replacement term also does not preserve the removed director's unexpired term. Section 21-288(d) ends every vacancy fill at the next shareholder meeting at which directors are elected, even when the board is staggered.

Common questions

Can Nebraska shareholders remove a director by written consent?

Not under the ordinary removal provision. Section 21-291(d) says removal occurs only at a purpose-called meeting whose notice states removal. A qualifying § 21-274 shareholder agreement may establish a different manner of removal.

Can a board below quorum fill a vacancy?

Yes. Section 21-293(a)(3) requires the affirmative vote of a majority of all directors remaining in office.

Does a staggered board require cause for removal?

Not by classification alone. Section 21-291(a) makes cause depend on an articles provision, while § 21-289 separately authorizes staggered terms.

Can a Nebraska court remove a director?

Yes, on the findings in § 21-292. Fraudulent conduct, gross abuse, or intentional harm is not enough by itself; the court also must make the statute's course-of- conduct, inadequate-remedies, and corporate-best-interest assessment.

Statutes and sources

• Neb. Rev. Stat. §§ 21-254 to 21-257, 21-267, 21-269 to 21-274. Govern special-meeting callers and orders, notice, vote rules, cumulative voting, and the qualifying shareholder agreement.
• Neb. Rev. Stat. §§ 21-288 to 21-293. Govern terms, classification, resignation, shareholder and judicial removal, vacancy filling, and replacement terms.