Corporate Director Removal and Board-Vacancy Requirements in Texas

At a glance

Requirements one by one

Tex. Bus. Orgs. Code § 21.002(2), (5) defines the ordinary domestic for-profit corporation and treats a person authorized to perform board functions under a qualifying shareholder agreement as part of the board concept. Tex. Bus. Orgs. Code § 21.101 and § 21.109 let a qualifying agreement determine director identity, term, selection, removal, and voting power, but end that agreement at specified public- market status.

The default is meeting-only removal with or without cause

Tex. Bus. Orgs. Code § 21.409(a) permits removal of one director or the entire board, with or without cause, unless the certificate, bylaws, or subchapter provides otherwise. The action must occur at a meeting called for removal and requires holders of a majority of all shares entitled to vote at the election of the affected director or directors.

A staggered-board director is different. Section 21.409(d) permits removal only for cause unless the certificate provides otherwise. This page reports that procedural condition without deciding whether alleged conduct constitutes cause.

Class seats and cumulative voting limit partial-board removal

Under § 21.409(b), only the class, series, or group entitled by the certificate to elect a director may vote on that director's removal.

If the certificate permits cumulative voting and fewer than all directors are being removed, § 21.409(c) blocks removal when the votes cast against it would be enough to elect the director cumulatively in a whole-board election. For a classified board, the statute instead uses an election of the director's class. The section states no separate rule for a director who entered office through a board-filled vacancy.

The ordinary statute states no general board or court removal route

The surveyed Chapter 21 provisions state no general power for the board or a court to remove an ordinary private-company director, and no automatic disqualification rule. Tex. Bus. Orgs. Code § 21.758(c) is different: it governs removal of a court-appointed provisional director in the close-corporation system and is outside the ordinary baseline.

Removal notice must identify the purpose

Section 21.409 requires a meeting called for removal. Under Tex. Bus. Orgs. Code §§ 21.352-.353, special-meeting notice generally must arrive 10 to 60 days before the meeting, state its purpose, and limit nonprocedural business to the noticed purposes. Section 21.409 states no director statement or hearing right and no separate delayed effective-time rule.

Resignation may depend on a future event and become irrevocable early

Tex. Bus. Orgs. Code § 21.4091 permits written notice to the corporation. The default effective time is receipt, but the notice may prescribe a later date or a future event, including failure to receive a specified reelection vote.

Once effective, the resignation is irrevocable. Before effectiveness it is revocable unless the notice expressly states that it is irrevocable.

Replacement term depends on the type of vacancy

Section 21.410 does not supply one standalone vacancy definition. It separately addresses the initial board before shares issue, later vacancies, increases in board size, and class/series/group seats.

A predecessor-seat replacement serves the predecessor's unexpired term. A board appointee to a newly created seat serves only until the next shareholder election. Between annual meetings, the board may fill no more than two seats created by an increase.

Fillers change before and after shares issue

Before shares issue, Tex. Bus. Orgs. Code § 21.410(a) permits a majority of organizers by vote or written consent, or a majority of remaining directors even below quorum, to fill an initial-board vacancy.

After shares issue, shareholders at an annual or purpose-called special meeting or a majority of remaining directors even below quorum may fill an ordinary vacancy. A newly created seat uses the same shareholder-or-board choice, subject to the two-seat between-meetings cap.

For a class, series, or group seat, § 21.410(e) instead permits a majority of the directors then in office elected by that constituency, the sole remaining such director, or holders of the constituency's outstanding shares, unless the certificate authorizes another route. Tex. Bus. Orgs. Code § 21.416(c)(7), (9) bars a board committee from filling a board vacancy or a seat created by an increase.

If no directors remain, Chapter 21 states no separate officer or court appointment shortcut. Shareholders may use the ordinary annual or special- meeting election route; § 21.352 lets the president, an authorized caller, or qualifying shareholders call the special meeting.

What trips people up

The generic “majority of remaining directors” sentence is incomplete. It does not replace the pre-issuance organizer route, shareholder election, class-seat restriction, predecessor unexpired term, or two-new-seat cap in § 21.410.

Removal and replacement are different votes. Section 21.409 uses a majority of all shares entitled to elect the affected director, while § 21.410 gives different fillers for the vacancy after office ends.

Common questions

May shareholders remove a staggered director without cause?

Not by default. Tex. Bus. Orgs. Code § 21.409(d) requires cause unless the certificate of formation provides otherwise.

Can a sole remaining director fill a vacancy?

For a class or series seat, § 21.410(e) expressly authorizes the sole remaining director elected by that constituency. For an ordinary post-issuance vacancy, subsection (b)'s majority-of-remaining-directors rule also operates despite a lack of quorum.

Can a resignation be withdrawn?

Before it takes effect, yes, unless the notice expressly says it is irrevocable. After effectiveness, § 21.4091(d) makes it irrevocable.

Statutes and sources

• Tex. Bus. Orgs. Code §§ 21.002, 21.101, 21.109, 21.352-.353, 21.409-.410, 21.416, and 21.758 — scope, shareholder agreements, public cutoff, special-meeting notice, removal, structural protections, resignation, vacancy terms and fillers, committee limit, and close-corporation boundary. Official current Chapter 21 text