The majority of shareholders of a company incorporated in Cyprus, during an AGM, has elected a new non-executive Director to the Board.
He then receives a letter of appointment materializing service and compensation. Such letter of appointment contains a clause allowing the Company to terminate the agreement unilaterally (without any factual reason), and consequently forcing the Director to resign from the Board*.
Why is such clause presumably applicable? I see such clause as contrary to the corporate governance of the company:
It allows the Company to supersede the vote of its shareholders: the shareholders voted for the Board, but the Company can immediately terminate the Board's appointment letters and hence dismiss the Directors from the Board.
It makes the Board at the mercy of the CEO, as the latter has the power to terminate their appointment letters and hence dismiss them.
(*) Clause seen in many different samples of LOA, such as ICSA