The prescribed approval of a company's members is required if the guaranteed term of the employment of a director of the company with the company exceeds or may exceed 3 years (section 534(1)).
The meaning of a reference to a guaranteed term of a director's employment is given in sections 534(2) to (5). The provisions provide, e.g., that a reference to the guaranteed term is a reference to the period during which the employment is to continue, or may be continued, otherwise than at the instance of the company; and cannot be terminated by the company by notice, or can be so terminated only in specified circumstances.
Companies should consider the terms and conditions of the proposed service contract and the provisions in section 534. If in doubt, they should seek independent legal advice.