De facto and shadow directors

The following Corporate practice note provides comprehensive and up to date legal information covering:

  • De facto and shadow directors
  • Definition of 'director'
  • De facto directors
  • Duties and responsibilities of a de facto director
  • Shadow directors
  • Definition of shadow director
  • Protection for professional advisers
  • Lenders and other creditors
  • Protection for parent companies
  • Duties and responsibilities of a shadow director
  • More...

De facto and shadow directors

Definition of 'director'

The Companies Act 2006 (CA 2006) broadly defines a director as 'any person occupying the position of director, by whatever name called'.

Within that definition, case law has established that there are two categories of director:

  1. de jure directors, being those directors that have been validly appointed in accordance with the company's articles of association and the CA 2006, and

  2. de facto directors

A third category of director, known as shadow directors, is defined separately in the CA 2006.

Note that a person could be both a shadow director and a de facto director, eg if they assume the functions of a director as regards one part of the company's activities and gives directions to the board in relation to a different part of the company's activities.

The remainder of this Practice Note focuses on the law regarding de facto and shadow directors.

De facto directors

A de facto director is a person that acts as a director of the company, although they have not actually or validly been appointed as such. In Re Hydrodam (Corby) Ltd, Millet J expanded upon this definition, saying:

'A de facto director is a person who assumes to act as a director. He is held out as a director by the company, and claims and purports to be a director, although never actually or validly appointed as such. To

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