De Facto and Shadow Directors
In a case involving a director’s disqualification, the High Court has summarised and restated the principle governing the definition of “shadow” and “de facto” directors.
The Court reviewed the authorities and summarized the potential factors relevant in determining whether a person is a de facto director, which by case law has established that a de facto director is within the definition of shadow director under section 6 of the Company Director’s Disqualification Act 1986.
Amongst the key factors pointing to a person being a de facto director are:-
- A de facto director must presume to act as if he were a director.
- He must have been part of the corporate governing structure and participated in directing the company’s affairs.
- He must either be the sole person directing the affairs of the Company or a substantial or predominant influence or force.
- The key test is whether the person concerned has undertaken acts or functions such as to suggest that his remit to act in the management of the Company is the same as if he were a de jure director. Lack of accountability to others may be an indicator, as may be the fact of involvement in major decisions.
For further information, contact Nigel Cook, either by telephone on 01306 502294 or by email [email protected].
