Go to Top

Definition of a Director

Companies act 2013

There is a general statement in the Companies Act which states that the expression “director” includes “any person occupying the position of director, by whatever name called”, which includes a person who is treated by the board as such, despite not having been validly appointed (often referred to as a “de facto” director).

The law also recognises the concept of “shadow directors” and many of the statutory provisions which apply to directors also apply to “shadow directors”.

Shadow Director

A shadow director is defined as “a person in accordance with whose directions or instructions the directors of the company are accustomed to act”.

This could be an individual or a company. A shadow director exerts control and may be held liable for his acts, particularly in cases of insolvency or where wrongful trading is alleged.

A shadow director, who exerts control but seeks to evade liability by not being appointed as a director, will not be protected just because he has not been formally appointed.

Non –Executive Director

There is no distinction in law between an “executive” director (i.e. one who is also an employee of the company, and who often has a designated management role) and a “non-executive” director; not withstanding that a non-executive director may only have occasional involvement in the company’s affairs, he will owe exactly the same duty of care and be subject to the same potential liabilities, as the executives.

 

 

, ,