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Just who is a director?

Aggrieved creditors, in looking to bring cases against company directors are, in the current economic climate, casting their nets ever wider. So just how big can that net get? There are essentially three categories of persons who could be directors of a company:

'De jure’ directors – these are the people you automatically assume are directors; they have been appointed as directors at Companies House and their names appear in the Annual Return and in the accounts.

 

‘De facto’ directors – whilst not technically appointed as such, these people ‘act as directors’; they perform the activities normally associated with directors, and/or participate in directing the company on an equal footing with the other directors, exerting real influence.

 

‘Shadow’ directors – these are the people who exert influence over the de jure and de facto directors. For example, suppose that you set up on offshore company, using nominee directors based overseas. Those overseas directors would be the de jure directors, but you (based back in sunny old England) would almost certainly be seen as a shadow director, so long as you’re the one who is ‘pulling the strings’ or, to be more formal, ‘controlling the board, without being formally appointed’.

 

Most of us are aware, broadly speaking, of the duties of directors – but we assume these only relate to the de jure variety. In fact, they also relate to the de facto type, too. Shadow directors’ duties are, broadly speaking, likely to apply only to those areas of the business in which they are directly involved. However, this is a grey area, and so even shadow directors should err on the side of caution and, perhaps, assume that they have the same duties as de jure directors.

 

Have a look at the small business portal website, bytestart.co.uk, for a good summary of the seven duties of directors, introduced in Companies Act 2006 and effective from 1 October 2008.

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