Shining light on the notion of Shadow Directors

It is common now for individuals who were either disqualified from being a director, or those who simply did not want the responsibilities of being a director to not be publically listed. They are known as shadow directors. Much stigma is attached to the term, sometimes that stigma is unwarranted and unnecessary however, the concept is undoubtedly used as a further level of protection for individuals who wish to control companies without any liability. The Small Business, Enterprise and Employment Act 2015 has tried to significantly reduce this by making it explicitly clear that shadow directors are required to adhere to the duties as outlined in the Companies Act.  Section 170(5) CA 2006 is being amended to provide that the general duties of directors apply to shadow directors where and to the extent they are capable of applying

The Act has also introduced what is known as a register of significant control. This was introduced on the 6 April 2016 and in effect, replaces the old annual return. Rather than outlining the ownership of the company, what is required now is for people to outline who controls the company. This has significant consequences for would be shadow directors and those who wish to control without recourse. It certainly appears to be a further way for the government to unmask those that lurk in the shadows of corporate governance.

Griffin Law can offer you advice regarding directorship and the legalities that surround it. Contact us via email: justice@griffin.law or on 01732 525923. At Griffin Law we pride ourselves on our second to none legal advice in addition to our risk/fee sharing approach.

Article by Mark Edmonds, Solicitor, Griffin Law

 

About the Author:

Mark Edmonds
Mark is a solicitor skilled at dealing with commercial and insolvency matters and litigation, having dealt with dozens of cases since qualification. Mark also has expertise in the use of third party litigation funding.