Whilst you may not use ‘director’ within your job description or believe yourself to be a director, there are circumstances in which you could still be classed as one. If this is the case, you will have statutory duties and obligations to adhere to.
There are three types of director, a de jure director, de facto director and a shadow director. All three are explained in more detail below.
De Jure Director
If you are a de jure director, you are formally appointed as a director. You will be recorded against the relevant company’s register at Companies House.
As a de jure director, you will have statutory duties, which can be found set out within the Companies Act 2006 at sections 171 – 177. These include (but are not limited to) the duty to avoid conflicts of interests, promote the success of the company and exercise independent judgement. As a de jure director, you should be aware of each of these duties in order to prevent any possible breaches.
De Facto Director
Whilst a de facto director is not formally appointed and therefore not registered at Companies House, your conduct could mean you are classed as a director i.e. if you are acting as a director or purporting to be a director to third parties.
A de facto director does not have to use the title ‘director’ in order to be classed as one but must be undertaking tasks and responsibilities which will, for all intents and purposes, mean they are considered a director.
A shadow director is someone whose instructions the company follows. This does not include professional advisors who instruct the board of directors.
An example of a shadow director could be a shareholder or someone who is disqualified from acting as a director but continues to instruct the board.
Why do I need to know?
Both de facto directors and shadow directors need to be aware that they will have the same statutory obligations as a de jure director and should be following the statutory duties set out at sections 171 – 177 of the Companies Act 2006.
During an insolvency procedure, the actions of all directors are looked at in detail in order to look for any misconduct or unlawful trading. Just like de jure directors, de facto directors and shadow directors can be subject to disqualification, criminal liability and liability for wrongful trading.
In consideration of the above, it is very important to know whether you are classed as a director, whether formally appointed or not, in order to know your duties and obligations.
If it is not clear to you whether you are a director or not, you should seek legal advice in order to fully understand your duties to the company.
If you have any questions, please get in touch with me or anyone else within the Corporate Commercial team on 01256 320555.
Corporate Commercial Solicitor