Shadow Directors: who are they, what are their duties, and what are the implications for limitation periods, accessory liability and D&O insurance?
In this podcast, Michael Bowmer discusses these elusive company law characters and some of the issues and implications around them.
The subject of shadow directors is highly topical as a result of the drive towards greater corporate transparency and establishing who really owns and controls companies as well as the desire, particularly in insolvency, to maximise recoveries following on from corporate wrongdoing. If a company can take steps not only against its former properly appointed and registered directors, but also against those individuals or even organisations who control the actions of those directors the net of potential recovery may be significantly widened.
The aim of this podcast is to look in some detail at the law relating to shadow directors in the context of the recent changes to the Companies Act 2006, and in particular the change to the way the general duties of directors applies to shadow directors, and in the light of decisions such as Instant Access Properties Ltd v. Rosser  EWHC 756 (Ch) in which the court had to address again the controversial issue as to whether shadow directors owe fiduciary duties. As such the focus is on two main issues:
- whether and in what circumstances someone might be held to be a shadow director of a company
- what such a finding means in relation to the duties that person owes to a company and his or her potential liability
A finding that someone did act as a shadow director also has significant implications for recoveries and this podcast also considers how the law on accessory liability and limitation might apply in relation to shadow directors such as to widen the net of potential defendants. In addition consideration is given to how typical D&O insurance deals with issues in relation to shadow directorship.